Income management in New Zealand and Australia: Differently framed but similarly problematic for Indigenous peoples

Abstract

Income management, which reduces the control that benefit recipients have over social security income by quarantining a percentage for approved expenses, was introduced in both Australia and New Zealand in the late 2000s. In Australia, income management explicitly targeted Indigenous communities, being initiated as part of the Northern Territory Emergency Response in 2007, then later extended to other benefit recipients. In New Zealand, all 16- and 17-year-old benefit recipients and 18-year-old parents on a benefit became subject to income management in 2012 as a means to inhibit future ‘welfare dependency’ amongst young people. Despite the absence of an explicitly racialised framing in New Zealand, this article contends that both income management programmes represent a form of institutional racism, disproportionately affecting Indigenous peoples and significantly limiting Indigenous opportunities for self-determination.

Keywords

Aboriginal peoples institutional racism Māori self-determination welfare reform

Introduction

The Global Financial Crisis ‘justified’ new waves of welfare reform and retrenchment in many countries. Yet Australia and New Zealand alone adopted compulsory income management programmes quarantining a percentage of benefit recipient income for approved expenses, although there are similarities with existing Electronic Benefit Transfer cards used in the United States and mechanisms elsewhere enabling benefit recipients to pay rent and utilities directly from their benefit (Fletcher et al., 2013). The first section of this article notes similarities in the programme logic and implementation of income management in the two countries before demonstrating that explicit racialisation of Indigenous peoples was evident only in Australia. ‘Racialisation’ is a process whereby perceptions about the biological differences promulgated in racial theories shape social relationships, including those between the state and its agencies and other social actors. Racialised binaries situating blackness as ‘bad’ and whiteness as ‘good’ were central to colonisation, dehumanising Indigenous peoples and relieving European guilt by framing the colonised responsible for their own oppression (Banton, 1997; Fleras and Elliott, 2003; Garner, 2009).

Drawing on an analysis of government documents, key evaluations and academic commentary, the article argues that such racialisation continues today, although cultural rather than biological differences between Indigenous and non-Indigenous peoples were employed in government discourse justifying the need for income management in Australia. This focus on cultural deficits shared some overlap with the ‘welfare dependency’ discourse framing New Zealand income management’s focus on young benefit recipients as ripe for remedial intervention (Rowse, 2002), but there were few references to Māori in government documents regarding income management. A second section of the article nonetheless demonstrates that both income management programmes constitute a form of institutional racism because each involves legally sanctioned organisational practices and procedures seeking to control and restrict Indigenous peoples’ financial agency, potentially enhancing poverty and stigmatisation and ultimately limiting Indigenous self-determination (Bielefeld, 2015; Fleras and Elliott, 2003).

Implementation and framing

Income management programmes in Australia and New Zealand share a similar neo-conservative programme logic: requiring benefit recipients to change their expenditure patterns (for instance, spending less on alcohol and more on nutritious food) will improve individual, familial and community outcomes (Bray et al., 2014). Restrictions on purchasing alcohol, gambling and pornography in Australia and alcohol and tobacco products in New Zealand are enabled by quarantining a significant proportion of a benefit recipient’s income. In New Zealand, all youth benefit income, family tax credits and other supplementary payments are quarantined except up to NZ$50 paid as an In-Hand Allowance, as recommended by the non-government Youth Service providers administering income management on the Ministry of Social Development’s behalf. This sees around 70% of a basic, single Youth Payment (YP) benefit of NZ$175 per week quarantined, although the proportion will be lower for Young Parent Payment (YPP) recipients accessing supplementary payments (Fletcher et al., 2013; Office of the Minister for Social Development – OMSD, 2012). In Australia, where social security agency Centrelink administers the programme, 50% of a benefit is generally quarantined (100% of lump sum payments such as the Baby Bonus), but this can rise to 70% if there is a child protection issue and an increase to 80% of income for all benefit recipients has been proposed (Bray et al., 2014; Forrest, 2014).

Quarantined income is also managed in similar ways in the two countries. Rent, utilities and debts can be paid directly from the benefit and remaining quarantined monies accessed through an electronic debit card for use at approved retailers and, in the case of Australia, on ‘priority needs’ defined as food, clothing, health, housing needs and specific household utilities (Bray et al., 2014). Although a wider range of retailers and services can be accessed through Australia’s BasicsCard compared to New Zealand’s Payment Card, concerns about restrictions on consumer choice are one rationale for Forrest’s (2014) review of Indigenous training and employment in Australia proposing a Healthy Welfare Card that can be used at any shop accepting Visa and MasterCard with electronic payment facilities (except alcohol or gaming outlets).

