Cashless welfare card trials extended for a year in SA and WA

Temporary third site likely but wider expansion blocked by Nick Xenophon Team

The cashless welfare cards quarantine 80% of a welfare recipient’s income.

The cashless welfare cards quarantine 80% of a welfare recipient’s income. Photograph: Melissa Davey for the Guardian

Trials of the cashless debit card will continue in South Australia and Western Australia for another year and the government has been given time to temporarily set up a third site, likely to be located in WA’s Goldfields region.

But legislation allowing for a far wider expansion of the card was blocked due to opposition from the Nick Xenophon Team in the Senate.

The cards, which have attracted significant controversy since the trials began, quarantine 80% of a welfare recipient’s income to a restricted debit card.

The trials overwhelmingly involve Indigenous Australians, and are designed to restrict spending on alcohol, gambling or drugs.

The program has been criticised as paternalistic and ineffective, and critics argue a better approach is needed to address complex issues driving crime, unemployment, and alcohol and drug use.

The current legislation allowed trials in three sites, but only two have so far been conducted; in Ceduna, South Australia, and the east Kimberley, in Western Australia.

The government introduced legislation last year to expand the program, announcing it would begin new trials in Bundaberg in Queensland and the Goldfields region in WA.

The legislation would have allowed the card to be deployed anywhere in Australia, but was blocked in the Senate by the NXT.

The NXT MP Rebekha Sharkie said last week the evidence was not yet there to support such a significant expansion.

Her fellow NXT senator Stirling Griff made a similar argument on Monday evening.

“It is an incredibly expensive experiment to continue the card trials, let alone expand them as this bill seeks to do,” he said.

“On that basis, the Nick Xenophon Team cannot support the bill as currently drafted. Why? Because the available data on the trial is inconclusive.”

NXT agreed to allow the current trials to be extended by another 12 months.

That extension of time gives the government the ability to push ahead with a third trial site, which would have been impractical otherwise, given the current legislation only allows trials until June.

The social services minister, Dan Tehan, welcomed the extension, which he said gave the government the ability to begin a trial in the Goldfields. But Tehan said the government was committed to a further expansion, and was happy to listen to feedback from the Australian Council of Social Service and others.

“We want to roll this out. We want the trials to be successful,” Tehan told the ABC.

“Because the feedback we’re getting from local communities is that the status quo isn’t working. The second, third-generation welfare dependence, and what that’s leading to, especially with children turning up to school without having been fed, etc – they want to see a real change. And they see this as a way to do that.”

Labor opposed any new trial sites, arguing there was insufficient evidence to show the existing trials were working.

“Labor requires a much more rigorous evaluation of the cashless debit card in the existing trial areas prior to any expansion,” the Labor frontbencher Doug Cameron told parliament.

He said the program had already cost $25.5m – or $12,000 per participant – though the government argued most of that was due to one-off startup costs.

The Liberal frontbencher Concetta Fierravanti-Wells said research found the scheme had been effective in reducing alcohol consumption and gambling.

The WA Greens senator Rachel Siewert said she had deep concerns with the NXT agreeing to expand the trial.

“I think it’s a bit rich quite frankly for them to say ‘oh yeah we’ll support another trial site – make it in Western Australia’,” Siewert said.

The crossbenchers David Leyonhjelm – who argued taxpayers didn’t want their money to pay for other people’s alcohol or gambling – Fraser Anning, Derryn Hinch and Cory Bernardi also supported the bill.

One Nation supported the scheme, leader Pauline Hanson channelling her 1996 maiden speech with claims of an “Aboriginal industry” in Australia’s welfare system.

The bill will now return to the lower house for amendments to be approved.

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