Government moves to scrap the cashless debit card. Why is this controversial?

This week, the Albanese government

It introduced its reform to the lower house on Wednesday, which would result in the card being abolished.

The bill will also stop any new welfare recipients from being placed onto the card.

Some advocates are welcoming the move but others aren’t happy, and fear it could lead to adverse impacts on the community.

What is the cashless debit card?

The cashless debit card (CDC) was introduced in 2016 by the then Coalition government and was extended to several sites across Victoria, Western Australia, South Australia and the Northern Territory.
The card in these sites has been compulsory for various welfare recipients, excluding those on the aged care pension.

Under the scheme, 80 per cent of recipient’s payments are placed on the card and cannot be used to buy alcohol, cigarettes, used for gambling, or withdraw cash.

Another form of income management is the BasicsCard, which was introduced in 2007 under the Northern Territory Intervention policy of the Howard government.
It was established as a voluntary program – unless it was court-ordered – and quarantines 50 per cent of a user’s income, similarly stopping them from using it to buy goods.

Both schemes were introduced to help minimise harm in regional and rural communities stemming from alcohol, gambling, and drug misuse.

Why is it controversial?

The cashless debit card scheme has been controversial as critics say it unfairly targets First Nations communities and stigmatises users.
The Labor government has been highly critical of the scheme. Minister for Social Services Amanda Rishworth said it has also been ineffective.
“The former Coalition government imposed the cashless debit card as a magic fix-all to complex and social problems experienced in some of our most vulnerable populations,” she said.
Hayden Patterson, executive director of the Worldwide Coalition of Unemployed Workers’ Unions, said the scheme has been “traumatic” for some people.

“I would like to see people come off this immediately,” he told SBS News.

“Initially it was in mainly Indigenous areas, and they’re also regional which means they’re already far more likely to be breached from their mutual obligations or have their payments suspended.”
Last month, an the previous Coalition government hadn’t shown the scheme works to reduce social harms.
The said the Department of Social Services, which ran the program, hadn’t outlined performance targets and hadn’t met its objectives.
The role of card provider Indue Ltd, a private financial company headquartered in Queensland, has also been subject to scrutiny.

The company has been awarded millions of dollars in government contracts to help administer the scheme.

“Documentation supporting the monitoring of Indue service delivery risk could be more regularly reviewed,” the ANAO report published in June found.
Mr Patterson said the private company is profiting off the scheme and has cost taxpayers more overall.

“It’s outsourced the responsibilities of our social security system,” he said.

Why are some supportive of it?

But the scheme has some supporters, who say the card has been beneficial.
Indigenous leader Ian Trust, executive chair of the Wunan Foundation, said there were some benefits, but they diminished over time as people found ways of getting around the barriers of the card.
“It did work for a certain amount of people, for a certain group of people when it first came out,” he said.
“But [now] people turn up at petrol bowsers and say, ‘I’ll buy your petrol, but you give me the money’. So, it didn’t keep pace with what was happening on the ground.”
Mr Trust said he is concerned it could lead to worse outcomes, if cash starts to flow back into the area.

But Mr Patterson said that aspect shows the card has not been working, and there are already reports of an increase in incidents in some regions.

Northern Territory Country Liberal Senator Jacinta Nampijimpa Price is a supporter of the scheme. Source: SBS News

“There is a lot more under-handed crime that is going on and exploitation,” he said.

“People resort to nefarious ways to get money and get around the card.”
Walpiri Celtic woman and Northern Territory Country Liberal Senator Jacinta Nampijimpa Price has been a vocal supporter of the card.
She told SBS News she conducted research on the BasicsCard after it was introduced and found the community response was largely positive.

“I have seen for myself and spoken to individuals who have been able to get their life in order and are in a much better position as a result,” she said.

What is the government doing?

The Labor government took a promise to the 2022 election to abolish the cashless debit card.
On Wednesday, it introduced its reform to the House of Representatives, which would see more than 17,000 existing participants moved off the card from September, depending on if – or when – the legislation is passed.
“There’s never been evidence to show it’s delivering on its objectives,” Ms Rishworth said.
She also announced that from next month, no new recipients would be put onto the card in all sites, except Cape York and the Territory.
Anyone who wants to remain involved voluntarily will be transferred to the BasicsCard.

The government says a separate income management program run by Centrelink – which is currently being used in 12 locations – will be assessed later.

What has been the response?

Some people are worried the move will hurt communities and increase alcohol-fuelled violence.
Senator Price said she has seen firsthand how the scheme has protected some vulnerable members of the community.

“When many of your family members have an issue with alcohol, substance abuse, gambling, and they want access to your income, the cashless debit card is a tool to prevent them getting access to your income,” she said.

The move also coincides with the , an Intervention-era ban on alcohol in some remote communities.
Lingiari Labor MP Marion Scrymgour said in her that has put vulnerable people at risk.
“You can’t just suddenly pull the pin on it without any protection sanctuary or plan for the vulnerable women and children whom the original measure was supposed to protect,” she said.
Mr Patterson said the support mechanisms for many of these communities also haven’t been addressed.

“The interest needs to be on the wraparound services that are there,” he said.

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