Cashless debit card program was a harmful failure

Except it's not.

By now, we should all know that the CDC program quarantines 30-80 per cent of welfare payments for just over 17,000 individuals in the trial zones in an apparent attempt to minimise welfare recipients' ability to spend money on non-priorities like purchasing alcohol, drugs and gambling. This was because access to these things was presumed to be the driver of undesirable social behaviours and criminal activities.

However, despite LNP posturing, independent reports failed to demonstrate the impact that the program had on social outcomes in the trial zones. The card was a failure, but even worse, qualitative data collected throughout the evaluation phases exposed the level of harm that the program inflicted on its participants.

In their book published last month, Compulsory Income Management in Australia and New Zealand: More Harm than Good?, researchers Greg Marston et al, shared participant reports detailing their experiences of social stigma and isolation due to the use of the card in public, loss of personal agency and control over their own affairs, housing insecurity due to administrative/technical issues with the payment transfer administered by the private company contracted to manage the program, infantilisation through having to ask permission to purchase bigger ticket items, and even cases of suicide.

There can be little doubt that the card was a harmful failure, and history will look on the last decade of welfare politics particularly harshly in years to come.

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However, what has become considerably surprising, is how the card has been used for "buy-before-you-pay" payment schemes. These schemes are hardly the cornerstone of sound financial management, but were often the only option available to participants in need of bigger ticket items like whitegoods and Christmas Hampers. If one of the driving forces behind the program in the first place was improving participants' skills in self and financial management, the exposure of this plot-hole in the CDC saga demonstrates just how much of a failure the program really was. Forcing people to use these interest-building hooks to purchase what they needed, led to participants paying more for what they were wanting to buy, and otherwise could potentially have purchased for considerably less in the cash market, seems to undermine the initial reasoning for the program.

Perhaps it is unsurprising to discover that according to bankingday.com, buy-now-pay-later provider Afterpay disclosed $69k in political donations during 2020-2021, $41.5k of which was made to the Liberal Party of Australia over the course of a number of transactions. The integrity of government dealings regarding this program has always been questionable, which makes a donation like this raise eyebrows. Especially when former National Party MP and Federal President of the National Party, Larry Anthony was a Director of the CDC administrator service provider, Indue Pty Ltd, between 2005 and 2013 according to ASIC records, and when the tendering process for the CDC contract was not open to public tender, there are questions raised about the transparency of the entire program.

But to get back to the point of this column, I am left wondering why the use of the CDC on a buy-before-you-pay scheme would be problematic for closing down the program. With any other card, you would just need to update your details with the fintech company when you have a new card. I know I haven't banked with the same institutions all my life, and changing my payment details hasn't been a problem for any buy-now-pay-later schemes I've been sucked into. As long as I was able to pay my instalment, it was a non-issue.

I'm now left wondering what it is about the CDC that is so different to other debit cards? We have been told for years that it's the same as any debit card, but you just can't withdraw cash or use it at certain venues, but if relationships with finance schemes are tied to the card itself, what aren't we being told?