Cashless debit card scheme has overwhelmingly negative impact on users, study finds

By Shannon Jenkins

Wednesday February 26, 2020


The government’s cashless debit card scheme has come under the microscope in new research which found restricting how social security payments can be spent has a “disabling rather than enabling effect” on the lives of recipients.

The study into Compulsory Income Management policies in Australia involved 114 interviews conducted at Playford, Shepparton, Ceduna, and Hinkler, and a survey of 199 people at income management sites nationwide.

The University of Queensland’s Professor Greg Marston said the majority of participants using the government’s BasicsCard or Cashless Debit Card “faced additional financial challenges” rather than stability.

“Many also found their expenses had increased as they were blocked from participating in the cash economy and burdened with new fees and charges,” he added.

Overall, 87% of survey respondents participating in the scheme did not see any benefits, while only 13% thought there were some advantages. The most frequently cited challenge was not having enough cash to pay for essential items, at 86% of respondents.

Respondents also identified difficulties with providing for family members, and difficulties with paying rent and bills.

The study uncovered an “overwhelming number of negative experiences”.

“Many of these relate to program design and implementation issues, or concern the feelings of stigma, shame and frustration that result from being caught up in a set of policies that are perceived as unnecessary, unhelpful and/or harmful,” the report stated.

Marston noted there has been a push to extend the Cashless Debit Card across the Northern Territory, despite the policy having “weakened many participants’ financial capabilities and autonomy”.

“To manage their finances, many participants have become reliant on family members, service providers or automatic payment systems,” he said.

Income management was introduced in 2007 as part of the federal government’s controversial Northern Territory Emergency Response. It has since been trialled in other jurisdictions to target “welfare dependent” groups in a bid to increase employment participation.

Dr Michelle Peterie said the voices of Cashless Debit Card and BasicsCard users have “frequently been lost or ignored in the policy debate”.

She argued the social, emotional and economic costs of the policies outweighed the benefits.

“The overwhelming finding is that compulsory income management is having a disabling rather than enabling effect on the lives of many social security recipients,” she said.

“This was true across all of our research sites.”

Marston said a policy approach that focused on providing employment and training opportunities and ensuring accessible social services and affordable housing would be a better starting point for creating healthy, economically secure and socially inclusive communities.

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