Compulsory income management

10.25 This section of the chapter considers the appropriateness of compulsory IM as a means to improve the safety of victims of family violence. It does so by examining how the assessment of ‘indicators of vulnerability’ in the ‘vulnerable welfare payment recipients measure’ may affect victims of family violence. It also considers how this assessment may affect a victim’s willingness to disclose family violence, and the criteria for exemption from income management.

Indicators of vulnerability and family violence

10.26 As noted above, one way a person is subject to compulsory IM is if the person meets the criteria under s 123UCA of the Social Security (Administration) Act, including that the Secretary (or delegated Centrelink staff)^[38] has determined them to be a ‘vulnerable welfare payment recipient’.^[39] In determining whether a person is a ‘vulnerable welfare payment recipient’, the Secretary must comply with certain decision-making principles set out in a legislative instrument.^[40] That instrument—the Social Security (Administration) (Vulnerable Welfare Payment Recipient) Principles 2010 (Principles)—requires the Secretary to consider whether:

• the person is experiencing an indicator of vulnerability; and

• whether the person is applying appropriate resources to meet some or all of the person’s relevant priority needs; and

• if the person is experiencing an indicator of vulnerability—whether income management under section 123UCA is an appropriate response to that indicator of vulnerability; and

• whether income management under s 123UCA of the Act will assist the person to apply appropriate resources to meet some or all of the person’s priority needs.^[41]

10.27 The Principles provide the following examples of indicators of vulnerability:

(a) financial exploitation;

(b) financial hardship;

(c) failure to undertake reasonable self-care; or

(d) homelessness or the risk of homelessness.^[42]

10.28 The Principles further illustrate what may satisfy three of these matters.^[43] For example, a person is said to be experiencing ‘financial exploitation’, if another person:

(a) has acquired; or

(b) has attempted to acquire; or

(c) is attempting to acquire;

possession of, control of or the use of, or an interest in, some or all of the first person’s financial resources, through the use of undue pressure, harassment, violence, abuse, deception, duress, fraud or exploitation.^[44]

10.29 While there is no express reference to family violence as an indicator of vulnerability, both the Principles and the Guide to Social Security Law recognise a number of links between indicators of vulnerability and family violence.^[45] For example, in addition to the definition in the Principles, the Guide explains that ‘financial exploitation’ may occur when

a person is subject to undue pressure, harassment, violence, abuse, deception or exploitation for resources by another person or people, including other family … and community members.^[46]

10.30 While the determination to impose compulsory IM may be triggered by the particular indicators—of which family violence is not a specific trigger in itself—family violence may be the overall context and cause of particular indicators of vulnerability, either individually or together. For example, ‘financial exploitation’ may amount to economic abuse and, in the context of the core definition of family violence set out in Chapter 3, may fit within the examples of the kinds of behaviour that may amount to family violence. ‘Homelessness’—another indicator of vulnerability—may also be the result of escaping family violence.

10.31 Family violence may be so caught up in the vulnerability indicators that income management may often be triggered in that context—and this in turn exacerbates a reluctance to disclose it. While FaHCSIA stressed that assessments to place persons into the ‘vulnerable stream’ of income management are made by Centrelink social workers ‘drawing on all their professional experience and skills including factoring in issues of domestic and family violence’,^[47] the National Welfare Rights Network (NWRN) submitted that:

The experience of family violence is so interwoven with existing vulnerability factors that it is necessary to completely exempt a person or persons experiencing family violence from being subject to Compulsory Income Management. This is necessary to avoid people experiencing family violence from being reluctant to disclose their circumstances to Centrelink for fear of being ‘marked’ for income management.^[48]

10.32 Indigenous organisations made similar observations.^[49] The Central Australian Aboriginal Legal Aid Service (CAALAS), for example, suggested that the vulnerability measures ‘are likely to trigger compulsory income management for those experiencing family violence’.^[50] The Aboriginal and Torres Strait Islander Women’s Legal and Advocacy Service reported that, in its experience, ‘child safety intervention and family violence often occur simultaneously’.

