Cashless debit cards: a helping hand or the nanny state?

It's just passed the House of Representatives by a single vote and now it goes to the Senate where the government needs crossbencher votes.

Liberal National Party MP Trevor Evans said the card was delivering "significant benefits". It was "helping welfare recipients with their budgeting strategies and reducing the likelihood they'll remain on welfare and out of the workforce for extended periods".

People on welfare are given the card which looks like a regular bank debit card but spending on it is restricted.

They can't use it, for example, to buy alcohol or for gambling or to withdraw cash. Eighty per cent of the welfare payment goes on to the card. The other 20 per cent goes into the recipient's ordinary bank account.

As the government puts it: "The Cashless debit card does not change the amount of money people receive from Centrelink, it only changes the way in which people receive and spend their fortnightly payments.

The Department of Social Services spells out the broad aim: "The Cashless debit card is testing whether reducing the amount of cash available in a community will reduce the overall harm caused by welfare fueled alcohol, gambling and drug misuse.

"While it is not the only solution, it is a useful tool operating alongside other reforms to address the devastating impacts of drug and alcohol misuse and problem gambling."

The government doesn't say so but the intention is clearly for it to be used in areas with high unemployment in Indigenous communities where there is a problem with drink, drugs and gambling.

The law introducing it says the object is to "to reduce immediate hardship and deprivation by ensuring that the whole or part of certain welfare payments is directed to meeting the priority needs of:

The program is currently operating in different forms the Ceduna region, South Australia, the Goldfields and East Kimberley regions, Western Australia and the Bundaberg and Hervey Bay region, Queensland.

People who can demonstrate to the government that they can manage their financial affairs can apply to exit the scheme.

They can work in some, limited circumstances, according to Dr Rob Bray of the ANU's Centre for Social Research and Methods who has studied schemes in the Northern Territory.

If they are targeted at people with particular problems like alcohol over-use, they can ensure that the recipient has money on the card each day to get food so it doesn't get spent on booze.

And the schemes need to be used in conjunction with other measures such as having social workers involved or locally-run support systems.

"But they don't turn people's lives around unless those people are already motivated to do so" Dr Bray said.

The difficulty with the government's scheme is that it applies to whole communities, and that is ineffective and can even make problems worse, Dr Bray felt.

A study was done of one of the early areas in the trials, according to Dr Shelley Bielefeld of Griffith University.

She said that of the 552 card holders, "97 per cent identified as Aboriginal or Torres Strait Islander peoples".

"Reduction in substance use and gambling occurred for 22 per cent of surveyed participants, but the data indicates that for the vast majority of Cashless Debit Card participants - 77 per cent - the trial is making no difference in terms of alcohol, gambling and illegal drug use."

The reasons for failure were varied: if a shop wouldn't take the card, the card-holder would have to travel further to get the legitimate purchase - like food - which he or she needed. Some complained that the inability to use cash meant that they couldn't buy bargains which demanded cash.

Dr Bray said there was a danger that a broad scheme, applying to a whole population, made some people feel humiliated and that could prompt more alcohol consumption.

The cards are designed to look like any other debit card but there can still be a stigma.

If someone was using it at a supermarket, for example, the person in the queue behind might identify the holder as a welfare recipient.

The Australian Human Rights Commission warned that "the proposals are not compatible with Australia's international human rights obligations" and highlighted that the measures "disproportionately impact Aboriginal and Torres Strait Islander people".

Commissioner June Oscar said: "The imposition of the cashless debit card diminishes the equal enjoyment of human rights and fundamental freedoms for particular geographic groups where the proportion of Indigenous residents is significantly above the national average."

Dr Shelley Bielefeld called them an example of a "new paternalism in western nations".

"This leaves the poor in an increasingly precarious position, both in Australia and globally."

New Zealand has a "money management policy" where welfare recipients have their rent and utilities bills paid directly. No more than $50 of the remaining welfare payment is then paid in cash while the rest goes on the card. It is a scheme limited, though, to teenagers, specifically to 16 to 19 year-old parents and to 16 and 17 year-olds who cannot live with their parents or guardians or be supported by them or anyone else.

Britain was contemplating a broad welfare scheme similar to Australia's but in the end didn't enact it (though refugees were given cards rather than cash to buy goods).

And in the United States, the poorest people get food stamps which can be used to get food.