The audit objective was to assess the effectiveness of FaHCSIA and DHS’ administration of New Income Management in the Northern Territory. The departments’ performance was assessed against the following criteria:
- New Income Management was effectively planned and implemented;
- DHS has developed effective processes for servicing customers and managing third party organisations;
- DHS has established effective performance monitoring and reporting arrangements, which are used to improve service delivery; and
- FaHCSIA effectively monitors, evaluates and reports on the performance of Income Management.
Income Management has been an area of ongoing interest to Parliament and the community, and there has been both support and criticism of the policy across a broad spectrum of stakeholders. During the audit a range of stakeholders were interviewed. While the ANAO’s mandate does not extend to commenting on the merits of government policy, stakeholders’ views on the administration of the scheme were taken into account, where appropriate.
The audit scope did not include an examination of individual cases and decisions such as:
- the assessment of applications for exemptions from Income Management; or
- decisions to apply Income Management based on Northern Territory Government referrals (under the child protection measure) or social worker assessments of vulnerable welfare recipients.
Since first being introduced in 2007 as part of the NTER measures, Income Management has evolved into a broader welfare policy. In this respect, from August 2010, Income Management was extended from the 73 prescribed communities under the NTER to all welfare recipients in the Northern Territory who met new eligibility criteria—known as ‘New Income Management’.
FaHCSIA and DHS (the departments) effectively managed the transition from NTER Income Management to New Income Management. Consistent with one of the critical success factors set by the Government, by 31 December 2010 DHS had transitioned or exited the majority of NTER customers and commenced additional customers who became eligible under the new criteria.
The service delivery approach required for New Income Management is resource-intensive, differs from the day-to-day processes used for the majority of services provided by DHS, and consequently is a relatively higher cost service. For a customer living in a remote area, the departments estimate that the cost of providing Income Management services is in the order of $6600 to $7900 per annum. The delivery approach adopted by DHS provides for the identification of eligible customers, the establishment of priority needs in consultation with the customer, and the payment of income managed funds to third party organisations. Consistent with the objectives of Income Management, this approach supports the primary aim of ensuring that a portion of income support and family assistance payments cannot be spent on excluded goods and services; this money is available to be spent on priority needs, including food and housing.
Due to the practical operation of Income Management, however, the departments are limited in their ability to determine if the notional allocations towards priority needs translate to actual spending on these goods and services. For example, a customer who has notionally allocated $70 for food on their BasicsCard can use these funds to purchase any non-excluded goods or services at any store accepting the BasicsCard. In this situation, departments can only routinely track the amounts spent via the BasicsCard, rather than the actual goods and services purchased.
New Income Management has moved from the implementation phase and is now provided to over 17 500 people in the Northern Territory. Funding for New Income Management has been provided until June 2014 and this period offers an opportunity for DHS to address a number of administrative aspects, such as the compliance program and quality assurance framework, that would improve the overall operation of the scheme. It is also timely for the departments to determine whether specific features of New Income Management, such as exemptions and the incentive payments, are working as intended.
DHS conducts a compliance program for third party organisations subject to contractual arrangements. The 2011-12 results showed that compliance rates were lower than the department’s desired level of 90 per cent, with 34 per cent of BasicsCard merchants reviewed (110 from 323 reviews) being found non-compliant. DHS has implemented a revised compliance program in 2012-13 to address identified process weaknesses. The revised program also presents an opportunity to better understand the reasons for non-compliance and subsequently develop mitigation strategies.
DHS relies on a number of IT workflows and automated functionality as a basis for its quality controls. DHS has also implemented a number of additional quality controls for specific parts of the process as issues have arisen, such as quality checks for parts of the exemption decision-making process. However, there is no overarching framework that outlines the approach to quality assurance and how the different aspects collectively address the risks. Given the different service approach that has been adopted for Income Management, and the risks associated with activities such as making manual payments on behalf of customers, there would be value in DHS assessing the merits of developing an overarching quality assurance framework to support the delivery of Income Management services.
The capacity for some customers to gain an exemption from Income Management is a key difference between New Income Management and the previous scheme. During 2011–12, a Commonwealth Ombudsman’s review and subsequent DHS internal taskforce identified a number of significant issues with the assessment of exemption applications, particularly concerning consistency and transparency in the decision-making process.7 DHS has since introduced a number of changes to its processes and it will be important that the department continues to monitor these changes to ensure they are addressing the issues that were identified.
In addition to exemptions, New Income Management has seen the introduction of the Voluntary Incentive Payment and Matched Savings Payment, with mixed success. As at 30 June 2012, 13 736 Voluntary Incentive Payments had been paid to 6006 customers, for a total of $3.4 million. By its nature, the payment is designed to encourage customers to begin and stay on the Voluntary Income Management measure. However, combined with the other operational attributes of Income Management (such as facilitating bill payments), there is a risk that the payment is also a barrier to some people moving off the scheme and becoming more self-sufficient in managing their financial affairs.
Take-up of the Matched Savings Payment has been significantly lower than expected, with only 18 people having received the payment at 30 June 2012. This suggests that the payment is not having the intended impact on savings behaviour. There would be value in FaHCSIA and DHS reviewing the design and impact of the payments to determine how they are contributing to the objectives of Income Management, and if necessary, provide advice to the Government on options to adjust the arrangements.
In stating the objectives of Income Management, the Act highlights that the scheme is intended to bring about a range of changes in individual and community behaviour. As the department responsible for both policy advice and overall performance reporting, FaHCSIA has a key role in measuring the success or otherwise of Income Management in meeting its objectives. Currently, very limited information on Income Management is publicly reported, and the reporting focuses on basic metrics such as the number of people on the scheme and the amount of spending via one of three payment methods (BasicsCard). Accordingly, there is scope for FaHCSIA to improve the existing reporting arrangements by developing and reporting on a range of key performance indicators that provide insights on the effectiveness of Income Management in meeting its legislative objectives.
Similarly, while DHS collects an extensive amount of administrative data on Income Management, the nature of internal reporting is largely focused on specific metrics, such as customer numbers, and is not complemented by analysis of trends, key drivers, or the quality of service provision. Therefore, there is also scope for DHS to strengthen its internal monitoring and reporting arrangements by developing performance indicators that better measure the efficiency and effectiveness of Income Management service delivery.
The Government has commissioned a consortium of experts to conduct a strategic longitudinal evaluation of the implementation and effectiveness of New Income Management in the Northern Territory. The evaluation includes a baseline study which reflects the circumstances of individuals soon after the implementation of New Income Management, and a series of four annual reports. The findings of the evaluation, particularly the final report due in December 2014, can be expected to provide important insights on the impact of Income Management and will inform the Government’s consideration of the success of the policy approach and its future direction.
The ANAO has made two recommendations to improve the internal and external monitoring and reporting of Income Management. The recommendations are aimed at assisting the departments and stakeholders gain a better understanding of the service delivery performance and the success or otherwise of the scheme in meeting the stated policy objectives.