An Australian experiment with conditional welfare ─ findings from the evaluation of Income Management in the Northern Territory

1 October 2013

Rob BrayResearch School of EconomicsANU

Introduction

• A brief overview of– Australia’s welfare system– The Northern Territory– Indigenous Australians

• The evaluation of New Income Management (NIM) in the Northern Territory

2

Australia’s welfare system

• Effectively universal needs-based, non time-limited income support payments, but:

– Categorical (Age/Disability/Parent (child

The Northern Territory• Self-governing territory – but with

strong federal powers• 237,000 people (1% of Australia)• While 49% live in Darwin & 12% in

Alice Springs – rest remote• 27% Indigenous (Nationally 2.3%)

– 50% of NT is Aboriginal land• 62% of Income Support recipients

in NT are Indigenous

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Indigenous AustraliansIndigenous Non-

IndigenousAustralia NT

Male Life Expectancy at birth (years) 67.2 61.5 78.7Child mortality (per 1,000) 7.8 12.2 4.0Year 7 literacy (% reaching national standard for reading) 76.6 40.4 95.9Completed high school (Yr 12)(per cent of 20-24 year olds) 45.4 23.6 88.1Employment to population ratio 46.4 37.9 62.2Age standardised imprisonment rate (per 1,000 persons) 18.9 17.3 1.3

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The evaluation• Nature of the evaluation• History, objectives and characteristics of

income management– Northern Territory Emergency

Response (NTER)– Closing the Gap

• Findings of the evaluation

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Evaluation of NIM • Consortium SPRC, ANU, AIFS• First report published in

November 2012– Bray (ANU)– Gray (ANU)– Hand (AIFS)– Bradbury (SPRC)– Eastman (SPRC)– Katz (SPRC)

• Detailed evaluation framework• Multi-stage to 2014

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The evaluation – first report• Data for first stage

– Administrative – DHS unit record files– Quantitative & qualitative surveys of intermediaries

(stores, financial counsellors, child protection workers, DHS staff, etc.)

– Quantitative & qualitative surveys of people on IM• 818 in NT and 305 in contrast sites • Urban and selected communities, over sampling

of non-Indigenous• Designed to be longitudinal

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What is Income Management (IM)

• Quarantining 50% of income support and family payments

• Quarantined money to be spent on “basics”– No alcohol, tobacco, pornography, gambling

• Money is:– Allocated to a BasicsCard– Payments on behalf of the person– Payments to merchants for specific purchases

• Voluntary: extra $250 every 6 months9

Basics card

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• Debit card which can be used at approved merchants

Initially introduced as part of NTER

• Following the “Little Children are Sacred” Report

• September 2007• Prescribed communities• All income support recipients• Part of a wider set of

interventions• Required suspension of parts

of the Racial Discrimination Act

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Prescribed communities

• Communities on land held under the Aboriginal Land Rights Act – 73 prescribed communities (mainly remote)– Urban “Town Camps” (mainly on fringe of

Darwin and Alice Springs)• 70% of the NT Indigenous population live in

these communities.

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An urban prescribed community

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New Income Management program• Introduced August 2010• Applied to all of the NT

– Restoration of Racial Discrimination Act• Essentially

– Age & Disability Pensioners not compulsory– Compulsory for others – on basis of duration– Voluntary, Vulnerable and Child Protection– Scope for exemptions– Supporting initiatives – matched savings &

money management

Other Australian Income Management Initiatives

• Voluntary / Child Protection / Vulnerable– Placed based trials in five locations , along with

certain communities and regions in WA and SA• Voluntary & Child Protection

– WA: metropolitan Perth & Kimberly region• Cape York (Community Based)

– Family Responsibilities Commission – 60-75% 3-6 months & option to apply for voluntary

• Small numbers – 1,634 Voluntary & 833 various compulsory

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Legislative objectives

• Reduce immediate hardship by ensuring payments directed at meeting priority needs

• Give support to budgeting• Reduce spending on alcohol, tobacco,

pornography & gambling• Reduce risk of harassment• Encourage socially responsible behaviour• Improve level of protection to welfare recipients

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Larger vision

“income management lays the foundations for pathways to economic and social participation through helping to stabilise household budgeting that assists people to meet the basic needs of life.”

Policy StatementLandmark Reform to the Welfare System,

Reinstatement of the Racial Discrimination Actand Strengthening of the

Northern Territory Emergency Response2009

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How might behaviour be impacted?• ½ money quarantined from alcohol and tobacco• Basics card as commitment device?

– For food– Circuit breaker on obligations

• Low cost banking• Knowledge of financial position?• Interview with Centrelink on allocations• Referral to money management training• Ability to gain exemption as incentive• Habitualisation vs. stabilisation

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Key numbers

• As at April 2013– 17,600 subject to IM in the Northern Territory– Compulsory – 13,900– Voluntary – 3,600– Child Protection - 18– Vulnerable - 150

• Administrative cost: $A 95 -110 million per annum – $A 5,000 per person per year

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Who is on IM ?• 91% are Indigenous

– Indigenous account for 71% of income support recipients (under APE)

• 61% women (63% compulsory, 56% voluntary)• 50% aged under 30 years• 11% of Age Pensioners • 70+% of Newstart, PPP & Youth Allowance• 60% of Single Parents on Income Support• 18% couples with kids, 18% sole parents, 25%

couples no kids & 40% singles20

NIM Child protection and vulnerable

• Child protection – view from child protection workers:– Financial management not seen as key issue– Not worth going from 50-70%– Risk of rupture of client relationship

• Vulnerable– Very small – potentially squeezed out?– 97% Indigenous– Government has extended the target group

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BasicsCard• Mixed responses – in part related to location

– More positive in remote and negative in urban• Issue of security cited by many • In remote – free banking service

– But govt. could do more re balance checking– Cost was high if using mobiles

• In urban – lack of acceptance of cards – especially markets

• Difficulty in making some large payments • Has not eliminated gambling etc.

