Response to Ms Macklin and Mr Neumann

The Hon Jenny Macklin MP
Shadow Minister for Families and Payments
Shadow Minister for Disability Reform
Parliament House
CANBERRA ACT 2600

The Hon Shayne Neumann MP
Shadow Minister for Indigenous Affairs
Shadow Minister for Ageing
Parliament House
CANBERRA ACT 2600

Dear Ms Macklin and Mr Neumann

Thank you for your letter of 9 October 2015 in which you expressed your desire for further information about the welfare debit card trial.

I am pleased to provide the information requested in the text below and the accompanying attachments. I will also place this information on my ministerial website.

Background to the Welfare Debit Card trial

As you would be aware, Mr Andrew Forrest presented his “Creating Parity” Report late last year. The Report outlined a series of recommendations to boost Indigenous employment and end the social and economic disparity between Indigenous and non-Indigenous Australians.

The Government has considered all of the recommendations and is already implementing many of them. For example, we have already announced significant changes to boost the demand for Indigenous employees, including boosting the Government’s Indigenous employment target; working with the top 200 companies to get them to be “parity employers” with respect to Indigenous employment; and most significantly, setting a Government procurement target. This target involves committing to provide three percent of all federal government contracts to Indigenous businesses by 2020.

The central recommendation of Mr Forrest’s report was the introduction of what he called a ‘Healthy Welfare Card’. The recommendation was for people on welfare payments to receive their payments via a debit card which allowed them to purchase anything, anywhere, but not alcohol or gambling products. The goal is to reduce the devastating harm that is caused by alcohol, gambling and drugs in some communities, paid for by welfare payments.

Earlier this year, the Government announced a trial of this concept in up to three locations. We were attracted to the concept of the debit card but wanted to assess its effectiveness in a small number of locations.

The Government is trialling the card based on evidence of welfare-fuelled alcohol, drug and gambling abuse devastating some communities. This abuse not only causes individual harm, but causes immense harm to the broader community, particularly women and children.

The assault rate against women in many locations is unacceptable, with much of it directly related to alcohol paid for by cash welfare payments. As Northern Territory’s Children’s Commissioner, Dr Howard Bath, notes: the rate of abuse of Northern Territory indigenous women “is enormously high and children are being exposed to this, resulting in very, very high rates of child neglect….Alcohol is the worst factor by a country mile….Between 60 and 70 per cent of violence is directly related to alcohol.”

You would have heard stories of there being no food on the table for children because one of the parents had gambled away all of the money on day one of the payment fortnight. In some cases, children cannot get to school because the noise associated with drunken parties keeps them awake all night.

This is not an issue specific to Indigenous Australians – we see this damage in communities all over Australia. It is an issue associated with the abuse of alcohol, drugs and problem gambling paid for by cash welfare payments.

The debit card trial (in concert with appropriate support services), provides a way of reducing some of this immense harm while still maintaining as much individual liberty as possible in the way a family spends their welfare payments.

People issued with the debit card will still receive exactly the same amount of money. The debit card would be an ordinary bank issued Visa or EFTPOS card – much like the card that many Australians carry with them every day. The debit card would automatically work everywhere to enable the purchase of anything, but could not be used to purchase alcohol or gambling, and cash would be limited.

What would this mean for a responsible income support recipient who is not a big drinker, drug taker or gambler? A responsible person would still be able to purchase everything they do presently, but with a debit card rather than cash. We acknowledge that this may be an inconvenience for some, but the potential upside is a community that is considerably safer. Fewer women could be bashed; children may be able to sleep better at night. Given this potential, we strongly believe that the debit card is worth trialling.

The Government also believes we have a responsibility to provide welfare payments in a way that does not cause damage to others.

The Government has always said that we would trial the debit card in locations which meet two criteria: first, where there is significant welfare fuelled alcohol or drug abuse, or high rates of problem gambling; and second, in locations where the community leadership is open to participating in a trial.

To date, Ceduna is the only confirmed trial site and we are having ongoing consultations with the East Kimberley communities. Ceduna very clearly satisfies the two criteria. All of the statistics point to a community which unfortunately has significant welfare fuelled alcohol and drug abuse, and high rates of problem gambling. The Government’s best estimate is the hospitalisation assault rate is 68 times the national average. The Sobering Up Centre in Ceduna last year had 4,667 admissions from a regional population of about 4,400. The Ceduna leaders themselves have made it very clear that alcohol is destroying too many lives.

As is outlined in further detail below, there has been tremendous support from the Ceduna leadership for the trial to proceed. Indeed, they have co-designed the trial with the Government and each of the community heads has signed a Memorandum of Understanding with the Government outlining the specifics of the trial.

