Income management is mutual obligation writ large

The release of the interim report of the McClure Welfare Review and expectations that the government will expand income management presents us with an opportunity to revisit the philosophical concerns of income management as a social security tool.

Income management is not a new concept for the Australian social security apparatus: It has been in place for several years in the Northern Territory by way of the BasicsCard, which has now been expanded on a trial basis in specific sites in other states to both Indigenous and non-Indigenous communities. Remote Indigenous communities also experience de facto income management through restrictions on alcohol sales and the purchase of select items.

Income management is based on two ideas: That some people are unable to take care of their basic needs and must have portions of their benefits carved out to provide for these basics; and that since benefits are essentially a gift from the taxpayer through the government, the government can impose whatever conditions it feels like.

These two moral principles also underpin mutual obligation, which is the set of minimum requirements, or 'hoops to jump through', that is attached to unemployment benefits. Job search requirements and the Work for the Dole scheme are both examples of mutual obligation.

A common objection to income management is that it makes unemployment benefits conditional and is therefore paternalistic. Yet this is already the case. Benefits are conditional upon being a member of a specific category (that is, being unemployed) and are also conditional upon certain activities being performed (mutual obligation).

Any objection to income management has to be an objection of the kind of conditionality of unemployment benefits, not the existence of conditions per se.

As such, the most fruitful way to discuss income management involves whether there's an actual problem that needs to be solved, whether it works, whether it passes the cost-benefit test, to whom it should be applied and how it should be applied.

Some of these questions have been at least partially answered.

The cost of income management is quite high so the evidence of its efficacy needs to be strong. There are some obvious potential pitfalls. If income management creates a different kind of dependence – dependence on the government to make decisions relating to one's basic needs – then this undermines the case for it.

The case is further undermined if income management is expanded to satisfy a political urge to reduce 'bludging', rather than for a specific end (such as ensuring children's wellbeing in at-risk families).

One does not have the same rights to income derived from benefits financed by the taxpayer as income earned privately. Nevertheless, there is reason to be sceptical about an expansion of income management.

Trisha Jha is a Policy Analyst at The Centre for Independent Studies.