The auditor general has been highly critical of the former government’s handling of the cashless debit card, finding the Morrison government had not demonstrated whether the scheme was working despite operating trials across the country for more than five years.
A scathing Australian National Audit Office (ANAO) report, tabled in parliament on Thursday, said the Department of Social Services ran the program and had “not demonstrated that the CDC program is meeting its intended objectives”.
The finding follows two independent evaluations of the card; with the former government spending more than $80m on its operation, it expanded the program into new regions and even tried to make it permanent.
The new Labor government has pledged to scrap the cashless debit card and all forms of income management as compulsory schemes but flagged it would first consult with affected communities.
The ANAO’s most recent audit was established after it had been highly critical of the department’s handling of the scheme in a report handed down in 2018.
Established in 2016 under the former Coalition government, the card quarantines 80% of a person’s welfare payments onto a debit card that cannot be used to withdraw cash or buy alcohol or gambling products.
The card was pitched as a solution to social problems in particular communities, and supporters claim there is anecdotal evidence it works.
But the ANAO report finds that, despite two independent evaluations, the government is yet to demonstrate the card is meeting these objectives.
It was particularly critical of a $2m independent evaluation conducted by the University of Adelaide, which was established after the ANAO found the first evaluation’s flaws meant it was “difficult to conclude whether there had been a reduction in social harm”.
The second evaluation had “similar methodological limitations to the first impact evaluation”, the ANAO said, a fact admitted by the government when it was finally released in February 2021. This meant it was still difficult to determine whether any outcomes could be attributed to the card.
However, before then, the government had sought to legislate to make the scheme permanent across sites in Western Australia, South Australia, and Queensland and expand it to the Northern Territory.
It had refused to release the report while parliament considered the bill, though Guardian Australia reported on leaked sections that cast doubt on the card’s effectiveness.
Ultimately, the government won enough support for the trials to continue, but the Senate opposed making the tests permanent.
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“The CDC program extension and expansion was not informed by an effective second impact evaluation, cost-benefit analysis or post-implementation review,” the ANAO report said.
The ANAO also revealed the government had also commissioned a cost-benefit analysis but again found its content was of limited use.
The card began in Ceduna, South Australia, East Kimberley, and the Goldfields in Western Australia but was expanded to Bundaberg and Hervey Bay in Queensland. It was more recently introduced into the Northern Territory and Cape York, which were already using “income management” forms.
Critics have long argued the card was ineffective at reducing social harm, stigmatized people on welfare, caused practical difficulties, including locking low-income people out of the cash economy, and that the millions spent on the scheme would be better spent on other social programs. Other independent reports have also questioned its effectiveness.
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In response to the ANAO, the Department of Social Services noted the audit did find the “department’s administrative oversight of the program is largely effective”.
“We acknowledge the rationale and supporting evidence that limitations constrained the second impact evaluation and the cost-benefit analysis to available data,” it said.
It rejected a recommendation for an independent review of the second evaluation, saying it would not be value for money given the department had already accepted its limitations.
It accepted the ANAO’s recommendation that the department develops “internal performance measures and targets to monitor CDC program implementation and impact better”.