Australia’s newly-elected Labor government has announced plans to abolish a controversial Cashless Debit Card (CDC) that was designed to prevent welfare claimants from spending on gambling and alcohol.
Last week, the Labor government headed by Anthony Albanese, Australia’s new Prime Minister, revealed details on how it plans to phase out the CDC.
After launching in several regions in three states as part of a trial process begun in 2016, most CDC users will be able to transition to a new voluntary model as of October 4 this year.
The voluntary system is also built around a card issued by Services Australia, an arm of the Department of Social Services, but welfare recipients may opt not to use it and receive their payments by bank transfer instead.
In a statement, the Labor Party said the changes will affect about 17,300 individuals in areas that plan to transition to the new voluntary system. And in the meantime, no new users will be added to the compulsory CDC programme.
The move represents an early promise delivered by the Labor Party, which had pledged to abolish the CDC as part of its election manifesto prior to their victory in May this year.
However, legislation must first be passed to formalise the proposed changes. That legislation is expected to move through the Australian Senate this week, after being delayed due to the death of Queen Elizabeth II.
A six-year social experiment
The CDC programme was initially pursued by the Australian government in an effort to promote “socially responsible” behaviour among welfare recipients.
For welfare claimants in CDC areas, between 50 and 80 percent of their welfare payments were accessible only through the CDC, while the remainder could be withdrawn as cash using a separate bank card. This was known as “income quarantining” or income management.
The CDC allowed users to make payments at all merchants that accept Visa or eftpos, including overseas, and that sell non-restricted items.
The only time the CDC could not be used was for the purchase of alcohol, gambling products or cash-like gift cards. It could also not be used to withdraw cash.
CDC users could make purchases online using most online retailers; however, if a retailer sold both restricted and non-restricted items, such as eBay, CDC acceptance would be blocked.
From time to time this was a grey area, however, and would have to be negotiated by the retailer and Services Australia.
Supermarkets that sold food as well as alcohol was one such grey area, but bars — which meet the criteria of “primarily” service alcohol — would be blocked.
Last week, the Labor Party reiterated its position that any system which forcibly restricts what welfare claimants can spend their money on “strips them of their dignity”.
However, the conservative Liberal Party, which was in power when the CDC was first launched, insisted that the restrictive nature of the card has helped to prevent alcoholism, gambling addiction and domestic violence in communities where welfare use is more common.
Ultimately, the Labor government said it plans to roll out its new voluntary income management system to all 24,000 people who are currently connected to the CDC system nationwide.