Voluntary income management and family violence

13.78 Income management remains a highly controversial policy within urban, rural and remote Australian communities. As noted above, the most controversial welfare reform in income management has, and continues to be, the compulsory quarantining of a person’s welfare payment. Despite various amendments to Compulsory IM, there has been an ongoing call to the Australian Government for its abolition.^[87]

13.79 As described above, Voluntary IM measures provide an alternative approach to income management. Under the Social Security (Administration) Act, a welfare recipient must remain on income management for a minimum of 13 weeks.^[88] The Secretary must terminate the Voluntary IM agreement on the request of the welfare recipient and the grounds of termination must be met.^[89] When a recipient applies to terminate the voluntary agreement, the recipient cannot make a new voluntary agreement for a period of 21 days.^[90]

Cape York Welfare Reform model

13.80 The Cape York Welfare Reform model, legislated under the Family Responsibilities Commission Act 2008 (FRCA), is an alternate model to that in the Social Security (Administration) Act. The income management regime is described as ‘conditional income management’.^[91] The model is being trialled in the Cape York communities of Aurukun, Coen, Hope Vale, and Mossman Gorge and associated outstations, and will run until 31 December 2011.^[92]

13.81 The legislative framework of the Cape York Welfare Reform model varies from the Social Security (Administration) Act system of income management. It is meant to design and adapt income management measures to meet the needs of individuals and their communities.^[93] The FRCA establishes the Families Responsibilities Commission (FRC), which has the power to make decisions in relation to notices given to it by agencies concerning matters including school attendance, enrolment, and child safety and welfare matters.^[94] The FRC has power to hold a conference about the agency notice to discuss the matter with the relevant person to whom the notice relates, after which it may decide to refer the person to Centrelink to be subject to income management.^[95] The FRC may require a person to be subject to income management for at least three months, but not more than one year.^[96] The FRC advises Centrelink as to how much of a person’s income may be managed—this is likely to be 60 or 75% of regular fortnightly payments and all of any advance and lump sum payments.^[97]

13.82 The main difference between the Cape York Welfare Reform model and that of the Social Security (Administration) Act is that the Cape York policy does not impose blanket quarantining of welfare payments.^[98] Other differences include:

• the Commissioners of the FRC recognise customary practice and take into account the customs and traditions of the individual;^[99]

• appointed Commissioners are representative of their community and satisfy the ‘good standing’ criteria for appointment;^[100]

• a community resident in Cape York can apply to the FRC for a voluntary referral to income management; the FRC takes into account ‘the best interest of the person, a child of the person or another member of the person’s family’^[101] in the decision-making process;

• the person or welfare recipient may participate in decision making to income manage—for example, the FRC holds conferences with community members^[102] to enable the person to enter into a Family Responsibilities Agreement and prepare a case plan;^[103] and

• under the FRCA, income management is applied as a last resort.^[104]

13.83 FaHCSIA plans an evaluation of the welfare reform regime implemented under the Cape York model in 2011.

13.84 The Cape York Welfare Reform model is generally consistent with recommendations in the National Plan to Reduce Violence Against Women and Their Children (2010–2022) and the Royal Commission into Aboriginal Deaths in Custody (the Royal Commission). The National Plan encouraged communities to identify and develop their own solutions to localised family violence;^[105] and the Royal Commission recommended that Indigenous communities be self-determining and resolve violence within their own communities.^[106]

13.85 The Cape York Welfare Reform model is also consistent with the findings of the Fitzgerald Cape York Justice Study, which noted that government policies aiming to protect victims of violence have little hope of success if the community is not engaged in the process. It recommended developing community-based solutions to meet the needs of victims.^[107]

13.86 These reports and studies emphasised the importance of individual agency and community involvement. By contrast, income management under the Social Security (Administration) Act—particularly compulsory quarantining of income—is inherently paternalistic, eroding individual agency and community self-determination.^[108]

Submissions and consultations

13.87 In the Social Security Issues Paper, the ALRC asked whether voluntary income management for people experiencing family violence should be adopted more broadly and, if so, how this should be done.^[109] The ALRC also asked whether there was any evidence that income management has improved the safety of people experiencing family violence.^[110]

Support for voluntary income management

13.88 Although most stakeholders did not support Compulsory IM,^[111] many submissions expressed qualified support for voluntary income managment measures, provided they are flexible and focused on the individual needs of people experiencing family violence.^[112] In addition, a number of stakeholders commented on the problems that exist under the current Voluntary IM measure.