If there is family violence in a household this may trigger a child safety investigation and a finding that due to exposure to violence the child is at risk of harm.^[51]

10.33 The wider question that this poses in this Inquiry is, therefore, whether the imposition of income management is an appropriate response to improve the safety of victims of family violence. The specific issue is whether there should be any change to the vulnerability indicators.

10.34 The Australian Human Rights Commission has stated that applying family violence as a trigger for the imposition of income management may have unintended consequences because people experiencing family violence living on low income welfare payments often require support services, not ‘merely’ financial management.^[52] The NWRN commented that one of the difficulties in the context of family violence is that the assessment of vulnerability, in leading to the imposition of income management, ‘is blurring the roles of providing support and enforcing compliance and punitive measures’.^[53] The need is for an appropriate supportive response. National Legal Aid submitted that

In the immediate short term it should be recognised that family violence alone and symptoms of that violence, should not warrant compulsory income management, including by way of the ‘vulnerable welfare payment recipient’ category being applied. Such recognition could facilitate some people who have experienced family violence to seek assistance and support from appropriate sources, such as Centrelink social workers, without the threat of being income managed by reason of vulnerability.^[54]

10.35 In Family Violence and Commonwealth Laws—Social Security Law, ALRC Issues Paper 39 (2011), the ALRC asked whether family violence should be included as an indicator of vulnerability for the purposes of administering the Vulnerable Welfare Payment under the income management provisions and, if so, what definition of family violence should apply.^[55]

10.36 Most stakeholders opposed adding to the definition of vulnerability by including ‘family violence’ as an indicator, and argued instead that the indicators of vulnerability should be removed altogether.^[56] NWRN, for example, submitted that ‘any system of compulsory income management based on vulnerability is going to cause people experiencing family violence to be reluctant to disclose to Centrelink’.^[57] Stakeholders emphasised their concern that ‘vulnerability indicators’ may result in a person experiencing family violence being ‘triggered’ into income management and, as a consequence, compounding the problem through quarantined payments where the person wants to flee family violence.^[58]

Exemptions

Availability

10.37 Exemptions are only available for one stream of compulsory IM: the participation/parenting measure, which applies to people under the Disengaged Youth and Long-term Welfare Payment Recipient Measures.^[59] That is, an exemption is not available under the ‘vulnerable’ stream, the child protection stream or the Cape York Reform model—however a person subject to income management on one of these bases ‘may ask the decision maker to review their circumstances’.^[60]

10.38 The Australian Government has explained:

For people subject to income management under the disengaged youth and long-term welfare recipient categories, … exemptions from income management are based on the demonstration of socially responsible behaviour. For people without dependent children, the exemption criteria are related, in general terms, to evidence being provided of engagement in study or a sustained pattern of employment. For those with dependent children, the exemption criteria are related to the provision of evidence of responsible parenting.^[61]

10.39 The relevant provisions are s 123UGC (a person with no dependent children) and s 123UGD (a person with dependent children). The availability of these exemptions is subject to meeting a range of conditions in these statutory provisions. For example, a person on income management may qualify for an exemption under s 123UGD if, amongst other things, the person has a ‘school age child’^[62] who is enrolled and attending school, or participating in other prescribed activities, and the Secretary is ‘satisfied that there were no indications of financial vulnerability in relation to the person during the 12-month period ending immediately before the test time’.

10.40 Section 123UGB(2) of the Act provides for the possibility of another exemption category. It provides that the Minister may, by way of legislative instrument, specify ‘a class of persons to be exempt welfare payment recipients’—that is, with respect to disengaged youth and long-term welfare payment recipients.^[63] The Secretary may then determine a person to be such an ‘exempt welfare payment recipient’.^[64]

10.41 The Guide to Social Security Law sets out some ‘core principles’ that should be applied in cases where a person seeks an exemption from income management. These principles, in part, state that:

• Exemptions are available in cases where income management is not necessary because a person has met the broad outcomes that comprise the objectives of income management. The person can demonstrate that they:

– are not experiencing hardship or deprivation and are applying appropriate resources to meet their families’ priority needs,

– can budget to meet priority needs,

– are not vulnerable to financial exploitation or abuse, and

– are demonstrating socially responsible behaviour, particularly in the care and education of dependent children … , or