Incentives to improve savings habits and financial literacy are a further feature of both income management programmes. In New Zealand, incentive payments of NZ$10 per week are awarded if an income management participant ‘successfully’ remains in full-time education, training or work-based learning for six months; completes budgeting programmes/talks; and, if they receive YPP, completes parenting programmes and meets ‘social obligations’ introduced in 2012, requiring all benefit recipient parents to enrol their children in early childhood education/school and primary healthcare. Incentive payments are not income-managed and are paid to each parent if both receive a benefit and attend a parenting programme. However, a first or second failure to meet obligations suspends the NZ$50 In-Hand Allowance/incentive payments while a third failure cancels 100% of YP (along with Temporary Additional Support/Accommodation Supplement) or 50% of YPP (but not other entitlements) for 13 weeks (OMSD, 2012; Work and Income, 2015). In contrast, Australian New Income Management measures introduced in 2012 saw increased funding for budgeting and financial education available to income management participants but no penalties apply for non-attendance. To encourage long-term saving and budgeting habits, the Australian government also introduced Matched Savings Payments of a maximum of AUS$500 for up to 50% of the total cost of a household item, such as a washing machine, for those meeting money management requirements. Such payments will not be available after 2016 (Arthur, 2015), presumably because Bray et al.’s (2014) major evaluation of income management found them ineffective in meeting the government’s financial literacy goals.

Although Australian exemption rules for compulsory income management were widened in 2012 to include those with dependent children who could demonstrate both ‘responsible parenting’ and ‘absence of financial vulnerability’, only around 10% had gained an exemption and 14,052 people were under compulsory income management in December 2013 (Bray et al., 2014). There were 1252 YP/YPP recipients in September 2015 (MSD, 2015a) and New Zealand Minister of Social Development, Paula Bennett (2013) had earlier claimed that about 70% of YP and YPP recipients are income-managed, representing around 890 individuals. But this proportion appears low given participants must demonstrate ‘financial competence’ for at least three months, comply with all expectations and obligations and earn all incentive payments available to be exempted. Cabinet documents indicate the threshold for release was intentionally set high and, once exempted, participants can be returned to income management if they fail to meet any required obligation or demonstrate ‘poor financial management’ (Fletcher et al., 2013; OMSD, 2012). Overall, both income management programmes appear to aim to keep benefit recipients in income management indefinitely.

The remainder of this section highlights how the Australian programme not only affects more individuals but explicitly targeted Indigenous communities when first introduced in 2007, contrasting with the narrowly targeted but racially-neutral focus of income management in New Zealand.

Australia

Income management was a core component of the Northern Territory Emergency Response (NTER), the Liberal-National government’s political reaction to the Little Children are Sacred report released by the Northern Territory Board of Inquiry into the Protection of Aboriginal Children from Sexual Abuse (2007). Despite the report’s focus on sexual violence, it highlighted a range of associated problems facing Indigenous communities in the Northern Territory, a large self-governing territory within the Commonwealth of Australia containing 1% of the total Australian population but over one-quarter of the Indigenous population, living mostly in remote locations (Bray et al., 2014).

The social problems identified are associated with historical government policies, such as the forced removal of Indigenous children from their parents to live within European families or mission stations, which continue to have a devastating impact upon Indigenous communities. Some are also linked to the geographical and social distance between remote and other Australian communities. This in turn is associated both with ‘terra nullius’, the idea that the Australian continent was ‘uninhabited’ before British colonisation which permeated colonial–Indigenous interactions (Havemann, 1999; Moreton-Robinson, 2015), and with challenges posed by one-fifth of Indigenous Australians preferring to live in remote locations that are culturally and genealogically meaningful but make provision of government services costly and difficult (Forrest, 2014; Rowse, 2002).

The Little Children are Sacred report recommended broad reforms, including land reforms and alcohol prohibitions, but notably not income management (Bielefeld, 2015). Yet within three months of the report’s release, compulsory income management began rolling out for all benefit recipients in 73 predominantly Indigenous communities and 10 town camp regions in the Northern Territory. Initially conceived as a time-limited measure, by 2008 it was also being trialled in Cape York (a predominantly Aboriginal area in Northern Queensland) and selected communities in Western Australia (Australian National Audit Office – ANAO, 2013; Bray et al., 2014).

In the context of the NTER, the Liberal-National government framed income management as a necessary response to significant problems of parental irresponsibility regarding child welfare amongst Indigenous communities. Vulnerability to violence and victimhood – especially amongst women, children and older people – was also expressed as a problem of cultural dysfunction and/or obligation associated with not only “an intergenerational cycle of passive welfare” (Macklin, 2009: 12783) but also the cultural norms of Indigenous society (Lovell, 2014). Income management was applied universally to “stabilise and protect communities in the crisis area” (Brough, 2007: n.p.) and overcome the ‘unique’ and significant forms of dysfunction found there (Lovell, 2014). As with racialisation processes more generally, Indigenous disadvantage was thus framed as a problem of Indigenous culture rather than structural inequalities (Altman, 2008; Garner, 2009). The NTER’s specific targeting of Indigenous communities and individuals required the government to seek exemption from the Racial Discrimination Act 1975 and controversy over this, including the United Nations placing Australia on a list of countries breaching human rights obligations, highlights the explicit racialisation of income management in the Australian context (Bielefeld, 2015).

