Voluntary income management

Social Security (Administration) Act model

10.82 The Social Security (Administration) Act includes an option of voluntary IM, under which a person may enter into a written agreement with the Secretary agreeing to be subject to the income management regime throughout the period in force^[124] (which must be at least 13 weeks).^[125] The agreement remains in force until it is terminated, or the period in force expires.^[126] When a recipient applies to terminate the voluntary agreement, the recipient cannot make a new voluntary agreement for a period of 21 days.^[127]

10.83 Under voluntary IM, all lump sum and advance payments are income managed at 100%,^[128] while other regular payments are income managed at 50%.

Cape York Welfare Reform model

10.84 The CYPWR model is ‘a different approach to welfare’,^[129] based on ‘conditional welfare’.^[130] It is being trialled in the Cape York communities of Aurukun, Coen, Hope Vale, and Mossman Gorge^[131] and associated outstations. It is a partnership between the four communities, the Australian Government, the Queensland Government and the Cape York Institute for Policy and Leadership. The reforms run from 1 July 2008 up to and including 31 December 2011 and ‘aim to create incentives for individuals to engage in the real economy, reduce passivity and re-establish positive social norms’.^[132]

10.85 The legislative framework of the CYWR model is set out in the Family Responsibilities Commission Act 2008 (Qld) (the FRC Act). The FRC Act establishes the Families Responsibilities Commission (FRC), which has the power to make decisions about agency notices concerning matters such as school enrolment and attendance, and child safety and welfare matters.^[133]

10.86 The FRC has power to hold a conference about agency notices to discuss the matter with the person, after which the FRC may decide to make a referral to Centrelink for income management.^[134] The FRC may require a person to be subject to income management for at least three months, but not more than one year;^[135] advising Centrelink as to how much of a person’s income may be managed—this is ‘likely to be 60 or 75 per cent of regular fortnightly payments and all of any advance and lump sum payments’.^[136]

10.87 The main difference between the CYWR model and the Social Security (Administration) Act model is that the CYWR model ‘does not include blanket quarantining of benefits’^[137] but implements both voluntary and compulsory IM regimes. Another notable difference is in s 109(2) of the FRC Act which provides:

The commissioner must amend or end the agreement, as requested by the person, unless the commissioner is satisfied the amendment or ending would be detrimental to the interests, rights and wellbeing of children, and other vulnerable persons living in a welfare reform community area.

10.88 As noted by FaHCSIA, it differs ‘from some of the measures of income management operating in the Northern Territory in that it involves individualised conferencing resulting from various triggers’.^[138]

10.89 Other differences include:

• the commissioners of the FRC recognise customary practice and take into account the customs and traditions of the individual;^[139]
• appointed ‘local commissioners’ are representative of their community^[140] and satisfy the ‘good standing’ criteria for appointment;^[141]
• 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 interests of the person, a child of the person or another member of the person’s family’ in the decision-making process;^[142]
• the person or welfare recipient may participate in decision to income manage—for example, the FRC holds conferences with community members to enable the person to enter into a Family Responsibilities Agreement and prepare a ‘case plan’;^[143] and
• under the FRC Act, income management is applied as ‘a last resort’.^[144]

10.90 The CYWR model is generally consistent with recommendations in the National Plan to Reduce Violence Against Women and Their Children 2010–2022 (the National Plan) 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.^[145] The Royal Commission also recommended that Indigenous communities be self-determining and resolve violence within their own communities.^[146] The CYWR 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.^[147]

10.91 These reports and studies emphasised the importance of individual agency and community involvement—consistent with the principle of self-agency/autonomy central to this Inquiry. Many submissions expressed qualified support for voluntary IM measures, provided they are flexible and focused on the individual needs of people experiencing family violence, and within their control.^[148] As submitted by the AASW (Qld) and WRC Inc (Qld):

limited voluntary income management is entirely different to compulsory income management and it does have the potential to provide support for those who want it. Any such system needs to be developed and implemented with great sensitivity to the particular circumstances of people experiencing family violence and only on a strong evidence base. Until such time as a thorough, independent assessment of the impact of current voluntary income management arrangements has been conducted, there should be no moves to extend this.^[149]

How voluntary is ‘voluntary’?

