Australian Council of Social Service

Income control a measure too far

9 March 2010

Published in The Australian

THE federal government is set to take unprecedented control over the finances of low-income Australians in a scheme at present being considered by parliament. Most Australians have heard little about these major reforms that could see the government dictate minor purchasing decisions, like where someone can purchase a carton of milk or buy oranges.

Under the government's income management scheme, people on Centrelink's unemployment, sole parent and youth payments for more than a year (or 3 months for young people) would have at least half of their payments managed by government if they live in an area declared by the minister as disadvantaged. The bill before parliament states that a disadvantaged area could include "the whole of a state or territory".

This is designed to get around the problem that applying this policy to indigenous people in the NT is discriminatory, which it is. But the solution is not to extend the discrimination to other low-income Australians.

Income managed funds - 50 per cent of regular payments - would be siloed off to a special account. People would have to use a Basics Card to buy groceries at outlets approved by the government.

If the bill is passed, income management would apply to a sole parent with preschool age children who has left a violent relationship.

She has moved to a disadvantaged area because that is the only place she can afford to rent. Though managing her social security payments well, this mother still struggles to raise two children on her limited income.

Under the government's scheme, she will have to meet Centrelink regularly to discuss her spending needs and priorities.

She will be required to shop at those stores that are approved by the minister.

Older people eager to work but often locked out of the labour market will also be affected. For example, the scheme would apply to a 50-year-old retrenched worker in a regional town with high unemployment, declared by the minister as disadvantaged. Already enduring the struggle of making ends meet on the $228 a week Newstart Allowance, he too will suffer the indignity of showing up at Coles with a Basics Card and be known to retailers as a long-term income support recipient.

People would be selected for this scheme simply according to which Centrelink payments they receive and where they live. They will be judged unfit to manage their finances or care for their children, without any regard to their individual circumstances.

Indeed, the only way the sole parent can escape the scheme is to provide proof that he or she is caring for her children properly. For the older retrenched worker, finding a job is the only way out of the scheme.

This is lazy, cliched policy design. It is true that disadvantaged areas with large numbers of social security recipients often have social problems including family violence, alcohol and substance dependency, poor budgeting and child neglect.

However, the government's policy assumes that everyone on income support in an area has these problems.

As experienced community agencies know, it is usually a small minority of residents that cause most of the trouble, the rest are simply trying to get on with their lives using the meagre resources they have.

The government's approach is consistent with a flawed view that joblessness is caused principally by individual behaviours, rather than structural factors, such as economic factors, lack of skills, chronic health problems and age and disability discrimination. During the downturn, the number of job seekers rose 40 per cent (June 2008-2009).

ACOSS strongly opposes compulsory income management. We do, however, support voluntary income management on an individual or community basis.

We respect a community's right to determine that income management can play a useful role in responding to acute social crisis.

However, we insist that measures must be genuinely community-supported, and that individual appeal rights be preserved.

By contrast, the government's proposed compulsory scheme is expensive, top down and highly bureaucratic.

Based on the government's funding estimates, the scheme would cost $4400 per person per year. Put in perspective, that's nearly nine times the amount paid to employment service providers to help long-term job seekers ($500 annually) and over one third of the Newstart Allowance paid to a single adult ($11,600 annually).

A wide range of frontline community organisations have raised concerns about the proposed income management scheme, including Catholic Social Services Australia, Family Relationships Services Australia, Jobs Australia, St Vincent de Paul Society, UnitingCare, and the Salvation Army, Southern Territory. Most of these organisations support voluntary, community-based or targeted models, but oppose the blanket nature of the measure.

They are joined by the peak body for the protection of children from abuse, NAPCAN and the Australian Financial Counsellors and Credit Reform Association. Both have questioned the poorly targeted nature of the scheme.

ACOSS would like to see concerted action by governments working with low-income communities to resolve these problems. The government should start by increasing payments and providing better employment assistance and training. Improving access for low-income Australians to mental health and alcohol and drug services would also have a big effect. The problems in child protection services and schools in poor areas should be addressed as a priority.

Of course, all of this requires a commitment of resources. It is deeply disappointing therefore that the government is prepared to spend more money on micro-managing people's lives than it is on alleviating poverty by increasing payments or supporting people into work. It also flies in the face of one of the government's objectives of the scheme, being to "move people up and out of welfare".

Clare Martin is chief executive of the Australian Council of Social Service and former chief minister of the Northern Territory.