Australian public opinion about Indigenous peoples/issues has long been ambivalent (Goot and Rowse, 2007); although public debate about the NTER was sufficient to encourage the Labor government elected in 2010 to make changes allowing the reinstatement of the Racial Discrimination Act, it also extended compulsory income management to all Northern Territory benefit recipients defined as ‘disengaged youth’, ‘long term’ or ‘vulnerable’ (that is, experiencing ‘financial exploitation’ or ‘financial hardship’, ‘fails to undertake reasonable self-care’ or where there is or may be a risk of homelessness) and those referred for ‘child protection’ issues. Arguing that “[i]ncome management is a key tool in the government’s broader welfare reforms to deliver on our commitment to a welfare system based on the principles of engagement, participation and responsibility” (Macklin, 2009: 12783), the New Income Management measures aimed to ‘support’ named categories of benefit recipients by reducing immediate hardship, deprivation and the chances of financial harassment, while encouraging better budgeting and parenting. Importantly, “many non-indigenous welfare recipients are similarly severely disengaged and at risk of harm” (Australian Government, 2009 cited in ANAO, 2013: 30–31), justifying uniform treatment of Indigenous and non-Indigenous peoples (Lovell, 2014).

In 2012, income management was further expanded to parents failing to comply with the government’s Improving School Enrolment and Attendance measure, which allows “welfare payments to be suspended altogether where parents do not ensure that their children comply with the government’s attendance and enrolment expectations” (Bielefeld, 2012: 558). State and territory agencies are also able to refer benefit recipients to compulsory income management regardless of where they live, preventing benefit recipients escaping income management by changing residence. Targeted income management measures for those placed in the ‘child protection’ or ‘vulnerable’ categories were also rolled out in several ‘disadvantaged’ areas around Australia and ‘voluntary’ income management became possible (Bray et al., 2014).

Although reframing income management as a welfare reform enabled the Racial Discrimination Act to be reinstated, it remains deliberately discriminatory (Bielefeld, 2015). Targeted income management programmes continue to be trialled in Indigenous communities in South and Western Australia (Bray et al., 2014), while a broader range of compulsory income management categories operated in the Northern Territory and these overwhelmingly applied to Indigenous benefit recipients (Bielefeld, 2015). The proposal that 80% of all welfare payments, other than age or veterans’ pensions, become subject to income management through the Healthy Welfare Card in 2016 was also made in the context of the Forrest (2014: 4) review of Indigenous training and employment which centred on “the undeniable fact that there is no employment gap, or disparity, for first Australians who are educated at the same level as other Australians”. Similar neo-conservative logic drove the claim that parity in educational outcomes “starts with individual responsibility during pregnancy, intensive early childhood preparation and decent schooling. It doesn’t mean more money” (Forrest, 2014: 4). Overall, income management thus meets Fleras and Elliott’s (2003) definition of a systematic form of institutional racism, in that the Australian government directly and deliberately prevented Indigenous peoples from full and equal involvement in society through the structure, function and process of its policy frameworks. The language framing income management may have changed over time, but its intent of restricting Indigenous agency over financial resources to transform deficits in Indigenous culture did not.

New Zealand

Introduced only five years later, New Zealand’s income management programme was similarly initiated under a conservative government and implemented in a country where the internally-colonised Indigenous population also suffers considerable relative socio-economic disadvantage. But significant contextual differences made it politically unpalatable to use explicitly racial frames to promote and implement income management in New Zealand. Indigenous Māori constitute 15% of the New Zealand population, while Aboriginal and Torres Strait Islanders represent only around 2.5% of Australians. Colonial recognition of Indigenous sovereignty was also radically different, since tribal Māori chiefs issued a Declaration of Independence in 1835 then signed the Treaty of Waitangi with the British Crown in 1840. Although forgotten for some decades, the latter is now commonly referred to as New Zealand’s ‘founding document’ and Article Two in the Māori-language version specifically notes the continuing possession of ‘tino rangatiratanga’ (autonomy and control) in balance with the ‘kāwanatanga’ (governance) granted to the British Crown in Article One. The absence of geographical exclusion on reservations or missions, alongside rapid urbanisation in the 1950s and 1960s and earlier incorporation into mainstream politics also contribute to greater levels of social and economic integration amongst Māori when compared to Indigenous Australians (Havemann, 1999).

Together these factors have facilitated a significant political voice for Māori in New Zealand. It is not unusual for Māori Members of Parliament to hold ministerial positions (often but not exclusively in Māori Development), while Australia made news in 2015 when the first-ever Aboriginal minister was appointed to the front bench (Henderson, 2015). There have also been a number of Māori-specific political parties, including the current Māori Party formed in 2004 (Humpage, 2015). Indeed, since 2008 the National Party government has had a supply and conference agreement with the Māori Party (and other small parties) to ensure it can pass legislation within New Zealand’s mixed member proportional representation political system, making it unfeasible for the National Party government to target Māori specifically and explicitly through income management.

