Income Management in Western Australia: Impacts and Outcomes VCOSS Income Management Forum 28 March 2011 Sue Ash Chief Executive Officer, WACOSS

WACOSS is the leading peak organisation for the Western Australian community, representing 300 member organisations and individuals, and over 800 organisations involved in the provision of services to individuals, families and children in the community. WACOSS is part of the national network consisting of State and Territory Councils of Social Service, and the Australia Council of Social Service (ACOSS). Since November 2008, the Australian Government has implemented a trial of two separate measures of income management in the Kimberley region and metropolitan area of Perth. WACOSS maintained a strong interest these trials and the implementation of income management more broadly in Australia. About WACOSS and the COSS network

Income management in the Northern Territory and Western Australia: An Overview According to the Australian Government, income management is: “the key tool in the Government’s broader welfare reforms, delivering a welfare system based on principles of engagement, participation and responsibility”.

Income management : An Overview Compulsory income management was initially introduced as one component of the Northern Territory Emergency Response (NTER). The Northern Territory Emergency Response investment included $1.2 billion in resources and $572 million in Indigenous housing, and $72.7 million to implement the Australian Government Child Health Check (AGCHC) initiative. As part of the NTER, the Racial Discrimination Act was suspended. This was reinstated in November An expansion of the income management scheme followed in July 2010.

Income management in the Northern Territory and Western Australia: An Overview The current expanded Northern Territory scheme applies to: –Disengaged youth aged 15-24; –Long term welfare recipients ; –Individual ‘vulnerable’ welfare recipients; and –Clients of child protection authorities (as in WA) Includes Voluntary Income Management

Income management : An Overview The Western Australian models of income management are quite different to the Northern Territory model Two schemes trialed in the Kimberley region and metropolitan Perth: –Child Protection Scheme of Income Management (CPSIM) –Voluntary Income Management (VIM) ORIMA evaluation of the Western Australian income management trials aimed to assess: –The impact of income management in improving child wellbeing; –The impact of income management on the financial capability of individuals; and –The effectiveness of implementation

Income management in the Northern Territory and Western Australia: An Overview Child Protection Scheme of Income Management –approximately 328 families involved in the scheme from commencement to 30 April 2010 –Families who are at risk of, or have found to have abused or neglected their children can have 70% of their income managed by Centrelink – Clients can be referred for financial counseling, but are not obliged to attend –20% of CPSIM clients had been referred to financial management services –Around three quarters of CPSIM clients (74%) reported that they had been unable to pay for at least one essential item prior to income management –Around 48% of CPSIM clients reported that they were unable to pay for an essential item since they had exited the program

Income management in the Northern Territory and Western Australia: An Overview Voluntary Income Management –Approximately 803 clients have participated from commencement to 30 April 2010 –Clients attend an initial interview with Centrelink –There are no end dates on VIM arrangements, however, clients cannot exit the program within the first 13 weeks –VIM clients can also be referred by Centrelink for financial counseling –13% of VIM clients had been referred to financial management services

Impacts of the income management schemes: Concerns about the Northern Territory income management programs: The Australian Institute of Health and Welfare’s (AIHW) final evaluation report indicated data quality issues. (August 2009) An independent report released by the Australian Indigenous Doctors Association (AIDA) found that compulsory income management had profound long-term negative impacts on psychological health, social health and wellbeing and cultural integrity. (March 2010) The Menzies School of Health Research found that income management led to no sustained change in the sales of healthy food, soft drink or tobacco.

Impacts of the income management schemes: WACOSS has consistently questioned the legitimacy of compulsory income management for a number of reasons, including: –Curtailment of civil and economic rights –Direct and indirect discrimination towards Indigenous communities and individuals –Costs versus benefits –Potential negative financial, emotional and social impacts on clients

Impacts of the income management schemes: The role of stigma The role for support services in obtaining improved, sustainable financial capability Lack of engagement or dis-engagement of Centrelink clients placed on income management Lack of empowerment of clients Income management as a destination, not a pathway Does income management really improve child wellbeing?

Impacts of the income management schemes: Unintended consequences Compulsory income management will not necessarily trigger positive, sustainable behavioral change. the demographic of people facing hardship, and the complexity of their problems, may continue to grow. Clients may obtain money in other ways

Income management impact on community sector organisations: Increased pressure on community services Greater pressure on community services in WA that may be utilised to support a greater number of individuals and families transitioning to these arrangements. These include family and relationship services, drug and alcohol treatment facilities, mental health services, homeless services, emergency relief, and domestic and family violence shelters.

Cost versus Benefit $350 million over four years to expand the program in the Northern Territory with 20,000 Territorians affected. Commonwealth to support the program with financial counseling and money management services, totaling $53 million over four years. No extra investment by the Commonwealth in family or other support services.

Cost versus benefit CPSIM in Western Australia costs approximately $19m per year Approximately $65,000 per family How has this $65,000 enhanced a family’s situation, or reduced their living costs on a day to day basis? For the cost of the income management scheme we could have doubled the number of those Centres and rolled them out across the regions. Wouldn't this have had a much more sustained benefit for families?

Income management is only part of the solution Compulsory income management is not a solution on its own. It may be a useful circuit breaker, but is not a long term, sustainable solution Vulnerable families need access to parenting and health services, financial support, and affordable, good quality childcare, especially in rural, regional and remote locations Services need to be sustainable, targeted, accessible, well-managed and appropriate to need.

Income management is only part of the solution Compulsory income management may yield some short terms benefits for a few individuals Need careful analysis of the risks Aim for long term solutions that address the root cause of disadvantage and work with people to make positive changes to their lives. An alternative approach to reducing poverty, social disadvantage and deprivation. Complex social problems cannot be solved with simple policy interventions.