– … meet … workforce participation requirements for those who are not a principal carer of a child.^[65]

The review process for exemptions

10.42 Where an exemption is refused by Centrelink, the welfare recipient has various ways to request a review of the decision. A person can request an internal review of the decision made by the Centrelink officer, which is conducted by a Centrelink Authorised Review Officer (ARO).^[66] If the ARO decides not to exempt the person from income management, a person can seek review before the Social Security Appeal Tribunal.^[67]

Problems in the context of family violence

10.43 In the Discussion Paper, Family Violence—Commonwealth Laws, DP 76 (2011) the ALRC proposed that the Social Security (Administration) Act and the Guide to Social Security Law should be amended to ensure that a person or persons experiencing family violence are not subject to compulsory IM.^[68]

10.44 This evoked a strong response from stakeholders, the majority of whom did not support the policy of compulsory IM or its continuation as a general matter, or specifically to people experiencing family violence.^[69] The Federation of Ethnic Communities’ Councils of Australia (FECCA), for example, submitted that for people experiencing family violence, compulsory IM fails to address ‘the specific needs, distinct challenges and barriers’ for victims and their family.^[70]

10.45 Particular themes that emerged, in research and in submissions and consultations, included:

• the importance of self-agency;
• the importance of community involvement;
• reluctance to disclose, due to a fear of imposition of income management;
• concerns about ‘labelling’;
• safety concerns;
• problems with exemptions; and
• tensions with respect to human rights.

Self-agency

10.46 The ALRC considers that the compulsory element in this form of income management runs counter to the theme of self-agency identified as a central theme in this Inquiry and, therefore, that compulsory IM is not an appropriate response for victims of family violence. Stakeholders argued strongly to similar effect—a problem arising from coercive and controlling conduct should not be met with a similar response. For example, the Good Shepherd Youth and Family Service, submitted that:

Family violence, the exercise of power and control of one person over another, is an attack on the individual autonomy, agency, and freedom of the victim. In this context, the risks of further disempowerment and loss of independence from compulsory income management are high. Replacing individual power and control with state power and control is at best stop-gap and at worst a further abuse.^[71]

10.47 Disempowerment was an issue identified by other stakeholders. The Australian Domestic and Family Violence Clearinghouse (ADFVC) argued it would disempower people already experiencing family violence and only lead to more hardship for them.^[72] The New South Wales Women’s Refuge Movement described income management as ‘secondary victimisation’:

Women who experience domestic and family violence are subjected to a range of controlling behaviours by perpetrators. The use of compulsory income management has the potential to further disempower women by removing any control they may have over their own income.^[73]

10.48 A report released by the Equality Rights Alliance in 2011, Women’s Experiences of Income Management in the Northern Territory, highlights serious concerns for people experiencing family violence who seek help from Centrelink as crisis assistance.^[74] The report identified that women who sought help to flee an abusive relationship, on applying for and then receiving the crisis payment, only weeks later were placed onto compulsory IM under the Vulnerable Welfare Recipient Measure.^[75] This raises serious issues for the safety and protection of victims and their children, when they fear being income managed.

10.49 The Equality Rights Alliance also referred to the disempowering effect of income management. In their submission the group referred to a quote included in their 2011 report from a domestic violence crisis support worker:

Some like having Centrelink pay their bills, but they’re not learning how to manage their money. It’s disempowering women. Basic livings skills courses teach than, it empowers women. The women can stop the course if they already have those skills. Not many women have a problem adapting to having money after having lived with an abuser who gives them so little to live on.^[76]

10.50 Stakeholders drew attention to the lack of autonomy for people experiencing family violence under the income management regime.^[77] For example, a number of stakeholders indicated that the welfare recipient should be fully engaged with any decision on what percentage of their income, if any, may be quarantined.^[78] The Equality Rights Alliance noted that 82% of respondents to their survey would remain on income management if a more flexible voluntary model were offered.^[79]

10.51 Stakeholders also emphasised the importance of choice—even in situations of family violence. While economic abuse may be a particular manifestation of family violence, CAALAS commented that it cannot be assumed that a person suffering domestic and family violence is also suffering economic abuse, nor should it be assumed that because of domestic violence, a person is unable to manage their financial affairs.^[80] Similarly, the study of Braaf and Barrett Meyering, for the ADFVC, reported that:

