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With an expansion of the welfare crackdown signalled this week in parliament, experts warn the government’s measures will lead to collateral damage. By Rick Morton.

Newstart: the human cost of Morrison’s plan

Prime Minister Scott Morrison speaking to journalists on Tuesday.
Credit: AAP Image / Mick Tsikas

On Wednesday, between meetings with Liberal MPs who breezily explained to her that the Newstart allowance was only a temporary payment, Tracey Smallwood, recovering and unemployed after fighting spinal cancer, had to be taken to the doctor because she was feeling unwell.

That evening, after hours of grinding advocacy in Canberra, Imogen Bunting desperately searched for professional counselling. She has been forced into homelessness by the low rate of the payment, which hasn’t been increased in real terms for a quarter century, and the day of meetings had taken its toll.

As the house and senate sat for the first time since winter break, the real world came crashing in to parliament, a place not usually known for its interactions with reality. The long-telegraphed delegation from the Australian Unemployed Workers’ Union (AUWU), which originally planned to discuss with MPs the enduring poverty of Newstart recipients, was met with news that the Coalition government had resurrected its plan to drug-test welfare recipients. Then legislation to extend trials of the cashless debit card was introduced into parliament on Wednesday.

“We know there has been pressure building on the government, including from their own backbenchers, to raise the rate,” AUWU spokesman Jeremy Poxon tells The Saturday Paper.

“So, it’s no surprise that when we are here, the government announces these policies that attempt to redirect the blame.”

The seemingly never-ending cashless debit card trials, which started in the South Australian town of Ceduna and the remote Kununurra in Western Australia in 2016, will be extended to about 22,500 people in the Northern Territory and Queensland’s Cape York if the legislation is passed by both houses. This would bring the trials to six sites, including Western Australia’s Goldfields, as well as the Bundaberg and Hervey Bay region in Queensland, where the trial targets people under 35.

In an interview published on Sunday, Scott Morrison told the Nine newspapers that the rollout is “commending itself for wider application”. These comments sparked speculation that the government’s endgame is a national rollout for young people on Newstart.

The income management scheme is an evolution of the BasicsCard, which was introduced in 2008 by the then Labor government, and was itself an extension of the quarantining that first took place under the Northern Territory National Emergency Response, otherwise known as “the intervention”. In its initial form, the card prevented someone from withdrawing more than half of their welfare payment as cash. Under the cashless debit card upgrade, the proportion allotted to the card is now 80 per cent. And this money can only be spent on approved purchases, such as groceries and school expenses.

The prime contractor for the first iteration of the card was Indue Limited, a private company with former National Party MP Larry Anthony as its deputy chairman. Perhaps because of its early work, Indue became the preferred option in subsequent contracts – some of which were “limited tenders”, supplied by a particular business “due to an absence of competition for technical reasons” – that have totalled almost $95 million in the decade since 2009.

As the parliamentary sitting week began on Monday, one unique contract for Indue’s “grey cards” was increased by $2.6 million for “additional deliveries by original supplier”. That contract is now worth $7.15 million. The single largest contract with Indue was last varied in July this year, bringing its value to almost $39 million.

Larry Anthony ceased his directorship of Indue in October 2013, long before the most recent contracts were entered into with the government. He continues as the group director of SAS Consulting Group, which kept Indue as a client until late 2017. SAS was established in 2009 with the late Labor MP Con Sciacca and former Liberal MP Santo Santoro, who resigned from politics in 2007 after being found to be in breach of the ministerial code of conduct.The Saturday Paper is not suggesting any wrongdoing on behalf of SAS or its directors.

In responses to questions on notice in the senate, the Department of Social Services says the total “operational cost” of the cashless debit card program “is expected to go below $2000 per participant once final 2018-19 costs are available”.

Based on figures to date, however, the cost for each participant has been many orders of magnitude higher – due to the fact the operational equation used by the department excludes significant set-up funding.

Indue did not respond to questions from The Saturday Paper.

The Australian National Audit Office released its findings about the trial in July last year. In auditing terms, it amounted to a scathing assessment of the department’s contracting and assessment capability.

“Aspects of the proposed wider roll-out of the CDC [cashless debit card] were informed by learnings from the trial, but the trial was not designed to test the scalability of the CDC and there was no plan in place to undertake further evaluation,” the report read.

“In particular, treatments were inadequate to address evaluation data and methodology risks that were ultimately realised.”

