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Has Labor learnt from the failure of the cashless debit card?

Legislation passed through the House of Representatives this week to wind down the cashless debit card (CDC), which was introduced into the East Kimberley and Ceduna in 2016 and since applied at other trial sites around Australia. The card compulsorily quarantines 80% of social security payments received by working-aged people. Implementing the CDC has cost more than <a>$170 million</a>. Yet <a href="https://www.uq.edu.au/news/article/2020/02/compulsory-income-management-disabling-study-shows" target="_blank" rel="noopener">research</a> shows it does more harm than good to people forced to use it. First Nations organisations, social service organisations, and others have consistently <a href="https://www.theguardian.com/australia-news/2020/nov/03/cashless-welfare-card-fewer-than-10-of-senate-inquiry-submissions-back-bill" target="_blank" rel="noopener">argued against its expansion</a>. The Albanese government says winding back the CDC will “leave no one behind”. But its legislation leaves more than 23,000 mainly First Nations people in the Northern Territory – as well as people in other parts of the country – on the <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/FlagPost/2017/June/BasicsCard_and_Cashless_Debit_Card" target="_blank" rel="noopener">BasicsCard</a>, a longer-standing compulsory income management scheme run by the Department of Social Services. We have known since 2014 that the BasicsCard <a href="https://caepr.cass.anu.edu.au/highlights/evaluating-new-income-management-northern-territory-final-evaluation-report-and-summary" target="_blank" rel="noopener">fails to meet its stated objectives</a>. Research published by the ARC Centre of Excellence for Children and Families over the Life Course found its use correlated with <a href="https://www.lifecoursecentre.org.au/research/journal-articles/working-paper-series/do-welfare-restrictions-improve-child-health-estimating-the-causal-impact-of-income-management-in-the-northern-territory/" target="_blank" rel="noopener">reductions in birth weight</a>, falls in <a href="https://www.lifecoursecentre.org.au/research/journal-articles/working-paper-series/the-effect-of-quarantining-welfare-on-school-attendance-in-indigenous-communities/" target="_blank" rel="noopener">school attendance</a> and other negative impacts on children. These are significant findings. The research suggests several possible explanations for reduced birth weight, including income management’s potential role in increasing stress on mothers, disrupting financial arrangements within the household and creating confusion about how to access funds. <h2>Strong opposition</h2> Given the government’s talk of <a href="https://www.smh.com.au/politics/federal/anthony-albanese-s-speech-at-garma-festival-annotated-20220729-p5b5sp.html" target="_blank" rel="noopener">respect and reconciliation</a>, it’s hard to know why it would continue a program introduced as part of the Howard government’s racially discriminatory and widely criticised <a href="https://www.theguardian.com/australia-news/2017/sep/02/northern-territory-intervention-violates-international-law-gillian-triggs-says" target="_blank" rel="noopener">Northern Territory Emergency Response</a>. When the Morrison government attempted to move people in the Northern Territory from the BasicsCard onto the CDC, <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/CashlessCardTransition/Submissions" target="_blank" rel="noopener">First Nations</a> leaders were clear about how damaging the BasicsCard has been, and recommended <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/CashlessCardTransition/Submissions" target="_blank" rel="noopener">genuinely voluntary schemes</a> instead. As shadow minister, Linda Burney supported that position. “Our fundamental principle on the basics card and the cashless debit card [is that] it