An election promise to phase out the widely maligned Cashless Debit Card is primed to hit the House of Representatives today as a legislative amendment, with the Albanese government strongly flagging it will insource income management rather than trying to foist it onto resistant banks.
The effective abandonment of the politically engineered and functionally deficient financial services product draws a line under a decade of attempts to forcefully retrofit controls to payment instruments under the pretext of protecting vulnerable communities by removing cash.
Officially, ‘income management’ is staying in many of the areas where it has been applied, with mixed results.
The policy of increasingly strict financial controls has had polarising effects on communities often forced to choose between the invidious options of a paternalist whitelist of approved goods and services deemed safe or exploitative industries which thrive on dependency and addiction that have historically targeted marginalised and vulnerable communities.
In a sign of how seriously Labor views CDC as an aberrant solution, four ministers — minister for social services Amanda Rishworth, minister for Indigenous Australians Linda Burney, minister for government services Bill Shorten and assistant minister for social services Justine Elliot — formed an orderly queue to sound the scheme’s legislative death knell.
“Following extensive consultation in sites across the nation, the Government has today announced a suite of measures that empowers local communities and will assist in abolishing the cashless debit card program and ensure communities are better off,” the ministers’ joint statement said.
“The Government will abolish the cashless debit card program and make income management voluntary in Ceduna, East Kimberley, Goldfields and Bundaberg-Hervey Bay.”
The Basics Card, which runs on the EFTPOS network and does not have consumer-facing internet payment functionality, will be retained, with the government indicating it will look to its own technology stack, which has its own significant issues, for income and payment-management functionality.
That endeavour will come in the form of an “updated income management technology solution with an enhanced card linked to Services Australia” the government says, although it is unclear what card or payments platform the solution will use.
The government has traditionally used the Reserve Bank of Australia to funnel welfare payments into people’s bank accounts, with transactions now made via the New Payments Platform (NPP) following the giant Welfare Payments Infrastructure Transformation.
However, despite around $2 billion being spent to create the new infrastructure platforms, there is little functionality for payments made by consumers because the systems are essentially back-end overhauls rather than front-end ones, which is why card schemes were dragged into the income-management arena.
With the Reserve Bank relinquishing its stake in the NPP following the controversial forced amalgamation of BPAY, EFTPOS and the NPP last year, banks now have no real reason to give the government access to their infrastructure or to modify it unless there is regulatory intervention.
Notably, it’s very much a back-to-the-future approach in terms of solutions Labor is betting on to keep income management functioning in some form.
“Updated technology for people moving to income management will provide access to more merchants and facilitate BPAY and online shopping. Protections such as pin technology and consumer-driven product blocking will also be explored.”
Much of that functionality already exists on card payments rails but was shut off to restrict transactional capability for CDC holders, making the card only really useable at big merchants like major supermarkets who were dragged into supporting the product by the previous government.
How BPAY will fit into the new equation is also unclear given its deeply uncertain future following the forced merger of payments schemes.
In that respect, the government is adamant it is now calling the shots, pointing to its own delivery capabilities rather than industry or banks.
“Crucially, under the changes, all income management will be delivered by Services Australia. Individuals will no longer be required to deal with a private company for customer support functions,” the ministerial statement said.
“The measures will restore the role of Services Australia in income management and provide enhanced choice.”
What those choices will consist of remains to be seen.
Any feedback or news tips? Here’s where to contact the relevant team.