Despite New Zealand’s official policy of biculturalism, which since the late 1980s has acknowledged the importance of Māori language and culture in the public sector and formed the basis for equity measures utilising Māori-specific services and programmes, National Party ideology also prioritises notions of equal opportunity that aim to achieve justice by treating all citizens the same. Famously articulated as ‘one standard of citizenship’ in 2004, National was part of an opposition party call to audit ‘race-based’ policies implemented under a Labour-coalition government. More recently, Prime Minister John Key argued that the Whānau Ora strategy, developed in 2010 to provide holistic family-focused prevention programmes to Māori families, should target all New Zealand families (Humpage, 2015). It is also important to acknowledge that the Māori Party itself is relatively conservative on welfare issues (Armstrong and Berry, 2007) and there is no evidence that it (or other commentators) critiqued income management’s disproportionate impact upon Māori.

This lack of debate is likely associated with the studious absence of reference to race or ethnicity in most government documents relating to income management. The Welfare Working Group (WWG, 2011: 125) commissioned by National to reduce long-term ‘benefit dependency’ amongst working-age New Zealanders did acknowledge the disproportionate level of Māori benefit receipt, but recommended income management only “as a last resort for the most at-risk people”. Cabinet documents noted that targeting income management on the basis of age and family status might be inconsistent with New Zealand human rights legislation and that “the young parent proposals affect predominantly women, particularly Māori women” (OMSD, 2012: 23). Although Te Puni Kōkiri (Ministry of Māori Development) was consulted about the Youth Package, no further reference to Māori was evident (MSD, 2012a). Only the Ministry of Social Development’s latest briefing paper discussed Māori over-representation amongst people needing support at length (MSD, 2014a: 25):

This over-representation has remained largely unchanged over the last two decades. Māori youth, who feature strongly in these statistics, will become an increasing proportion of the New Zealand population as the non-Māori population ages. This young Māori cohort will represent a significant long-term liability if they continue to come in contact with social services at the present rate.

The reference to ‘long-term liability’ indicates the dominant framing of income management in New Zealand. Influenced by the WWG (2011), the National Party government adopted an actuarial approach predicting the future cost of welfare dependency which estimated the average ‘forward liability’ as NZ$113,000 for 16–17 year olds and NZ$108,000 for 18–19 year olds on a benefit, considerably higher than for adult unemployment (NZ$58,000) and sickness (NZ$105,000) benefit recipients (MSD, 2012a). The WWG (2011) noted that forms of income management existed in other countries but no research evidence supported claims that it would reduce welfare dependency (Fletcher et al., 2013). Instead, forward liability statistics were used to support neo-conservative views that welfare dependency is an intergenerational problem: “[p]eople who first went on a benefit as a teenager make up 70% of New Zealand’s future welfare liability” (MSD, 2014a: 16) and “[o]f the estimated 14,000 young people Not in Employment Education or Training, we know that up to 90% will go on benefit by the time they are adults” (Bennett, 2012: n.p.). In this context, Bennett (2012: n.p.) said: “I will be frank: we want to make welfare a less attractive proposition for many young people.”

The actuarial approach allowed the government not only to frame discussion about the financial cost of dependency but also to avoid referring to Māori culture as a cause of it, as evident in Australia and as implied in the National Party government’s planned use of predictive modelling to assess the risk of ‘vulnerable children’, where ethnicity was used as a key factor in determining such risk. This was delayed following a review of ethical issues as they related to Māori (Blank et al., 2013), possibly discouraging a more explicit focus on Māori in regards to income management. Notably, the Australian government is adopting New Zealand’s actuarial model (Arthur, 2015) and the Forrest review (2014) also targets young people but there is no evidence of any New Zealand policy learning from Australia’s racialised implementation of income management.

In this context, New Zealand income management was introduced in 2012 as part of a broader Youth Service Package to “provide services to encourage and help young persons to move to education, training, and employment rather than to receiving financial support” (New Zealand Government, 2012: n.p.). Over 12,000 young people in 2015 were enrolled in Youth Service intensive case-management and there are plans to include at-risk 18–19 year olds and 19-year-old teen parents from 2016 (Tolley, 2015a), but only those receiving Youth Payment and Young Parent Payment are currently subject to income management. Both groups receive income support because they cannot be assisted by their parents or guardians (often having been in the custody of the state for many years) or, in the case of young parents, have low-income parents, are in a married/civil union/de facto relationship or they are 18 years old and have no partner (MSD, 2014b).

