2. The new model of income management

Income management was first introduced in 2007 as part of the Northern Territory Emergency Response (NTER). The initial rollout of income management only affected people who received income support or family assistance payments and who lived in the 73 prescribed communities, their associated outstations and the 10 town camp regions of the Northern Territory.

The new model of income management was introduced on 1 July 2010. The new program differs from the previous model, in particular with regard to the targeting of particular groups of income support recipients. Importantly NIM applies to people who meet criteria independent of their race or ethnicity—this is consistent with the Racial Discrimination Act of 1975 (RDA). Information on earlier initiatives and background to the development of new income management is at Appendix A.

Implementation of new income management commenced on 9 August 2010 in the Barkly region (Zone 1).  Implementation in Zone 2 – Alice Springs, Katherine, East Arnhem Land and other outback areas – commenced on 30 August. Implementation in the remaining zones commenced on 20 September (outback areas) and 4 October (Darwin and Palmerston). It is expected that most people will have been transitioned from the old scheme to new income management by 31 December 2010.

2.1 What is income management?

Under income management, a percentage of a person’s welfare payments is set aside for their priority needs and those of their children and families. This helps to ensure that:

• money paid by the government for the benefit of children is directed to the priority needs of children
• women, the elderly and other vulnerable community members are provided with better financial security, and
• the amount of cash in communities is reduced to help counter substance abuse, gambling and other anti-social behaviours that can lead to child abuse and community dysfunction.

Income managed funds cannot be used to purchase excluded goods, including alcohol, home brew kits, home brew concentrates, tobacco products, pornographic material and gambling goods and activities.

Income managed funds must be directed towards agreed priority needs and services such as food, rent and utilities. This process assists families to meet essential household needs and expenses.

2.2 Rates of income managed funds

An individual's income support and family assistance payments are income managed at 50 per cent for the participation/parenting (mainstream), vulnerable and voluntary streams and 70 per cent for the child protection stream. Any lump sums (e.g. Baby Bonus) and advance payments are income managed at 100 per cent. The portion of an individual’s regular fortnightly payments that is not subject to income management (i.e. the discretionary funds) is paid in the usual way.

Income management does not reduce the total amount of payment an individual receives from Centrelink. It only changes the way in which they receive their payments. Individuals can spend their income managed money by using the BasicsCard at approved stores, or by arranging direct payments to organisations such as community stores, landlords, or utility providers.

2.3 Categories or streams of new model of income management

The NIM model is more targeted in its approach than the previous income management measure under the NTER.  For the purposes of this framework, NIM has been described using four broad streams or categories:

2.3.1 Participation/parenting (mainstream) stream

• For disengaged youth—people aged 15 to 24 years who have been in receipt of specified welfare payments (Youth Allowance, Newstart Allowance, Special Benefit or Parenting Payment) for more than three of the last six months.
• For long-term welfare recipients—people aged 25 years and above who are on specified welfare payments such as Newstart Allowance and Parenting Payment for more than one year in the last two years.

2.3.2 Child protection stream

• 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. This measure will apply at the discretion of a State or Territory child protection worker.

2.3.3. Vulnerable stream

• 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. Individuals on Age pension or Disability Support Pension and those subject to financial harassment). It can only be applied following an assessment by a Centrelink Social Worker.

2.3.4 Voluntary stream

• 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. 

The pathways into the new income management measure are shown in Figure 1, below:

Figure 1. From old to new: an illustration of major pathways for the new income management measure1(Opens in a new tab/window)

Figure 1. From old to new: an illustration of major pathways for the new income management measure
Figure 1 represents the pathways for customers to experience the new model of income management.

Previous income management customers under the Northern Territory Emergency response and new customers to income management can transition on to new income management through three compulsory measures or through voluntary income management. Each compulsory measure has specific eligibility factors.

Individuals moving off income management can be out of scope, exempt from income management or otherwise not be subject to income management due to moving to a non-income management area.

2.4 Additional features including incentives for people on income management

The new model of income management has a number of additional features.

1. The Matched Savings Payment is 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:
   • be income managed (excluding VIM and Cape York income management)
   • complete an approved money management course
   • maintain a pattern of savings from their discretionary funds for 13 weeks or longer after the commencement of the approved money management course  and
   • not have previously received a Matched Savings Payment.
2. The Voluntary Income Management Incentive Payment is a payment to encourage people who are not income managed 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.
3. Income management is supported by financial counselling and money management services, totalling $53 million over four years. Income management arrangements introduced under the NTER will operate until 30 June 2011, while people are transitioned to the new model.

2.5 Exemptions

The new model of income management provides pathways to evidence-based exemptions for people under the participation/parenting (mainstream) stream of income management. For people with children, exemptions will be based on a financial vulnerability assessment and demonstrated evidence of responsible parenting activities for their children. These include regular child health checks and immunisations, and participation by the child in age appropriate, social, learning or physical activities.

Individuals referred to the child protection or the vulnerable streams are not eligible for exemption pathways. However, appeal processes are available through Centrelink, the Social Security Appeals Tribunal and the Northern Territory Government. See Section 2.6 below for more detail.

For people without children, exemptions will be based on a demonstrated record of or participation in employment and study.

2.6 Appeal rights

Under the new model of income management people will have access to the full range of review and appeal rights through Centrelink’s Authorised Review Officers and the Social Security Appeals Tribunal. Additionally reviews and appeals processes will be available through the Northern Territory Government specifically for the Child Protection Measure

1. As this figure only represents the major pathways for the new income management measure, it may not capture the nuances of individual circumstances.