Australia and New Zealand are the only two countries who apply compulsory income management to benefit recipients. On 2 May 2019, New Zealand got one step closer to abolishing its version of income management when a government-commissioned Welfare Expert Advisory Group released its report entitled Whakamana Tāngata: Restoring Dignity to Social Security in New Zealand.
Along with recommendations to remove most sanctions and a range of other conditional and punitive welfare policies, it said: “We are also persuaded by the recent review of compulsory income management in the Youth Service system that this aspect of it serves no useful purpose and should be discontinued”. This review emerged from the New Zealand component of the Australian Research Council-funded project: Conditional Welfare: A Comparative Study of Income Management Policies.
The New Zealand review found many of the same problems that have been identified with compulsory income management in Australia. Across the Tasman, only Young Parent Payment and Youth Payment recipients in New Zealand lose control over their income, with most of it being redirected to landlords or placed on a Payment Card that can only be used at certain suppliers and never to buy alcohol, cigarettes or electronic goods. Despite their young age, the study found that the assumption that all young people are poor money managers is simply not true and that sanctions and incentives do not affect young people’s financial behaviours.
Moreover, income management puts some young people at risk of exploitation by landlords, their families or suppliers willing to ignore the rules and impinge upon their consumer rights. It also affects the social identity of young people because they felt ashamed by and stigmatised for using the Payment Card. Both young people and the Youth Service providers who must mentor and monitor young people on income management said the programme further inhibited Maori and Pasifika peoples meeting their cultural obligations and domestic violence victims leaving home as soon as the need arises.
The Welfare Expert Advisory Group’s report promotes a new social contract based on mutual expectations and responsibilities, where dignity and respect are front and centre of the government’s engagement with benefit recipients. This is something that Australia could learn from.
The New Zealand government’s response thus far has been disappointing, with only three of 42 recommendations addressed in its first announcement. But there will likely be more in the run up to the 30 May Budget and there is an election looming in 2020.
Who knows, could it be that next year Australia is the only country with compulsory income management?