The ‘Hidden Costs’ of Compulsory Income Management

adminSocial security rights review

Dr Michelle Peterie, Prof Greg Marston, A/Prof Philip Mendes,
Dr Shelley Bielefeld, Dr Zoe Staines and Mr Steven Roche

There is mounting evidence that Compulsory Income Management (CIM) policies cause more problems than they solve. Yet government enthusiasm for the schemes shows no signs of waning.

In May 2020 Social Services Minister Anne Ruston announced that the trial of the Cashless Debit Card (CDC), due to end on June 30, would continue until December 31.[1] The CDC is the latest of several iterations of CIM – an approach to social security provision that sees a portion of benefit recipients’ income support payments quarantined for use on approved purchases.

CIM was first introduced to Australia as part of the 2007 Northern Territory Emergency Response. At the time, the policy was framed as a measure to protect children from abuse and neglect and women from financial and physical violence in remote Indigenous communities. The goals of CIM, however, have been progressively widened and now include decreasing so-called ‘welfare dependency’ and increasing employment participation.

CIM currently operates at CDC trial sites in Queensland, South Australia and Western Australia. The BasicsCard (an earlier iteration of CIM) is in place in the Northern Territory, and in some areas of Western Australia, Victoria, Queensland, New South Wales and South Australia. As of 5 June 2020, 35,215 Australian welfare recipients are subject to CIM – 22,515 on the BasicsCard[2] and 12,700 on the CDC.[3] A significantly smaller group of 3,197 people are voluntarily participating in income management via the BasicsCard.[4]

Our research[5] – the first independent, multi-site study of CIM in Australia – aimed to understand the lived experiences of those subject to CIM. It involved 114 in-depth interviews with program participants and other stakeholders at four sites: Playford (BasicsCard) and Ceduna (CDC) in South Australia; Shepparton (BasicsCard) in Victoria; and the Bundaberg and Hervey Bay region (CDC) in Queensland. We also collected 199 survey responses from income managed welfare recipients and community members around Australia.


Financial (In)Stability

Proponents of CIM champion its potential to stabilise the lives and finances of those it targets. By quarantining a portion of social security payments and constraining how these funds are spent, the policy purports to encourage responsible purchasing and help combat addiction. As then social services minister Paul Fletcher explained in March 2019, CIM policies “provide a stabilising factor in the lives of families with regard to financial management and to encourage safe and healthy expenditure of welfare dollars”.[6]

Our study found that while some individuals experience these benefits, the majority face additional financial challenges because of CIM.

87% of survey respondents on CIM indicated they did not see any benefits in the scheme, while only 13% thought there were some advantages. For those who saw CIM’s introduction as positive, the main reported benefit was improved spending on essential goods and services, in line with the policy’s intent. Yet we found no statistically significant difference in self-reported financial management behaviour between survey respondents who were placed on CIM and those who were not. Indeed, we found that CIM appears to weaken the financial position and capabilities of those who are subjected to it.

We also found that CIM had introduced new financial stress to many participants’ lives, with 86% of survey respondents indicating they did not have enough cash to pay for essential items. Our in-depth interviews shed further light on these experiences, highlighting countless instances of cardholders – unable to participate in the cash economy – struggling to provide for themselves, their children and their families.

In Bundaberg, for example, single mother Emma had struggled to make basic purchases since the CDC’s introduction. Her card did not always work, and with little available cash she was unable to access the local produce markets and second-hand retailers where she used to shop. Problems with the CDC payment system added additional strain to Emma’s financial situation. In the past she had always been on time with rental payments, but the CDC made paying bills difficult:

I pay [my rent] to a private landlord and so you’re waiting for it to go through and waiting for it to go through. Then I think it was two days later, next minute, that amount had been bounced back in my account and I’m looking at it and I’m like ‘why has that bounced back?’ Then you ring [CDC administrator, Indue] up and they say, oh it’s just a minor teething issue, just keep trying. […] You’re telling me it’s a minor teething issue to breach a contract?