One reason given for compulsory income management is to ensure that payments are spent on basic needs like food, rather than on undesirable expenses such as alcohol, drugs or gambling. However, this study found limited evidence from the literature that women who are affected by domestic violence generally have less capacity than other people to manage their own finances. Indeed, women in the study appeared to be managing their finances well, although were greatly hampered by their low income exacerbated by, for example, ex-partners’ failure to meet childcare obligations and also by large costs often associated with the violence, such as relocation, medical and legal expenses.^[81]

10.52 A further illustration was provided in the submission from the Good Shepherd Youth and Family Service, which noted that, in their experience, women who have experienced family violence, especially single mothers, have generally high levels of financial skill in juggling living costs on low and limited budgets.^[82]

10.53 The key issue is the ability of the person to make a choice about the appropriate response. As commented by the Equality Rights Alliance, ‘[e]nsuring that women experiencing family violence are not subject to Compulsory Income Management would be an improvement, and would not prevent women participating in Voluntary Income Management if they find it helpful’.^[83]

Community involvement

10.54 The Aboriginal and Torres Strait Islander Social Justice Commissioner argued that the critical step for substantial improvement for Indigenous peoples is to be major stakeholders in all stages of policy and legislative development impacting upon them.^[84]

10.55 Until the late 1970s, the New Zealand Government implemented ‘social welfare’ policy for Maori communities in order to reverse overcrowded housing, poverty and other socio-economic malaise; due to official assimilation policies.^[85] The result was ‘a large scale welfare agency of increasingly diminished value’,^[86] with statistics suggesting that ‘the Maori were more likely than the general population to end up underemployed, poorly educated, imprisoned, or impoverished’.^[87] However, from 1977, a new culturally-inclusive model sought to address Maori disadvantage through increased self-determination, innovative community development and voluntary self-help, which combined the strengths of Maori and Pakeha (non-Indigenous).^[88] This initiative was met with ‘[w]idespread enthusiasm’ and ‘acceptance’, with one commentator noting that ‘the community development philosophy … serv[ed] the vested interests of the Maori, the Government and the Department of Maori Affairs’.^[89]

10.56 The New Zealand Government’s approach up until 1977 could be said to be based upon a ‘public service model’; arguably the Australian Government’s income management policy has been based on a similar model. However, the New Zealand Government’s approach from 1977—which was more popularly received—was ‘grounded in the philosophy of self-determination and community development’.^[90]

10.57 Similarly, as submitted to the ALRC in this Inquiry, a failure to consult, and measures which deny individual choice, rather than enhancing choice, risk being ineffectual or regarded as punitive.^[91]

Reluctance to disclose

10.58 Barriers to disclose family violence are summarised in Chapter 1. In the context of income management, the prospect of the compulsory imposition of income management was identified as a specific reason leading to failure to disclose family violence.

10.59 Several stakeholders submitted that people experiencing family violence are likely to be more reluctant to disclose their circumstances where such disclosure may lead to compulsory IM, which may result in the victim missing out on appropriate services and support.^[92] Victims of family violence may therefore ‘choose’ to stay in an abusive relationship rather than to leave, out of fear that disclosure to agencies may affect their social security payments.^[93] The NSW Women’s Refuge Movement submitted, for example, that

Lack of economic independence is a ‘major factor influencing a woman’s decision to remain with a violent partner’. CIM, whilst potentially restricting the ability of the perpetrator to misuse the income, also restricts the victim’s control over her income, does nothing to improve her financial independence and may further restrict her capacity to leave the violence.^[94]

10.60 The National Council of Single Mothers and their Children argued that compulsory IM financially penalises women who seek help from Centrelink, and they feared that income management may therefore ‘serve as a barrier for women disclosing violence, leaving abusive partners and reduce their ability to protect self and child at a time of crisis’.^[95]

10.61 These issues are exacerbated where English is not the first language. For example, the Ombudsman commented that:

any expansion of voluntary IM must be accompanied by comprehensive communication tools and material in a broad range of languages, and be supported by the use of Indigenous language interpreters.^[96]

