INCOME MANAGEMENT: IMPACTS ON REFUGEE AND HUMANITARIAN ENTRANTS

INCOME MANAGEMENT: IMPACTS ON REFUGEE AND HUMANITARIAN ENTRANTS May 2012 This paper provides background information about the new income management scheme that will come into effect on 1 July 2012 as well as a summary of refugee community and service provider views on income management that were documented through the Refugee Council of Australia s (RCOA) annual community consultations. 1 Between September and November 2011, 43 consultations in eight states and territories were held to seek community views on issues for consideration in planning Australia s 2012-13 Refugee and Humanitarian Program. More than 730 people, representing nearly 200 organisations and 33 refugee communities, participated in the process. A discussion paper was circulated prior to consultations and included a question that asked: What concerns, if any, do you have about an income management scheme and its potential impacts on refugee and humanitarian entrants? 2 1. What is the Place Based Income Management (PBIM) scheme? Under income management, a percentage of a person s welfare payments are set aside for their priority needs and those of their children and family. Place Based Income Management (PBIM) will be piloted in five local government areas from 1 July 2012 Bankstown (NSW), Logan and Rockhampton (Queensland), Playford (SA) and Shepparton (Victoria) and follows on from the income management schemes that was introduced in the Northern Territory in 2007, and Western Australia and the Cape York in Queensland in 2008. From 1 July 2012, Centrelink welfare recipients who are identified under particular categories in the five pilot locations will either be voluntarily or involuntarily placed on the scheme. For those who are placed on income management, between 50% and 70% of their Centrelink payment will be allocated in a non-cash form to account for priority goods and services such as food, rent and utilities. Income managed funds can be directed towards a BasicsCard for purchases in approved stores. 3 Income managed funds cannot be used to purchase items such as gambling goods, alcohol, pornography and tobacco. A number of additional features will also be implemented: Matched Savings Payment an incentive payment to encourage people on income management to develop a savings pattern and increase their capacity to manage their money. If eligible, a person can receive $1 for every $1 they save, up to a maximum of $500. A person can only receive a Matched Savings Payment once. The Matched Savings Payment is paid directly into the person s income management account. To receive a Matched Savings payment an individual must: o be subject to income management (excluding people on voluntary income management and Cape York income management); o complete an approved money management course; 1 See: www.refugeecouncil.org.au/resources/intakesub.php 2 See: www.refugeecouncil.org.au/resources/intakesub/2012-13_intakesub_dpaper.pdf 3 Department of Human Services, Income Management, www.centrelink.gov.au/internet/internet.nsf/individuals/income_mgt_customer.htm#basic Suite 4A6, 410 Elizabeth Street Surry Hills NSW 2010 Australia Phone: (02) 9211-9333 Fax: (02) 9211-9288 info@refugeecouncil.org.au Web: www.refugeecouncil.org.au Incorporated in ACT ABN 87 956 673 083 The Refugee Council of Australia represents non-government organisations and individuals working with and for refugees in Australia and around the world

o maintain a pattern of savings from their discretionary funds for 13 weeks or longer after the commencement of the approved money management course; and o not have previously received a Matched Savings Payment. Voluntary Income Management (VIM) Incentive Payment a payment to encourage people who are not on income management but who might benefit from it to volunteer for income management and to continue to participate in it long enough to recognise its benefits. Individuals who voluntarily participate in income management are eligible for an incentive of $250 for every six months they remain on VIM. Income management is supported by financial counselling and money management services in the five sites, totalling $12.2 million over five years. Eligibility for income management Centrelink recipients in the five pilot sites who fall into the following welfare categories, or streams, will be placed on income management: 4 Stream Category Decided by Child protection measure Vulnerable measure Voluntary Measure For parents and/or carers referred for income management by a child protection worker. Child protection authorities will refer people for compulsory income management if the child protection worker deems that income management might contribute to improved outcomes for children at risk of neglect. This measure will apply at the discretion of a State or Territory child protection worker. For vulnerable welfare payments recipients who would benefit from