Magazine of Socialist Action in Australia

Poor hit hardest by cashless welfare changes

Reading Time: 3 minutes

The Turnbull government is trialling a new cashless welfare card in three rural towns in preparation for a planned national roll out next year. The so-called Healthy Welfare Card is designed to restrict spending by welfare recipients to basic essentials like food, clothes, rent and utilities, and can only be used at certain government-approved vendors.

In addition, it cannot be used to gamble or purchase alcohol. Under the plan, initially proposed by mining billionaire Andrew Forrest and fully supported by the Labor Party, welfare recipients receive only 20% of their payments in cash and must use the card for the other 80%.

While the card is being touted by the government as a solution to drug and alcohol abuse, research has shown that compulsory income management schemes like the Healthy Welfare Card do not actually address these issues. A similar cashless welfare system called the BasicsCard was rolled out to 73 Aboriginal communities as part of the racist Northern Territory Intervention in 2007, and expanded to other parts of the country over the following years.

However, a three-year review commissioned into the BasicsCard by the Department of Social Services found in 2014 that welfare quarantining did not reduce alcohol consumption or lead welfare recipients to save their merger payments any more effectively. The report led news outlets to brand the BasicsCard, which has cost more than $1 billion to implement since 2007, an “expensive failure”.

The problems however do not end there. A 2011 study by the Australian Law Reform Commission into family violence found that victims of domestic abuse are less likely to come forward to authorities when their vulnerable circumstances could lead to the imposition of compulsory income management. Restriction of personal finances via income management makes it much harder for victims to flee violent relationships.

Most small businesses and some landlords do not accept cashless welfare cards as payment, and there are numerous reports of individuals having difficulty paying for simple mundanities like bus fares that could mean the difference between life and death in a situation of domestic abuse.

The government’s real motivations for implementing the Healthy Welfare Card are clearly unrelated to dealing with social problems. Big businesses like Coles and Woolworths benefit greatly from being on the list of approved vendors for cashless welfare, allowing them to essentially hold a monopoly on unemployed and vulnerable people’s spending.

Additionally, the inconvenience and social shame associated with cashless welfare is a way of discouraging low income earners from seeking welfare payments at all and forcing them back to work for poverty wages.

This makes it easier for the government to carry out the dismantling and privatisation of the welfare state, as well as providing big business with a pool of cheap labour that they can use to drive down wages for everyone else. It fulfils the dual aim of reducing the budget deficit and pleasing their big corporate backers.

By cloaking these regressive measures in the language of individual responsibility, the government can present these attacks on the poor as simply practical reforms to curb substance abuse. Drug and alcohol abuse are real problems, but they are symptoms of a broader crisis of jobs, affordable housing and access to services throughout Australia.

The fact is that there are not enough jobs to go around, and both major parties are fully committed to passing the costs of an economic downturn onto ordinary people through further government spending cuts and tax hikes.

The capitalist profit system is incapable of solving society’s worsening social issues. We need to fight for massive amounts of public investment to create sustainable, socially useful jobs and provide decent welfare and social services for people in need.

There is more than enough wealth in society to pay for all of this, and for every person to have a living wage and somewhere to live, but this wealth is horded away by the rich. Only by breaking with capitalism and building a socialist society can we create a system that truly meets people’s needs.

By Jeremy Trott


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