should be on a voluntary basis,” she <a href="https://www.theguardian.com/australia-news/2022/apr/19/cashless-welfare-labor-vows-to-end-compulsory-use-of-basics-card">said</a> earlier this year, adding: <blockquote> If people want to be on those sorts of income management, then that’s their decision. It’s not up to Labor or anyone else to tell them what to do. At the moment it’s compulsion and that’s not Labor’s position. </blockquote> Yet the legislation introduced into the house last week maintains compulsory income management via the BasicsCard, promising only consultation. It leaves the door wide open for continued compulsory income management. As social security minister Amanda Rishworth said in her second reading speech, the bill allows her: <blockquote> to determine, following further consultation with First Nations people and my colleagues, how the Northern Territory participants on the CDC will transition, and the income management arrangements that will exist. </blockquote> <h2>Policy from above</h2> We have learnt a lot from the CDC, including how government claims that communities can decide about who goes on and off income management are often used to legitimise the continuation of compulsory income management. Both the CDC and BasicsCard are ideas that were developed and lobbied for by the Australian political and business elite. They never came from the “community”. The BasicsCard was one of many measures implemented under the Northern Territory Emergency Response, which included the suspension of the Racial Discrimination Act and the use of the <a href="https://theconversation.com/ten-years-on-its-time-we-learned-the-lessons-from-the-failed-northern-territory-intervention-79198" target="_blank" rel="noopener">Australian Defence Force</a>. The CDC, on the other hand, was a key recommendation of mining billionaire Andrew Forrest’s 2014 <a href="https://www.niaa.gov.au/resource-centre/indigenous-affairs/forrest-review" target="_blank" rel="noopener">National Indigenous Jobs and Training Review</a>. Since it was introduced, Forrest and his Minderoo Foundation have advocated for its extension. The government used much-needed funding for local services as a sweeetener to gain communities’ agreement for the CDC to proceed. In some cases, the threat of <a href="https://caepr.cass.anu.edu.au/sites/default/files/docs/Working_Paper_121_2017.pdf" target="_blank" rel="noopener">funding cuts</a> was used in negotiations. In contrast, proposals from communities themselves for appropriate community- and Aboriginal-controlled services had long been overlooked. <h2>Real consultation?</h2> Governments routinely use “consultation” as a label for what are essentially information sessions, with no alternatives on the table, in an effort to signal broad-based support. In the case of the CDC, <a href="https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwi__I3yoKf5AhU9R2wGHSjBAuwQFnoECC8QAQ&url=https%3A%2F%2Fwww.aph.gov.au%2FDocumentStore.ashx%3Fid%3D9e59ccc9-b9e6-4fad-9fb6-2a992d84fd44%26subId%3D516467&usg=AOvVaw19C21P3oIBS4l5A1b2pr0R" target="_blank" rel="noopener">calls for the program to be aborted</a> or changed dramatically were long ignored. Those who were forced onto the BasicsCard as part of the intervention were not offered a consultation process by the Howard government. And now, the Labor government has also failed to embrace their views and opted for a path of more consultation. If Labor forces people to stay on the BasicsCard, what has it learnt from the CDC? Governments have spent more than $1 billion implementing the two failed compulsory income management schemes, and the new government has implicitly committed to spending more. Imagine what else this money could be going towards. This article originally appeared on <a href="https://theconversation.com/has-labor-learnt-from-the-failure-of-the-cashless-debit-card-188065" target="_blank" rel="noopener">The Conversation</a>. Image: Shutterstock