income management in order to meet their social and parental responsibilities, to manage their money responsibly, and to build and maintain reasonable self-care. This stream provides Centrelink Social Workers with an additional tool to help individuals who are vulnerable and/or at risk (e.g. homelessness due to rental arrears). It can only be applied following an assessment by a Centrelink Social Worker. For people on income support who wish to volunteer for income management to assist them to meet their priority needs and to learn how to manage their finances for themselves and/or their family in the long term. Child protection worker Centrelink Social Worker Voluntary 2. Income management and impacts on refugee and humanitarian entrants The local government areas (LGAs) of Bankstown, Logan, Playford and Shepparton are all locations of significant refugee and humanitarian settlement. Rockhampton has seen recent secondary settlement of refugee and humanitarian entrants who have moved to the area for work and are under-represented in statistics. The following table highlights the demographic profile of the five pilot LGAs for the Place Based Income Management (PBIM) scheme: 5 4 See: Social Policy Research Centre. Evaluation Framework for New Income Management (NIM), p.8-10 for more information www.fahcsia.gov.au/sa/families/pubs/nim/documents/evaluation_framework_nim.pdf 5 Department of Immigration and Citizenship, DIAC Settlement Database, www.immi.gov.au/settlement, ABS (2011). 3218.0 Population Estimates by Local Government Area: 2001 to 2010, /www.abs.gov.au/ausstats/abs@.nsf/detailspage/3218.02009-10 RCOA (2012) Income management: Impacts on refugee and humanitarian entrants 2

Pilot location Humanitarian entrants who arrived between 1/7/01 and 30/6/11 6 LGA population size % of population who are humanitarian entrants Bankstown, NSW 1,593 188,814 0.84% Logan, Qld 2,834 282,673 1.00% Rockhampton, Qld 177 115,526 0.15% Playford, SA 1,210 70,010 1.73% Shepparton, VIC 1,048 57,088 1.84% Australia 129,988 22,328,847 0.58% As recent research has shown, humanitarian migrant households are more likely to be in receipt of Centrelink payments than other migrants or Australian-born residents 7, and often require Centrelink payments for a longer period of time as they settle in, study and look for work. Around 85% of humanitarian entrants households are in receipt of Centrelink payments, while around 28% of skilled migrants households make use of Centrelink payments. This is in part due to the fact that humanitarian entrants are far more likely to be studying full-time, studying and working or studying and looking after families. Research has also shown that, despite their motivation to find work, refugee and humanitarian entrants face significant barriers to entering the Australian labour market 8 and a myriad of challenges navigating complex new systems, cultures and expectations in Australia. Many refugee and humanitarian entrants also have considerable responsibilities to care and support family members overseas which can compound the financial pressures of rebuilding their life in a new country. Many new arrivals struggle to find stable, affordable housing which can lead to vulnerability to homelessness. 9 As such, it is likely that refugee and humanitarian entrants will be affected by the introduction of the PBIM policy in the five pilot locations. 2.1 The Northern Territory income management model Whilst the PBIM scheme does at least partially differ to the model introduced into the Northern Territory (NT) in 2007 10, and new model of income management introduced in the NT in July 2010, concerns have been raised by a number of local, territory and national organisations regarding the introduction of income management in the Northern Territory which offer considerations for the new pilot sites. While some of the feedback from refugee communities and service providers on the NT income management scheme has been positive, the majority of feedback has been critical. 11 In particular, many members of refugee communities regarded the NT income management scheme as a paternalistic, discriminatory and otherwise unfair restrictive measure on their financial autonomy. Specific concerns held with the Northern Territory program included: A lack of access to exemptions Refugee and humanitarian entrants reported there being a lack of access to exemptions from the NT income management scheme. Service providers understood this to have stemmed in part from the difficulties in the application process, particularly for those with low levels of English or literacy. 6 These statistics are for first place of residence in Australia after arrival and do not include refugee and humanitarian entrants who moved to the location after initial settlement. 