Contracted service providers are expected to play a “quasi-guardian role” (OMSD, 2012: 1), receiving up to $11,250 per benefit recipient, including a payment for milestones and a success fee, to ensure participants attend regular planning and budgeting meetings, attend education or training, complete budgeting/parenting courses and meet social obligations (Fletcher et al., 2013). Cabinet papers indicate that “a broad range of community or iwi [tribal] organisations could undertake the Service Provider role” (OMSD, 2012: 13) and MSD’s (2015b) list of Youth Service providers suggests a small number of Māori organisations are involved. There was, however, no explicit acknowledgement that Māori-specific providers were appropriate because a disproportionate number of benefit recipients being income-managed are Māori (OMSD, 2012) and Māori organisations are more generally framed as both critical providers of social services and a viable source of jobs for Māori (MSD, 2014a). The institutional racism evident in New Zealand was generally more systemic than systematic, in that income management did not directly target Māori as a group but was applied ‘universally’ without full consideration of the disproportionate impact upon them (Fleras and Elliott, 2003). Nonetheless, the next section demonstrates that income management is having similarly negative impacts upon both Indigenous peoples.

Outcomes for Indigenous peoples

This section posits four key reasons why income management constitutes a form of institutional racism. Given the lack of a comprehensive evaluation in New Zealand, it draws more heavily on Australian data but similarities in the core logic and mechanisms of income management mean these findings offer insights into the likely impact upon Māori.

Disproportionate level of benefit receipt

Indigenous peoples in both countries are disproportionately affected by any welfare reforms because they are significantly more likely to receive an income support benefit than other citizens. Around half of Indigenous Australians rely on benefits compared to 17% of other Australians (Forrest, 2014). Even under New Income Management measures that target benefit recipients generally, Indigenous peoples are thus more likely to have their income managed than non-Indigenous counterparts, especially if they live in the Northern Territory where they constituted 88% of all people under compulsory income management in December 2013 (Bray et al., 2014).

Despite this, the exemption rate for Indigenous peoples by the same date was only 4.9% compared to 36.3% amongst non-Indigenous peoples, with those living outside urban areas far less likely to be exempted (Bray et al., 2014). Bielefeld (2012: 548) argues that:

Under compulsory income management, entire categories of people are effectively declared guilty of financial incompetence and then made to bear the burden of proving otherwise. Yet proof of these matters is undeniably difficult for Indigenous people living in remote communities, where ‘limited opportunities for study or part-time work’ mean that ‘the prospect of exemption based on learning or earning is illusory’.

Indeed, Bray et al. (2014) found both lower rates of application and higher rejection rates for exemptions amongst Indigenous peoples, resulting in their on average spending 97.1 out of 124.5 weeks on income support under income management compared to 34 out of 54.7 weeks receiving income support amongst non-Indigenous people.

In New Zealand, government statistics do not identify income management participants by ethnicity, but 48% of YP/YPP recipients are Māori and, given few exemptions, the majority likely have their income managed (MSD, 2015a). Māori constitute only 15% of the total population but over half are under the age of 25, partly explaining why Māori make up 50% of children in custody and 60% of youth justice residents which are known pathways to the YP and YPP (MSD, 2014a). YP and YPP numbers fell overall between 2013 and 2015 and the government claims this as evidence of the Youth Service’s success (Tolley, 2015b). Yet analysis of adult declines in receipt of both Jobseeker Support and Sole Parent Support (the adult equivalents of YP and YPP) show only a 1% decline amongst Māori between 2010 and 2015 compared to 6% amongst other New Zealanders (MSD, 2015a). Similarly slow declines are also likely for the two youth payments.

Risk of increased poverty and stigma

The disproportionate participation of Indigenous peoples in compulsory programmes is concerning given Australian evidence they are associated with increased levels of poverty and stigmatisation. Around 40% of Bray et al.’s (2014) Indigenous income management respondents reported running out of money for food or clothing during the past month, while 55% said they had run out of money before ‘pay day’ sometime in the month. Around a third had experienced financial problems over the same period because they had given money to others or had to ask others for money to obtain essentials, leading Bray et al. (2014: 165) to argue that “[i]ncome management appears to have had little impact on changing the financial vulnerability of people when this is measured in terms of their ability to hold funds in reserve or to save”.

Moreover, the ANAO (2013) found numerous cases of income management participants waiting weeks or months to have money reimbursed to their income management account when paid incorrectly, leading to potential debt and impoverishment (Bielefeld, 2015). Earlier BasicsCards largely limited spending to within the Northern Territory and the current model continues to favour big chain supermarkets, making it difficult to use cheaper markets, wholesalers, online or second-hand shops (Fletcher et al., 2013). Difficulties checking card balances also led to a high proportion of failed transactions (FaHCSIA, 2011), while many approved merchants impose minimum purchase limits, surcharges and higher prices for using the BasicsCard. Income management thus not only limits consumer choice but likely costs users more overall than if they had full access to their money (Bray et al., 2014; Mendes et al., 2014).

