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Cashless debit cards for welfare recipients

1st September 2017

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Dr Shelley Bielefeld is the inaugural Braithwaite Fellow in RegNet. She has expertise in social justice issues affecting Australia’s First Peoples.

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Please note this article was written in June 2017 ahead of the release of the Final Evaluation Report on 1 September 2017.

This article first appeared in the ANU Reporter in August 2017.

The cashless debit card, introduced in 2016 in Ceduna and the East Kimberley, restricts 80 per cent of a person’s regular social security payment to an industry-issued card that cannot be used to purchase alcohol and gambling products.

The 2017-2018 Federal Budget announced the program would continue in Ceduna and the East Kimberley for another year and be expanded across two new sites in September 2017.

Treasurer Scott Morrison also flagged the government intended to commence drug testing of 5,000 new welfare recipients, with any who tested positive to be placed on the card.

Indigenous welfare recipients are grossly overrepresented in the program. Given the bipartisan tendency to stereotype Indigenous welfare recipients as substance abusers, they are also at greater risk of being targeted under the new drug testing trials.

The government has rationalised the card as necessary to address ‘welfare dependency’ and reduce ‘alcohol consumption, illegal drug use and gambling’. It declared the trials have been a ‘success’ and claimed an evaluation conducted by Orima Research indicates “these trials have been effective in reducing alcohol consumption, illegal drug use and gambling”.

However, at the time these statements were made, evaluation of the program was incomplete. So why is the program being declared a success and being expanded before the evaluation is complete?

In forming their opinions, government ministers appear to have relied heavily on views expressed by card advocates and taken a dismissive stance to any contrary feedback about the card by those who are forced to use it.

Orima’s Cashless Debit Card Trial Evaluation: Wave 1 Interim Evaluation Report revealed there are significant problems for those who are subject to the program. Numerous users report the card has created difficulties for them in meeting their everyday needs.

Orima’s research revealed 49 per cent of program participants were worse off, compared to 22 per cent who said it had made their lives better.

Reasons provided as to why the program made life worse included people being unable to pay for bills, difficulties checking their account balance, difficulties using the card, some merchants telling cardholders they would not accept the card to purchase goods meant to be accessible by the card, and exclusion from participation in a range of cash-only transaction settings.

Although 22 per cent of Orima’s surveyed participants reported a reduction in either substance use or gambling, the data showed the trial making no difference for alcohol, gambling and illegal drug use for 77 per cent of card users.

Feedback from the trial sites indicates that many people on the card who object to it are not doing so because they want to purchase alcohol, illicit drugs or gambling products, but because they do not want to experience financial and social exclusion.

Cashless welfare cards have been rationalised by the rhetoric of substance abuse and gambling addiction, linked to alleged deficits in the character and capacity of welfare recipients. It must be asked who is best served by this discourse. One big winner in this arrangement appears to be Indue Ltd who have been awarded just over $10.8 million to design and administer the program. This is part of a reported $18.9 million allocated to the program, with a cost of approximately $10,000 per trial participant.

The outcome is that there is less funding dedicated to other services to assist people in need, especially children. A fair social security system would treat people who need income support with dignity, rather than on the basis of their largely imagined deficiencies.

Instead, with the cashless debit card, we have a powerful elite using intensive regulation as a tool of socio-economic control over the less powerful.

Shelley Bielefeld is a Braithwaite Research Fellow at the ANU School of Regulation and Global Governance (RegNet).

Updated:  10 August 2017/Responsible Officer:  Director, RegNet/Page Contact:  Director, RegNet