Uncertainty surrounds the revenue outlook for Queensland-based payments solutions provider Indue Ltd after opposition leader Anthony Albanese confirmed that Labor would terminate the Morrison Government’s controversial welfare quarantining card if it wins the federal election.
Indue has been the main issuer of the cashless debit card since it was first rolled out in 2016 and the company generates at least 12 per cent of its annual revenue from the program.
The government mandates cashless debit cards for working age welfare recipients in selected regional areas to control their spending choices.
Funds loaded on to the cards cannot be used to purchase alcohol and gambling services.
The program is controversial because it is targeted exclusively at communities with high indigenous populations. This has led Labor and Green senators to describe the program as racist.
The cashless card is funded only until the end of the year and the prospect of it being scrapped looms as a business risk for Indue.
According to several reports, Indue has received A$70 million from the government since 2016 to issue cards and provide call centre services under the program.
Last year the government earmarked $26 million to be paid to the Brisbane company over 24 months for overseeing an expansion of the scheme to the Northern Territory and Far North Queensland.
The deal with the government is material for Indue because it is questionable whether the business would have remained profitable without the government contract.
In the 12 months to the end of June last year the company generated fee income of $96 million and a net profit of $2.5 million.
While Indue’s commercial interest apparently partly hangs on the re-election of the Morrison government, the company’s involvement in the cashless debit card could still be at some risk.
The Australian National Audit Office, which in 2019 raised questions about the Department of Social Services’ procurement and risk monitoring for the program, is expected to release a second performance report by the end of the year.
The report could include recommendations for the card issuing functions to be put out to a competitive tender and for other financial institutions to be involved in the program.
Public support for the cashless debit card appears to be waning.
In a submission to a senate inquiry in 2020 the Brotherhood of St Laurence panned the scheme, arguing it led to perverse outcomes.
“The cashless debit card applies a blanket assumption of incapacity and significantly reduces choice and agency,” the Brotherhood said in a joint submission with Familycare.
“As currently designed, the CDC is just a compliance program and the weight of evidence suggests an expensive and not particularly effective one.”
Peak welfare sector advocate, the Australian Council of Social Service, has also railed against the program on the grounds that it undermines the rights of indigenous communities.
“More than three quarters of people subjected to the card identify as being Aboriginal or Torres Strait Islander,” ACOSS observed in a 2019 report.
“Aboriginal and Torres Strait Islander people must have control over the policies and programs that affect them.
“The Cashless Debit Card fails this test.”