Normal text size Larger text size Very large text size In 2014, billionaire miner Andrew Forrest handed a report on Indigenous employment and training to the federal government. Recommendation five of 27 was a Healthy Welfare Card – a card that "directs spending to purchases that sustain and support a healthy lifestyle for the recipients and any children of the recipients". By 2015, the government was prepared to trial the card. Now they are talking of rolling it out nationwide. So what is the card and what is its purpose? How does it work and has it achieved its aims so far? Cashless card trials have been running since 2016. Credit: What are cashless welfare cards? The cashless welfare card is a debit card issued to people on welfare. Most welfare payments go onto this card instead of into a recipient's regular bank account. The card cannot be used to buy alcohol, gambling products (excluding lottery tickets and scratchies) and gift cards that allow users to buy alcohol or gambling products. It cannot be used to withdraw cash.


Trials have been run since 2016 in the Ceduna region in South Australia, East Kimberley and the Goldfields region in Western Australia, and in Bundaberg and Hervey Bay in Queensland. In Queensland, the trial applies only to people aged 35 years and under receiving Newstart, Youth Allowance or a parenting payment. The cards don't cover all of a person's welfare payments: 80 per cent are restricted to the card and 20 per cent are paid to the person's usual bank account. To ensure card users do not end up with more than 20 per cent of their welfare in cash, welfare bank accounts limit the amount users can transfer to their own (unrestricted) bank accounts to $200 every 28 days. Prime Minister Scott Morrison in Parliament in September. Credit:AAP What is the government's vision for the cards? Prime Minister Scott Morrison is eyeing a national rollout of the cards as part of his self-described "compassionate conservative" welfare agenda that also includes trialling drug-testing of welfare recipients. Compassionate conservatism is a term that caught public attention when it was used by United States President George W. Bush in 2000. "I felt compelled to phrase it this way," the former president said in 2018, "because people hear 'conservative' and they think heartless. And my belief, then and now, is that the right conservative philosophies are compassionate and help people." The term was later picked up by former British prime minister David Cameron and former New Zealand prime minister John Key.


Mr Morrison believes that the best form of welfare is a job: "Welfare is about helping people to become self-sufficient, in my view, where you're able to do that," he said in early September. "And where you're not, to make sure you're providing that support to be able to deliver, you know, a good life. And that's hard to do when you're completely income-dependent on the government." Labor argues that the government is choosing politics over policy. "[Mr Morrison] thinks it's a clever political battle with Labor," says Labor's industrial relations spokesman, Tony Burke. "It won't create a job. It humiliates people. It's not a sensible policy." Not everyone likes the card in the South Australian town of Ceduna, where it has been trialled since 2016. Credit:Alex Ellinghausen Greens social services spokeswoman Rachel Siewert says it's an argument "based on ideology rather than evidence". "People on the card talk about frustration, anger, depression. They're upset. They also think it's demonising and stigmatising," she says. The federal government will spend $129 million to expand the trial to include roughly 22,500 welfare recipients in the Northern Territory and Cape York from April 2020. How do the cards work in practice? When the trials began, welfare recipients were delivered debit cards in the mail with instructions on how the new program would work. The government places businesses that sell alcohol or gambling products into one of two categories: blocked merchants and mixed merchants.


At blocked merchants, people on the cashless welfare program have their cards denied if they try to purchase something. Most mixed merchants – mainly businesses such as cafes and supermarkets that mostly sell unrestricted goods – are required to have a separate EFTPOS machine for processing purchases with cashless welfare cards. Loading Replay Replay video Play video Play video Who administers the cards? The government has hired Indue, a company previously criticised because The Nationals' former president Larry Anthony lobbied on its behalf, to issue the debit cards. Indue's pilot program contract was worth $7.9 million. How much is all this costing? Figures on the cost of a nationwide rollout have not been revealed. The government put aside $129 million in this year's budget for an expansion of existing trials. Documents obtained under freedom of information laws in 2017, when the trial involved only 2000 participants, revealed that it would cost $18.9 million over two years – or about $10,000 per person.


The government spent $2.6 million on administrative costs, and an additional $2.6 million on support services – such as drug and alcohol rehabilitation centres – that were boosted alongside the card trials. Have the cards achieved their purpose so far? Very little concrete evidence on the program is publicly available. The government, using private company Orima Research, completed an interim evaluation of the program at the beginning of 2017 that said participants were drinking 41 per cent less frequently, gambling 41 per cent less frequently, and using illegal drugs 48 per cent less frequently. But these results are contested. Critics point to an Australian National Audit Office report from June last year that found it was "difficult to conclude" where social harm had been reduced due to a "lack of robustness in data collection". The report also said the government's "approach to monitoring and evaluation was inadequate" and ignored how much the program may cost. A second trial evaluation, run by the Future of Employment and Skills Research Centre at the University of Adelaide, is under way. Meanwhile, groups such as the Australian Council of Social Service have accused the government of wanting to expand an ineffective, expensive program that stigmatises people on welfare.


The federal government has pointed to a drop in youth unemployment at the Queensland sites as early evidence that the trials work. Youth unemployment in Wide Bay – the region that encompasses Queensland trial sites – has fallen from 19.8 per cent to 18.5 per cent since January, a decrease critics say is too small to mean much yet. Loading In August, Social Services Minister Anne Ruston said the number of people on Newstart or Youth Allowance in Hervey Bay and Bundaberg dropped in the first six months of the trial from 5779 recipients to 5277. But in the South Australian town of Ceduna (district population: 3400), the top drug and alcohol treatment centre, Stepping Stones, had 14,746 client contacts in the 2015-16 financial year – and 18,190 in 2018-19. "I keep hearing the rhetoric from the government about how successful these trials are," South Australian Aboriginal Drug and Alcohol Council chief executive Scott Wilson, who oversees Stepping Stones, said. "We've sort of said, from our point of view, people obviously still have access to alcohol."