This background note outlines the available evidence in relation to income management in the Northern Territory, Cape York and Western Australia, and concludes that the evidence for or against it is inconclusive.

Income management (also known as ‘welfare quarantining’) refers to a policy under which a percentage of the welfare payments of certain people are set aside to be spent only on ‘priority goods and services’ such as food, housing, clothing, education and health care. Income management was introduced by the Howard Government in 2007 as part of the legislation for the Northern Territory Emergency Response (NTER). At this time, income management schemes were also established as part of the Cape York Welfare Reform Trial for situations of child neglect and non- enrolment and/or non-attendance at school. In addition to these compulsory income management schemes, provisions were also introduced for people to have their income managed voluntarily. Since then, the Rudd and Gillard Governments have expanded the scheme so that it now applies throughout the Northern Territory and other designated ‘disadvantaged areas’ throughout Australia.

Income management has been a controversial part of the Australian Government’s welfare reform agenda in recent years. While various conditions have always been applied to eligibility for welfare payments, restrictions on how payments may be spent are a new development that has been criticised by some as paternalist and stigmatising.

Much of the debate surrounding income management has related to the question of evidence. That is, does a sufficient body of evidence exist to justify the policy of compulsory income management? Alternatively, is there evidence of policy failure or harmful consequences arising from income management? In other words, is income management working?

There are several reasons why these questions are important. First, income management has been justified by its supporters on the grounds of the potential benefit it can bring to individuals and their families. Second, the Government has stated that further expansion of income management will be informed by evidence of how well it is working and how it might be improved. Finally, the Government has consistently emphasised the importance of evidence-based policy. For example, the Minister for Families, Housing, Community Services and Indigenous Affairs has spoken of her ‘unshakeable belief in the power of responsive, evidence-based policy to drive progressive reform at many different levels’.

This Background Note is intended as a brief guide to the evidence about the efficacy of income management. It outlines what income management is and what it is intended to do. It also highlights the substantial difficulties associated with evaluating the effectiveness of income management, including the limitations of the available evidence. The Background Note then outlines the available evidence in relation to income management in the Northern Territory, Cape York and Western Australia.

The Background Note concludes that, thus far, the evidence provided for or against income management is inconclusive. At best, the evidence has only partially clarified particular aspects of a complex situation.

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