Appendix B: Current income management evaluation activities 8

B1. Findings from the evaluation of the child protection scheme of income management and voluntary income management measures in Western Australia

The Australian Government implemented a trial of two separate models of income management in the Kimberley and Cannington regions in WA starting in November 2008. The evaluation of these trials, led by FaHCSIA and supported by WA Department of Child Protection (DCP), was undertaken by ORIMA Research Pty Ltd. The report was publicly released by the Minister on 8 October 2010 and can be found can be found on the FaHCSIA website.

The evaluation was designed to assess:

• the impact of income management in improving child wellbeing
• the impact of income management on the financial capability of individuals and
• the effectiveness of the implementation of income management.

The evaluation findings are based on various data sources including:

• quantitative data collected from surveys of people on VIM and CPSIM, and the comparison group9
• online surveys of Centrelink and DCP staff, as well as financial counsellors, money management advisers, WA peak welfare sector bodies and community organisations with an interest in income management
• administrative data from Centrelink, WA DCP and financial management service providers and
• qualitative data based on focus groups and interviews conducted with community leaders in the Kimberley area.

Since the start of trials of income management in WA in November 2008 to 30 April 2010, there has been a total of 1,131 people in receipt of Centrelink payments who have participated—328 who have been referred to income management by the WA DCP and 803 who have volunteered for income management. At 30 April 2010, there were 598 people on income management—226 people on CPSIM and 372 people on VIM. See Figure 1, below.

Figure 1: Number of current CPSIM and VIM participants (28 November 2008 to 30 April 2010)

Figure 1 identifies the number of current child protection income management and voluntary income management customers as of 28 November 2008 to 30 April 2010.

The graph illustrates that the number of voluntary income management customers is larger than those on the child protection measure, with both measures experiencing steady increases in customer’s number from 28 November 2008 to 30 April 2010.

B2. General findings

Overall the evaluation report suggests that income management had made a positive impact on the wellbeing of individuals, children and families. Moreover, since the introduction of income management, CPSIM respondents reported decreases in a range of negative behaviours in their communities.

There was an initial perception that compulsory income management (including CPSIM) would not be as well received or as able to achieve the best outcomes for individuals as would a voluntary scheme of income management (VIM). However, contrary to the common view that compulsory schemes, such as the Child Protection Scheme of Income Management (CPSIM), are not as effective as voluntary schemes, the evaluation findings showed that that both voluntary and child protection measures are having equally positive effects on the wellbeing of families in WA.  Around 62 per cent of people on CPSIM and 60 per cent of people on VIM thought that income management had made their life better.

A further breakdown reveals that more people on the VIM scheme (51 per cent of people surveyed) than the CPSIM (34 per cent) felt that income management had made their lives “a lot better”.  The remainder felt that income management had made their lives “a bit better” (9 per cent for VIM and 28 per cent for CPSIM). 

This finding is reinforced by the willingness of both people on CPSIM and VIM to recommend income management to others. Sixty-five per cent of CPSIM and 82 per cent of people on VIM reported that they had already recommended income management to someone else or planned to do so in the future. (A similar sentiment appears evident in the NT where early indications in the Barkly area show that 75 per cent of those who could have exited from the new income management scheme chose to remain on VIM).

There were three main reasons why people on income management had recommended or intended to recommend the scheme:

• income management can have a positive impact on people’s lives
• income management helps improve budgeting skills and saving money and
• due to the benefits associated with the BasicsCard.

The report also identified areas for improvement in terms of the income management schemes.  There was a low level of awareness among people on income management as to the proportion of funds that was being managed and the reasons they were subject to income management.  The report also revealed a need to increase the number of merchants that are approved to accept the BasicsCard and a need to improve communications to people on income management. The most commonly reported potential negative outcome was that some people might become dependent on income management.

B3.  Specific findings

There was an increase in the percentage of people able to buy essential items and meet priority needs, and an increased ability to save money on a regular basis.  Around 74 per cent of respondents reported that they had been unable to pay for at least one essential item (such as food, utilities, rent, bills and so on) in the 12 months prior to commencing income management.  However, during income management the proportion of people unable to pay for such items decreased by 25 per cent.

After exiting income management, many people reported that their increased ability to meet their own, and their children’s, priority needs that occurred whilst they were on the scheme continued and, in some cases, improved. Figure 2 below shows the proportion of people on CPSIM who ran out of money to pay for an essential item category before, during and after (in the case of people formerly on CPSIM) income management participation. During the income management period, both current and people who were formerly on CPSIM were less likely to run out of money for food, utilities, rent and other bills.

