Andrew Forrest’s idea of paying social security benefits with a prepaid card is not original; it has been popular in certain circles for many years and it is now operating in two trial sites.  The cashless debit card looks and operates like a normal bank card, except it cannot be used to buy alcohol or to gamble and withdraw cash.

In 2015 the Federal LNP Government (with assistance from Labor) passed laws to enable a ‘cashless welfare card’.  People on income support payments like Newstart, Disability Support Payments, Carer Payment and Youth Allowance can only access 20% of their payments in cash.  The balance may only be used on the cashless welfare card at ‘approved merchants’ where credit or debit cards are accepted.  There is also a webpage devoted to ‘Blocked and Excluded Merchants’.

Whilst the card is designed to stop alcohol and substance abuse and gambling; the pilot will impact on all people who receive income support payments and live in the geographical areas where the trials are being conducted.  This flies in the face of treating citizens with dignity and respect as it targets everyone on income support payments, not just those people who might gamble, or abuse alcohol and other substances.

There were to be three trial sites, but one proposed trial site rejected the trial of the cashless welfare card.  Community leaders outlined their concerns, including: evidence that income management is a flawed approach, the practical impact of the measure on people who need cash for everyday transactions, the lack of other resources, impacts on crime, elder abuse and the inadequate community consultation process.  There was also a very real concern expressed about stigma; in one community the cashless welfare cards are known as the ‘white cards’.

Communities facing complex issues need real individualised services that help people deal with the challenges they are facing.  It is well known that people on income support are some of the best at handling their finances and living off next to nothing, the cashless welfare card well and truly throws a spanner in the works for many just battling to get by.

Constructive strategies will give better outcomes.  Things like specialist drug and alcohol services, wrap around services that meet people’s needs, early intervention supports, and, addressing poverty.  What happens if there is not enough in the 20% cash component to cover school children’s lunch money, bus fares, and school excursions?  Will they have to stay home?  The stigma and loss of dignity is both disturbing and potentially distressing.  The Government needs to stop, take a deep breath and reconsider what it is doing.

The prepaid debit card has been championed by Andrew Forrest, as a means of restricting what claimants can spend their benefits on.  A prohibition on alcohol is popular among some who seem to believe that most people dependent on benefits are incapable of budgeting, and if they are in dire straits it is probably because they had squandered their meagre incomes.  The cashless welfare card appears designed to stigmatise and control citizens.  Limiting cash will not stop alcohol or substance abuse; anecdotal evidence suggests people are finding a range of ways to convert goods or services purchased for cash.

The other problem is that people on aged pensions were not included in the trial and continue to receive the pension as previously.  This has led to old people getting ‘humbugged’ for cash and leaves them open to elder abuse.

Arguments that suggest that non cash payments helps prevents domestic violence are fallacious, a much more complex picture is emerging.  For example, evidence from research in the Northern Territory suggests the opposite is true, that is to say more controls on finance and access to cash increases the risk of domestic violence.

The cashless welfare card could have positive features, and be seen to reflect a less judgmental attitude.  It could be used to withdraw cash, without restrictions on what can be purchased.  The card can supposedly be used anywhere that accepts debit cards; it will work online, for shopping and paying bills.  In this way, it could be seen to give access to a form of banking, which some citizens may not currently have.  Nonetheless, despite some potentially positive features of the cards, the scheme still raises major concerns and many questions.  Will use of the card identify someone as a benefit claimant, and attract stigma?  Even if a cashless welfare card is established with relatively benign rules, isn’t the potential there to change the rules in the future, and apply harsher terms and conditions?  Will Centrelink eventually have visibility and control on all payments and purchases?

Centrelink has restricted certain merchant codes (known as ‘merchant blocking’) so that cards cannot be used to purchase certain products and cannot be used at certain retailers/services. What safeguards are in place to ensure restrictions on merchants will not be expanded in the future?

The planned debit card is an extension of Compulsory Income Management by stealth; and it is much cheaper to administer. Compulsory Income Management is a failed measure, it impacts negatively on the communities it affects and imposes significant costs on Government.

Andrew Forrest (along with government and other advocates for the card) urged this form of social control on the basis that poverty is often not due to economic injustice and incomes too low to meet basic needs, but on the stupid or irresponsible behaviour of poor people.  Policies have been geared not to raising the incomes of people living in poverty, but to changing their behaviour, whilst simultaneously cutting their income and choice. It is difficult to imagine that the cards would not then be rolled out to all citizens on benefits, especially if the cards proved to save money on administration.

While the cards may appear to have attractive features, in reality they are just one more way of treating benefit claimants as different from the general population?  Wouldn’t a basic bank account, an adequate income, and genuine support do far more to enhance people’s ‘choice’ than yet another scheme which treats claimants as somehow ‘other’?  This certainly appears to be at odds with the whole ideology of ‘consumer directed care and services’.

There is no clarity around what the principles underlying this scheme.

One principle is that the trial should lead to a reduction in the need for people to receive social security entitlements.  In contrast, the evidence from the NT shows that there was an increase in welfare dependency.  More principles should be that it leads to real and tangible outcomes, like: a reduction in crime, keeps our elders safe, reduces domestic violence, gets keeps children at school, reduces poverty, increases community engagement and support for community organisations.

In contrast the outcomes are likely to bring real harm to individuals, families, businesses and communities.

Despite the rhetoric about the card being universal in its use, apart from the blocked and excluded retailers, anecdotal evidence is that many small businesses are not able to process card purchases.  There is this undercurrent of the government supporting big business over local small businesses. There is also a huge risk in the rise of people becoming homeless as many have their own arrangements: couch surfers, boarders and lodgers, and even the payment of mortgages.

There are also very real concerns about the company that administers the cards.  Indue, is an unlicensed company in terms of the banking industry (although news to hand suggests Indue is considering becoming a bank), with no transparency about them, in control of millions of dollars of citizens funds.  How are they making their money and at who’s expense? Not to mention many questions around Privacy laws and their ability to look at anyone’s purchases without consent.

It is unclear what the Federal Government’s Review Process is and whether report from that will ever be made available to the public and participants.  Melbourne University is undertaking an independent review with the East Kimberly Legal Services Network.  There are clearly two sets of issues emerging, the short-term issues that come with implementation and the longer term more systemic issues of the functionality of cards in family and community.

To some extent, this is about whether we trust Centrelink to always act in the best interests of citizens, and so feel happy to give it yet more control over their lives.  Given the harm caused in recent years by benefit sanctions, disability assessments, and numerous other policies, this trust is not possible.  But even if it were, there is no need for Centrelink control of what should be a basic and universal entitlement in a modern civil society.

For further reading