Australian welfare recipients face compulsory income management

If Australian authorities think children are at risk of neglect, they can freeze part of the welfare incomes of their parents or carers and force it to be spent on “essentials”.

The draconian impost, euphemistically misnamed “income management”, has been used against Aboriginal people in the Northern Territory for the past four years.

From July 1st the federal government plans to expand income management into five new locations: Bankstown (a Sydney suburb) in New South Wales, Logan (near Brisbane) and Rockhampton in Queensland, Playford in South Australia and Shepparton in Victoria.

Under this "trial", anyone assessed by the Centrelink benefits administration to be “vulnerable to financial crisis” will have half of their payment quarantined. Parents and legal guardians referred to Centrelink by child protection authorities will have 70% of their income compulsorily quarantined.

Like under the disastrous Northern Territory intervention, Centrelink will issue a ‘BasicsCard’ to people who have had their payments quarantined. This card may only be used to purchase priority items e.g. food, clothing and utilities from government approved outlets such as the mega-corporations Woolworths, Coles, Target, Kmart, Best and Less and Big W.

The government estimates that 20,000 people will fall under income management in the five locations over the next five years. This is around 1,000 persons per location each year.

Income management was first rolled out as part of the racist intervention in the Northern Territory in 2007. Aboriginal communities have experienced almost five years of hardship and shame as a result of this and related policies.

Income management in the Northern Territory has been widely criticised, both locally and internationally as it stigmatises and humiliates welfare recipients, wastes money on bureaucratic administration and discriminates specifically against Aboriginal people. In the NT, income management costs approximately $4,400 per person per year in administration alone. There is no evidence base to support the expansion of the system.

Yet politicians claim that income management has already proven effective in trial locations in Perth and the Kimberley in Western Australia, Cape York in Queensland and throughout the Northern Territory. They maintain that the quarantining is designed to make sure that welfare payments are spent in the best interest of children, rather than tobacco, alcohol and gambling.

But independent research conducted by the Menzies School of Health, Darwin, has found that income management has had no beneficial effect on tobacco and cigarette sales, soft drink or fruit and vegetable sales. A recent report by the Equality Rights Alliance surveyed 180 women on income management in the NT. It found that 79% wanted to exit the system, 85% had not changed what they buy and 74% felt discriminated against.

A report released by the Australian Indigenous Doctors Association concludes that compulsory income management in the NT has profoundly long-term negative impacts on psychological health, social health and wellbeing and cultural integrity (March 2010).

International research suggests welfare reforms that utilise sanctions such as the income management system place additional stresses on families with young children and have the potential to increase family breakdown and child abuse.

Income management has already been found to be an expensive and administration-intensive approach with no evidence to suggest that it delivers outcomes that justify its complexity or cost. The expansion must be stopped and all those on income management in the NT should be given immediate freedom to leave the system.

More than 50 organisations including trade unions, church and community groups reject income management. The government will ignore them.