In Playford, Dean shared a similar story, explaining that his situation had become so dire he was forced to turn to charity:

You want low of low, I was having to get meals at charities. I was getting St Vincent de Paul – which were wonderful, wonderful people – to come and bring a box of food and pet food because I couldn’t feed my pets. I had St Vincent de Paul and I had the RSPCA come and drop off a 10-kilo bag of cat food, that kind of thing. I love them to bits but they shouldn’t have been doing that because I shouldn’t have been in the situation.

Far from combatting financial ‘dependency’, CIM made people like Dean reliant on emergency assistance from charities, family members and friends. Those without access to these additional support networks often went without.

Significantly, the impacts of these challenges on participants’ social, emotional and physical health could be considerable. Emma, for instance, recalled that in her first weeks on the card she had lost several kilograms of body weight:

I could not stop throwing up; just the anxiety of using the card and trying to switch payments over, worrying about which payments were going to get paid, is my landlord going to kick me out, what’s going to happen?

Numerous participants across our four interview sites relayed similar stories, explaining that – beyond the impacts of the material deprivation associated with CIM’s restrictions – the stress CIM caused had damaged their mental health. Individuals with pre-existing mental health conditions such as anxiety, depression and obsessive-compulsive disorder were particularly vulnerable to these impacts.


Social (Dis)Integration

In political discourse, CIM participants are frequently portrayed as people who cannot manage their money, who abuse alcohol or drugs, and who do not wish to work. CIM’s purported capacity to integrate ‘problem citizens’ back into their communities has thus been cited as a policy objective. As federal Attorney-General Christian Porter put it in 2018,

The cashless debit card can help to stabilise the lives of young people in the new trial locations by limiting spending on alcohol, drugs and gambling and thus improving the chances of young Australians finding employment or successfully completing education or training.[7]

Yet the majority of people impacted by CIM do not have alcohol, drug or gambling issues. Rather, while individually targeted CIM policies exist, most CIM participants have been selected for the program based purely on demographic factors such as place of residence, payment type and age. In this context, CIM can have counterproductive effects – stigmatising people with no history of anti-social behaviour and pushing them to the margins of their communities.

84% of survey respondents in our study indicated they had experienced stigma and embarrassment using their payment cards, and numerous interviewees shared harrowing stories of public humiliation. As Ceduna interviewee Mike explained, the distinctive appearance of the cards was a key concern. There were “no secrets” as an individuals’ social security status was clearly visible to all. “[S]traight away you get branded. ‘Ah, bludger, dole bludger’”.

In Shepparton, Maryanne concurred. She had no history of substance abuse but had received disparaging comments at her local supermarket when other shoppers noticed her distinctive payment card:

I got called a junkie and I said: ‘I’m not a junkie, do you see any marks or anything?’ They were like: ‘No, but you have a BasicsCard.’ I said: ‘What’s that got to do with it? Centrelink gave it to me. I can’t do nothing’.

In Bundaberg, Jessica shared a similar story involving her CDC failing at a self-checkout machine:

[T]he self-serve light on the top started flashing and I had to wait for the lady to come over and then I had two tradies just behind me and they were like ‘oh, that’s one of them junkie cards’. I was already a bit panicky because the card wasn’t working and I just burst into tears […] I’ve never touched drugs in my life.

This combination of financial strain, social sigma and emotional distress caused some participants to withdraw from their communities. Far from increasing social cohesion, CIM thus turned community members against one another. As Jessica emphasised, “[i]t just makes you feel useless, as if you’re not a part of society anymore, like you’re segregated, like you’re one of those goes into that corner”.


Future Directions

Changing course in social policy is never easy, particularly when populism and politics trump a balanced assessment of program costs and benefits. But a growing body of research shows that CIM does not work.[8] These blunt, punitive policies are having a counterproductive effect – pushing ordinary Australians further towards the margins. If safer and healthier communities are the objective, the significant sums of money currently directed towards CIM policies may be better spent providing properly funded social services, greater access to education and training, and adequate payment rates for those relying on income support payments.

Participants’ names have been changed. The full research report – ‘Hidden Costs: An Independent Study into Income Management in Australia – is available at

With thanks to Anastasia Radievska at Economic Justice Australia for her valuable editorial work.