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Strong controversy around Australian welfare cashless card

Categories : Cash does not require a technology infrastructure, Cash is universal
September 19, 2017
Tags : Australia, Cash restrictions, Cashless, inequality, poverty, Unbanked
There is huge controversy around the cashless welfare card in Australia which cannot be used in cheaper stores not to settle transportation fares of school lunches.
Communication Team / Equipo de Comunicación

The Australian department of social services is currently testing a new method of dispensing social assistance in the form of a Cashless Welfare Card. Launched in March-April 2016, the trial focused on three regions especially affected by unemployment and poverty – Ceduna, Wyndham and Kununurra. Participants receive 80% of their welfare payments on a debit card that cannot be used to buy alcohol, drugs or gambling products nor can be used to withdraw cash. The welfare card was designed to reduce criminality in disadvantaged communities and improve financial well-being.

Various reports have been released now that the one-year trial is over, but the results are sparking intense controversy in the country. According to Orima Research, a report commissioned by the Australian government, the cashless was a success. The results indicate for instance that 33% of surveyed people acknowledge that the card made their life better, while 45% declared to have saved more money than with traditional assistance. Nevertheless, critics accuse the government of skewing the statistics as these results also show that the majority of people were extremely disappointed by the card. What’s more, interviewers recorded participants’ IDs, which also contributed to bias the survey as they were thus certainly less keen on confessing illicit purchases. Figures of the Western Australian police indicate that the number of offences has risen since the introduction of the card, proving the program’s inefficiency.

The card cannot be used at cheap retailers such as Aldi or to buy bus fares and school lunches, two purchases that are crucial for low-income consumers. The trial areas are almost exclusively inhabited by Aboriginal Australians who are rarely acquainted with cards and mobile apps (used to check one’s account balance). More importantly, the Australian outback is mainly unequipped to handle digital payments. The card can thus lead to social exclusion and stigmatizes a population that is already suffering from inequality. Lawford Benning – leader of the MG Corporation – officially backtracked on his decision to support the card and denounced an attempt to restrict one’s fundamental right to freedom. Benning accepted the trial carried out in East Kimberly in return for support services for unemployment or drug-addiction, which never came. 

The government had already tested such cards a few years ago in the Northern Territory, under the name “Basic Card”. The method was identical to the welfare card, except that participants were in addition prevented from buying pornography and tobacco. This first trial also proved useless, many reports suggesting that there was no evidence of changes in spending patterns or any improvement in user social and financial well-being. Yet, the government perseveres and recently announced that the cashless welfare card will be expanded to two new locations in the coming months, leading to one question: why is the Australian government stubbornly pushing through this cashless solution?