The federal opposition has renounced the government's plan to make the Cashless Debit Card (CDC) a permanent feature of the Australian welfare system.
Labor said it would oppose legislation to make the CDC permanent and stop its scheduled rollout in the Northern Territory.
The Australian government introduced the trial of the welfare quarantining system in 2016, via a CDC, with the aim being to govern how those in receipt of welfare spent the money, such as by preventing the sale of alcohol, cigarettes, and some gift cards and blocking the funds from being used on activities such as gambling.
Participants of the CDC trial have 80% their funds placed on card, which is managed by Indue, with the remaining 20% to be paid into a bank account.
As of early March, there were 12,150 participants in the CDC trials across Bundaberg and Hervey Bay, the East Kimberley, Ceduna, and Goldfields regions.
Services Australia is charged with oversight of the initiative, and as the agency was inundated with a new wave of welfare payments in the wake of the COVID-19 outbreak, the government announced it would place a temporary pause on transitioning new participants onto the CDC.
Since then, it has quietly made the decision to both make the card permanent in the trial sites and roll out the card to 23,000 people in the Nothern Territory.
"The government is ideologically obsessed with the Cashless Debit Card," Shadow Minister for Families and Social Services Linda Burney said on Friday. "Yet, it has so far failed to prove that it is effective."
The decision to make the CDC permanent was made as part of the 2020 federal Budget, announced on October 6. But during Senate Estimates last month, it was revealed the decision was made before Minister for Families and Social Services Anne Ruston got hold of a report from Adelaide University that evaluated whether the card was in fact working efficiently in the trial sites.
The report was priced at AU$2.5 million.
"An Auditor General's report from 2018 panned the government's evaluation of the card, which failed to demonstrate that its broad-based compulsory income management program actually worked," Burney said.
"Instead, it has made it more difficult for participants to purchase basic and essential items at more affordable prices."
There have been a number of issues raised by those considered "participants" of the CDC. Many feel they would be disadvantaged by its Australia-wide rollout, with some feeling that the scheme places unreasonable restrictions on spending, making it more difficult to save, or flee from domestic abuse.
Department of Social Services deputy secretary Liz Hefren-Webb last month admitted a few community groups weren't supportive of permanency, including the Coalition of Peaks, which is a representative body comprised of around 50 Aboriginal and Torres Strait Islander community-controlled peak organisations that have partnered with the Australian government on closing-the-gap initiatives.
Minister for Employment, Skills, Small and Family Business Michaelia Cash believes, however, the government decided to make the CDC system permanent because there were community groups that supported it. Hefren-Webb agreed.
The CDC is currently accepted at around 90,000 merchants and there are a number of those that have been blocked, including 18+ establishments such as breweries, bottleshops, and TABs.
The government in December kicked off a AU$3.4 million pilot of product-level blocking with tech vendor DXC Technology, which recognises when a CDC is being used and automatically declines a transaction if the shopping basket includes restricted products. The pilot is aimed specifically at assisting small businesses. Major retailers such as Woolworths, Coles, and Australia Post already automatically block purchases.
The trial will continue until December 31.
"It is clear that the government is absolutely determined to ram through and roll out this ideological obsession with broad-based compulsory income management," Burney said.