10.92 The ALRC considers that the compulsory element of income management hinders access to welfare and support for victims of family violence and that a more flexible voluntary approach provides a more measured response that includes a focus on individual autonomy for people experiencing family violence. In the Discussion Paper the ALRC suggested that the CYWR model provided an instructive model for the Australian Government and the administering agencies of welfare reform, because of its 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 CYWR 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.

10.93 On this basis the ALRC suggested that the CYWR model could provide 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.

10.94 This received support from stakeholders. For example, National Legal Aid commented that the Cape York experience ‘might be informative’.

The priority should be to identify all issues and the best response to those issues, which might then avert the need for income management. Whilst this approach would require front-end resourcing, it could also avert the need for resource intensive applications for exemption.^[150]

10.95 Stakeholders strongly supported a more flexible income management model, commenting, for example, that:

• any model should be flexible;^[151]
• a more flexible voluntary IM model would enable women to regain management of their money;^[152]
• an alternative approach to income management may be beneficial to Indigenous women experiencing domestic violence as a mandatory income management regime may discourage reporting;^[153]
• many people would like to utilise voluntary IM, but they would like more control over the percentage of the managed payments and the ability to opt-in and opt-out at their own discretion;^[154]
• the effectiveness and consequences of the CYWR model should be rigorously evaluated through the communities where this model has been introduced and any further expansion needs to be informed by robust empirical data conducted by an independent research organisation and findings to be made public for further comment.^[155]

10.96 The ALRC recognises that it is important to offer a flexible welfare policy to address the needs and safety of the welfare recipient and his or her children for people experiencing family violence. In addition, the ALRC considers that further research and evaluation of the various voluntary measures will assist to identify the relationship between family violence and appropriate responses.

10.97 Submissions from many stakeholders did not support the current voluntary IM regime because it was not flexible for people experiencing family violence, and that it was not a truly ‘voluntary’ scheme, in form or substance. The controversial aspect of income management is not only the compulsory regime but also the voluntary provisions.

10.98 A number of stakeholders commented on the problems that exist under the voluntary measure under the Social Security (Administration) Act model. 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 for 13 weeks before being able to exit.

10.99 A number of stakeholders were also critical of the way in which the CYWR model is working, namely that:

• it does not allow for flexibility and is not an appropriate model;^[156] and
• it is not supported without further information and assessment of its impact on communities and also raises systemic issues as a welfare model.^[157]

10.100 Some responses from stakeholders stated that voluntary IM under the CYWR model also seeks to impose restrictions.^[158] For example, the AASW (Qld) and WRC Inc (Qld) submitted that,

While in essence income management is voluntary, there are instances where this is not the case particularly where someone has been referred to the income case management team by, for example, the Department of Communities (Child Safety Services) in these communities. The unintended consequences of this require further evaluation.^[159]

10.101 CAALAS pointed out that:

while the Cape York Welfare Reform model creates a more flexible administration of income management (by allowing the Family Responsibilities Commission to take into account the best interests of the person, their children and families in deciding to refer a person for voluntary income management), it does not create extra flexibility for an individual in terms of how voluntary income management will work for them. … It is not an appropriate model upon which to base any amendment of the voluntary income management measure.^[160]

10.102 The Aboriginal and Torres Strait Islander Women’s Legal Services NQ Inc stated that they did not support the CYWR model ‘without further information and assessment of the impact on the communities and individuals’.

