The federal government is in talks with banks about a controversial proposal to issue welfare recipients with a card that would ensure they used their benefits for things like food and clothing and ban spending on gambling and alcohol.
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The proposal was recommended by mining magnate Andrew Forrest in his review of indigenous employment and training, released in August. The government has been examining Mr Forrest's 256-page report, which also suggested parents lose family payments if their children wagged school and tax-free status for innovative indigenous businesses.
Mr Forrest's welfare management scheme would see all welfare payments to all Australians, other than age or veterans' pensions paid into a savings account, which could be accessed by a "health welfare card". It would be fully redeemable at any Australian shop that accepts Visa and MasterCard with electronic and EFTPOS payment facilities.
This would direct "spending to purchases that sustain and support a healthy lifestyle for the recipients and any children … and to savings for larger expenses". It would require the government to work with banks to issue the card using debit card technology.
When the report was handed down, Prime Minister Tony Abbott said the government had "no plans" to expand welfare quarantining as widely as Mr Forrest had recommended.
On Thursday, Department of Social Services head Finn Pratt told a Senate committee that the government had been talking to banks about the mining magnate's suggestions.
He would not give any detail of the banks' response, but said the issue of what it would cost banks to run the a healthy welfare card scheme had been raised.
Mr Pratt said the government had not made a decision, while another senior official, Barbara Bennett said the department had not been asked to do any modelling on the healthy welfare card.
This comes after Alan Tudge, parliamentary secretary to the Prime Minister Alan Tudge, told ABC radio earlier on Thursday that he would be having "further discussions in weeks ahead with the banks in relation to [the card's] technical feasibility, its practicalities and its costs".
He said the idea behind the card would be to prevent the "absolute destruction" which alcohol is causing in some communities.
More than 20,000 Australians currently have their incomes managed voluntarily or compulsorily around Australia in places including the Northern Territory, Perth, the Kimberley region, South Australia and Cape York, with trials in local government areas, including Bankstown, Greater Shepparton and Ceduna.
Some welfare recipients have their incomes managed to deal with issues around child protection, financial hardship and drug and alcohol dependency. Other people have their incomes managed simply because they have been on a particular benefit - such as Youth Allowance - for three of the previous six months.
The current schemes, which were introduced by Coalition and Labor governments, quarantine at least half of a person's payment for necessary items and prevent spending on things such as alcohol, cigarettes, home brew kits and pornography. At this stage, the various schemes are due to end in mid 2015 and mid 2016 and the government is considering its next move in the area.
Welfare groups have warned that increasing controls around how people spent their welfare payments could backfire, arguing that existing controls already cost the Commonwealth $1 billion without producing results and stigmatise people on low incomes in the process.
But earlier this month, an evaluation found that in the Anangu Pitjantjatjara Yankunytjatjara Lands of South Australia, the introduction of voluntary income management had helped people with chronic financial management problems. Another evaluation of trials around Australia found some people who volunteered for income management were less likely to run our of money for food and accommodation.
Greens senator Rachel Siewert said forced income management was not fair and "not the right way to treat people".
"We know it has a detriment impact on people's sense of control over their decision making."
She added that Mr Forrest's proposal would not be cost neutral to the banks.
The government will consider the Forrest recommendations together with the McClure review into the welfare system, which is due to be completed in November.