Similar to other Australian research (Equality Rights Alliance, 2011; Yu et al., 2008), however, Bray et al.’s report () found mixed Indigenous views of income management. A significant minority (21%) reported that compulsory income management had made things worse for them, but 35% said it made no difference and 44% acknowledged some positive impact because they felt they had more control over their money and lives. Notably proportions for those positively or negatively impacted were reversed amongst non-Indigenous people under compulsory income management (Bray et al., 2014); that is, the population least affected by the policy were more likely to feel it negatively impacted them, suggesting that it offended their sensibility of what is ‘normal and acceptable’ amongst non-Indigenous communities while there was a certain inevitably amongst the Indigenous participants. This is not surprising given the way income management was racially framed by the government. Fewer Indigenous participants reported that their objective was to get off income management (around 42% compared to 56% of non-Indigenous respondents) and, as with negative views about its impact, these figures were lower outside larger urban areas. Bray et al. (2014) suggest this may stem from the different lifestyles evident in different locations, but it may also relate to a greater sense of inevitability in remote areas where government intervention has been long-standing.

Of those who wished to exit income management, around 29% of Indigenous peoples compared to 51% of non-Indigenous peoples said this was because they already felt they had the ability to manage their money effectively and did not see why they were required to go on the programme, supporting claims there was no evidence that benefit recipients had problematic spending around alcohol, gambling or pornography nor any research to suggest that income management’s programme logic was likely to be successful (Bielefeld, 2015; FaHCSIA, 2011). In contrast, 54% of Indigenous compared to 38% of non-Indigenous respondents said they wished to exit because they wanted to control their own money, wanted rights back or wanted to express freedom of choice. This likely stems from findings that the BasicsCard has encouraged negative stereotypes, disrespect and overt racism from both Centrelink and approved retailers, resulting in reports of income management participants feeling degraded and disempowered and experiencing depression and despondency, with sometimes devastating outcomes (Bielefeld, 2012, 2015; Equality Rights Alliance, 2011; Yu et al., 2008).

In New Zealand, the Youth Service evaluation argued that it:

is helping young people, particularly those receiving a Youth Payment benefit, to become independent of the benefit system. It also appears to be helping young people to gain NCEA qualifications … those receiving a Youth Payment benefit spend less time on a benefit and fewer transition to a working-age benefit. (MSD, 2014a: 16)

As noted, MSD (2015a) figures show that YP/YPP numbers fell from 1393 in March 2010 to 949 in 2014. But they then rose to 1252 in 2015. Moreover, MSD (2012b: 11) earlier noted that youth unemployment following the Global Financial Crisis was not as significant as during the 1990s recession and that the number of young people receiving an unemployment benefit had already begun declining before income management was introduced. This raises questions about the purported disincentive effects of income management and other reform measures.

Although the Youth Service evaluation did not focus on income management specifically, newspaper reports certainly suggest that participants have attempted to regain control over their finances by on-selling goods bought at the supermarket for cash that can be used for other purchases, as Bennett (cited in Chapman, 2012: n.p.) has noted:

we have some bizarre things that happen; you know people buy 10 cooked chickens and then go and sell them in the car park. Batteries were the most purchased item on the cards because they were easily on-sold, while food was being swapped for cash.

Fletcher et al. (2013) note that this behaviour is a rational rather than ‘bizarre’ response to a policy restricting what goods can be purchased, particularly in a context where the inflexible and arguably inappropriate balance loaded onto the Payment Card for food has left participants short for clothing, medical, transport and other costs (Collins, 2012). Providers cannot shift funds to provide additional cash to buy a specific item, even if the beneficiary has spare funds on the Payment Card; instead, the provider must apply on the recipient’s behalf for a recoverable benefit advance which, if accepted by the Youth Service Support Unit, is then repaid in instalments from the Payment Card allocation. Yet, applications for benefit advances could be seen as evidence of ‘poor budgeting’ and thus reason not to release a person from income management (Fletcher et al., 2013). Wynd (2013) further highlights how increased use of sanctions (with financial penalties) since 2010 is detrimentally impacting benefit recipients more generally. Overall, the smaller amount of cash available to benefit recipients and fewer registered Payment Card outlets in New Zealand suggest that Māori subject to income management are likely to face many of the same problems identified amongst Indigenous Australians.

Imposing Western ideas of financial management and well-being

Australia’s ‘solution’ to problems of consumer choice – a Healthy Welfare Card that is better integrated into Australia’s mainstream banking and financial services – highlights how income management imposes individualistic Western understandings of well-being upon Indigenous peoples that sit in tension with Indigenous world views in at least two ways. First, Australian income management explicitly aims to help Indigenous individuals overcome financial exploitation from their own families and communities. While such ‘humbugging’ can be a serious problem in some communities, Bielefeld (2015) reports evidence that some Indigenous peoples in the Northern Territory have been denied exemptions by Centrelink because any reciprocal kinship obligations, where sharing of resources is normal and appropriate, were assumed to be financially exploitative. This is particularly concerning since the New Income Management evaluation found no decrease in harassment over money at the community level and, as discussed earlier, some reports of being more likely to be asked for money because of perceptions it is more available under income management (Bray et al., 2014).