In our experience, any system which seeks to impose restrictions, unless by consent of the individual/s affected, risks producing fractured communities and may be perceived as punitive action by the decision-makers (especially if local) rather than supportive measures. Further, such a system is open to abuse where there are long-standing disagreements between families or individuals.^[161]

10.103 Voluntary IM under the Social Security (Administration) Act and the CYWR models have some ‘voluntary’ characteristics, but neither is fully ‘voluntary’ as there is an inflexibility for a person to ‘opt-in and opt-out’ of these systems when they choose. However, many submissions expressed qualified support for voluntary IM measures, provided they are flexible and focused on the individual needs of people experiencing family violence.^[162]

‘Opt-in and opt-out’ model

10.104 The ALRC recommends that the Social Security (Administration) Act 1999 should be amended to create an ‘opt-in and opt-out’ income management model that is voluntary and flexible. Stakeholders supported this approach, on the basis that it would encourage the disclosure of family violence,^[163] and still ensure that the complex needs of victims and their safety are provided for,^[164] and that it had the potential to offer dignity and choice in the very complex system of social security compliance.^[165]

10.105 CAALAS, for example advocated for reform of voluntary IM

to allow individuals to enter into, and exit from, a voluntary income management agreement at any time, and to allow voluntarily income managed individuals to determine the percentage of their income that is income managed including the percentage of any lump sum payments.^[166]

10.106 The ALRC considers that the development of such an ‘opt-in and opt-out’ income management model needs to include a number of key aspects, such as:

• ways to ensure that individuals understand the consequences of voluntary IM, particularly where victims of family violence may be experiencing trauma or have language barriers;
• ways in which the community may be involved, to ensure appropriate support for individuals; and
• other measures, such as financial counselling, which may support and strengthen the effectiveness of any voluntary IM measures.

10.107 The ADFVC submitted that a system of voluntary IM 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.^[167]

10.108 The Commonwealth Ombudsman reported that it received general feedback from people and representative organisations that

many people would like to utilise voluntary IM, but they would like more control over the percentage of their payments that are managed and their ability to opt-in and opt-out at their own discretion.^[168]

10.109 The Aboriginal and Torres Strait Islander Women’s Legal and Advocacy Service Aboriginal Corporation argued that any type of voluntary IM should be flexible—‘the social security recipient should have the capacity to make an informed decision’.^[169]

Future reform—the need for further evidence

10.110 Many submissions recognised the importance of evidence-based policies, and the ALRC considers that the development of a new voluntary model of income management should be informed by the development of an appropriate evidence base. The Ombudsman, for example, commented that ‘[i]t is evident that more analysis and understanding is required to better inform the development of policies in this field’.^[170]

10.111 Considerable research and evaluation has already been undertaken and this provides a foundation upon which further evaluations may be conducted.

10.112 In May 2010 Jumbunna Indigenous House of Learning responded to the proposed introduction of the Social Security and Other Legislation Amendment (Welfare Reform and Reinstatement of Racial Discrimination Act) Bill 2009. In doing so, it provided a detailed outline of government identified sources and other relevant reports prepared between June 2008 and November 2009. It noted the ‘absence of any baseline data when the NTER commenced, and the limits to data collected during its operation’.^[171]

10.113 As outlined in FaHCSIA’s submission, in September 2010 ORIMA Research released a report following evaluation of the trials of two income management measures in the metropolitan area of Perth—CPSIM; and voluntary IM. The three overarching research objectives of the evaluation were to assess the impact of income management in improving child wellbeing, on financial capability of individuals and to assess the effectiveness of implementation.^[172] The evaluation found that income management ‘has generally had positive impacts on the wellbeing of individuals, children and families’.^[173] In particular it found that:

• 6 in 10 income managed clients thought that income management had made their lives better.
• Generally stakeholders though that CPSIM and voluntary IM has positive impacts on the wellbeing of children. However some also reported negative impacts.
• In the 12 months prior to income management, 74% of respondents indicated that they had been unable to pay for at least one essential item (such as food, utilities, rent) in the previous 12 months, this decreased to around 50% during the income management period.
• Stakeholders tended to report that income management had had a positive impact on family relationships.^[174]

10.114 In its submission, the Equality Rights Alliance referred to its own contribution to developing an evidence base—their report based on data gathered during May and June 2011.^[175] The report sample group included over 180 women on income management—‘the largest number of women on Income Management in any study’ of which they were aware.^[176] What this report concluded was that the qualitative data indicates that compulsory Income Management is ‘not improving the safety of some women experiencing family violence’. An example from the report is quoted:

