What is 'income management' and how does it affect my payments?
Here's an explanation of income management based on the provided legislation:
In Plain English
Income management is a tool designed to help people budget and ensure that welfare payments are used to cover essential needs. If you're subject to income management, a portion of your welfare payment is set aside to pay for things like food, clothing, and housing. This money is managed through an income management account, and in some cases, you might receive a BasicsCard to make purchases. The goal is to make sure that priority needs are met and to reduce spending on things like alcohol, gambling, and tobacco. There are different types of income management, including voluntary and enhanced versions, each with its own rules about how much of your payment is managed and what you can buy with it.
Detailed Explanation
The legislative context describes two primary forms of income management: income management under Part 3B of the Social Security (Administration) Act 1999 and enhanced income management under Part 3AA of the Social Security (Administration) Act 1999.
Income Management (Part 3B)
- Purpose: The objects of Part 3B, as outlined in section 123TB of the Social Security (Administration) Act 1999, are to reduce hardship, support budgeting, and limit spending on alcohol, gambling, tobacco, and pornography. It also aims to reduce harassment related to welfare payments and encourage responsible behavior.
- How it works: If a person is subject to income management, a portion of their welfare payment is deducted and credited to their income management account (sections 123WA and following of the Social Security (Administration) Act 1999). The Secretary can then debit amounts from this account to meet the priority needs of the person and their dependents.
- Income Management Record: The Social Security (Administration) Act 1999 establishes an "Income Management Record" (section 123VA) which acts as a single point of reference for reporting on and referencing the collective balances of all the separate income management accounts.
- BasicsCard: Participants may receive a BasicsCard (sections 123YC and 123YE of the Social Security (Administration) Act 1999) to access their income managed funds for priority needs.
- Voluntary Income Management: A person can voluntarily agree to be subject to income management under section 123UFA of the Social Security (Administration) Act 1999, by entering into a voluntary income management agreement (section 123UM of the Social Security (Administration) Act 1999). The Minister may determine areas where voluntary income management is available (section 123TGA of the Social Security (Administration) Act 1999).
Enhanced Income Management (Part 3AA)
- Purpose: Similar to Part 3B, enhanced income management aims to prevent welfare payments from being spent on products and services that contribute to social harm (Explanatory Statement, Social Security (Administration) (Enhanced Income Management Regime—Commonwealth Referrals and Exemptions) Determination 2023). It also provides budgeting support.
- Qualified vs. Unqualified Portions: Under enhanced income management, a welfare payment is split into "qualified" and "unqualified" portions (section 123SJ and following of the Social Security (Administration) Act 1999). The "qualified portion" is managed through a BasicsCard bank account and can only be used for approved goods and services. The "unqualified portion" is paid directly to the recipient for discretionary spending.
- BasicsCard Bank Account: The qualified portion of payments is credited to a BasicsCard bank account (section 123SLH of the Social Security (Administration) Act 1999). This account is linked to a debit card (SmartCard) that can be used at most merchants, except those primarily selling excluded goods or services (Explanatory Statement, Social Security (Administration) (Declinable Transactions and BasicsCard Bank Account) Determination 2023).
- Excluded Goods and Services: Excluded goods and services typically include alcohol, tobacco products, gambling, and pornographic material (section 123SLI of the Social Security (Administration) Act 1999).
- Voluntary Transfer: Individuals subject to income management under Part 3B can request to transfer to the enhanced income management regime (section 123SIA of the Social Security (Administration) Act 1999).
Crediting of Accounts
- The Social Security (Administration) (Income Management – Crediting of Accounts) Rules 2025 specify circumstances where amounts are credited to the Income Management Record and a person's income management account. This often relates to debits made for issuing or increasing the value of a BasicsCard.
Important Considerations
- The Minister has the power to determine percentages for the qualified portion of welfare payments and may specify different percentages for different types of payments (Social Security (Administration) Amendment (Income Management Reform) Act 2023).
- The Secretary can vary the percentage of qualified vs. unqualified portions in certain circumstances, such as when a person is unable to access their BasicsCard account due to technological issues or natural disasters (Social Security (Administration) Amendment (Income Management Reform) Act 2023).
- There are rules and guidelines around who is subject to income management, including vulnerable welfare recipients, those with child protection concerns, and voluntary participants (Social Security (Administration) Act 1999).