Income Management

This Federal Labor government claims both to have Labor values and to use evidence as its policy driver. These claims are confounded in many of the social policy areas they are pursuing but none more so than in their current policy initiatives on income management. Here the government shows few signs of either fairness or a serious examination of any evidence that income management works to benefit its unwilling participants.

This article deals with the various forms of compulsory income management that involve quarantining a proportion of government payments imposed on certain categories of people. The policy was first applied in 2007 as part of the NT Emergency Response, also known as the Intervention. It targeted all Commonwealth income recipients in seventy-three NT Aboriginal communities, quarantining half of their payments and specifying what the money was not to be used for and where it could be spent. The policy was part of a package, ostensibly to reduce child abuse, and was not based on any evidence that controlling 50 per cent of income would bring about the changes desired by government or by local communities. There may be arguments about what comprises evidence, but this is a particularly data-free zone, both before and since this program was introduced.

The government also funded two less universal versions of income management, in Western Australia and Cape York, which targeted identified ‘problem families’. After three years of the NT scheme being applied to all recipients of payments in the specified Aboriginal communities, the program was reworked and in 2010 was amended and extended to most income recipients in the Northern Territory on a non-racialised basis. This last change was partly the result of UN criticisms of the government’s suspension of the Racial Discrimination Act that had allowed it to apply income management to Aboriginal people alone. Rather than cancel the racially discriminatory compulsory aspect of the policy, it has now been extended to non-Indigenous groups, which begs the question as to whether this was always intended. The government, in a recent Budget 2011 decision, has further extended income management programs using the less compulsory WA version of this program. From 2012, it will apply in five new areas in NSW, Queensland, Victoria and South Australia.

The rationale for selecting these new areas is unclear but their diverse locations suggest this move is the beginning of a full national roll-out to what the federal government would define as appropriate target areas with higher than average numbers of welfare income recipients. This strategy is in line with government assumptions that the problems faced by those who are not in the paid workforce are partly communal but mostly personal, not structural.

The solution, therefore, is pressuring people, via their entitlements to payments, to re-order their lives so they are pushed into paid work. The Budget contained other targeted coercive participation requirements to be placed on working-age recipients of benefits, designed to further pressure the million-plus not employed to look for paid work, without noting that there are only 200,000 job vacancies. This proposed set of changes moves them further from having any sense of control over their lives as even their payments will be seriously conditional.

The signs are, therefore, that by the next Budget ever more working-age recipients of welfare payments will be subjected to control over their spending. While the current spending limits are fairly broad, usually 50 per cent to be spent in designated stores, with alcohol and cigarettes barred, last year’s tender for a new Basics Card suggests including product barcode readings. This change would allow further controls at a later date. Comments by Minister Jenny Macklin on the Menzies Health Research NT purchasing study suggest that she would like to see such ‘unhealthy’ products as soft drinks targeted.

The increasing use of income management brings Australia closer to the US food stamp model of welfare. It confirms a seismic shift away from the post-WWII model of state entitlements to a decent basic income for all, to a paternalistic, conditional welfare model that rewards the ‘deserving poor’. What is particularly worthy of comment is that this change has been introduced into general welfare policy and to the community by using Indigenous recipients of payments as a stalking horse. Indigenous income recipients were targeted because of their presumed inability to manage money and families, a racially based assumption that disguised basic changes to wider policies. Because these changes started in Aboriginal communities, few have noticed that they might be harbingers of broader policy shifts.

Where is the Evidence?

There has been little formal support for the imposition of compulsory income management. From the original concerns raised in 2007 by many Aboriginal groups, through to the 2008 report from the NTER Review Board chaired by Peter Yu, and the available reports from the extensive consultation run for the government by the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA), there has been a consistent view that income management should not be compulsory. The only group to publicly support the imposition of compulsory income management has been the Ngaanyatjarra Pitjantjatjara Yankunytjatjara Women’s Council (NPYWC). Their support has allowed Minister Macklin and others to define this as a gender issue, but many other women in Central Australia and elsewhere do not support the compulsory model.

