ABOLISH COMPULSORY INCOME MANAGEMENT

DEMAND 7

Redirect funding from punitive welfare controls to community based programs.

Lift incomes above the poverty line.

Overview

Income Management (IM) is a system which "quarantines" 50 per cent of Centrelink payments. Quarantined funds are usually held on a "BasicsCard" and can only be used to buy "priority items", such as food and clothing, at government approved stores.

Almost 30 per cent of attempted BasicsCard transactions have failed, usually due to lack of funds.

Intervention legislation initially applied IM to all welfare recipients living on Aboriginal land in the Northern Territory. This required the suspension of the Racial Discrimination Act 1975.

The Labor government re-instated the RDA with respect to IM in 2010. New laws (pdf) now allow IM provisions to be applied to any declared areas around Australia.

The entire Northern Territory has been declared an "Income Management Area". Compulsory IM applies to all "disengaged youth" - people under 25 not involved in work or full-time study and "long term unemployed" - people who have been eligible for unemployment benefits for a total of 12 months of the last two years.

Referral from Child Protection Authorities can lead to 70 per cent of payments being Income Managed.

Compulsory IM also applies to people Centrelink deems to "vulnerable to financial crisis". In the NT, vulnerability has been determined by canvassing Centrelink recipients with phone interviews which ask questions such as, "how would you save for a washing machine?" or "do you have family members who ask you for money?"

Welfare recipients can volunteer to be on IM. A $250 bonus is offered every 6 months for those who volunteer. More than 50 per cent of Aboriginal welfare recipients nominally granted the right to leave IM after the changes to legislation are now on the "voluntary" system.

There is evidence of Centrelink applying pressure to "volunteer", or not giving people a choice. The NT Ombudsman says that remaining on Income Management is being presented as the only viable option for remote area residents who need to pay rent. They have commissioned a report into the "voluntary" system.

There is no evidence that compulsory IM is leading to improved outcomes for welfare recipients. The Menzies School of Health reported that the system led to no increases in sales of fresh fruit and vegetables, although a sharp spike was recorded when incomes temporarily increased through the government stimulus package in 2009.

The largest study of people on Income Management was completed by the Equality Rights Alliance in May and June of 2011, titled Women's Experience of Income Management in the Northern Territory. More than 180 women with direct experience of Income Management participated. It found that 79% wanted to exit the system, 85% had not changed what they buy and 74% felt discriminated against.

IM is extremely expensive, with an estimated cost of more than $4400 per person per year in administration.  $105 million was budgeted for administration costs to manage $150 million of Centrelink income in the NT over the 2009/10 financial year alone. $350 million has been budgeted to roll out IM across the NT over the coming years.

From July 2012, the federal government plans to introduce Income Management into five 'trial sites' across Australia: Bankstown (NSW), Rockhampton and Logan (Qld), Shepparton (Vic) and Playford (SA). It will initially apply to those 'vulnerable to financial crisis' and referred by child protection authorities. A new coalition has formed in Bankstown to oppose this policy, supported by more than 50 organisations.

Explore the reality further:                                        What's the next demand?