Income management a failure, according to three-year study which contradicts findings of Forrest review

Income management in the Northern Territory has not led to people on welfare drinking less alcohol, sending their children to school more often or buying healthier food, according to the findings of a three-year study commissioned by the Federal Government.

A report from the study Evaluating New Income Management in the Northern Territory was handed to the Department of Social Services on September 30 but has still not been seen by the Minister, Kevin Andrews.

Under NT income management, 50 per cent of a person's welfare payment is distributed to their bank account. The remaining 50 per cent is put onto their BasicsCard, which cannot be used to pay for alcohol, gambling, tobacco or pornography.

Alice Springs' Tangentyere Council research coordinator Matthew Campbell, whose team helped collect data for the study, was briefed on the report and said the evidence was clear.

"Income management through the BasicsCard does not achieve what it sets out to achieve," Mr Campbell said.

"People are not spending their money any slower, they are not saving money up. So they're not actually changing the way they manage their money.

"There's no evidence of less drinking, there's no evidence it's encouraging children to attend school and no evidence that people are eating better foods."

BasicsCard 'popular in town camps'

According to Mr Campbell, despite some key failings there were some surprising trends emerging from Evaluating New Income Management in the NT.

Many people on income management would choose to stay on the BasicsCard if they were offered the opportunity to get off it, he said.

"There are a whole pile of interesting findings about how people feel about being on income management," Mr Campbell said.

"Seven out of ten people in town camps say that they think income management is good for them."

The study's findings could also have implications for the Healthy Welfare Card (HWC) being pushed by mining magnate Andrew 'Twiggy' Forrest.

In July, Mr Forrest delivered his Creating Parity review of Indigenous employment and training, which became known as the Forrest review.

Mr Forrest proposed the HWC which he said was directly influenced by the NT's income management system.

The HWC would distribute 100 per cent of a person's welfare payment, removing all cash from welfare recipients.

Concern Healthy Welfare Card could 'cause further disadvantage'

The HWC would be issued by a major bank or financial institution as a debit card and would be blocked from being used for gambling or the purchase of alcohol.

The Prime Minister's parliamentary secretary Alan Tudge said the Government was "looking very seriously" at the concept.

But Mr Campbell said they did not have all the facts.

"As far as I know, the policy prescriptions made by Twiggy Forrest were released prior to this research being finalised and handed to government," Mr Campbell said. "He wouldn't have had access to this research."

The big four banks, which would be critical to the success of the HWC, are in talks with government about how it would be administered.

The banks will not comment on the talks but the Australian Bankers Association (ABA), an umbrella group whose members include the big four, is against the HWC.

The group's executive director of retail policy Diane Tate said the card would be costly to implement and potentially discriminatory.

"We have concerns about potential delays for everybody using the system, not just welfare recipients," she said.

"Of course [there is also] the potential additional costs that would be involved in developing the new technology.

"It's going to be placing limits on goods and services which some Australians are allowed to have and not others - that's a problem for us.

"Of course blocking access to cash for some people, especially in a remote community, could cause further disadvantage for them."

But the Forrest review said the cashless welfare system was "influenced" by NT's "pioneering" income management system and the BasicsCard.

"These initiatives have demonstrated the benefits to welfare recipients of a more stable financial environment in which rent and other bills are paid and sufficient food is provided," the report stated.

Card should apply to all welfare recipients: advisory council

Chairman of the Prime Minister's Aboriginal Advisory Council Warren Mundine said its members were told the HWC's predecessor in the NT succeeded as "part of a range of other things".

"There's varying views across the council in regards to the [Healthy Welfare] card but the feeling is that it is something that needs to be done," he said.

The council believes the card should be applied to all welfare recipients.

"It should be for the people in Sydney and the people in Dubbo or Adelaide or anywhere else in Australia. Anyone who's on the same benefit should be in the same boat," Mr Mundine said.

He described the banks' approach to Mr Forrest's card as cautious.

"Overall, it's possible but there are a few questions about the operation of it," he said.

But Ms Tate worded the sector's reservations more strongly.

"If it's going to be a big cost for the banking sector to implement, if it's going to be a big cost for the government to implement, if it's going to impact on all retailers potentially in Australia and certainly impact on all card holders in Australia, then we have to ask if this is the best way to deliver an outcome which is a noble outcome, which is about how can we make sure welfare payments are not used in ways that would cause economic and social problems," she said.

The authors of the new report, who are academics from the University of New South Wales, the Australian National University and the Australian Institute of Family Studies, were not allowed to speak about their findings until Government released the report.

Representatives for Mr Andrews and Mr Tudge said neither of the MPs had seen a copy of the report and they would not comment on its findings.