Legal

Why the government is persisting on cashless debit cards for welfare recipients

It would be nice if the “facts” being thrown around in the debate over the Cashless Debit Card were peer-reviewed, or even just evidence-based. Instead, there are <a href="https://www.anneruston.com.au/joint_media_release_expanding_the_cashless_welfare_in_hervey_bay_and_bundaberg">anecdotes</a>. And it’s these that are being used to justify the government’s decision to spend <a href="https://parlinfo.aph.gov.au/parlInfo/download/chamber/hansards/91962b64-398e-400e-ae19-98cf415623ec/toc_pdf/Senate_2019_07_31_7091_Official.pdf;fileType=application%2Fpdf">A$128.8 million</a> over four years continuing the existing trial of the cashless debit card in five sites in Western Australia, Queensland and South Australia and extending it to Cape York and all of the Northern Territory. The extension will lift the number of people on the card from 11,000 to 33,000. Most will be Indigenous people - its disproportionate targeting has already attracted the attention of the <a href="http://docs.wixstatic.com/ugd/b629ee_01e1002bbfc748459d2a323d278d9300.pdf">National Congress of Australia’s First Peoples and the Human Rights Commission</a>. The cashless card was recommended to Prime Minister Tony Abbott in a <a href="https://www.niaa.gov.au/sites/default/files/publications/Forrest-Review.pdf">report</a> from mining billionaire Andrew Forrest in 2014. He initially called it the “<a href="https://theconversation.com/healthy-welfare-card-begins-here-where-next-50756">Healthy Welfare Card</a>”. It wasn’t a new idea. Some A$1 billion dollars had already been spent on income management programs in the past, many of which had <a href="https://caepr.cass.anu.edu.au/highlights/evaluating-new-income-management-northern-territory-final-evaluation-report-and-summary">failed to meet their stated objectives</a>. It’s been tried before The biggest was the Basics Card introduced as part of the 2007 Northern Territory Emergency Response (the “<a href="https://en.wikipedia.org/wiki/Northern_Territory_National_Emergency_Response">Intervention</a>”) which was only made possible through the suspension of the Racial Discrimination Act. Research published by the Australian Research Council funded <a href="https://www.arc.gov.au/2020-arc-centre-excellence-children-and-families-over-life-course">Life Course</a> Centre of Excellence found its introduction was correlated with negative impacts on children, including reductions in <a href="https://www.lifecoursecentre.org.au/research/journal-articles/working-paper-series/do-welfare-restrictions-improve-child-health-estimating-the-causal-impact-of-income-management-in-the-northern-territory/">birth weight</a> and <a href="https://www.lifecoursecentre.org.au/research/journal-articles/working-paper-series/the-effect-of-quarantining-welfare-on-school-attendance-in-indigenous-communities/">school attendance</a>. It points to several possible explanations, including increased stress on mothers, disrupted financial arrangements within households, and confusion about how to access funds. The government has not addressed these serious issues. Instead, it now seeks to place those who have been left on the basics card for over ten years now, on to the cashless debit card. What was ‘Basics’ has become ‘Indue’ <img src="https://images.theconversation.com/files/167621/original/file-20170503-4096-12pb3xf.