Why we should be sceptical about the Cashless Debit Card
There has been considerable discussion about the trial of cashless debit cards currently underway in Ceduna and Kununurra. With the Commonwealth apparently ready to announce an expansion of the trials in the May budget, David Tennant explores what that would mean and why is it relevant to regional centres like Shepparton.
Shepparton was selected as a trial site for a series of welfare reform measures in May 2011. We have hosted a trial of income management since 2012 – the only place located in Victoria. Benefit recipients who volunteer or are required to participate in income management have 50% of their incomes quarantined, accessed by a government-issued basics card.
The cashless debit card trials are more intense. The proportion of income managed is 80%. The card is issued by a company on government’s behalf and, under the current arrangements, all benefit recipients except people receiving aged or veteran pensions must participate. For example disability, carer, single parent and youth payments are all included.
Sites that already have income management would be logical transition communities if the trials expand. If Shepparton joined, numbers could go from around 250 people with 50% of their income managed by government, to around 10,000 people with 80% of their income quarantined.[1] In a community this size people not receiving benefit payments covered by the card would inevitably have acquaintances, friends or family members affected by the process.
After 22 years of advocating safe, fair financial services for low income people, I am strongly opposed to the cashless debit card. Here are three reasons why.
For participants, the card reduces basic protections that every other Australian enjoys. Privacy rights are diminished because the card issuer is required to share transaction information with government. Our system regulating financial services and products is based on choice and suitability to a customer’s needs and means. By design, the cashless debit card removes choice. Participants who choose not to use the card are locked out of accessing 80% of their modest income. Choice is a vital component of financial wellbeing; even more important for people on a low income.
Second, the card exacerbates social and economic separation. Compulsory issuing of cashless debit cards assumes all people receiving benefit incomes cannot be trusted with their money and that left unsupervised they will spend it on alcohol, gambling or drugs. Broader roll-out risks the creation of a banking underclass directed by government.
Finally and most compelling, the interim evaluation report released in March 2017, notwithstanding significant flaws in design and presentation, contains evidence that should cause concern. Almost half of the participants (49%) said the card made their lives worse.[2] Four in five participants reported none of the positive outcomes the trial was meant to deliver. Over a third of participants reported not engaging in any of the activities the trial focuses on before it commenced.[3]
This data points to a blunt compliance measure applied to every person receiving welfare payments, even if they have none of the problems the card is meant to tackle. That is before we consider whether it does anything useful. No analysis of any type of costs versus benefits, social or economic has been completed, or is planned.
‘Proof of concept’ has been claimed by the interim evaluation report and government commentary since its release.[4] It has certainly proven that government can force people who receive welfare to do things. Whether it should, is much more important. I sincerely hope Shepparton is not required to take part in further testing of an unfair system that will make life harder for the people involved.
[1] The estimation is based on data maintained by the Department of Prime Minister and Cabinet accessible via data.gov.au. The relevant data set, DSS payments by Local Government Area March 2016 to December 2016 provides a count of benefits paid, rather than benefit recipients. The two main categories of benefits covered if the Cashless Debit Card were to apply in Shepparton are the Disability Support Pension and Newstart, which together add to 5,926.
[2] Orima Research; Cashless Debit Card Trial Evaluation – Wave 1 Interim Evaluation Report; Department of Social Services; Canberra; February 2017; page 4.
[3] Orima Research; Wave 1 Interim Evaluation Report (ibid); page 20.
[4] The Hon Alan Tudge MP, Minister for Human Services and The Hon Christian Porter MP, Minister for Social Services; Media Release: Cashless Debit Card extended following positive independent evaluation; 14 March 2017.
David Tennant is the CEO of regional community service provider FamilyCare, based in Shepparton Victoria. This article originally appeared as an opinion piece in the Shepparton News on Wednesday 26 April 2017.
Posted by @jrostant