Cashless Welfare Does Not Decrease Crime or Gambling

Dec. 30, 2020 Share Source

The stated goal of replacing regular benefits with cashless welfare cards for Australians in areas with high welfare rates was ‘reducing social ills’, however recent studies show restricting cash access has had ‘no substantive impact’ gambling or drug and alcohol abuse, and may have increased fraud.

The cards—which are not universally accepted by businesses—ringfence 80 percent of money loaded onto them to be spent on certain items, and cannot be used to withdraw cash. The government had moved to make the cards permanent, however numerous concerns from both users and opposition government have meant, for now, their use will just be extended for two years.

Researchers from the University of South Australia and Monash University examined data from Ceduna, where the cards have been operating since 2016. They report the cash-restricting measure resulted in ‘no substantive impact on measures of gambling, drug and alcohol abuse, crime or emergency department presentations.’ Their findings suggest overall crime rates have remained stable, and were not significantly affected by the cashless cards.

Since 2015, the government has spent $80 million (around €50 million/US$59 million) on the scheme. Figures reported by the University of Sydney further state the company running the card system—Indue Ltd.—charges the government an annual $10,000 admin fee for each card user. The researchers concluded the scheme offered very little, if any return on investment.

Government-commissioned research from the University of Adelaide would seem to agree. Though the full findings have not been released, a draft evaluation seen by Guardian Australia said ‘little consensus was found as to whether the CDC was fulfilling its intended aims and having a positive impact on levels of alcohol and drug misuse.’ It also raised concerns that some criminal activity may have actually increased, linked with fraud and exploitation of older people.

Cash assistance is typically preferred to cashless options for distributing welfare money since it provides choice to recipients—in terms of what and where they buy—and increases opportunities, such as saving money by making second-hand purchases, or buying from market stalls. It enables participation in the local economy, and offers equality for users with non-users, since everyone can pay cash and its origin is not apparent to those being paid.

A third study reported the cards cause ‘stigma, shame and frustration’ due to being obvious indicators that the user is receiving welfare money, removing their choice over when and to whom this is disclosed. In addition to shutting users out of the local cash economy, the benefit of cash as a tangible store of value—offering a clear, visual indication of how much is being used and how much remains—is also removed by the cards.

Cash assistance is transparent for the provider—with easily-defined spends, and no hidden costs—and allows recipients privacy, dignity, and choice over where and what they purchase. The idea that cash enables criminal behaviour has been debunked by both broad studies, and work specific to the regions of Australia in question.

The case for cash welfare advanced by opponents of the cashless cards—such as Rachel Siewert, a Greens Senator for Western Australia, and Bridget Archer, a Liberal MP for Tasmania—has been strengthened by these studies, reigniting hopes that the government may yet reverse course in the face of continued opposition, and redirect funds towards community programs designed to tackle addiction and mental health problems, and lifting people out of poverty by raising JobSeeker benefits above the poverty line.

Last Updated: Dec. 29, 2020

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