September 2014 - J Rob Bray, Matthew Gray, Kelly Hand and Ilan Katz

Background

A relatively recent development in the Australian social security system has been the introduction of policies of income management for some people in receipt of income support payments. The policy limits the amount of income support paid to people as an unconditional cash transfer and imposes restrictions on how the remaining – sometimes termed ‘quarantined’ – funds can be spent. Income management was designed to ensure that these funds are spent on essential ‘basic’ items and to limit the amount of income that can be spent on tobacco, alcohol, pornography, and gambling.

Income management was first introduced in the Northern Territory in 2007 as part of the Federal Government’s Northern Territory Emergency Response (NTER). The main form of income management currently in place is “New Income Management”, which was introduced in the second half of 2010 to replace the NTER Income Management program and operates only in the Northern Territory.

New Income Management consists of a number of subprograms or streams. These are differentiated by: the criteria for determining who will be income managed; the proportion of income which is subject to income management; whether the person has access to exemptions from the program; and whether they receive any additional payment for participating in the program.

The first major stream comprises the Long Term Welfare Payment Recipient and Disengaged Youth measures (together referred to in this report as Compulsory Income Management), which applies compulsorily to people who have been in receipt of certain income support payments for more than a specified period. People placed on this form of income management are able to apply for an exemption. Exemptions cannot be gained from the other forms of New Income Management.

The second major stream, Voluntary Income Management, allows people who want to be on income management and are not on any of the forms of compulsory income management to participate in the program. The other income management measures operating in the Northern Territory are all relatively small and are applied on a compulsory basis. They include various forms of Vulnerable Income Management – some forms involve people being assessed by Centrelink as being vulnerable and others automatically being assessed as being vulnerable because of the types of income support payments they receive – and Child Protection Income Management, and Supporting People at Risk income management, to which people are referred by Northern Territory Government authorities.

While income management has been implemented in a number of other locations in Australia, it is only in the Northern Territory that the program is primarily composed of a compulsory component, which is simply linked to duration on payments and is implemented on such a large scale.

Income management is operationalised largely through the use of the BasicsCard, which is an EFTPOS
card that can be used in approved stores and services to buy non-prohibited goods and cannot be used to withdraw cash.

In 2010, the then Australian Government Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA, now the Department of Social Services (DSS)) commissioned this
evaluation of New Income Management.