This trial has a very simple objective: to assess whether a restricted debit card (with corollary services) can reduce the significant social harm caused by alcohol, drugs and gambling.

The South Australian Government is supportive of the trial.

In your letter you raised six areas where you sought further information or assurance. Let me address each in turn.

1. Consultation in trial sites

Every single aspect of this trial from conception, including design, support services, how it will operate, and what the card will actually look like, has been developed in consultation with the community leaders. It has been a genuine co-design process with the Ceduna community leaders. They have stated this publicly.

The Community Heads Leadership group and the Ceduna District Council have guided our consultations from the beginning. The consultation schedule was developed in consultation with both bodies and at least one of their members was in attendance at all sessions.

Each discrete community (Yalata, Oak Valley, Scotdesco, Koonibba) also formally endorsed the trial at their respective community council meetings. In Ceduna, the Ceduna Aboriginal Corporation’s board formally endorsed the trial as did the Ceduna District Council.

At the end of this initial consultation process, the leaders of each of the discrete communities and the Ceduna District Council signed a Memorandum of Understanding which outlines the parameters of the trial. The MoU is attached for your information at Attachment A. I have also attached (Attachment B) the press statement which was issued by the Community Heads Leadership group on the day of the signing stating:

We want to build a future for our younger generation to aspire to and believe we cannot do this if our families are caught up in the destructive cycle of alcohol or drugs that destroys our culture, our lands and our communities.

At the heart of this reform, is a change that is being shaped specifically to meet our local needs. It has been a true collaboration to ensure that we can give our mob and our Communities every chance to create real and genuine change in their lives.

We have grasped this initiative; we have helped shape this initiative; and we are confident that this initiative is for the betterment of all people within our region.

At the Senate Committee inquiry on 11 September 2015, officers of the Department of the Prime Minister and Cabinet tabled a comprehensive summary of consultations. I have attached a report that summarises the Ceduna consultations at Attachment C.

The Australian Government Departments of Social Services and the Prime Minister and Cabinet continue to meet weekly with the community leaders in Ceduna working through specific details of:

• how the card will function, right down to the look and feel of the card;
• extra supports which might be appropriate for the region;
• the establishment and operation of a community panel (as set out, specifically, in Sections 124PE and 124PK, of the proposed Bill);
• the evaluation strategy; and,
• communications.

As subsequent trial site/s are agreed and announced, this approach and a local co-design process will be established in those locations too.

2. Package of support services

The debit card will significantly reduce the amount of cash that is available for the purchase of alcohol, drugs and gambling. While reducing cash availability is vital, it is also important to have appropriate support structures in place to assist people to eliminate or reduce their dependence on these products.

To this end, I have worked with the state government and local leaders to ensure that the local service system can appropriately support the trial.

On Friday I announced the federal government’s support package to enhance existing services in Ceduna. The support package was developed in consultation with the signatories of the MoU and the South Australian Government.

The package focuses on areas where there are existing gaps in funding and where it has been identified locally that people are likely to need the greatest support during the trial.

The package includes funding to support a new mobile patrol team to operate 24 hours, experienced drug and alcohol counsellors, increased rehabilitation services, intensive financial counselling, family violence services and additional “diversionary activities” funded through the government’s Community Development Program.

This package is the result of many months of co-design with the Ceduna community. It reflects community-identified priorities in building local enterprises and generating employment opportunities.

Details of the support package is enclosed at Attachment D.

The South Australian Government is also committed to the trial and has been working closely with the Australian Government. At Attachment E is a letter from the South Australian Premier, the Hon Jay Weatherill, outlining the support that the South Australian Government is proposing to provide. I will continue to work with the Premier on these proposals and how they will best complement the Commonwealth supports.

Together, this represents a very comprehensive package to assist people to reduce or eliminate their dependence on alcohol, drugs or gambling and assist with better financial management practices.

3. An evidence based rationale for the trial.

This trial is a trial in the true sense of the word.

The Government has examined and considered all the evidence from income management and other similar programs both here and overseas.

We are embracing the positive learnings from income management, combined with new and different methods to support vulnerable communities in dealing with the scourge of alcohol and drug abuse and problem gambling.

Evaluations of income management have provided us with clear findings from the people on the ground, people who are living in communities with significant problems, that income management has helped them to improve their lives. This is particularly true for women who are bullied and harassed for money and children who frequently went without the basics of life before income management

Income management participants have reported that they feel a greater sense of control over their money, and have experienced reductions in financial stress. Housing stress levels have reduced and housing stability has improved for many people. Importantly though, some income management evaluations have produced mixed findings. The Government supports income management and believes it is a useful and important tool. However, the mixed evaluation findings means there is a need to try other options and solutions to address the issues faced by some communities.

