The cashless debit card could be another robodebt-style fiasco
The federal government has agreed to a whopping $1.2bn out-of-court settlement for the class action against the robodebt scheme. What stood out about robodebt was the government’s dogged insistence, over a number of years, that the approach was lawful, while targeting some of Australia’s most marginalised people with little regard for their rights. Belatedly, that position was reversed, paving the way for massive repayments yet limited compensation.
We are concerned that another robodebt-like fiasco may be on the horizon – this time involving the cashless debit card. A bill to make the card permanent, despite there being no evidence of its success, is before parliament. If passed, it will transfer about 25,000 people in the Northern Territory and Cape York who are on the basics card (an earlier version of income management) on to the cashless debit card.
The card forces a similar cohort of benefit recipients to those affected by robodebt on to the card issued by a private company called Indue Pty Ltd. Here, 80% of people’s social security payments are quarantined, aiming to prevent spending on alcohol, illegal drugs and gambling products.
The card and the account holding the quarantined funds are subject to terms dictated by the Department of Social Security. Just like robodebt, the government is undermining the foundational principles of the law. For robodebt, it was the concept of safety and fairness in the collection of debts. For the card it is the ability to choose a savings account that suits the customer’s needs and means.
A key legal protection not available to compulsory cashless debit card holders was raised in a Senate inquiry considering the expansion bill. Sending a debit card or credit card to a person who did not ask for one is prohibited under section 12DL of the Australian Securities and Investments Commission (Asic) Act 2001. This is aimed at protecting people from privacy breaches, anxiety and increased debt. Issuing a card in contravention of this section of the Asic Act is an offence of strict liability, attracting a civil penalty.
To get around this issue for the original trial, Indue, with the backing of the Department of Social Services, was granted a no-action letter by Asic in 2016. The no-action letter confirmed that the commission would not take any action against Indue for sending the card to people who did not ask for or want one. Agreeing to take no action is not the same as saying that sending unsolicited cards to people is not a contravention of the law.
The current no-action letter was limited to the first trial of the card and will not cover the ongoing and broader permanent program proposed in the bill.
In terms reminiscent of the nowdiscredited defence of robodebt, the government members of the Senate committee were dismissive, and recommended the bill be passed.
Both the Greens and Labor submitted dissenting reports that recommended the opposite. The ALP made direct reference to the serious questions raised about the potential issuing of tens of thousands of unsolicited debit cards. Labor senators called on the government to urgently clarify the legal standing of its cashless debit card policy.
It is yet to be seen whether the bill will pass and if it does, whether Indue or any new card issuer will be able to secure another no-action letter from Asic.
But serious questions remain. If the cashless debit card is ongoing, how long is long enough to allow a “temporary” breach of the law? Perhaps more importantly, if financial services regulation is designed to provide a safe and fair market for everyone, should governments be allowed to ignore these laws to continue their pursuit of people accessing social security?
The context for considering these questions is that the people targeted by the cashless debit card are already financially marginalised and have the greatest need for protection under the law.
Research has shown that the cashless debit card causes ongoing stigma and anxiety for those subjected to it, as well as making the management of money harder. Concerns of breaches to privacy have also been raised. All are issues that section 12DL of the Asic Act was meant to reduce, not facilitate.
In our view, the government’s commitment to pass this bill jeopardises the integrity of Asic’s regulatory powers. These powers should not be vulnerable to being switched on and off.
And the passage of this bill that will foist a debit card on those welfare recipients who are opposed to its uninvited imposition risks another robo-debt-like class action.
The bill requires more careful consideration, especially now that its potential illegality has been raised before a Senate inquiry and is on the public record.