Matthew Gray

31 October 2014

Welfare conditionality and Income

Management

Conditionality

• Has always been conditionality in the social security

system

• Traditional forms of conditionality generally around

establishing and testing eligibility

– Means test; dependent children; relationship status; job search

• Last 2 decades has been extension and diversification of

the use of conditionality in Australian social security

policy

New conditionality

• Seeks to alter pre-existing forms of behaviour – set of

interventionist measures aimed at minimising negative

precursors of welfare policy – seeks to alter social norms

and patterns of behaviour for the betterment of society

• Inherently paternalistic

• Aimed at altering behaviour that has traditionally been

considered private and that is often difficult to measure

(e.g., good parenting).

• Largely related to child wellbeing

• Punitive in nature – does not offer bonuses or additional

benefits as incentives for changing behaviour, but

demands that behaviour requirements be met on pain of

sanction

Examples

• Linking benefits to immunisation of children (late 1990s)

– Maternity Immunisation Allowance, Child Care Benefit

conditional upon proof of age appropriate immunisation

• School Enrolment and Attendance Through Welfare

Reform Measure (since 2009)

– Receipt of income support payments conditional upon children’s

school attendance

• Compulsory Income Management (since 2010)

• Teenage mothers – placed based trials

What is income management

• Quarantining 50% of income support and family

payments

• Quarantined money to be spent on “basics”

– Not alcohol, tobacco, pornography, gambling

• Money is:

– Allocated to a BasicsCard

– Payments on behalf of the person

– Payments to merchants for specific purchases

Basics card

6

• Debit card which can be used at approved merchants

Income Management Initiatives

• NT Income Management

• Voluntary / Child Protection / Vulnerable

– Placed based (Playford Shepparton Bankstown Logan

Rockhampton)

– WA Laverton, Ngaanyatjarra, Kiwirrkurra

– APY lands

• Voluntary & Child protection

– WA: metropolitan Perth & Kimberly

• Cape York

– Family Responsibilities Commission – 60-75% 3-6

months & option to apply for voluntary

7

Introduced as part of

NTER • Following the “Little Children

are Sacred” Report

• September 2007

• 73 prescribed communities

• All income support recipients

• Part of a wider set of

interventions

• Required suspensions of parts

of the Racial Discrimination Act

What is a prescribed community?

9

Original objective of IM

‘stem the flow of cash that is expended on substance

abuse and gambling’ and ‘to ensure funds that are

provided for the welfare of children are actually

expended in this way.’

The Hon Mal Brough MP, Social Security and Other

Legislation Amendment (Welfare Payment Reform) Bill

2007, Explanatory Memorandum

Larger vision

“income management lays the foundations

for pathways to economic and social

participation through helping to stabilise

household budgeting that assists people to

meet the basic needs of life.”

Policy Statement

Landmark Reform to the Welfare System,

Reinstatement of the Racial Discrimination Act

and Strengthening of the

Northern Territory Emergency Response

2009

11

Legislative objectives

• Reduce immediate hardship by ensuring

payments directed at meeting priority needs

• Give support to budgeting

• Reduce spending on alcohol, tobacco, porn &

gambling

• Reduce risk of harassment

• Encourage socially responsible behaviour

• Improve level of protection to welfare recipients

1

Kimberley Land Council

Newsletter 1981

Thanks to Dr Will Sanders for use of this

slide

What are the mechanisms? • ½ money quarantined from alcohol and tobacco

• Basics card as commitment device?

– For food

– Circuit breaker on obligations

• Low cost banking

• Knowledge of financial position?

• Interview with Centrelink on allocations

• Referral to money management training

• Ability to gain exemption as incentive

• Habitualisation vs stabilisation

14

Key stats (Audit Report)

• As at 30 June 2012

– 17,600 subject to IM in the Northern Territory

– Compulsory – 13,300

– Voluntary – 4,050

– Child Protection - 50

– Vulnerable - 140

• $95 -110 million per annum

– $5,000 per person per year

15

Who is on IM • 91% are Indigenous

– Indigenous account for 71% of income support

recipients (under APE)

• 61% women (63% compulsory, 56% voluntary)

• 50% aged under 30 years

• 11% of Age Pensioners

• 70+% of Newstart, PPP & Youth Allowance

• 60% of PPS

• 18% couples with kids, 18% sole parents, 25%

couples no kids & 40% singles

16

Exemptions from IM

17

- Non

Indigenous

Indigenous

48.7% 13.2%

79.8% 36.5%

Apply

Applications successful

Exempt 38.8% 4.8%

Reason for seeking exemption

0

10

20

30

40

50

60

70

80

90

Control of money

Stigma and shame

Get rights back

Have freedom to

choose

Cash purchase cheaper

Indigenous Non-Indigenous

18

First Evaluation Report Conclusion

• Diverse impacts

– Can benefit some

– Applied to many who neither need nor benefit

• Incentives/supports not effective

• Means of control – not building behaviours

• People likely to remain on for a long time

Low birth weight infants

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

2006 2007 2008 2009 2010 2011

Pro

port

ion

low

bir

th w

eigh

t (%

)

NT Indigenous Aust. Indigenous

NT non-Indigenous Aust. non-Indigenous

Source: AIHW Interactive Child Indicators Database.

Alcohol related ED presentations & admissions

0

100

200

300

400

500

600

Jul-

05

Jan

-06

Jul-

06

Jan

-07

Jul-

07

Jan

-08

Jul-

08

Jan

-09

Jul-

09

Jan

-10

Jul-

10

Jan

-11

Jul-

11

Jan

-12

Jul-

12

Jan

-13

Jul-

13n

um

ber

of

alco

ho

l re

late

d E

D p

rese

nta

tio

n a

nd

h

osp

ital

ad

mis

sio

ns

non-Indigenous Indigenous

Source: NT Government Department of Health

Conclusion of the Parliamentary Joint

Committee on Human Rights (2013) …… the committee considers that, in light of the evidence

that is available to the committee and notwithstanding that

the income management regime pursue legitimate goals,

the government has not yet clearly demonstrated that:

• the income management regime to the extent it may be

viewed as having a differential impact based on race, is

a reasonable and proportionate measure and therefore

not discriminatory; or

• the income management regime is a justifiable limitation

on the rights to social security and the right to privacy

and family.

The Forrest Review Income management was widely regarded as very helpful

for vulnerable people, enabling them to manage their

budgets, save for expenses and stay in stable housing.

However, it is complex, it can be considered paternalistic

and comes with a cost that renders it unsustainable and

unsuitable for broader application.

While income management is useful to stabilise an

individual’s circumstances, it can make transitions off

welfare and into work more difficult. (Forrest 201)

Australian National Audit Office, 2013

the nature of the practical operation of

Income Management, such as the facilitation

of bill payment arrangements, means that

there is an inherent risk that instead of

developing budgeting skills, customers may

come to rely on DHS and choose to remain

on Income Management

(Australian National Audit Office, 2013)

Composition of benefit packages, 2009

Lone parents, two children, USD PPPs

0

5000

10000

15000

20000

25000

30000

35000

Basic Housing/other

Source: Whiteford, P. (2011), ‘Conditional welfare in OECD countries:

The exception or the rule?’, presentation to ASPC 6-8 July 2011, UNSW, Sydney

Effects of income management on

composition of benefit packages

Source: Whiteford, P. (2011), ‘Conditional welfare in OECD countries:

The exception or the rule?’, presentation to ASPC 6-8 July 2011, UNSW, Sydney.