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" alt="" /> The 2016 Indue Cashless Debit Card. indue.com.au The “Indue” Cashless Debit Card trials underway since 2016 direct 80% of each payment to the card (<a href="https://www.niaa.gov.au/sites/default/files/publications/Forrest-Review.pdf">Forrest asked for 100%</a>) where it can only be spent on things such as food, clothes, health items and hygiene products. Purchases of alcohol and withdrawals of cash are not permitted. The trials are compulsorily for everyone living in the trial sites receiving a disability, parenting, carer, unemployment or youth allowance payment. My own research in the East Kimberley found it makes those people’s <a href="https://openresearch-repository.anu.edu.au/handle/1885/147866">lives harder</a>. Those targeted are a broad group needing support for a broad range of reasons, yet all are treated as if they have issues with alcohol or drugs or gambling. Most of the people on it do indeed have a common problem: that is trying to survive on meagre payments in remote environments with a chronically low supply of jobs. Of all the claims made for the card, the least believable is that it gets its users into jobs. What it does do is limit access to cash needed for day to day-to-day living. It makes it hard to buy second-hand goods, transport and (at some outlets) food, and can make living more expensive. For anyone actually struggling with addiction, it can’t substitute for treatment, a concern raised by medical specialists. While the government says the trials have been community-led, in reality consultation has been limited to a small group of people not subject to the card. When leaders in the East Kimberley who had agreed to the card <a href="https://www.theguardian.com/australia-news/2017/aug/23/aboriginal-leader-withdraws-support-for-cashless-welfare-card-and-says-he-feels-used">withdrew their support</a>, the government continued with the trial. Its success has not been established In addition to relaying on anecdotes, the government continues to cite a <a href="https://www.theguardian.com/australia-news/2017/sep/18/cashless-welfare-card-report-does-not-support-ministers-claims-researcher-says">widely condemned report</a> by <a href="https://www.dss.gov.au/about-the-department/feature/cashless-debit-card-trial-evaluation-final-evaluation-report">Orima Research</a>. Among others, the Australian National Audit Office <a href="https://www.anao.gov.au/work/performance-audit/implementation-and-performance-cashless-debit-card-trial">found this report was inadequate</a> to draw any conclusions from. Profiting from the Cashless Debit Card has been <a href="https://www2.indue.com.au/">Indue</a>, a private company whose <a href="https://nationals.org.au/our-team/federal-management-committee/">deputy chairman</a> up until 2013 is now the present President of the National Party, Larry Anthony. Indue’s involvement is helping to create a <a href="https://www.researchgate.net/publication/285590411_Is_the_Cashless_Welfare_Card_the_forerunner_to_a_Banking_Underclass">two tiered banking system</a> in which most people have a choice of financial providers, but those subject to the card are restricted to one, which provides a very different product to the others. Indue is also not a member of the Australian Banking Association, and so is not bound by the consumer protection provisions of its <a href="https://theconversation.com/the-new-banking-code-looks-impressive-but-what-will-it-achieve-120582">Banking Code of Practice</a>. The inquiry is due to report <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/CashlessCardTransition">next week</a>. Given the expensive and harmful consequences of the trial, it ought to find the extension is not justified. There are better ways to spend $128.8 million that would actually help vulnerable Australians.<img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/123763/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /> Written by Elise Klein (OAM), Senior Lecturer in Development Studies, University of Melbourne. Republished with permission of <a rel="noopener" href="https://theconversation.com/theres-mounting-evidence-against-cashless-debit-cards-but-the-government-is-ploughing-on-regardless-123763" target="_blank">The Conversation</a>.