The debit card trial has a very narrow objective as I outlined above: to reduce the social harm caused by welfare-fueled alcohol, drug and gambling abuse.

To reduce the rates of harm in communities, we are aiming to reduce the amount of cash available that could be spent on these items by placing a greater proportion of payments onto the card than was placed on the BasicsCard under income management. Income management normally restricts 50 percent, while the trial will restrict 80 per cent. This level was developed in consultation with communities.

However, the Welfare Debit Card will provide many beneficial features compared with the BasicsCard. First, it will be connected to mainstream payment platforms. This means that it will work everywhere in the country and online, unlike the BasicsCard which requires individual retailers to sign up to it.

Second, it will look and feel like an ordinary bank debit card which millions of Australians carry with them every day.

Thirdly, it will be much easier to get account balances. Indeed the tools which we are proposing will greatly assist people to budget and manage their payments over the course of the fortnightly payment cycle.

Finally, the Welfare Debit Card does not require Government management of payments. People will have complete discretion over their welfare payments with the only limits on alcohol, gambling and cash. Of course, the Government will encourage people to establish good financial management practices and will have experts on hands to assist.

The trial will run for 12 months. It will be robustly evaluated and importantly, it is being designed in partnership with the communities which will host it. That means it will be tailored to address local needs and incorporates local ideas about what will work. This includes elements such as the items restricted under the trial, the percentage of funds to be quarantined and the delivery mechanism of the card.

You asked why cigarettes and pornography are not excluded in the proposed trial. The trial has been agreed with community leaders. It has narrow objectives and we are determined to see the trial succeed. Sadly, pornography is now freely available online and impossible to prevent through a debit card. Our aim is to reduce the social harm from welfare dependence. Cigarettes will kill the smokers but do not impact the broader community the way that alcohol, ice and gambling do. Further, restricting cigarettes would make compliance more complex and expensive.

4. Operation and transition to the card.

Since the trial was announced, I have made it clear that the debit card will work just like a regular mainstream bank debit card, and be co-designed with the communities who elect to participate.

As with a regular bank debit card, participants will be able to pay bills online, check their balances online and over the phone, and access replacement cards if it’s lost or stolen. The card will be able to be used in all shops with EFTPOS facilities, and can be used to purchase anything they like with an exclusion on alcohol and gambling products.

The Department of Social Services and Department of Human Services are working together closely to ensure that people who are currently on income management will experience a smooth transition.

The Departments of the Prime Minister and Cabinet and Social Services are currently working closely with the Ceduna community to finalise guidelines to authorise a community body to have the power to adjust the settings of the card, as is envisaged under the Bill. That panel may take the form of a board of leaders but the specific arrangements will be negotiated with the communities.

Should an individual feel the card is too restrictive for them, they will be able to apply to that panel to have their cashless component adjusted down.

5. Evaluation framework

It has always been intended that there would be a full independent evaluation of the trial.

A proposed evaluation and monitoring framework is currently being tested with community leaders.

The evaluation will include both qualitative assessments (which will involve surveying people impacted by the trial), as well as quantitative assessments (such as the rate of hospitalisations due to assault, presentations to the local sobering up facility, domestic assault rates).

This framework will be developed and implemented with full consultation with the communities involved, and independent experts in evaluating social policy. The full, final framework will be made available once it is agreed and finalised.

6. Community support

As has been outlined above, and as you would be aware from your own discussions with many of the leaders in the community, there is strong support for the trial. I have also indicated throughout this letter that all aspects of the trial are being co-designed with the community.

This trial has been co-designed since the start and there will continue to be full cooperation with community leaders during the implementation process.

Conclusion

Ms Macklin, you are aware that this trial has strong support because you said it yourself in your address to the House of Representatives during the debate on the bill:

The community leaders have made it very clear to me–that alcohol abuse is continuing to devastate the lives of too many people and their families. I know the community is desperate. We cannot now turn our back on what they are telling us. We cannot tell them that they are on their own. Rather, all of us need to listen to their calls for help and do what we can to support them, to make sure that the change they so desperately need and want is delivered.

I hope that you do not now turn your back on the Ceduna leaders who are desperate to make a better life for their community by trialing a bold new measure.

The media stories that suggest that Labor may not support the legislation in the Senate have distressed some of the Ceduna community leaders. Three members are coming to Canberra on Monday and Tuesday to stress that they want this trial to proceed. I hope you will meet with them personally and repeat what you said in the House of Representatives.

The issues you raise have been given much attention throughout the planning and engagement with community leaders. Passing this Bill now will demonstrate bipartisan support for communities’ decisions to stand up to make a change and address issues of violence, harm and dysfunction which arise from welfare-fueled alcohol, drug and gambling abuse.

Yours sincerely

ALAN TUDGE