There have been various formal inquiry and submission processes on both the program and possible changes. Before passing the Bills that facilitated the 2010 changes, the Senate Community Affairs Committee held an inquiry into the proposed income management legislation and related changes. Of the more than eighty submissions received, nearly all those covering income management opposed the extension of forms of coercive income management. This included groups such as the Australian Indigenous Doctors Association (AIDA), the medical group AMSANT, and various land councils, which all stated serious concerns. Objections also came from major welfare agencies that had looked carefully at the evidence and statistics. Many claimed there was a lack of evidence that the program was working and that none of the studies offered clear evidence of the program’s benefits exceeding possible harm.

Many of the studies used as government evidence were criticised. For example, Australia’s peak social services body ACOSS commented:

Data collected by Centrelink on purchasing patterns have … been shown to be of limited value. The Department of Human Services gave evidence to the Senate Select Committee on Remote and Regional Indigenous Communities inquiry that 64 per cent of income managed funds were being spent on food. This was then clarified as being money spent at stores that primarily sell food.

A survey of store owners by FaHCSIA was also of limited evidentiary weight. Conducted by departmental staff rather than independent researchers, store owners’ perceptions and observations were relied on, in lieu of quantitative data, to inform conclusions not only about purchasing patterns but also about supposed broader social and behavioural change among income-managed customers. As well as customer shopping habits (with a reported increase in the amount of healthy food purchased), store owners’ comments were relied upon for evidence of change in familial relationships and humbugging, and in relation to mistrust and confusion about income management.

These are serious criticisms by a major agency of the main research reports the government claims offer evidence for the decision to maintain and extend income management. Another report they mention was by the Australian Institute of Health and Welfare (AIHW) which claimed that small surveys done or funded by FaHCSIA did not offer evidence that the program worked, although they have since been used to justify the types of changes the government has pursued.

There are other studies, never quoted by the government, that cast further doubt on the legitimacy of these programs. The study by AIDA showed that possible short-term benefits were outweighed by potential long-term serious damage caused by the processes employed. The Menzies Health Research unit’s careful statistical study of purchases pre and post the introduction of income management in a group of stores showed no statistical evidence of better purchasing patterns after income management.

The majority Senate report noted these objections but oddly failed to use lack of evidence as a reason to amend or delay the legislative changes. Despite recording concern about the lack of evidence, the ALP backed the Bills, which were then passed with support from the Opposition. ALP senators did ask that more evidence be sought before any further extension of the program beyond the Northern Territory, but the new programs announced in the 2011 Budget show this has not happened.

The government has committed funding for a three year evaluation of the NT scheme, but in their requirements for a design for such an evaluation, they clearly signalled they wanted a report by the end of 2011, to inform further policy changes. These changes are already in train, despite the lack of the report and the little data on the benefits of the NT scheme so far, except for the numbers of people enrolled.

The so-called pilot scheme in Western Australia, Perth and Kimberly has just been refunded till June 2012 and it is a version of this model that is being expanded in the 2011 budget. This more limited project covers child protection-referred families and ‘voluntary’ recipients. The current scheme has just been evaluated. The pilot covers a city and a rural Indigenous community, with a mix of families under voluntary income management and compulsory child protection income management. The government has claimed that the recent evaluation showed clear evidence that potential recipients benefited, but a careful reading of the evaluation does not support this view.

The evaluation was based mainly on the reported views of 100 or so recipients of the two types of income management from both locations. This means the numbers were very small, and thus unreliable. Participants’ responses did agree that income management had been useful in helping them manage money and care for children, but there was no supporting hard data, from bank accounts or health reports, to validate their claims. Given the possibility of gratuitous concurrence (being polite to interviewers), the small numbers responding, and the payment of $50 to take part in the evaluation, the reliability of the evidence is questionable. My doubts as a researcher are similar to those voiced in a report by the WA Council of Social Services, which concludes with the following:

Whilst this initial evaluation provides focus and initial qualitative data, it fails to answer many questions, and raises further questions about the effectiveness of the government’s income management programs in the longer term. Furthermore, there are enough doubts around the rigour of the research, such as sampling error, attribution, and satisfaction survey methodology that the Council cautions very strongly against relying on it as a basis to formulate new, or validate existing, public policy.

