Cashless welfare unsuccessful and unwelcome

As I am writing this, with the radio on, Christian Porter, the cabinet minister in charge of welfare, is announcing the local government area of Canterbury-Bankstown in New South Wales as the first site for his welfare recipient drug trial. This is the latest foray into increasingly conservative, paternalistic changes to our welfare system, already one of the meanest in the OECD. Some 1750 applicants will have to submit to a drug test for marijuana, ice and ecstasy and, if positive, will be placed on an 80 per cent cashless welfare card payment. The legislation for this and some other nasties may not pass, as the Labor Party will oppose it, but it clearly indicates the direction of the Coalition’s welfare policies. 

This is the latest example of an ever more judgemental and stigmatising approach to welfare policies. The government’s obsessive focus is based on the assumption that people need pressure and controls to get them into paid jobs. This blames the victims and ignores the figures that show there are six jobseekers for each available vacancy. Even more importantly, it ignores the signs that the number of paid jobs is likely to decrease. 

The availability and nature of paid work is changing, as shown by more gig jobs, precarious work, and jobs replaced by technology. In addition to this, there is pressure to reduce environmental damage and the demand for resources. Debates on the future of paid employment are prevalent around the world, where there is discussion of shorter working hours and forms of universal payments in order to reduce poverty and to facilitate those workers moving between jobs. This is on the agenda of governments in many developed countries, but not here. Instead our government becomes more paternalistic and focuses on recipients’ presumed antisocial behaviour. We have a welfare system that does not recognise there is limited access to paid work.

What makes it worse is that these changes are seriously problematic in their own terms. Simply, they do not succeed in meeting the government’s goals of behavioural change. Reforms to past programs, particularly over the past decade, are both ineffective and expensive. Evidence already available shows clearly that such changes are not working, but the data are ignored. One can only assume the government is driven by particular values and ideologies that don’t and won’t work, now or in the future.    

To understand how this situation developed requires an awareness of our welfare history, so that we can institute reforms that fit better with both our past and our future. A starting point is recognising that Australia has one of the most targeted welfare systems in the OECD, partly because it is essentially a pay-as-you-go system, funded from general revenue rather than from contributions by employers and employees. The result is that it is seen as taxpayers funding the “deserving poor”, with no income entitlements as costs are contained to reduce the need for more taxes.

Australia had historically been the “working man’s” welfare state, where able-bodied men could find paid work. This was undermined in the Depression, when lack of jobs meant many were forced onto charity. Similar issues in Europe and the United States created the pre-war social unrest that led to extreme nationalism, rising fascism and World War II. The Allies decided to correct this situation via massive expansion of the welfare state after the war, designing good social policies to counter any future distrust of democracy. Australia followed the trend and both the Labor Party and the Liberals expanded welfare eligibility over the next three decades, culminating in reforms by the Whitlam and Fraser governments, with some contributions from Hawke’s. 

However, with the arrival of the market model, neoliberal cuts slowed the rate of public spending. Later changes, from the 1990s on, tightened welfare eligibility and increased the pressure on working-age recipients to get a paid job. This set the scene for more recent changes, starting with John Howard’s welfare-to-work program – the beginning of extra controls and conditions, assumed to get people into jobs and off welfare. However, the more serious moves to control how the income was spent started a decade ago as an Indigenous-targeted program, and have expanded rapidly, almost unnoticed, to more mainstream programs. 

The first major shift came in Howard’s final months, in 2007. It was continued and expanded by the Rudd government. As part of the so-called “emergency intervention” in the Northern Territory, Howard brought in a targeted form of income management, which reduced recipients’ access to 50 per cent cash. This control was claimed to be a fix for social disorder, child abuse, alcohol, gambling and the other presumed behaviours of residents in more than 70 Indigenous communities. As it targeted only Aboriginal people, the Racial Discrimination Act was suspended to ensure its legality.

These changes were sold as necessary to address child abuse in some Indigenous communities and as such were relatively invisible to the media and the wider population. This continued to blur the reality of the shift, despite the Labor government including all welfare recipients in the Northern Territory, opening options for many more trials in the states and with other populations.

