A person making a card payment at a shop.
More than 15,000 welfare recipients across six locations are using cashless debit cards. Image by Dan Peled/AAP IMAGES

Cashless welfare card cost is way off the money

AAP FactCheck November 17, 2021
WHAT WAS CLAIMED

Indue, the federal government’s cashless debit card contractor, is paid $10,000 of public money per year for each card it administers.

OUR VERDICT

False. The true amount paid to Indue per card over the life of the scheme to date is estimated to be around $1200 annually.

A federal government trial to distribute some welfare payments via cashless debit cards has sparked outrage over the amounts purportedly paid to the private company administering the program. 

A Facebook post from October 27 says: “The Cashless Welfare Card gives the manager, Indue, $10,000 per annum per card, courtesy of the taxpayer. Imagine how those on welfare could live if, instead, that $10,000 was added to their welfare payments.” 

However, the $10,000 figure misinterprets information released early in the scheme, which started in 2016. The government recently put the current annual cost at $1100 per participant, which includes payments to Indue and other government expenses.

Based on publicly available information, AAP FactCheck estimates Indue – a Queensland-based payment services company – has been paid around $1200 per card each year to operate the scheme when costs and participant numbers are averaged over the life of the scheme to date.

The cashless debit card (CDC) program quarantines up to 80 per cent of welfare payments into a restricted bank account accessed by a card that does not allow cash withdrawals or spending on alcohol, gambling or cash-like products.

It began in February 2016 in trial areas in South Australia and Western Australia, and has been expanded to four more areas in WA, Queensland and the Northern Territory.

The claim that Indue is being paid $10,000 per card each year can be traced back to an ABC News report from May 2017, which says the program “is costing taxpayers up to about $10,000 per participant”.

The ABC article bases its figures on a response to a Freedom of Information (FOI) request that shows the “maximum” cost of the original 2016 trial was $18.9 million.

About 1850 people were included in the first year, meaning the average cost to taxpayers was about $10,000 per card.

But this refers to the program’s total cost in establishing the scheme, not just Indue’s payments. It also only represents the average cost of each card in the scheme’s first year, not the cost per card when looked at over a longer period.

The FOI document shows Indue’s contract was at the time valued at $7,939,809, which means Indue was paid a maximum of around $4300 per card during the initial trial period.

On October 28, Department of Social Security deputy secretary Liz Hefren-Webb told a Senate estimates committee the CDC cost per participant was now “approximately $1100”.

In an email, a spokeswoman for the department told AAP FactCheck the $1100 figure was the latest available annual cost per participant, but the figure varied each year as participant numbers change. At the time of writing, the program had 15,383 participants.

“Generally speaking, if the participant numbers increase across the current sites, per-participant costs will decrease,” she said.

Calculating the exact amount Indue has been paid per card is complicated because the number of participants has grown over time and fluctuates month to month. The value of Indue’s contract has also increased as the trial expanded.

The current total value of Indue’s CDC contract is $70,340,628 however, the department said this represents the maximum value of the contract from March 2016 to December 2022. The spokeswoman said the actual cost of the contract since 2016 is $50.3 million.

AAP FactCheck estimates the amount paid to Indue across the life of the program to date is around $1200 per card each year.

This is based on the $50.3 million paid to Indue over four and a half years since March 2016 and an average of about 9000 participants per year in the program to date. The figure does not, however, represent the current cost per participant, which may vary based on the number of people involved in the program and changes to Indue’s contract.

The $1200 estimate refers to Indue’s operational contract only. Indue was additionally paid $2.87 million for an information technology build contract during the initial CDC trial phase in 2015-2016.

Indue did not respond to a request for comment on the claim.

The Verdict

The claim that Indue is paid $10,000 per cashless debit card appears to be based on a misinterpretation of figures released early in the program. When the costs of the program and number of participants are averaged out over its life so far, AAP FactCheck estimates the annual amount paid to Indue to be around $1200 per card.

The federal government says the current average cost of the program is $1100 per participant each year, including both payments to Indue and other expenses.

False – The claim is inaccurate.

AAP FactCheck is an accredited member of the International Fact-Checking Network. To keep up with our latest fact checks, follow us on Facebook, Twitter and Instagram.

Updated Wednesday, November 17, 2021 17:10 AEDT: Clarifies wording in brief verdict to show $1200 is annual cost.

Updated Thursday, November 19, 2021 12:10 AEDT: Adds paragraph to clarify quoted figures are based on operational costs not including a $2.87m IT build contract.

All information, text and images included on the AAP Websites is for personal use only and may not be re-written, copied, re-sold or re-distributed, framed, linked, shared onto social media or otherwise used whether for compensation of any kind or not, unless you have the prior written permission of AAP. For more information, please refer to our standard terms and conditions.