Despite this judgment, the original research report is one of two main studies used in the Budget papers as supporting the extension of the program. The other study, which FaHCSIA also claims as support for the new extended program, was the original research write-up by the most scrupulous of government statistical collectors, the AIHW. Mentioned above, that report expressed doubts to FaHCSIA in 2009, which continued to claim it as evidence children were eating more and were healthier due to income management. The small survey in the NT was described thus:

This was based on interviews with parents in which more than half of those interviewed reported their children were eating more and were healthier. A majority of clients interviewed also reported that there was less gambling (63 per cent), less drinking/alcohol abuse (60.9 per cent) and less ‘humbugging’ (52.1 per cent). The authors of the (AIHW) report, however, were careful to identify the limitations of the available evidence. They stated that, ‘The research methods used in the income management evaluation (point-in-time descriptive surveys and qualitative research) would all sit towards the bottom of the evidence hierarchy’. Later they commented: ‘Due to the absence of a comparison group, the evaluation was dependent on the perceptions of a range of stakeholders, which would have been strengthened if supplemented with empirical indicators.’ (Quoted in the ACOSS submission to the Senate inquiry.)

Surely these two reports, which are quoted by FaHCSIA as supporting the latest extension, together with the inadequacies of the research also noted above, are an inadequate basis for making major policy changes. More doubts about the usefulness of income management will be detailed in a forthcoming issue of the Journal of Indigenous Policy.

Widening Income Management

The above process of selective reading of research reports and the turning of a blind-eye to the many contending views, allowed a core group of ministers and bureaucrats to implement a big, general policy shift almost unnoticed, and certainly without the wide public discussion such a change should generate. The new legislation passed in June 2010 was supported by both the government and the Opposition and only opposed by the Greens. Now the government has the power to apply this policy to selected areas with welfare recipients anywhere in Australia.

The 2010 policies included some changes that would make income quarantining more generally acceptable. This included a shift of focus from all welfare payment recipients, the blanket restriction on any Aboriginal recipient under the Intervention, to covering just working-age benefit recipients. The change excludes those on age, disability and carer payment in the general population, as these are the more ‘respectable’ state dependants and likely to attract public support if upset by loss of control over their money. The legislative changes cover, with some time factors, recipients of Newstart, Youth Allowance for non-students, Parenting Payments and some recipients of Special Benefit, for example, some refugees. These categories are convenient tabloid media targets who are the least likely to attract major public support.

The new legislation does allow those declared to be recipients to apply for exemptions, but relatively few Aboriginal people have achieved this in the Northern Territory, and we are told that forward estimates assume about only up to 10 per cent will be granted. There is also a bribe available to encourage those in the Northern Territory no longer covered by compulsory income management to stay on as voluntary recipients for an extra $250 after six months. There are some recorded examples of confused or even angry people being pressured to stay on when they want to opt out.

We are now facing a major shift in policies on payments that is likely to be imposed slowly but surely, Australia wide. Given the costs are considerable (the estimate for staff and administration costs in the Northern Territory was about $4000 per recipient per year), the government should have clear evidence that there are benefits for the communities and individuals affected. However, as shown, the evidence is that this policy does not create more individual or community well-being. It does not make children safer or communities less violent and there is very limited evidence that many of the local communities affected want it or find it beneficial.

Such serious policy changes need more than assertions to validate their worth. From 1 July 2012, income management will be applied to more ‘vulnerable families and individuals’ as assessed by Centrelink social workers, and as there is no proof it works, this is a problem. There are some suggestions that it may undermine self-confidence and a sense of autonomy which is elsewhere seen as a major consequence of inequality. The negative effects of income management are yet to be studied.

The whole process outlined above raises serious questions about the social policy credentials of a supposedly Labor government. The use of initiatives like the Howard government’s Intervention to maintain policies that are discriminatory against outgroups, and racist in origin, is seriously problematic. What is interesting is that few in the progressive community are looking at these areas of social policy and considering what needs to be done to move back to a human rights and equity model.

Eva Cox is a long-term activist and feminist. She is currently working with Jumbunna Indigenous house of learning at the University of Technology, Sydney, and is developing alternative policies to make societies more civil. She can be reached at



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