Whilst on income management (and compared with when they were not on income management), CPSIM respondents were most likely to report that the following positive impacts had emerged:

• they and their children had eaten less takeaway food (56 per cent and 55 per cent respectively)
• their children had eaten more food (54 per cent)
• they and their children had eaten more fresh food (53 per cent and 48 per cent respectively)
• they had purchased more clothes for their children (53 per cent) and
• they had purchased more toys for their children (48 per cent).

Figure 2: Proportion (per cent) of people running out of money for essential items, by item type: before, during, and after income management

Figure 2 illustrates the proportion of people running out of money for essential items before, during and after income management

Before income management, 59% of respondents were running out of money for food. During income management, this percentage dropped to 29%. After income management only 16% of people were running out of money for food.

Before income management, 40% of respondents were running out of money to pay utility expenses. During income management, this dropped to 9% of respondents.

Before income management, 31% of respondents were running out of money for the children’s education. During income management, this dropped to 14%. After income management, the percentage of people running out of money for children’s education increased to 21%. 

In terms of their ability to save money, around 70 per cent of CPSIM and 80 per cent of VIM respondents reported that they were regularly able to save money when they were on income management.  This is a significant increase from 51 per cent and 54 per cent respectively before being involved in the income management scheme.

The evaluation report indicates that the take up rates for money management and financial counselling services are low.  Around 31 per cent of all CPSIM respondents and around 14 per cent of all VIM respondents reported that they had attended financial counselling or money management services while they were on income management. Around 87 per cent of VIM respondents who accessed a financial management service thought that this service had provided them with skills to manage their money better. The introduction of the matched savings scheme and incentive payments on 9 August 2010 is expected to improve the take up of financial counselling services in the future.

Despite the low take up rates, over two-thirds of respondents across the four key stakeholder groups believed that income management had led to at least a moderate improvement in financial management among people on CPSIM, and around one-third of respondents across three key stakeholder groups believed that the trial had led to a large improvement in financial management among those people.

About 55 per cent of financial counsellors and money management advisers, and 52 per cent of Centrelink staff believed that the VIM trial had led to at least some decrease in the incidence of trial participants seeking emergency relief, emergency payments or other financial crisis support.

At a persons’ mid-term review, WA DCP case workers indicated that for 46 per cent of CPSIM cases people were ‘very likely’ or ‘fairly likely’ to manage their income to prevent neglect occurring in the future. At their final review, this had increased to 61 per cent of CPSIM cases.

Since the introduction of income management, CPSIM respondents reported decreases in a range of negative behaviours in their communities, including:

• 70 per cent reported less drinking
• 67 per cent reported less violence
• 62 per cent reported less gambling and
• 60 per cent reported less humbugging.

In addition, 56 per cent of CPSIM respondents felt that there had been an increased participation in cultural activities since the implementation of income management.

B4.    Potentially negative outcomes from income management

The most commonly reported potential negative outcome that stakeholders thought could emerge from income management measures in WA was that some people might become dependent on the system and not be able to manage their finances without remaining on income management. 

From July 2010, the income managed funds ratio was reduced from 70 per cent managed/30 per cent not managed to 50 per cent managed/50 per cent not managed for people on VIM.  The CPSIM ratio remained unchanged.  Although a large number of service providers (Centrelink [68 per cent] and financial services providers [56 per cent]) believed that the change had an adverse impact on the effectiveness of VIM, a few respondents commented that it was useful in promoting VIM to potential clients.

B5.    ORIMA Research Pty Ltd recommendations

ORIMA recommended the Government undertake the following actions.

• Develop a communications campaign that positively promotes the benefits of income management.
• Improve communications with people on income management about how the program operates.
• Provide targeted training about income management to DCP and Centrelink staff.
• Increase the number and variety of merchants accepting BasicsCard.
• Improve communications with people on CPSIM about why they are going on income management and how it will help them.
• Encourage participation in VIM upon completion of CPSIM.
• Give people on VIM a choice of the ratio of funds subject to income management.

B6. Cape York welfare reform

The evaluation is being conducted over three years with 3 parts.

• An implementation review of the FRC.
• A progress report covering implementation issues and early progress in achieving outcomes.
• An outcome report summarizing reports and providing evidence about whether change occurred against the four objectives of the reform:
  • rebuilding social norms
  • restoring Indigenous authority
  • increasing individual engagement in the real economy and
  • transitioning people to home ownership.

Key evaluation questions include:

• Are social norms and behaviours changing?
• Was the CYWR implemented as agreed?
• Have governance arrangements supported changes in the service provision, social norms and behaviours?
• Has service provision changed in a way that supports norm and behaviour change?

A comprehensiveevaluation framework and program theory for the Cape York Welfare Reform Trial

8. The information in this section was provided by FaHCSIA.
9. Table 2 presents the research design/number of interviews.
10. Number of people who participated in the survey as a percentage of all people in the sample who were contacted.