Income Management Scheme to Penalise Low-Income Australians

The federal government is set to roll-out a wasteful and highly bureaucratic scheme that will cost taxpayers millions of dollars and will exacerbate not address social problems say national representatives of the community sector and financial counsellors.

AFCCRA and ACOSS have strongly opposed the government’s moves to introduce compulsory income management to disadvantaged communities across Australia.

“Income management is based on an incorrect premise that people cannot manage their own incomes. In our experience, this is a long way from the truth. Many, many people on low incomes are in fact excellent budgeters. In many ways they have to be to manage their low payments,” said Fiona Guthrie, Executive Director, Australian Financial Counselling & Credit Reform Association.

“The aim of financial counselling is to put a client back into control of their financial situation. The inherent contradiction in government’s policy is that income control is said to foster individual responsibility. It is hard to see how this happens when individuals lose control over 50% of a welfare payment and 100% of any lump sum payment.”

“This is a bureaucratic measure that will penalise, not protect low-income Australians. It is poorly targeted, expensive and will inflict indignity on income support recipients,” said Clare Martin, CEO, Australian Council of Social Service.

“$4,400 will be spent each year on every person being income managed. This is nearly nine times the amount paid to employment service providers to help long-term job seekers – just $500 annually.

“If this legislation passes, the government will have unprecedented control over the finances of low-income Australians and determine minor purchasing decisions, like where someone can purchase milk or the newspaper.

“Taxpayers’ money would be better spent on targeted employment assistance and training, improved access to mental health and alcohol and drug services, or improving the adequacy of income support payments.”

ACOSS and AFCCRA support voluntary income management on an individual or community basis.

ACOSS has told a senate committee inquiry today (Friday) that the proposed scheme has a weak evidence-base, and is founded on unsubstantiated assumptions about long-term income support recipients.

Under the Government’s scheme, long-term income support recipients receiving particular payments and living in areas declared as ‘disadvantaged’ will have 50-70% of their payments quarantined. Their ability to shop at preferred outlets will be constrained, and discretionary funds will be limited.

ACOSS’ opening statement to the Senate Community Affairs Committee Inquiry is available on our website  

An overwhelming majority of organisation’s submissions to the senate committee inquiry oppose the proposed scheme including ACOSS members:

Australian Association of Social Workers
Catholic Social Services Australia
Family Relationships Services Australia
Jobs Australia
National Council of Single Mothers and their Children
National Ethnic Disability Alliance
National Shelter
National Welfare Rights Network
People with Disability Australia
Salvation Army
St Vincent de Paul Society

Media Contact: Clare Cameron, ACOSS – 0419 626 155
Fiona Guthrie, AFCCRA – 0402 426 835