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Let the disadvantaged manage their own income

By Paul McDonald - posted Friday, 24 June 2011

Each year Anglicare Victoria surveys some of the 60,000 Victorians who use our emergency relief services. The survey outcomes paint a vivid picture of the lives and situation of those in our society who are battling hard to make ends meet. It tells us how much they have to live on, what they spend their money on and how they manage when the money runs out.

Not surprisingly, this year's results tell us that it is getting harder for people receiving government benefits to afford the bare essentials. Approximately one in five people could not afford a safe and secure home and about the same proportion could not afford one substantial meal a day.

The results also give us a clear picture of the spending patterns of those who live on very low incomes. Contrary to widely held assumptions, it is clear that all the families surveyed were doing their best to manage very tight financial situations. Indeed, the majority of their income was spent on bare essentials. Housing, groceries and heating accounted for 70% of their spending , and many people found themselves trapped in a web of debt to make ends meet. Spending on tobacco, alcohol or drugs represented only 4% of total spending .


The recent Commonwealth budget release has stimulated welfare reform debate and reinvigorated the populist sport of questioning the values and morals of individuals receiving benefits. The Government has chosen to adopt more punitive measures and a result we have seen a proposed extension of income management; the replacement of benefit incomes with vouchers; mandatory work search or training for teenage mothers which could place at risk their parenting benefits; and increasingly punitive youth policies to name just a few.

The Government has argued that such measures would reduce spending on alcohol, cigarettes, gambling and porn, and would ''encourage socially responsible behavior''. Yet the Anglicare survey suggests that it is in fact income benefit levels not parties, pokies and plonk that is resulting in poor social outcomes for disadvantaged Australians. Further, the survey's finding that over 30% of families are regularly spending in excess of their income, sees families turn to the precarious 'companionship' of pay day lenders where quick cash is available at 48% interest as the only means of covering family needs.

Fanning the flames of this debate and encouraging Government to go further is support received from an unexpected source. Some in the community sector are calling for a new approach to welfare reform. They argue that there is 'too much emotion in welfare policy', and that we need to see a new welfare paradigm that requires increased accountability and activity.

However, this is a risky strategy and great caution is required. For instance, new accountability requirements can contribute to an increasing scenario of welfare payment suspensions that will undoubtedly trigger desperation that further entrenches disadvantage. Encouraging Governments to expand compulsory income management can also further humiliate families whose confidence and self esteem is already low. Imagine the impact of your family having to front up at the supermarket with a 'basic card' as the only means of accessing food and basic household items. Is this the way we really want to treat our most disadvantaged citizens?

In life, there is always a simple answer to a complex problem and it is usually wrong.

Compulsory income management has not been proven as an approach that has improved the lives of most families across the Northern Territory . This method of controlling expenditure of individuals and families is outrageously expensive to administer. For example it will require $350million to continue to operate an income quarantining scheme in the NT over the next four years for 16,000 people. The current trial of income management for families involved in the child protection system, will cost $65,000 per family to administer. Surely such resources are better spent on rebuilding disadvantaged communities, creating incentives for individuals to re-engage with work or bringing public/ private investment into our most disadvantaged postcodes.


The flaw in these policies is that it offers a solution that is based on the assumption that a lifetime of disadvantage can be turned around if we either threaten to take a person's benefit or turn that benefit to a voucher. Suddenly they will have the life skills and experience to obtain and hold down a job or not neglect their children. Immediately, employers will be prepared to hire many more people with disabilities, teenage mums and disaffected youth.

It is almost as if we have decided the problem is too hard and instead of addressing the structural issues of poverty and disadvantage in a meaningful way, we have instead opted for a sophisticated version of blaming the individual.

Anglicare works with tens of thousands of such individuals each year. They have the same aspirations as all of us – they want a job, a home, financial relief and to belong. Let's build our response to poverty in Australia on real opportunities for work and training that provides incentives and rewards participation, rather than the drift to paternalism which demeans people and drives more wedges between the haves and havenots.

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About the Author

Paul McDonald is CEO of Anglicare Victoria.

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All articles by Paul McDonald

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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