10.62 The AASW (Qld) and Welfare Rights Centre Inc Queensland (WRC Inc (Qld)) identified a connection between reluctance to disclose and a feeling that victims would not be believed:

They need to have their safety concerns believed and validated through all system interventions. Importantly victims need to be treated with dignity and respect, provided with all the necessary information to allow them to make choices for themselves which can assist them to move on from violence and abuse. … [T]here needs to also be a shift from a culture of ‘disbelief’ of an individual’s experiences of family violence, to one of willingness to believe. This creates a more meaningful platform from which key Government departments such as Centrelink, can then engage with individuals.^[97]

10.63 The Equality Rights Alliance Report included information on the interaction with Centrelink and the response to family violence, which is referred to in the group’s submission to this Inquiry. In particular, 84% of respondents chose ‘I do not want to tell Centrelink if I have problems’, while only 14% chose ‘I feel safe talking to Centrelink’.

It is of great concern that such a high proportion of women on Income Management do not feel that they could talk to Centrelink about problems that might include financial vulnerability or family violence. In addition, some women have said that they decided not to apply for a Centrelink crisis payment to escape family violence because it might trigger a referral for Income Management under the Vulnerable Welfare Payment Recipient Measures.^[98]

10.64 The group submitted that removing compulsory IM ‘will not prevent women from participating in the program voluntarily, should they find it helpful’ and that ‘women are not required to identify themselves to Centrelink staff as experiencing family violence if they do not feel safe to do so’.^[99]

Labelling

10.65 The fear of being labelled as subject to income management was identified in the evaluation by FaHCSIA of the operation of the NTER, that reported in November 2011, which noted that the ‘abrupt imposition’ of things like income management ‘broke trust and made some people feel that they had been unfairly labelled’.^[100] FECCA stated that its ‘stance against the imposition of Income Management’ was ‘primarily because of its ability to stigmatise, inadvertently discriminate and impede culturally familiar practices, such as shopping at local markets’.^[101] FECCA emphasised the ‘impact of stigma and community shame’ of compulsory IM, where BasicsCard holders ‘face isolation from their communities due to the limitations of what shopping outlets and community activities are financially accessible under the scheme’.^[102]

10.66 The sense of the ‘punitive’ character of compulsory income management was also identified by the NSW Women’s Refuge Movement.^[103]

Safety concerns

10.67 Where a person experiencing family violence is placed on Compulsory IM following a violent incident, safety issues may arise for the victim, as the perpetrator may blame the victim for being income managed.^[104] The AASW (Qld) and WRC Inc (Qld) submitted that the imposition of income management was ‘a form of re-victimisation which carries the risk of putting the victim further in danger, due to either the lack of funds to take independent action of retribution from the perpetrator’.^[105] As another stakeholder remarked:

Family violence requires renewed and careful consideration in relation to social security law, especially given current income management policies and increasing knowledge of financial abuse and other financial aspects of family violence. Safety is probably a more fundamental consideration for family violence victims than for any other social security applicants … the responsibility of the social security system to assist women whenever necessary to leave and re-build their lives is clear.^[106]

10.68 In order to improve safety stakeholders identified the need for better education and training.^[107] National Legal Aid, for example, commented that

More community and service provider education, training and tools regarding family violence and the operation of income management should be developed. Centrelink staff should be familiar with appropriate service providers to whom people can be referred to address the family violence and related issues.^[108]

10.69 The NSW Women’s Refuge Movement pointed to the inconsistency with

many of the principles and policy directions contained within many of the Government’s other policy frameworks including the National Plan to Reduce Violence Against Women and their Children and the Homelessness White Paper: the Road Home. Both policy frameworks emphasise the need to improve coordination between agencies and ensuring that victims of family violence or other people experiencing homelessness should be able to disclose their experiences and receive appropriate responses by any agency through direct support or referral pathways. The Road Home refers to this as having ‘no wrong door’. CIM effectively ‘closes the door’.^[109]

Exemptions

10.70 While New IM is intended to operate within the Racial Discrimination Act, stakeholders identified that it still operates in a way that has a disproportionate impact on Indigenous people. The NWRN submitted that the income management exemptions are ‘one-sided’ and that, in relation to the ‘discretionary area of decision-making’ in the form of the granting of exemptions from income management, ‘discrimination and paternalism appear rife’. Further, the network argued that ‘at its core the exemptions policy appears to be discriminatory in its application’:

As of March 2011, there were 2,130 persons granted an exemption from income management. Seventy-five per cent were non-Indigenous and just 25 per cent were Indigenous.