7 Australian Survey Research Group (2011). Settlement Outcomes of New Arrivals: Report of findings. Study for Department of Immigration and Citizenship, DIAC, Canberra. www.immi.gov.au/media/publications/research/_pdf/settlement-outcomes-new-arrivals.pdf 8 RCOA (2010). What Works: Employment strategies for refugee and humanitarian entrants, see Section 4.2 Barriers to employment, RCOA, Sydney. www.refugeecouncil.org.au/resources/reports/2010_employment.pdf 9 Berta, L. (2012). Making it home: Refugee housing in Melbourne s West, Footscray Community Legal Centre, www.footscrayclc.org.au/images/stories/tenancy_report.pdf 10 FaHCSIA, Future Directions for the NTER: Discussion paper, www.fahcsia.gov.au/sa/indigenous/pubs/nter_reports/future_directions_discussion_paper/pages/individual_measures.aspx 11 RCOA (7 September 2010). Letter to Dr Jeff Harmer, Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs on Compulsory Income Management Scheme, www.refugeecouncil.org.au/resources/statements/100907_jharmer_income_mgt.pdf RCOA (2012) Income management: Impacts on refugee and humanitarian entrants 3

Relocation Services reported that some refugee families relocated from Darwin to other states partially because of what they felt was the income management program s discriminatory nature. Around nine of approximately 14 Somali families living in Darwin during 2010 were reported to have moved to other states following the introduction of the new income management program, despite the fact that the policy would still be applied to them after relocation. Difficulties in paying for goods and services Community members raised concerns about minimum amounts being applied to BasicsCard transactions by vendors, with $10 being incorrectly taken from the card for a $3 purchase. Detrimental impact on long term spending patterns Some people commented that the restrictions on spending instituted by the scheme had had a detrimental impact on the spending patterns of refugee communities. One service provider noted that the scheme appeared to undermine the capacity of community members to support each other, citing the example of the difficulties communities faced in pooling funds to assist families who are moving house. Communication Some community members in the NT reported that they were not provided necessary information about income management prior to its introduction and while subject to the policy. Some reported being left without important information, such as how to access both their cash and BasicsCard amounts. 2.2 Concerns about Place Based Income Management In late 2011 RCOA held face-to-face consultations in Bankstown, Logan, Adelaide, Shepparton and Darwin as part of annual community consultations. 12 During these consultations, a number of issues regarding income management were raised by refugee community members and service providers. These included: BasicsCard Many consultation participants felt that the BasicsCard would be likely to impose unjustifiable restrictions on the liberties and purchasing freedoms of recently arrived refugee families. Many refugee and humanitarian entrants prefer to shop at markets and specialty shops for their food, for access to particular produce which is preferred for either cultural or religious reasons, or because the market prices are lower than the commercial supermarket price. The option of purchasing food at markets or at local specialty shops shops sometimes run by former refugees establishing a business to fill a need in the community may be limited because of income management, particularly where businesses are reluctant to sign up to accept the BasicsCard or accept other forms of non-cash payment (e.g. some smaller businesses accept cash only). Recognising strengths Many people spoke about the fact that placing refugee and humanitarian entrants on income management during initial periods of settlement does not duly recognise the experiences that many people have had, such as living on limited resources for many years after fleeing from persecution. Often communities survive on low incomes by pooling money and distributing the impacts of big expenses. Having a restricted amount of cash available will limit the capacity of individuals, families and communities to participate in communal financial management and savings practices. Understanding and negotiating systems Recently arrived refugee and humanitarian entrants are likely to find it more difficult to advocate for themselves if they are assessed by Centrelink as being vulnerable, primarily due to their limited English and lack of knowledge regarding the Australian social security system. Refugee and humanitarian entrants are also likely to be negatively affected by the flow-on effects that income management causes, such as having to cancel, open and re-arrange bank accounts and rearrange direct debit payments. Financial literacy Refugees and humanitarian entrants are likely to remain no more financially literate than they would have otherwise been prior to the PBIM program unless culturally 12 See: www.refugeecouncil.org.au/resources/intakesub.php RCOA (2012) Income management: Impacts on refugee and humanitarian entrants 4

