It is budget day, so how will the new Holy Cow surplus drive the political agenda? There will be cuts, but the PM assured us last week that “it will be a Labor budget, driven by Labor values and that means we will be protecting front-line services and looking after those Australians who need our support the most”. This approach should involve cutting programs that don’t work, but not those that do. The decisions can be based on evidence of what can be cut and/or extended, expensive paternalistic supervision that doesn’t seem to be working?

The Treasurer should have looked for savings that can improve social well-being by cutting the costs of overly bureaucratic controls that show few benefits. An example of a good cut would be the abolition of the various compulsory income management programs in the NT, WA and now about to start in a another five locations, including Shepparton and Bankstown. On my rough estimates, there are, or will be, some 23,000-plus recipients of this program, most under some level of compulsion. The government could save about $100 million per annum by cutting the costs of bureaucratic infrastructure, controls and the plastic cards.

This nearly five-year-old program, the government claims, improves welfare recipients’ well-being by diverting 50% or more of their payments for use on approved types of purchases. It was started in the NT, as part of the intervention, but is now has been de-racialised and part of  general welfare programs. On July 1, a version of income management (IM) will be delivered as pilots to wider populations in five new sites, including Bankstown, Playford, Logan, Shepparton and Rockhampton.

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Many have questioned these official claims of benefits. Until now, the debate has tended to be between government assertions on one side and criticisms from many Aboriginal and community groups on the other. However, a new briefing note, from an impeccable source has now sounded a clear note of caution. It was published by the Commonwealth Parliamentary Library as one of its briefings for backbenchers. The Parliamentary background note, released on May 1, documents all the data and concludes that there is inadequate evidence of benefits for recipients. The document stated:

“This background note has highlighted the absence of adequate data related to the effectiveness or otherwise of income management … Such evaluations as have been attempted should be treated with caution due to a range of methodological problems such as the lack of comparison group or baseline data; the limited amount of quantitative data; the strong reliance on qualitative measures; questions over the independence of some evaluations; and problems with other design aspects of various reviews.”

Given the program is nearly five years old in some areas, this is not a good look. As, after some time, IM has not measurably contributed to the well-being of people in some of the 73 communities in the earlier version, it raises question on the legitimacy of retaining and expanding this problematic and quite expensive program. What makes this move more serious is the assumption that IM is now being piloted nationally as an alternative model to current welfare payment policies. The delivery is demeaning to many recipients and  makes welfare payments more complex and expensive to deliver. It is being introduced without serious public debate on the merits of the program. While there is no evidence as yet of damage, we need to decide on the acceptability of a program that reduces rights and infantilises recipient at the administrative costs of $100 per person per week.

The background note does examine carefully the available research and the considerable effort put in by the Commonwealth to find supporting data, and states:

“The overall picture is one in which positive changes have been uneven and fragile. On the other hand, there is no clear evidence that income management is responsible for a worsening of the situation in areas in which it operates.

“Income management has been a controversial part of the Australian government’s welfare reform agenda in recent years. While various conditions have always been applied to eligibility for welfare payments, restrictions on how payments may be spent are a new development that has been criticised by some as paternalist and stigmatising.”

In the conclusion the paper states:

“The background note has also summarised the available evidence in relation to the operation of income management in the Northern Territory, Queensland and Western Australia. In each of these areas, evidence is subject to the limitations outlined above. In none of these locations is there unambiguous evidence for or against the effectiveness of income management. The overall picture is one in which positive changes have been uneven and fragile.”

This expensive, possibly problematic program is still in place and is being extended as part of making life harder for those out of the workforce in then hope of forcing them into jobs. This is the reason government gives for cutting welfare payments to another 100,000 single parents, and soon for many people now on disability payments. While paid work usually does bring benefits, there is again no evidence that cutting and controlling payments does raise participation. It does, however, make many more lives miserable and poor, as Newstart is generally recognised as inadequate.

So I suggest they do not continue with or extend income management, and use the savings  to maintain the $59 a week for about 100,000 sole parents they threaten to cut.

The move to Newstart, which has already happened to many recent sole parents, seems to be a false economy as only about half as many (16%) single parents on the lower payment work part-time, as do those sole parents still on the more generously means tested Parenting Payment. Again, the government apparently allows ideology to over-ride its own evidence!

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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