Although the racially-neutral framing of New Zealand’s programme meant familial or community exploitation was not an articulated rationale for income management, Māori cultural norms are similarly centred on kinship obligations that can include a sharing of financial resources (Fleming, 1997). It is unclear if and how Youth Service providers acknowledge this in managing young people’s incomes and Payment Cards were initially issued with personal identification numbers consisting of the last four digits of the card number which security experts believed would not be a sufficient safeguard – even with a signature – from exploitative use (Chapman, 2012). Overall, income management in neither country appears to have adequately accounted for Indigenous cultural norms regarding the sharing of financial resources.

A second issue relates to income management’s association with the broader welfare reform agenda of better engaging Indigenous peoples in the capitalist labour market (Bielefeld, 2015). Racialisation is closely tied to labour markets and the power imbalances inherent in modern capitalism (Banton, 1997; Garner, 2009), which have contributed to almost 40% of Indigenous peoples in the Northern Territory not being in the labour force with figures swelling to over 50% if counting Community Development Employment Project (CDEP) participants who work on community projects in return for a government-funded wage (FaHCSIA, 2011). Forrest’s (2014: 40) emphasis on ‘creating parity’ through increased Indigenous participation in paid work recommended abandoning CDEP and transferring participants to Newstart Allowance “to ensure all job seekers have the same incentives and obligations in return for income support”, as well as providing special incentives for job seekers relocating from remote communities. These shifts ignore the geographical specificity of Indigenous cultural norms and perpetrate what Altman (2008: v) considers to be a number of false binaries:

people can either live on country or off country; participate in the mainstream economy or the Indigenous (heavily state dependent) economy; live in viable or unviable communities. At the heart of this false binary is an apparent choice between living in kin-based or market-based societies. If only it were that simple. In reality, the majority of Aboriginal people live interculturally between the market economy and customary economy with heavy state mediation.

FaHCSIA (2011: 9) found that: “The most frequently recorded comments about economic development and employment were that [Indigenous] people wanted jobs in the community and didn’t want to have to leave their community”. Thus creating employment in those communities would facilitate the real possibility of ‘choice’, which Rowse (2002) identifies as a key feature of self-determination.

Māori are highly urbanised but most individuals continue to have strong cultural connections with the particular geographical area/s where their ancestors reside. Similar to Forrest (2014), the WWG (2011: 46) framed such connections as a key factor behind the precarious relationship Māori as a group have with the labour market relative to other New Zealanders:

One of the issues for many Māori is that jobs are not necessarily to be found in their turangawaewae [place where one has rights of residence and belonging through kinship and genealogy]. However, it is also critical for the future of young Māori that they be guided to locations with jobs so they can create financial independence and well-being for themselves and their whānau [extended family].

The WWG (2011) thus suggested enhancing current provisions around limited employment locations, requiring individuals on a work-tested benefit who move to a specified area to demonstrate they have access to reliable transport and are willing and able to commute to a nearby centre where suitable employment is available. Failure to do so would identify them as unavailable for work.

In both countries, then, cultural and historical ties outside cities are regarded as less important than participation in the paid labour market. In Australia, Forrest (2014: 37) further commented that since Indigenous businesses “are about 100 times more likely to employ first Australians than any other business” they should be encouraged to take on more Indigenous staff. Referring to the government’s pledge of 61,000 jobs through the Australian Employment Covenant, it was further argued that the “issue now (thankfully) is not the jobs being available; it is the capability of the Indigenous job seekers that is the challenge” (Forrest, 2014: 38). New Zealand’s WWG (2011) similarly identified Māori organisations as playing a significant role in ensuring employment is available for young Māori. Thus, contemporary Indigenous peoples are framed as not only the cause of, but the solution for, their own disadvantage.

Limiting self-determination

Government acknowledgement that potential solutions may lie within Indigenous communities does not equate with Indigenous peoples’ calls for self-determination, which can be variously defined but commonly refer to greater control and autonomy over land, identity and political voice (Havemann, 1999). In fact, the problems with income management outlined above inhibit the self-determination of individuals and communities to make decisions about how and when to use their financial resources. Income management is inflected by neo-conservative assumptions a) that ‘welfare dependency’ is caused by poor choices and b) that it is possible to encourage greater ‘self-reliance’ by restricting human agency and control. Yet, Bray et al.’s (2014: xxii) evaluation found: “rather than building capacity and independence, for many the program has acted to make people more dependent on welfare”. Nor did they find much evidence of improvements in community safety, child nutrition or school attendances, arguing that positive effects tended to be outweighed by the many negative effects of compulsory income management. Other evaluations of the NTER or income management more specifically came to similar conclusions (Equality Rights Alliance, 2011; Yu et al., 2008)–although the Cape York Welfare Reform Trial’s more targeted approach, which was accompanied by a range of support services, appears to have been more successful (Bray et al., 2014).

