More income management trials will prove futile – it doesn't work

How do you sell a policy trial when there is considerable evidence that it is not going to work? The Abbott government is facing this dilemma in its desire to implement Twiggy Forrest’s suggestion for a card restricting welfare recipients’ access to cash.

This is essentially an upgrade of the BasicsCard income management program. The 2015 budget allocated A$146.7 million to cover both the extension of income management and the introduction of the Forrest version, the cashless welfare card, despite a lack of evidence of the model’s effectiveness.

Background to the policy

“We have to do something” is a common response to questions on why the government should continue income management programs or introduce its proposed offspring, the cashless welfare card. The first is mainly imposed on Indigenous welfare recipients. The second, slated to be trialled in 2016, will also target mainly Indigenous communities, even though both apply to some non-Indigenous welfare recipients.

Both cards are justified as measures to curb purchasing power and the serious levels of excessive alcohol-fuelled violence in mainly Indigenous communities. The BasicsCard quarantines 50% of ordinary welfare payments. The new card will generally control 80% of payments. Neither card can be used to purchase alcohol.

The government has tried to play down the similarities, while emphasising the alcohol issue. Parliamentary secretary Alan Tudge said:

This proposal is not income management. There will be no compulsion for anyone to spend their payments in a particular way, although of course people will be encouraged to establish a budget.

Tudge pointed out that Ceduna, the only town to have formally signed up to the new card’s trial, has a rate of hospitalisation from assault that is 68 times that of the wider community – largely due to alcohol abuse.

Has it solved alcohol-related issues?

However, there is no evidence in the evaluations of the Northern Territory income management programs that controlling access to cash has reduced alcohol abuse, even in communities covered by the program for up to seven years.

As the main differences are technicalities of access, it is highly unlikely the new program will be effective as they are very similar, despite Tudge’s claims that the card represents a:

… radical new positive approach to the distribution of welfare.

The government appears to be ignoring its funded evaluations that show the NT versions have not worked, particularly for those on compulsory income management. On alcohol-related issues, the evaluation said:

There has been a substantial decrease in per capita alcohol consumption from the mid-2000s. However, this decrease started well before the NTER [Northern Territory Emergency Response] and is almost certainly driven by factors other than income management.

The number of alcohol-related presentations to emergency departments and admissions to public hospitals by Indigenous people in the Northern Territory has increased dramatically since the mid-2000s.

Imprisonment rates of the Indigenous population have increased in the Northern Territory since 2002 at a faster rate than amongst the Indigenous population Australia-wide.

The report continues:

When the data are taken as a whole, not only does it suggest that there has been very little progress in addressing many of the substantial disadvantages faced by many people in the Northern Territory, but it also suggests that there is no evidence of changes in aggregate outcomes that can plausibly be linked to income management.

There are many more detailed analyses of the limited effects of the NT programs introduced by the Howard government and carried on by Labor. The general consensus is that controlling access to cash doesn’t work as people find ways around it, including home brewing.

What next?

The government’s assumption that upping the proportion of quarantined payments from 50% to 80% will work fails to understand that the problems that create boredom and addiction need quite different approaches. Labor too is apparently unrepentant at its failed efforts and is leaving its options open on whether it supports the bill’s passage.

The failure to accept the evidence raises questions as to why has there has been little serious debate – officially and generally in the welfare sector, or in the more general policymaking community – on the efficacy of these types of conditional welfare payments. Some of this can be blamed on policy bipartisanship.

There is also a case to be made that the programs targeting Indigenous recipients and communities are distorted by possible anti-Indigenous prejudices that reduce the necessary level of evidence-based scrutiny.

The lack of real progress in closing the gap suggests the government generally fails to follow the advice of its own experts such as the Australian Institute of Health and Welfare. The AIHW has produced criteria for Indigenous programs that work.

The government should follow the evidence-based advice before wasting more money on a new “trial” program that further infantilises mainly Indigenous welfare recipients and won’t work.

Eva Cox does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.