13.89 CAALAS submitted that the provisions are unduly inflexible: 50% of the welfare recipient’s income is quarantined, and recipients must remain on the Voluntary IM measure for 13 weeks before being able to exit. CAALAS argued that people experiencing family violence should be able to determine the percentage of their payment to be quarantined and not be subject to a minimum time period on income management. CAALAS suggested that one way of increasing flexibility would be to amend s 61(a) of the Social Security (Administration) Act to allow an individual entering a voluntary agreement under s 123UM to determine the deductible portion of a welfare payment. CAALAS also noted the importance of ensuring that an individual entering a Voluntary IM arrangement is fully informed and understands the options for exiting the arrangement.^[113]

13.90 WEAVE commented that income management should only be available for ‘voluntary use in circumstances where a person has a demonstrated history of being unable to manage their income’. WEAVE noted that conditions such as intellectual disability, chronic substance abuse or a gambling addiction may be relevant in this determination.^[114]

13.91 The Sole Parents’ Union submitted that the implementation of an income management system should be offered on a needs basis.^[115] The Welfare Rights Centre Inc Queensland suggested that this had the potential to offer dignity and choice in the very complex system of social security compliance.^[116]

13.92 The ADFVC submitted that a system of voluntary income management should be supported by voluntary financial counselling and access to financial products. As their research showed,

women who were able to stabilise their financial situation quickly after separation were doing much better than women who were not. Women who were able to find long term, affordable accommodation, who were able to find work, who did not have protracted legal battles and who could attend to health needs were doing better than those who were not.^[117]

The need for evidence

13.93 A number of stakeholders were critical of the lack of appropriate evidence-based research to evaluate the full effect of income management—particularly for people experiencing family violence. For example, the Welfare Rights Centre Inc Queensland commented that ‘[t]he evaluation of income management has been inadequate and inconclusive’.^[118]

13.94 The Welfare Centre NSW highlighted this concern:

The Government is pursuing financial control measures in the absence of clear evidence that either it will deliver positive benefits or that massive administrative costs of income management will be offset by significant improvements in the social and economic health of those targeted by this regime.^[119]

13.95 The Welfare Rights Centre NSW emphasised the importance of further evidence-based research to identify and recommend any progressive improvements from amended income management policy.^[120]

The question of safety for people experiencing family violence, including children, is an issue that the evaluation into the extension of Compulsory Income Management … there is no reliable evidence about whether income management per se, makes for safer families and children … The question of whether income management has improved family safety is highly complex and controversial.^[121]

ALRC’s views

13.96 Income management under the NTER and the New IM measure continue to be debated as government policy and operate upon the most disadvantaged people in Australia, those who receive Centrelink payments and entitlements. The policy operates on an assumption that income management improves wellbeing.

13.97 The ALRC considers that the compulsory element of income management may hinder access to welfare and support for victims of family violence. A more flexible voluntary approach to income management may provide a more measured response. However, this reform approach should focus on ensuring individual autonomy and respecting the core principles of human rights in the context of social security.

13.98 The ALRC considers that the Cape York Welfare Reform model provides an instructive model for the Australian Government and the administering agencies of welfare reform. Under the Cape York model there is a great deal of flexibility in the approach to income management and a focus on the individual needs of the person. In contrast with the Social Security (Administration) Act model, the Cape York Welfare Reform model provides more engagement and empowerment of the individual within welfare reform and involves the welfare recipient in the decision-making process and the determination of income management.

13.99 The Cape York Welfare Reform model thus provides a basis on which to conduct further research and trials for a flexible voluntary policy, that is an opt-in and opt-out one, coordinated with meaningful community consultation. As the evidence from the Cape York trial becomes available and is reviewed, it would be timely to review the income management approach more generally—in particular for people experiencing family violence.

13.100 Many submissions recognised the importance of evidence-based policies, and the ALRC considers that any specific recommendations should be made only after the development of an evidence base. The ALRC suggests developing an independent assessment of the effectiveness of voluntary income management for people experiencing family violence. This assessment should include consideration of the Cape York model of income management. This process should incorporate the active participation of the community and family violence service providers to identify and evaluate the effect of programs on people experiencing family violence.

13.101 Aspects of voluntary income management schemes that any assessment should consider include:

• ways to ensure that individuals understand the consequences of voluntary income management, particularly where victims of family violence may be experiencing trauma or have language barriers;

• options for individuals to leave voluntary income management;

• ways in which the community may be involved in voluntary income management to ensure appropriate support for individuals; and

• other measures, such as financial counselling, which may support and strengthen the effectiveness of any voluntary income management measures.

13.102 In the ALRC’s view, it is important to offer a flexible welfare policy to address the needs and safety of the welfare recipient and his or her children. Such an approach will also need to apply to those welfare recipients under the original NTER who are subject to Compulsory IM.