In addition to choice and control, recognition of past injustices is central to self-determination claims. Importantly, while governments in both countries articulated a concern with the economic disadvantage and benefit dependence amongst Indigenous peoples, they did not explicitly acknowledge the state’s role in creating and perpetuating such disadvantage. For instance, while New Zealand’s WWG (2011) acknowledged how urbanisation, loss of jobs in the 1980s and 1990s, low levels of education and training, poorer health and geography shape Māori disproportionate receipt, it ignored issues of institutional racism, colonisation and land alienation. An even more glaring omission was the Australian government’s lack of acknowledgement that income management parallels former policies that saw many Indigenous peoples denied all or some of the wages they earned in paid work, which were held by ‘Aboriginal protectors’. Bielefeld (2015: 99) regards such policies as a form of ‘structural violence’, which had the effect of “transferring the wealth that rightfully belonged to Indigenous peoples to government treasuries” and rendering Aboriginal peoples more like “subjects of the state rather than full rights-bearing citizens”. She contends that the micro-management of Aboriginal incomes through income management follows in this tradition of regarding Aboriginal peoples as primitive, child-like and thus incapable of dealing with financial matters, while also adding the inability to stay sober, resist drugs and demonstrate a work ethic to the list of cultural deficits found in Aboriginal communities. In describing compulsory income management as a ‘support’ service for clients, Bielefeld (2012) suggests the government perpetuates a myth of capitalist customer relations rather than colonial control. This is despite the many parallels with former colonial practices and the fact that income management is a big business with many private businesses and corporations benefitting from the BasicsCard.

In this context, Bielefeld (2012) argues that Australia is not fulfilling its obligations when signing the United Nations Declaration for the Rights of Indigenous Peoples (UNDRIP). In particular, compulsory income management is contrary to the aim to protect Indigenous peoples from discrimination (Article 2) and promote self-determination (Article 3) and autonomy (Article 4). New Zealand is also a UNDRIP signatory but Cabinet papers proposing income management did not consider such human rights obligations nor Treaty of Waitangi implications, despite the programme clearly contradicting Article Two’s acknowledgement of tino rangatiratanga.

The same Treaty relationship was, however, invoked by MSD (2014a: 25) when indicating that Māori over-representation across a number of negative social indicators requires “building strategic relationships with iwi”, both as service providers and through Social Sector Accords that form part of recent Treaty settlements. Such Accords – which will “require the Ministry to undertake certain activities such as reporting information on social outcomes, participating in joint planning with the respective iwi, and working together on agreed issues” (MSD, 2012b: 29) – are still in the planning stage but will require a greater level of consultation than apparent during the development of income management. There is no evidence that Māori outside of Te Puni Kōkiri were specifically consulted. In Australia, FaHCSIA (2011: 5) criticised the lack of consultation before the NTER, while noting programmes such as income management were better understood and accepted after community consultation had occurred. Yet many of the concerns raised about the potential for income management to discriminate against and stigmatise Indigenous Australians were ignored and there was a lack of transparency about future changes that would impact Indigenous communities (ANAO, 2013; Bielefeld, 2012; Mendes et al., 2014). As Moreton-Robinson (2015) notes, self-determination involves more than providing space and voice but requires white people to relinquish power in reconstructing the space if we wish to move beyond a post-colonising to a post-colonial framework.

Conclusion

Income management programmes in Australia and New Zealand are both paternalist and interventionist, involving the micro-management of Indigenous lives. Whether explicitly acknowledged or not, Indigenous peoples in both countries are disproportionately subject to this new policy tool, raising questions about whether either country currently meets its human rights obligations or, in the case of New Zealand, those stemming from the Treaty of Waitangi. These facts, alongside enhanced poverty and stigmatisation and limited acknowledgement of Indigenous cultural norms indicate that income management constitutes a contemporary form of institutional racism. Notably, although New Zealand is often regarded as a world leader when it comes to Indigenous recognition, its policy of biculturalism and the Māori Party’s position of relative power only seems to have veiled, rather than avoided, the disproportional impacts of income management on Indigenous peoples.

There may be some merit in voluntary participation, including simply having rent, utilities and other regular bills paid before an individual receives the remainder of their benefit since some Indigenous peoples, at least in Australia, believe income management has benefitted themselves and their families, There may be come merit in voluntary participation, including simply having recent, utilities and other regular bills paid before an individual receives the remainder of their benefit, since some Indigenous peoples - at least in Australia - believe income management has benefitted themselves and their families. But given a lack of evidence that a) money management problems were common in either country and b) compulsory income management alleviates them, there is no rationale for compulsory participation for any social group. This is particularly the case in Australia and New Zealand where historical, demographic and geographical factors contribute to compulsory income management representing a contemporary manifestation of the colonial pattern of ‘helping’ Indigenous peoples in ways that actively inhibit their capacity for self-determination.

Footnotes

Funding

This research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors.

Author biography

Louise Humpage is an Associate Professor in Sociology at the University of Auckland, New Zealand. She has written widely in the areas of Indigenous affairs policy and welfare reform in both New Zealand and Australia. She has further research interests in public attitudes to the welfare state, culminating in Policy Change, Public Attitudes and Social Citizenship: Does Neoliberalism Matter? (2015, Policy Press).

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