In Shepparton, they're getting used to a future that looms not with promise but with strings attached.

As the town reels from federal cabinet's decision to reject a $25 million assistance package to save SPC Ardmona, locals are contemplating a future without the company that forms its economic backbone - and a future that could see an abruptly distorted number of them reliant on a welfare system that is also using the town as an experiment.

Two years ago, Shepparton was selected as one of five locations nationally whose economic and social profile saw it deemed suitable as a trial site for an expansion of ''income management'' - the enforced quarantining of welfare payments to essentials such as food, rent and bills.

First used in the Northern Territory intervention into indigenous communities, income management dictates where and how welfare recipients can spend money.

With Shepparton facing hundreds of job losses at SPC Ardmona itself and many more indirectly, enforced income management could become a reality for large numbers of long-term employed residents encountering the welfare system for the first time. ''If you get up to 3000 new people who hit the unemployment lines at roughly a similar time, that will have a very dramatic and disproportionate impact,'' says David Tennant, the chief executive officer of FamilyCare, a local welfare organisation.

Mr Tennant is not opposed to income management as a broad principle, but argues that forcing it on people involuntarily is misguided. And he warns that the SPC Ardmona crisis, in the worst-case scenario, could present problems that will worsen the program's existing shortcomings.

''If income management was compulsorily applied to more people then it would be a very dramatic and sudden shift. Anything that takes people who have had long-term financial stability and puts them in a crisis situation puts great stress on them … [there are] additional mental health issues, you have additional mainstream health demands. And for us, who provide child and family services, families that are otherwise functional and doing quite well are significantly disrupted.''

Social Services Minister Kevin Andrews is likely to be watching the Shepparton trial closely: the MP last year called for a fast-tracking of evaluation of the income management trial sites and, more recently, announced a review into the welfare system, focusing on unemployment and disability payments.

The trials are costing the federal government $117.5 million, or $23.5 million a site - just shy of the $25 million requested by SPC Ardmona.

Says Mr Tennant: ''On the one hand you've got a program [income management] that so far is assisting in ways that are yet to show sustained positive impact, and another program that will keep 700 people potentially in a job, earning money and paying taxes, that hasn't attracted support.''

In Shepparton, income management was predominantly undertaken on a voluntary basis after the trial began in July 2012. But in recent months, with an expansion of the categories of welfare recipients targeted by the program, the number of forced participants has increased.

One local resident, Troy Edwards, 21, said his benefits were quarantined automatically late last year, without explanation. Like all participants, he has a ''Basics'' card from Centrelink that holds 50 per cent of his benefit payment and which can be used only for certain purchases at certain stores, and for paying rent and bills.

''You're restricted to certain shops; they give you a list of where you can use it,'' he told Fairfax Media. ''No booze, no smokes, nothing like that. It also pays my bills and my rent.''

Mr Edwards said there had been technical glitches. ''It's taken them almost two weeks to pay my rent. And when I first got my Basics card I came [to Kmart] to get some clothes and I tried to use my Basics card but it wouldn't work so I had to go into Centrelink and get them to put money on the card.''

Another Shepparton resident, who did not want to be named, said a Centrelink error had led to her son's Basics card being rejected at the checkout after he had done a sizeable grocery shop.

She supported the principle of income management, but said it should be voluntary - a stance backed by Mr Edwards. ''I guess it does help some people manage their money but it should be voluntary all round.''

Mr Tennant advocates a series of changes to the system: making it voluntary except in extreme circumstances; linking the Basics card to the normal banking system to remove the stigma of the government-issued card; and ensuring the focus is on education in financial literacy and not simply enforcing welfare compliance.

A spokeswoman for Mr Andrews said: ''The government will continue to monitor the income management program and any future decisions will be guided by the review.''