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Money management• Money management/financial counselling appears

to be valued– Immediate demand though is for short-term

assistance• Approved money management courses and

matched savings not successful– Very low take-up– Not well pitched

• Centrelink staff did not see value in referring

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Did IM make things better for family ?

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0

10

20

30

40

50

60

70

80

Female Male Female Male Female Male

Indigenous CIM Indigenous VIM Non-IndigenousCIM

Pro

porti

on o

f res

pond

ents

(%)

Made thingsbetter

Made nodifference

Made thingsworse

How often do people feel

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0% 20% 40% 60% 80% 100%

IndigenousCompulsory

IndigenousVoluntary

Non-IndigenousCompulsory

IndigenousCompulsory

IndigenousVoluntary

Non-IndigenousCompulsory

Not

fair

Dis

crim

inat

edag

ains

t

All the time

Most of thetime

Sometimes

Hardlyever

Never

Control over money

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0

10

20

30

40

50

60

Female Male Female Male Female Male

Indigenous Compulsory Indigenous Voluntary Non Indigenous Compulsory

Pro

porti

on o

f Res

pond

ents

(%)

More control now About the same Less control now

Aim for IM

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0

10

20

30

40

50

60

70

80

Female Male Female Male Female Male

Indigenous Compulsory Indigenous Voluntary Non-Indigenous Compulsory

Pro

porti

on o

f res

pond

ents

(%)

Stay on income management Not sure Get off income management

Perceived outcomes for children

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-20-10

010203040506070

Hea

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Mor

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od

Saf

er

Bet

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Bal

ance

of i

mpr

ovem

ent

less

poo

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(%)

Indigenous Compulsory NTER Indigenous Compulsory non-NTERIndigenous Voluntary NTER

Sufficient money for food - change

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-20%

-10%

0%

10%

20%

30%

40%

50%

60%In

dige

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CIM

Indi

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IM

Non

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IM

Ref

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Ref

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Perceived Reported

Model results – Frequency of feeling

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Relative to control pop. – Coefficients βStdY

Indig. CIMNTER

Indig. CIM non‐NTER

Indig. VIM NTER

Discriminated against 0.547** 0.440** 0.532**

Embarrassed 0.632** 0.526** 0.348

Not fair 0.520** 0.529** 0.247

In control of life ‐0.374* ‐0.795** ‐0.171

Better for self and family ‐0.206 ‐0.567** ‐0.003

In control of money ‐0.362* ‐0.828** ‐0.227

Not worried ‐0.102 ‐0.248* ‐0.124

Safer ‐0.252 ‐0.727** ‐0.124

Model results – Perception of change

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Indig. CIMNTER

Indig. CIM non‐NTER

Indig. VIM NTER

Managing your money 0.128 ‐0.393** 0.221

Saving money 0.218 ‐0.295* 0.368*

Having enough food 0.534** 0.312** 0.629**Knowing how much money 0.329* ‐0.210 0.341Looking after family obligations 0.171 ‐0.173 0.272

Model results – change in experiences

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Coded so that +ive is an improvement

Indig. CIMNTER

Indig. CIM non‐NTER

Indig. VIM NTER

Ran out of money for food ‐0.233 ‐0.215 ‐0.281Ran out of money for clothing ‐0.132 ‐0.174 ‐0.162Ran out of money for medicine ‐0.214 ‐0.185 ‐0.101Rent on time ‐0.309 ‐0.302* ‐0.264Bond ‐0.349 ‐0.276 ‐0.003Utilities ‐0.011 ‐0.012 0.060Difficulties because gave to others 0.495** 0.209 0.389*Asked ‐0.141 ‐0.014 ‐0.189Emergency Relief 0.035 ‐0.005 0.041Travel ‐0.191 ‐0.278* ‐0.325School activities ‐0.338 ‐0.006 ‐0.224Survey participants (d) 244 168 128

Exemptions from IM

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-NonIndigenous

Indigenous

48.7% 13.2%

79.8% 36.5%

Apply

Applications successful

Exempt 38.8% 4.8%

First Evaluation Report Conclusion

• Diverse impacts

– Can benefit some

– Applied to many who neither need nor benefit

• Incentives/supports not effective

• Means of control – not building behaviours

• People likely to remain on for a long time

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Next steps• Final report June 2014• Use more administrative data on outcomes –

including alcohol and tobacco sales• Specific studies – vulnerable, child protection• Understanding:

– Motivations of those on voluntary– The lived experience of IM

• As well as second stage of participant survey• An antipodean model?

– Income management for youth in NZ35

Evaluating New Income Management in the Northern Territory: First Evaluation Reporthttp://www.fahcsia.gov.au/our-responsibilities/families-and-children/programs-services/income-management/evaluating-new-income-management-in-the-northern-territory-first-evaluation-report

Audit Report: Administration of New Income Management in the Northern Territory http://www.anao.gov.au/Publications/Audit-Reports/2012-2013/Administration-of-New-Income-Management-in-the-Northern-Territory/Audit-summary?sc_camp=F27966D3337F4E0C83E730C230B4ECD4

Productivity Commission: Overcoming Indigenous Disadvantage: Key Indicators 2011http://www.pc.gov.au/gsp/indigenous/key-indicators-2011

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