The operation of income management

Overview

10.4 Income management does not affect or otherwise reduce the total amount of welfare payments payable to a recipient; rather, it changes the way in which a person receives their payment. Under income management, a percentage of a person’s welfare payment is quarantined for use in purchasing particular goods and services such as food and housing, defined as ‘priority needs’.^[1]

10.5 Payment amounts subject to income management are paid into a separate, notional, account held by welfare recipients called ‘income management accounts’.^[2] In order to access funds in income management accounts, welfare recipients may be issued with a stored value card, vouchers, or receive other payments or credits for use in purchasing goods and services.^[3] Stored value cards, vouchers or other payments or credits may not be used to purchase excluded goods or services, which include alcoholic beverages, tobacco products, pornographic material and gambling services.^[4]

10.6 The Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) has primary responsibility for the Australian Government’s income management system, which is administered by Centrelink. The Department of Human Services (DHS) provides a central policy and coordination role for the Government’s delivery of services and now includes Centrelink within its portfolio.^[5] DHS is responsible for national service delivery strategy for income management.

Staged introduction

The model used as part of the ‘Northern Territory Emergency Response’

10.7 Income management was first introduced in 2007 as part of the ‘Northern Territory Emergency Response’ (NTER) to allegations of child abuse in specific Indigenous communities, ‘to promote socially responsible behaviour and help protect children’.^[6] Under the Social Security and Other Legislation (Welfare Payment Reform) Act 2007 (Cth), the NTER imposed income management upon peoples receiving income support or family assistance payments ‘in 73 prescribed communities, their associated outstations and 10 town camp regions of the Northern Territory’.^[7] The object was ‘to improve the well-being of certain communities in the Northern Territory’.^[8]

10.8 The Australian Government implemented income management legislation as a ‘special measure’ for the purposes of the International Convention on the Elimination of All Forms of Racial Discrimination^[9] and s 8 of the Racial Discrimination Act 1975 (Cth).^[10] Invoking the ‘special measure’ provision was necessary because the legislation had a disproportionate effect on Indigenous people in its application to persons living in a ‘declared relevant Northern Territory area’. As commented by FaHCSIA in the evaluation of the NTER released in November 2011:

One of the most controversial aspects of the NTER was the introduction of compulsory income management. Income management was initially imposed according to place of residence, and only communities on Aboriginal-owned areas within the Northern Territory were selected.^[11]

Other Australian income management measures

10.9 Other income management measures that have been introduced include:

• the Cape York Welfare Reform (CYWR) model—which is discussed later in this chapter;
• the Child Protection Scheme of Income Management (CPSIM) in parts of Western Australia from late 2008;
• voluntary income management (voluntary IM) in parts of Western Australia from late 2008; and
• the Improving School Enrolment and Attendance through Welfare Reform Measure (SEAM) in parts of the Northern Territory from early 2009.^[12]

The new income management model

10.10 In 2010 the income management regime was amended,^[13] following legal challenges to the NTER legislation on the basis of racial discrimination.^[14] On 1 July 2010, the Australian Government introduced a new welfare reform phase—known as the new income management model (New IM).^[15] The Government’s plan was that, ‘[o]ver time, and drawing on evidence from implementation experience in the NT, it may progressively be rolled out more broadly across Australia’.^[16]

10.11 Implementation has progressed as follows: from 9 August 2010 income management applies in the Barkly region; from 30 August 2010 in Alice Springs, Katherine, East Arnhem Land and other outback areas; from 20 September 2010 in outback areas; and from 4 October 2010 in Darwin and Palmerston. New IM has been implemented in urban and rural areas such as Alice Springs, the Barkly region, Darwin, East Arnhem, Katherine, and Palmerston, and now applies to the whole of the Northern Territory.^[17]

10.12 From 1 July 2012, aspects of the income management regime will operate in five new communities across Australia: Bankstown (NSW), Logan and Rockhampton (Qld), Playford (SA) and Shepparton (Vic).^[18] This is described as place-based income management and will apply to people assessed as vulnerable welfare payment recipients, persons who are referred for CPSIM by the relevant child protection authority and persons who volunteer to be income managed.^[19]

Stop Press: Stronger Futures

10.13 In November 2011, the Australian Government introduced the Stronger Futures in the Northern Territory Bill 2011 (Cth), and its companion, the Northern Territory (Consequential and Transitional Provisions) Bill 2011 (Cth) into the House of Representatives. It simultaneously released the Stronger Futures in the Northern Territory: Policy Statement. The Bills ‘form a part of [the Government’s] next steps in the Northern Territory’.^[20]

10.14 The Stronger Futures Bill is intended to replace the Northern Territory National Emergency Response Act and contains three key measures—‘the tacking alcohol abuse measure, the land reform measure and the food security measure’.^[21] It also provides for an independent review of the measures after seven years of operation and the measures will sunset 10 years after commencement. The Consequential and Transitional Provisions Bill proposes to repeal the Northern Territory National Emergency Response Act and contains savings and transitional provisions associated with the repeal.

