The federal government is spending up to $18.9m to trial the cashless welfare card for fewer than 2,000 people.



Data published by the Department of Social Services under freedom of information reveals that is the “estimated maximum” cost of the trial.



The trial involves about 1,850 people, according to the most recent evaluation, published in February, although it had about 2,000 participants in October.

The program has cost the department $2.6m in administration costs and the private firm providing the cards, Indue, is on a $7.9m contract.

The government has paid $1m and $1.6m for wrap-around support services in Ceduna (South Australia) and the East Kimberley respectively.

The Australian Council of Social Service said the government was continuing the program at an extraordinary cost, despite the lack of reliable evidence of its effectiveness.

Its chief executive, Cassandra Goldie, said the money should be diverted to investing in proven support services.

“The cashless debit card costs around $10,000 a year per participant to administer, when the person themselves is receiving a meagre $14,000 a year in Newstart payments. How on earth is this good value?” Goldie said.

“What we spend on this card would be much better spent on investing in services and supports that have a far stronger evidence base of being effective in addressing individual and community needs.”



The Greens senator Rachel Siewert said the trial was an “ideological waste of money”.

“That money should go towards wrap-around services, supports and programs for people struggling with drug, alcohol and gambling addiction and tackling the underlying causes of disadvantage,” Siewert said. “People who work in drug and alcohol services for people in struggling communities have plenty of ideas on how that money could be better spent.”

Twelve-month trials began in Ceduna in March last year and the East Kimberley towns of Kununurra and Wyndham in April last year.



The program restricts the way welfare recipients can spend 80% of their social security, which cannot be withdrawn in cash or used to buy alcohol or gambling products. The remaining 20% can be withdrawn in cash.

The trials were extended in March and the human services minister, Alan Tudge, has signalled the government’s intention to expand the use of the cards. Tudge told the ABC last month he was consulting different regions to gauge their interest in the card.

The government has relied largely on a review of the trials, conducted by Orima Research, as proof of its success. The review found the cards to be effective in reducing alcohol and drug use and gambling. It also found that almost half of the participants felt the card had made their lives worse.

The card was also in use in areas where significant and concurrent investments were being made in separate support services. The Greens said that made it difficult to draw any concrete conclusions about the program’s success.

“We need preventative measures that go to the root of the problem, we need job programs that actually move people into meaningful employment and we need to be encouraging community engagement so people don’t feel so isolated,” Siewert said.

But the government said the program required large up-front costs, including the development of IT, co-development of the card with local communities and merchants, consultation and expert input.

The human services minister, Alan Tudge, said there were economies of scale involved in the cashless welfare card system.

“The actual running costs of the card are a fraction of the up-front costs and we expect those costs to continue to reduce in the normal operating years following implementation,” he said.

Tudge said the card, by reducing alcohol use among 20% of participants, also generated savings that more than covered the running cost of the card.

“That’s before you consider things like the reduced cost of family violence, poor school attendance and other related problems,” he said.

“We are already seeing significant positive results from the card with around a quarter of participants reporting they are drinking less alcohol, a third are gambling less and a quarter are using less drugs.”