This spreading of income management was a clear sign of increased behavioural control by welfare payments. It should have raised wider questioning of its effects on the rights and dignity of welfare recipients. Indigenous communities complained that these changes somewhat echo the punitive assumptions of rations and shaming, but these warnings were not heard. Most protests were drowned out by the government’s use of child abuse, violence, drink, drugs, gambling and other dysfunctions to justify the financial controls. Now, they are again targeting drug use and addiction to obscure the basic flawed beliefs that income control will fix problems. All these propaganda forays add to the public view that the fault lies with the recipients, and that such paternalism is for their own good.

In The Daily Telegraph on Tuesday, Alan Tudge, the junior welfare minister, illustrated this paternalism. “Australians,” he said, “are generous; they are happy to help people down on their luck with welfare payments, but they do not work hard and pay their taxes to support other people’s drug habits.” Similarly, miner Andrew “Twiggy” Forrest showed a graphic film of violence to politicians in order to expand support for the cashless debit card. This is the updated version of the Northern Territory BasicsCard, and is now being trialled in Ceduna and East Kimberley. It takes control of 80 per cent of cash and covers all local recipients of working age payments, regardless of race, financial competence and drinking habits.

Further expansion of this card is also part of the package of reforms. Last week, Tudge introduced the Social Services Legislation Amendment (Cashless Debit Card) Bill 2017 to operate in more locations and abolished the trial’s closing date. Without further legislative controls, a much greater number of communities could be included at the will of the minister. 

Does it matter? What difference does it make if access to most of the payments is via a debit card with little cash available? There are questions of rights, dignity and respect that need to be raised if those who are already often stigmatised and misjudged have to use a card that identifies them as welfare recipients. Some studies have reported shame and distress, as well as possible reduced capacity to manage decision-making. Michael Marmot’s work on the social determinants of health for the World Health Organisation shows that a sense of agency is vital to good health and wellbeing. This needs to be thought through.

The question of whether these programs, which the government claims to be evidence-based, are effective is crucial. Do they work to improve behaviour? There exists a range of reports and official evaluations of the Northern Territory and other income-management programs, as well as some initial data on the cashless debit card trials. These include a major $1 million government-funded evaluation of the NT program that has failed to find any serious evidence of its effectiveness. This report, by the Social Policy Research Centre, starts with a summary of recent general data from the Northern Territory, which show that most of the Territory’s wellbeing statistics have deteriorated over the past few years, post-intervention. The following data below relate specifically to the effect of the income-management trials. To quote from the summary:

“When the data are taken as a whole, not only does it suggest that there has been very little progress in addressing many of the substantial disadvantages faced by many people in the Northern Territory, but it also suggests that there is no evidence of changes in aggregate outcomes that can plausibly be linked to income management.”

And later:

“Despite the magnitude of the program, the evaluation does not find any consistent evidence of income management having a significant systematic positive impact. Some 35,000 people have been on the program at some point, and there were 18,000 people on it at the end of December 2013, many of whom have been on it for extended periods.”

The above conclusions are reflected in many other reports. The current claims in the cashless debit card report are on equally unproven grounds, and there is a similar lack of valid data in most other reports. These results raise questions as to why this type of quite expensive payment control, these so-called trials, are continued, let alone slated for expansion.

There are also serious questions as to whether these programs remedy or damage recipients’ wellbeing. Ken Wyatt, the federal minister for Indigenous health, described the cashless debit card as being a Band-Aid at best. The minority of recipients with addiction problems need services. Senator Pat Dodson has described the card as a “public whip” designed to control Indigenous people and said the federal government should focus on holistic solutions to the problems of alcohol, drug addiction and violence in remote communities.

What this messy collection of bad policies suggests is a serious need to reform our welfare system, including its robo-debt problems, from scratch. Instead of conservative paternalistic models, let’s look at flexible, supportive, non-judgemental social security policies that can build social resilience and cohesion, together with some real income security. We need a 21st-century model, not a 19th-century version. Maybe, even, we need a universal basic income.

This article was first published in the print edition of The Saturday Paper on Aug 26, 2017 as "Welfare crack of the whip".