10.15 In addition, the Government introduced elements of the Social Security Legislation Amendment Bill 2011 (Cth), which applies beyond the Northern Territory, in order to provide ‘greater flexibility in for the operation of income management so it can be implemented in’ five new sites.^[22] It also contains proposed reforms to allow recognised state or territory authorities to refer individuals for income management as well as measures in relation to school enrolment and attendance.

10.16 All three Bills were referred to the Senate Community Affairs Legislation Committee, which is due to report on 29 February 2012.

Income management measures

10.17 Income management measures are targeted at specified groups of income support payment recipients. As explained in FaCHSIA’s Guide to Social Security Law, income management operates by redirecting ‘a proportion of income support and family assistance payments, and 100% of lump sum payments of eligible income support recipients, to facilitate the expenditure of money on life essentials and in the best interests of children’.^[23]

10.18 The income management measures are as follows:

• child protection measure;^[24]
• vulnerable welfare payment recipients measure;^[25]
• parenting/participation measure—including the long-term welfare payment recipients measure^[26] and disengaged youth measure;^[27]
• school enrolment and school attendance measures;^[28]
• Queensland Commission measure;^[29] and
• voluntary income management measure.^[30]

10.19 The Guide to Social Security Law explains that income management measures are targeted to specified groups of income support payment recipients, comprising people:

• referred for income management by child protection authorities;
• assessed by a delegate of the Secretary (in practice, a Centrelink social worker), as requiring income management for reasons that include vulnerability to financial crisis or economic abuse;
• aged 15 to 24 years old who have been receiving Youth Allowance, New Start Allowance, Special Benefit or Parenting payment for more than 13 weeks out of the last 26 weeks (disengaged youth);
• aged 25 years old and above (and younger than age pension age), who have been in receipt of Youth Allowance, New Start Allowance, Special Benefit or Parenting payment for more than 52 weeks out of the last 104 weeks (long-term welfare payment recipients); and
• who have been referred to income management by the Queensland Families Responsibilities Commission under the CYWR model.^[31]

10.20 In addition, people who are not in any of the target groups, and reside in a declared area, may volunteer to have their income support and family assistance payments income managed.^[32]

10.21 Under the income management measures, a relevant person may be income managed either compulsorily or voluntarily. Voluntary income management is a separate measure from the other income management measures.^[33] People who are income managed under the participation/parenting measure can apply for an exemption from income management. However, people who are on income management under the child protection or vulnerable welfare payment recipient measures are not able to apply for an exemption.^[34]

10.22 Under compulsory income management (compulsory IM), an individual’s income support and family assistance payments are income managed at 50% (under the participation/parenting and vulnerable measure) or 70% (under the child protection measure), and all lump sum and advance payments are income managed at 100%.^[35]

Income management and family violence

10.23 FaHCSIA states that income management is ‘part of the Australian Government’s commitment to reforming the welfare system’, ensuring that ‘income support payments are spent in the best interests of children and families and helps ease immediate financial stress’.^[36] The objects of income management, as set out in the Social Security (Administration) Act, are to:

(a) reduce immediate hardship and deprivation by ensuring that the whole or part of certain welfare payments is directed to meeting the priority needs of the:

(i) recipient of the welfare payment; and

(ii) recipient’s children (if any); and

(iii) recipient’s partner (if any); and

(iv) any other dependants of the recipient; [and to]

(b) ensure that recipients of certain welfare payments are given support in budgeting to meet priority needs;

(c) reduce the amount of certain welfare payments available to be spent on alcoholic beverages, gambling, tobacco products and pornographic material;

(d) reduce the likelihood that recipients of welfare payments will be subject to harassment and abuse in relation to their welfare payments;

(e) encourage socially responsible behaviour, including in relation to the care and education of children;

(f) improve the level of protection afforded to welfare recipients and their families.^[37]

10.24 In this chapter the ALRC identifies where these policy objectives may not be being met in the context of people experiencing family violence. The ALRC has identified three broad issues that arise in relation to the ways in which income management affects victims of family violence:

• the appropriateness of compulsory IM to victims of family violence;
• applying voluntary IM to victims of family violence; and
• practical issues that victims of family violence face in accessing necessary funds.