22nd Jun 2023, 12:49 PM – Senate Social Security (Administration) Amendment (Income Management Reform) Bill 2023 - Second Reading - Agree with bill's main idea

The majority voted in favour of a motion to agree with the main idea of the bill. In parliamentary jargon, they voted to read the bill for a second time. This means they can now consider it in greater detail.

What does the bill do?

The bills digest provided the following key points on the bill:

• Enhanced Income Management (eIM) is a hybrid welfare quarantining regime which has replaced the Cashless Debit Card (CDC) regime. The Bill proposes to also replace the existing Income Management (IM) regime with eIM. Welfare quarantining restricts the way a portion of a social security recipient’s payment can be spent.

• eIM is a hybrid regime in that it reflects the policy and legislative framework of the existing IM regime but uses an identical technology platform as the CDC regime to operate.

• The Bill proposes to:

• extend the eIM regime to include all the measures currently covered by the existing IM regime

• allow individuals currently subject to the IM regime to voluntarily move onto the eIM regime

• close the existing IM regime to new entrants and move all new individuals subject to welfare quarantining onto the eIM.

• The Bill will allow the Minister to extend eIM compulsory and voluntary measures to new locations via legislative instrument, although the Explanatory Memorandum states there is no intention to expand the ‘Long-term welfare payment’, ‘Disengaged youth’ and voluntary measures.

• The Government does not appear to have settled on a long-term plan for the future of welfare quarantining. The Government has stated its preferred option is a voluntary welfare quarantining scheme (except in Cape York) with the option to allow for communities to make referrals for compulsory welfare quarantining. A consultation process is ongoing.

How is this SmartCard different to the Cashless Debit Card (or Indue Card)?

Short answer: we're not sure.

The parliamentary library included a good discussion of the similarities and differences of the different welfare quarantining systems in the bills digest, but noted that:

This Bills Digest was produced at short notice to assist early consideration of the Bill. It provides an overview of some of the policy issues raised by the Bill as well as background information to help readers understand the policy context. The Digest does not include a detailed discussion of the Bill’s provisions nor does it canvass the views of stakeholders.

When comparing the systems, the bills digest explained the differences the following way:

The platform is essentially identical to the one used in the CDC regime. Former CDC participants will have the same welfare restricted bank account and can continue to use the same card. Eventually, CDC participants will be issued with a new card. This will look different and will have a new name: the ‘SmartCard’. As with the CDC and the BasicsCard, the banking services attached to the SmartCard—including the bank account itself, the physical card and the connection to financial systems—are provided by Indue. DSS officials told Senate Estimates in February that those moved from the CDC to eIM would keep the same bank account.

As the Traditional Credit Union (TCU) explains to card holders, restrictions on the card have changed (a policy change) but the differences between the CDC and the new SmartCard are its colour and its name. The new restrictions are pornography and tobacco purchases (restricted under IM but not the CDC).

One further difference is that no interest is accrued on funds in the restricted bank account.

The Bill brings all the existing IM measures into the new eIM regime’s legislative framework. One feature of this, is the ability of the Minister to add new locations through a legislative instrument. Unlike the CDC regime, there is no sunset clause and no need for the Minister to amend the Act to expand eIM.

With the Bill’s proposed amendments, the eIM regime has the potential to be easier for Government to expand than either IM or the CDC. It will combine IM’s less restrictive legislative framework with the CDC easier to expand platform.