Crucially, the audit office said, the tender process was “not robust”.

“The department did not document a value for money assessment for the card provider’s IT build tender or assess all evaluators’ tenders completely and consistently,” the report said.

Despite tens of millions of dollars in funding, there are still major technology issues facing the cashless welfare card. For example, a new phone application that allows people to check how much money they have available is giving users out-of-date information.

In more than one case, a person has checked their balance, which showed they had money to spend, only to have the card declined while trying to pay for groceries.

Those with no experience of ceaseless poverty may wonder about the fuss, but the shame associated with such an event shouldn’t be underplayed.

A spokeswoman for Social Services Minister Anne Ruston said the department “is not aware of any systemic issues with the app”.

Greens senator Rachel Siewert visited Ceduna again last week and said one person involved in the rollout – whom she has chosen not to name – told her the card has been a “debacle for Aboriginal people”.

“There are some people who say the card has worked for them, and I don’t oppose that at all, but it really should be voluntary,” Siewert tells The Saturday Paper.

The senator met with Indigenous people in Ceduna who have been using the cashless welfare card. “The card has been there for a while and they hate it, they don’t like it,” says Siewert, “but they are resigned to it and they find ways around it.

“There is a very strong feeling that, although the government claims the card has been successful … the reasons don’t stack up. One of the things they say is that there are less people on the street drinking but there have been a range of council measures that banned drinking on the foreshore. And now there is this music that plays in public places that is supposed to move people on.

“What they have done, though, is shifted the drinking.”

Anne Ruston’s office says $2.8 million has been provided for intervention services in 2019-20 for Ceduna, its “surrounds” and areas around the Kununurra trial site. This includes $110,000 for the Tullawon Health Service, to “provide assessments and referrals to support services for Aboriginal people who experience drug and alcohol addictions and in particular those who are at risk”.

Tullawon is more than two hours’ drive from Ceduna and, as Senator Siewert notes, many of the “genuine rehabilitation services” are located in Port Augusta, which is almost a five-hour drive away.

“So, people are saying they have to go over there [Port Augusta] and they are removed from their families, they are isolated and then they are returned to the same situation from which they left,” says Siewert.

“They are not addressing the underlying causes.”

The rehabilitation centre in Port Augusta is run by the Aboriginal Drug and Alcohol Council (SA). Its chief executive, Scott Wilson, says almost no one has made the trip from Ceduna.

“Since the trial started, the number of people who have come from that region to the centre I could count on both my hands,” he tells The Saturday Paper.

“And this is one of the services the government tried to say was funded under the cashless welfare card trial, and it wasn’t. We were funded a year or two before that even began, under the Indigenous Advancement Strategy.”

Wilson is adamant that reductions in problem drinking have come not because of the card itself but because of the services that came in with it or around it.

“You have to treat this stuff, not make life harder elsewhere,” he says.

Take, for example, the fact many participants in the cashless welfare trials find themselves locked out of the second-hand economy because they have access to only 20 per cent of their social security payments in cash.

This amounts to $111 a fortnight for a single person on the dole. Saving up for even the most mechanically dubious car to drive to work would take years – assuming nothing else went wrong financially. And, of course, one of the defining traits of being perpetually skint is that things always do. Debts spiral. The smallest of unexpected bills can signal disaster.

Then there is the process of attempting to exit from the cashless welfare program. When the government first extended the trial time frame earlier this year, it did so alongside a non-government amendment that would have allowed people to win exemption from the program if they demonstrated to a “community panel” that they could manage their own financial affairs responsibly.

This spooked the Department of Social Services. In briefing notes released under freedom of information laws, it mobilised to add a raft of contingencies to the process, including allowing the secretary of the department to be a decision-maker if community groups did not want to, and giving “equal weight” to other factors beyond financial management.

The “urgent legislative changes” – now law – included adding provisions for a person to be judged not only on how they kept their finances but also on the “health and safety of the person and the community, engagement with the community, risk of homelessness, engagement in unlawful activity, interest of any responsible children and the applicant’s employment or efforts to find work”.

Complaints about fairness are also being made of the Coalition’s reprised plan to drug-test welfare recipients, which has failed twice to pass the parliament. As such, there are no details about which service would perform the tests or how they might be conducted.

Ruston told parliament this week that she expects 500 of 5000 welfare recipients in the proposed trial sites – Logan, south of Brisbane; Bankstown in Sydney’s west; and Mandurah, south-west of Perth – would fail one test under the scheme.