appropriate education relating to financial literacy is available and accessible to those subjected to income management. Stigmatisation Income management schemes tend to imply that those who are being managed need to be, and are unable to handle their finances in a suitable manner. Some consultation participants have raised concerns that the BasicsCard will stigmatise card holders. This is likely to undermine the promotion and enhancement of self reliance, life skills and independence in the early periods of settlement. Remittances Income management is likely to hamper the ability of refugee and humanitarian entrants to send remittances overseas to relatives who may be living in perilous situations. Studies show that families of former refugee and humanitarian entrants continue to remain reliant on remittances from migrants as a significant contribution to their social and economic development. 13 Supporting family members overseas may not be considered a priority need under the PBIM scheme, despite the fact that a family s survival may depend on remittances and the social and mental health impacts on family members in Australia who are unable to provide this support as part of their caring role may be significant. Relocation Some refugee and humanitarian entrants may relocate to other LGAs prior to the introduction of the PBIM on 1 July 2012 because they are afraid of being subject to income management. As previously mentioned, some families relocated from Darwin to other states partly because of the introduction of income management in 2010. It is possible that people will relocate to LGAs which are not under the PBIM program for similar reasons. Indeed, RCOA had received reports of refugee families seeking assistance from services to relocate out of the PBIM pilot LGAs. Housing instability Paradoxically, some consultation participants felt that newly arrived refugee and humanitarian entrants may face further housing instability as a result of being subject to PBIM. This would be due to the fact that some community members share low-cost accommodation with other humanitarian entrants and pool their money to pay rent in cash to landlords, therefore requiring a larger part of their Centrelink payment in cash form to cover housing costs. Landlords or people sub-letting may be unwilling to accept different forms of payment from tenants, particularly in more informal community arrangements. Identifying vulnerability Refugee and humanitarian entrants may not reveal their vulnerabilities to Centrelink for fear of being subject to income management, and therefore not receive the appropriate and adequate levels of support they may require. In addition, concerns have been raised that Centrelink social workers may not receive the necessary training and support to identify vulnerability in a way that recognises the particular complexities and resilience of refugee and humanitarian entrants who are rebuilding their lives in Australia. Undermining independence in settlement Were a refugee or humanitarian entrant be made subject to income management, it would contradict the Government s long-held view that refugees should work towards gaining independence and self-sufficiency as they settle in Australia. 3. Further reading Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) (URL). Building Australia s future workforce - Targeted locations income management, www.fahcsia.gov.au/about/publicationsarticles/corp/budgetpaes/budget11_12/documents/fahcsia_incomemanagem ent_web.htm Department of Human Services (URL). Income Management Information for individuals, www.centrelink.gov.au/internet/internet.nsf/individuals/income_mgt_customer.htm 13 See: Brinkerhoff, M. J. (2009) Creating an Enabling Environment for Diasporas Participation in Homeland Development in International Migration, 50(1), pp. 75-95; Singh, S., Cabraal, A. and Robertson, S. (2010) Remittances as a Currency of Care: A Focus on 'Twice Migrants' among the Indian Diaspora in Australia in Journal of Comparative Family Studies, 41(2), pp. 245-263; Cohen, S. J, (2011) Migration, Remittances, and Household Strategies in Annual Review of Anthropology, 40(1), pp. 103-114. RCOA (2012) Income management: Impacts on refugee and humanitarian entrants 5

Social Policy Research Centre (2010). Evaluation Framework for New Income Management (NIM) www.fahcsia.gov.au/sa/families/pubs/nim/documents/evaluation_framework_nim.pdf RCOA (7 September 2010). Letter to Dr Jeff Harmer, Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs on Compulsory Income Management Scheme, www.refugeecouncil.org.au/resources/statements/100907_jharmer_income_mgt.pdf RCOA (2012). Community views on post-arrival settlement support, Section 5.2 Income management, www.refugeecouncil.org.au/resources/intakesub/2012-13_intakesub_settlement.pdf RCOA (2012) Income management: Impacts on refugee and humanitarian entrants 6