A domestic violence crisis worker said that some general stores still allow women to book up an account, including alcohol and cigarettes under pressure from an abusive partner, and pay it off once a fortnight using their BasicsCard. Some women in abusive relationships are asked by their partner to trade their BasicsCard for cash at a much lower value that what is on their card. She says these women say they are reluctant to talk to Centrelink about getting help to leave the relationship because they know they have broken the rules for using the BasicsCard, and don’t want to be in even more trouble with Centrelink. Administrative problems with rent payments made by Centrelink to NT Housing also affect the women’s access to NT Housing crisis support services.

‘Women needing crisis accommodation can’t get on the priority housing list (at NT Housing) if their rent is in arrears. Affects domestic violence crisis situations if Centrelink are not getting the rent paid. In a recent situation, a woman had to go back to the community where her abuser lives because of this’ — Quote from a domestic violence crisis support worker.^[177]

10.115 In November 2011, the report on the evaluation of the NTER conducted by the Australian Institute of Criminology, the Australian Institute of Health and Welfare, the Australian Institute of Family Studies, the Australian Council for Educational Research, Allen Consulting Group, Colmar Brunton Social Research, and KPMG was released. The report was ‘not intended to provide policy advice or suggest what should be done next; rather, it provides an assessment of outcomes to date’.^[178] The study aimed to

examine whether the measures, both individually and collectively, have been effective and comprehensive and have led to improved and sustainable outcomes in safety, health, education and employment.^[179]

10.116 The evaluation found that ‘[i]ncome management was supported by many people in the communities who believed that it was bringing about positive outcomes, especially for children’.^[180]

Under the [2010] changes, income management was extended across the Northern Territory and was focused on the long-term unemployed, disengaged youth, people considered vulnerable by a Centrelink social worker, and people referred by a child protection worker. NTER residents could be exempted from income management following the 2010 changes.

After the change to the program, many people who had been forced onto income management were taken off it. Of those released from compulsory income management at least 59 per cent had chosen to go onto voluntary income management by the end of 2010. Some participants have been able to save for and purchase major household items, such as washing machines or new refrigerators. Some are using income management as the basis of a household saving program.^[181]

10.117 The report notes however some difficulties with the limitations on available data.

While the report does have a strong focus on data, it is important to understand that there are only around 45,000 Indigenous Australians resident in the NTER communities. It can be difficult at times to observe trends in some outcome data for what is a relatively small population over a four-year period. It is also important to understand that the NTER is a very complex policy response that has many elements. It is not always possible to identify the additional impact of individual measures because so many changes, both NTER and other measures, were introduced at a similar time.^[182]

10.118 A number of stakeholders in this Inquiry pointed to a lack of empirical evidence about the impact of income management on people experiencing family violence.^[183] For example, the Welfare Rights Centre (NSW) highlighted its concern that:

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.^[184]

10.119 It also emphasised the importance of further evidence-based research to identify and recommend any progressive improvements from amended income management policy.

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.^[185]

10.120 The AASW suggested that, prior to further expanding and revising income management that research based on a robust evidence base for any model and to identify the intended and unintended consequences of income management.^[186] National Legal Aid added:

there is a lack of evidence based research as to the effectiveness of current income management schemes including their impact on people experiencing or attempting to escape/escaping from family violence. We therefore suggest that there is a need for independent evaluation of the impact of income management schemes including on people experiencing family violence, and in particular the consequences for their safety.^[187]

10.121 FaHCSIA indicated that the NTER evaluation, released in November 2011, just before the reporting date for this Inquiry, ‘will inform future consideration of policy and legislative issues related to domestic violence’.^[188] The ALRC considers that such evaluations provide an important contribution to developing an evidence base to inform future reforms in relation to income management. Further evaluations, particularly in relation to the ‘voluntary’ models 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, as well as key agencies. The ALRC notes in this regard that DHS in its submission stated that,

Should the Australian Government commission an independent assessment of voluntary income management on people experiencing family violence, DHS would participate and assist with any subsequent implementation.^[189]