A strike rate of 10 per cent is more than 20 times greater than the 0.3 per cent of tests that were positive in New Zealand in 2017-18. The Kiwis tested almost 50,000 welfare recipients that year, and only because they were referred to jobs that required it.

Ruston told The Saturday Paper she does not draw a distinction between welfare recipients using drugs recreationally and those with debilitating addiction issues.

“We don’t think that anybody should be taking an illegal substance because we understand it has a significant impact on their capacity to be able to function and to get a job, which is very important to their health and wellbeing,” she said in a statement.

“We hope that the risk of being tested will encourage people to think twice about taking drugs. For those who may be just meddling around the edges of taking drugs, being put on the BasicsCard after one positive test might give them a wake-up call to say to themselves, ‘This really isn’t a smart thing to be doing’, and hopefully prevent them from heading off down the path of drug addiction.”

Some observers, as well as Tasmanian senator Jacqui Lambie, have wondered whether recreational drug use among political staffers and MPs – also funded by the taxpayer – ought to be included, too. Finance Minister Mathias Cormann, for the record, says he would be fine with that.

On Thursday afternoon, Anne Ruston announced that she had taken a drug test that morning, “just like the millions of other Australians who are drug tested each year as a requirement of their employment”. She passed.

Ruston says the government wants those who test positive twice to get appropriate, individualised support for their substance abuse to help them get back on track.

To that end, the government will provide a $10 million package for treatment, which it says equates to “up to $65,000” per person. It’s a substantial amount, but experts in the field say they have seen mandatory treatment fail time and again.

Matt Noffs is the chief executive of the Noffs Foundation, the largest drug and alcohol treatment service for young people in Australia. He says he will not take a cent of the government money.

“This program extends the arm of the mechanism of punishment for this government. It’s a very clear lengthening of the whip and our fingerprints would be on the handle,” he says.

“The real clue here is that this program is not coming out of the Department of Health. This is a welfare program and it is purely punitive.”

There is a system of treatment that does work well, says Noffs, and it has arisen from the judicial system, where offenders are referred to treatment services as part of a “slim choice” between rehab or going into lock-up.

It’s not much of a choice, and still constitutes a form of coercion, but the psychology matters.

“Even though it is a slim and narrow choice, the person referred to treatment still goes in thinking they have a choice to leave at any time,” says Noffs.

“And that has been largely successful because it’s enough of a choice. If they leave, they go into detention. So, often, they stay. Testing welfare recipients is punishing the addiction and all the medical experts agree, addiction is not about choice.”

The situation is compounded by the fact Australia’s network of treatment centres for those experiencing drug addiction, especially methamphetamine addiction, is woefully underfunded. People who find the smallest window of clarity and decide to get help, usually with broken family members by their side, are often turned away when it matters most. Scott Wilson from the Aboriginal Drug and Alcohol Council (SA) wonders what might have been done with the $2.5 million each year it will cost just to test 5000 welfare recipients.

“Our rehab centre runs 24 hours a day and seven days a week,” he says. “You know what the budget for that is? $1.5 million a year.”

Here, Noffs repeats what medical professionals the world over know and many governments ignore: “The precursor of an addiction, especially for a drug like ice and especially if you are using it every day, is trauma, and we are doing nothing about it.”

Noffs says it doesn’t matter whether the legislation is passed, because that was never the point. “Australians are penal populists and the government keeps telling journalists that this issue polls really well with voters,” he says. “This is about appealing to their base and they are milking it. And in a way, for them, it doesn’t really matter if it passes or not because then they can say, ‘Oh, but we really tried.’”

The AUWU says there were some concessions made this week when their delegation met with Liberal backbenchers.

“They agree there are not enough jobs for the number of people who need them,” Jeremy Poxon says.

“But that’s when they start trumpeting their rhetoric about this only being a temporary payment. It’s all well and good to say it is designed for that, but we came to show them the reality.”

That’s why Tracey Smallwood and Imogen Bunting made the trip to Canberra with the delegation. As did an unemployed man, who is a Liberal voter and member.

“We are trying to find common ground here,” Poxon says. “It’s not about politics, it’s about showing them that this is how people are living.”

Anne Ruston declined requests to meet with the AUWU.

This article was first published in the print edition of The Saturday Paper on Sep 14, 2019 as "Newstart: the human cost of Morrison’s plan". Subscribe here.

Rick Morton
is The Saturday Paper’s senior reporter.