Retirement Income

Could tap-and-go payments be costing you a fortune?

It’s fast become the main way Aussie are paying for purchases, but the consumer watchdog has issued a warning about the hidden payments associated with tap-and-go. The Australian Competition and Consumer Commission is reminding consumers that using a debit card at the checkout – whether you tap-and-go or even use a pin – can attract a fee similar to using credit cards. Dr Michael Schaper, deputy chair of ACCC, said businesses are within their rights to charge the underlying fees for using contactless cards but they must not charge higher than the cost of providing the service. "For most businesses there is a fee they're charged through their bank or their card operator," he told the <a href="http://www.abc.net.au/news/2018-04-26/tap-and-go-fees-on-rise-as-convenience-drives-up-costs/9691550">ABC</a>. "If you do tap and get hit with an extra charge, it is legal." Businesses are already allowed to pass on a 1 to 2 per cent surcharge on credit card transactions, but the fee charged by banks to process debit and eftpos purchases is much lower. "It really does require customers to make sure when they buy something they ask that question," Dr Schaper said. "I think too many of us probably don't because we assume we're not going to be charged for it." The Australian Retailers Association estimates tap and go costs merchants an extra $500 million a year.

Money & Banking

The ATM celebrates 50 years but we’re using it less

Steve Worthington is an Adjunct Professor at Swinburne University of Technology. As the Automatic Teller Machine (ATM) celebrates its 50th birthday, it’s actually being used less and less to withdraw cash in Australia. There are currently more than 32,000 ATMs across Australia and <a href="http://www.rba.gov.au/payments-and-infrastructure/resources/statistics/payments-data.html" target="_blank">cash withdrawals</a> in February 2017 were A$9,924 million, down 10% from the previous year and just above the total of February 2005. ATM’s (Automatic Teller Machines) were first introduced at the end of June 1967 and were welcomed by both bank customers and the banks themselves. This “hole in the wall” enabled customers to access their cash 24/7. The ATM’s self-service nature enabled the banks to reduce their costs, by closing bank branches, reducing opening hours and laying off staff. But the Reserve Bank of Australia’s <a href="http://www.rba.gov.au/publications/bulletin/2017/mar/7.html" target="_blank">2016 Consumer Payments Survey</a> reported that cards were used more often than cash for in-person payments, as well as online payments. This is facilitated by Australian consumers and merchants’ rapid adoption of contactless. The July 2017 changes to the level of merchant service fees for accepting payment cards might even further reduce our reliance on these machines. The changes should reduce surcharging and minimum spends for accepting cards (in theory) and we will then have even less reason to carry cash. ATMs will need to evolve to remain relevant, perhaps taking on other services entirely. Lots of cash, just not from ATMs Paradoxically, there has never been so much cash available in Australia. By April 2017 there were <a href="http://www.rba.gov.au/publications/annual-reports/rba/2016/banknotes.html" target="_blank">1.5 billion individual banknotes</a> on issue, an average of 62 notes for every Australian. The RBA has recently opened a new super bank vault to store <a href="http://www.rba.gov.au/about-rba/corporate-plan.html#7-banknotes" target="_blank">its contingency reserves of banknotes</a>. There are similar patterns in other countries. For example, the <a href="http://www.bankofengland.co.uk/banknotes/Pages/about/stats.aspx" target="_blank">Bank of England notes in circulation rose</a><a href="http://www.bankofengland.co.uk/banknotes/Pages/about/stats.aspx"></a> by 10% in 2016, the fastest pace in a decade. This is despite technological advances that now allow people to pay by contactless cards and digital devices, such as mobile phones. Why then is cash still so popular? The RBA’s <a href="http://www.rba.gov.au/publications/bulletin/2017/mar/7.html" target="_blank">2016 survey</a> concluded that cash is widely held as a store of value. If found 70% of respondents to the survey held cash in places other than their purses and wallets. The government’s <a href="https://www.google.com.au/search?q=black+economy+taskforce+interim+report&oq=black+economy&aqs=chrome.1.69i57j69i59l2j0l3.8227j0j4&sourceid=chrome&ie=UTF-8" target="_blank">Black Economy Taskforce estimates</a> that the Australian black economy is around 1.5% of GDP, or A$25 billion per year. Much of this is enabled by the use of hard cash, as opposed to electronic payments. <a href="https://www.amazon.com/Curse-Cash-Kenneth-S-Rogoff/dp/0691172137" target="_blank">Harvard professor Kenneth Rogoff wrote</a> that physical cash can facilitate corruption and tax evasion. In his view, many of the disadvantages of cash could be reduced if larger denomination notes were withdrawn from circulation. As an example, the Euro 500 note is due to be withdrawn from the end of 2018, however it may take more than this to reduce the underlying attraction of cash. There are many assumptions, attitudes and beliefs which legitimise and perpetuate participation in the black economy. Questioning these will require behavioural change from all citizens, according to the <a href="http://kmo.ministers.treasury.gov.au/media-release/040-2017/" target="_blank">Black Economy Taskforce’s interim report</a>. As an example, if someone else is avoiding GST by paying in cash, others might think “well if they are doing it, I would be a fool not to do it myself”. Other uses for the ATM These are services available to bank customers through their ATMs in countries other than Australia. For example, ATMs could be made more efficient by encouraging more customers to deposit cash into the ATM and then recycling that cash in the machine to be used by those seeking to withdraw cash. This would remove many of the costs and security risks of constantly replenishing ATMs with cash. Additional functions could be added to the ATM. In the United States you can buy postage stamps at the ATM; in Spain tickets to football matches; in Dubai bars of gold; in California fresh cupcakes and elsewhere fishing licenses and tax bills can all be accessed through ATMs. As regards customer security to ward off identity theft, biometric measures could make access to the ATM more secure. In Japan finger vein scanning is already in use in many ATMs. These developments could put ATMs in the forefront of an enhanced customer experience, giving the ATM reasons to survive for another 50 years. Written by Steve Worthington. First appeared on <a href="http://www.theconversation.com" target="_blank">The Conversation.</a><img width="1" height="1" src="https://counter.theconversation.edu.au/content/79847/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation"/>

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