Put another way, non-Indigenous welfare recipients, who make up just 4 per cent of the entire population on quarantined payments in the NT, accounted for three quarters of all exemptions granted.^[110]

10.71 The Commonwealth Ombudsman, in a general review of Centrelink’s internal review model, has highlighted the complexity involved for a welfare recipient to have a matter reviewed by Centrelink.^[111] The Ombudsman found that:

Prioritisation of reviews exists in some instances, but does not uniformly consider the complexity of the case, vulnerability of the customer, and severity of the decision consequence for the customer.^[112]

10.72 The Ombudsman also pointed out that communication difficulties surround the exemption process—of particular concern in relation to

communicating with people from Indigenous and multicultural communities and the limitations of telecommunication systems (as the majority of the financial vulnerability decisions are made after phone contact with customers).^[113]

10.73 The Equality Rights Alliance Report revealed that a range of problems surround the access to exemptions, which include welfare recipients not knowing how to obtain an exemption, the belief that exemptions were too difficult to access, minimal or no skills in English, provided with incorrect information by third parties and an adherence to inflexible exemption requirements.^[114] In their submission the group stated that understanding how the system works

Is particularly important for women who do not speak English as their first language, do not have strong written literacy skills, or have no previous experience of the Australian social welfare system. Women who are reliant on income support payments for the first time in their lives, or who do not easily understand the complexity of the system as explained in standard Centrelink letters, will need Centrelink staff to explain the system to them, possibly more than once, in order to understand how to best manage within the rules.^[115]

10.74 The ALRC considers that the general approach to exemptions within income management, as reflected in the decision-making principles under the Social Security (Administration) Act, would make it difficult for most people experiencing family violence to obtain an exemption. The difficulty of meeting the requirements for exemption may be exacerbated where people experiencing family violence live in rural, remote or discrete communities, because they have limited access to support services, low-income housing and temporary accommodation.

10.75 A number of stakeholders supported an unqualified exemption from compulsory IM for people experiencing family violence.^[116] The NWRN submitted that a ‘general exception’ should be established and that ‘information acquired during the course of addressing an instance of family violence is never used in support of a determination of compulsory income management’.^[117]

10.76 CAALAS suggested that access to an exemption is unduly onerous to navigate and places an administrative burden of proof on people seeking to be exempt from income management.^[118] NAAJA considered that the exemption process is time consuming, in particular the review and appeal process.^[119]

10.77 NAAJA also suggested that the test time of 12 months under s 123UGD(1)(d) should be amended, for example, where a welfare recipient experiencing family violence has recently left a violent relationship and settled down to a safe environment, the person is still required to wait 12 months for the exemption period to end.^[120]

Human rights concerns

10.78 The AASW (Qld) and WRC Inc (Qld) pointed to the ‘inherent tensions’ concerning ‘fundamental human rights’ which underpin the ALRC’s conceptual framework for the Inquiry:

Striving for social justice is a key value of social workers and our experience is that [compulsory income management] in fact perpetuates social injustice.^[121]

10.79 They also submitted that

Violence against women and children is a complex issue that is steeped in a long history of dispossession, oppression, coercion and disconnection from country and kin. Any sustainable and effective strategy needs to be holistic and take a ‘bottom up’ approach, where it is developed by the communities, with the support and resources of government and other services.^[122]

10.80 Another stakeholder argued that ‘fundamental principles of justice and human rights to dignity are undermined by compulsory IM applied across any whole population group (now amended to be on geographic and demographic grounds rather than racial grounds, but still applying to whole groups)’.^[123]

10.81 The vulnerable position of people experiencing family violence, and the complex needs for their safety and protection, suggest that a different response is required. The ALRC considers the development of such flexibility in the context of voluntary IM models, discussed below.