United Nations Public Service Awards Case Studies

In July 2007, the previous Australian Government announced major and urgent changes to its welfare payments system for approximately 20,000 customers in remote and vulnerable Indigenous communities. Most of these customers were located in central Australia. The program’s objective was to encourage socially responsible behaviour by parents to enhance the well being of their children.

“Income management” is used as a mechanism within Welfare Payments reform to withhold a percentage of government income support and family assistance payments and direct those payments to ensure that children’s needs are being met. The initiative involves Centrelink (Australian’s social service delivery agency) quarantining 50 % of a customer’s income support payments so that those funds can be used to purchase goods and services, such as food, clothing and other priority goods. Customers cannot use these quarantined monies to purchase alcohol, pornography, tobacco products and gambling products.

Following the passage of legislation underpinning income management in August 2007, income management was first implemented in several communities in remote Australia (Northern Territory) in September 2007.

Under the original arrangements, the Government quarantined funds in two major delivery approaches:

• store cards on demand (requiring customers to regularly visit Centrelink offices to receive new gift cards); and
• direct deduction facilities (referred to as merchant managed accounts) where income managed funds are transferred to specific goods and services providers.

The manual arrangements generated significant problems and limitations:

1. For Centrelink it was very labour intensive, expensive, error prone, and slow to deploy. For example, the end-to-end store card process from ordering through to reconciliation involved approximately forty steps, and this is a scenario where there no errors or exceptions. These steps were required to ensure appropriate security and audit controls.
2. For customers it lacked flexibility, was time consuming and restricted customers in their choice of where to shop. Store cards were not reloadable and Centrelink had to reconcile any residual balance on the card against the customer’s payments. New store cards had to be issued once the card balance got to zero. Some customers were travelling significant distances to a Centrelink office 2-3 times per week to obtain store cards before being able to go to a supermarket to shop.
3. For merchants it was an expensive and time consuming administrative burden that was not scalable because of the level of manual book-keeping required.
4. There were media reports of customers trading store cards for cash, defeating the intent of the policy.
These existing problems were expected to get worse and the welfare payment reform initiative was therefore at risk of being perceived as failing to meet its objectives.

Following the Australian Federal Election in November 2008, the newly elected Prime Minister, the Honourable Kevin Rudd MP highlighted the need to reform health and social welfare systems. Subsequently, the Government made the implementation of improved income management arrangements a priority.

What is the initiative about? (the solution)
In response to the limitations of the original income management initiative, the Department of Human Services (DHS) was asked to find a more effective solution for income management. Working in conjunction with other stakeholders, DHS planned, developed and coordinated the implementation of a card solution (known as the “BasicsCard”). The BasicsCard is PIN-protected and allows customers to use their income managed funds to purchase goods/services at approved merchants using existing EFTPOS functionality. For the Government The solution was quickly deployed, delivering significant efficiencies over the existing solution by reducing face-to-face time with Centrelink case officers. Customers are required to undertake a face-to-face interview with the Centrelink in order to obtain a BasicsCard, but do not need to go into the office to have their BasicsCard ‘reloaded’. As a consequence, the number of store cards that Centrelink need to maintain is reducing, and this downward trend is continuing. The BasicsCard system provides aggregate level information on the broad categories of goods and services purchased (e.g. 55 % spent on food, 34% on clothing). This information was previously unavailable to the Australian Government and is an important input to evidence based policy. The BasicsCard is PIN protected and if lost/stolen, cannot be used. The card can be quickly deactivated and subsequently activated if the customer urgently requires a new card. It prevents the incidence of customers selling store cards and vouchers in secondary markets to purchase prohibited substances. Another immediate benefit was the ability to use the BasicsCard to support the delivery of payments to disadvantaged income managed customers as part of Government’s response to the Global Financial Crisis. The broad sign up of merchants in relevant areas has meant that a broader base of businesses benefited from the flow of much needed funds into the local economy. For the Customer The BasicsCard has substantially increased customer convenience, dignity and flexibility. Customers are able to use it at the services/goods outlet of any approved merchant. Unlike store cards, which are limited to specific stores and require cards to be issued when the value of the card has been spent, the BasicsCard is ‘re-loaded’ with the customer’s income managed funds on a regular basis or as an immediate allocation. The BasicsCard’s popularity with customers is demonstrated by an 85% take up rate in the first three months of implementation. Centrelink staff reported that customers are proactively requesting a BasicsCard having seen their friends and family use them. In addition, control of the money remains with the customer - the owner of the BascicsCard and the account. For the Merchant The introduction of the BasicsCard resulted in a level playing field for smaller merchants who previously believed that they were disadvantaged under the old scheme. Smaller merchants claimed that they were losing customers to the big supermarkets as store cards were store specific and unable to be used by other stores and smaller merchants. Smaller merchants complained that they did not have the resources to undertake the burdensome administration associated with direct deduction facilities.

Who proposed the solution, who implemented it and who were the stakeholders?
Overseeing the project was a steering committee comprising three Government agencies, Department of Human Services (DHS), Department of Families and Housing, Community Services and Indigenous Affairs (FaHCSIA) and Centrelink. This governance arrangement was the mechanism that formal briefs and communication occurred up to the Minister for Human Services, the Minister for FaHCSIA, other relevant Ministers (such as the Minister for Finance and Deregulation) and as appropriate, the Prime Minister. Consultants and Card Transaction Providers DHS sought the services of an independent consultant to undertake an assessment of the card and transaction provider market capabilities and commercial practices. The consultant advised that only one company could meet the critical requirements with an existing product that could be rapidly deployed. This company, Retail Decisions (ReD) was engaged, helping to develop a card solution, a merchant approval process and IT support and processing facilities. Regulatory Stakeholders Because this was a new financial product, strong collaboration with a number of regulatory stakeholders was required. A decision was made early to implement the BasicsCard solution within the existing law, rather than changing the law to facilitate the implementation. The existing "reloadable" stored value solutions in the Australian market operated within tight limitations that were not suitable. Accordingly, DHS needed to obtain regulatory confirmations or exemptions from a number of regulatory bodies - the Australian Securities and Investments Commission (ASIC), Reserve Bank of Australia, Australian Taxation Office and the Australian Transaction Reports and Analysis Centre. The solution is novel in a number of respects and the re-loadable stored value nature of the cards raised a number of new policy issues for regulators. Nevertheless, the exemptions and ruling were obtained within the required timeframes. This was achieved through early high level initial contact with the regulators, detailed submissions that "spoke the regulators' language" and discussed the arguments on both sides of the key issues, rapid, detailed responses to questions raised by regulators, clear communication of the required timeframes and respectful but regular follow-up to ascertain progress. DHS consulted with ReD at length regarding regulatory exemptions to ensure that the provider was comfortable with both the description of the solution being given to the regulators and the relief being sought. DHS also ensured that relevant policy Departments were consulted on the analysis of the law underpinning the approaches to the regulators. Relevant policy departments and responsible Ministers were informed about the lodgement of the requests to regulators. Customers and Community Groups Market research was undertaken with Indigenous customers and community groups to gain a better understanding of their needs and preferred communication methods. This process directly impacted on the name and branding of the card and development of DVDs in 10 Indigenous languages. Merchants A merchant engagement strategy was developed to provide a management framework for stakeholders and their issues. Merchants were consulted to better understand their needs and to provide input into the card system design and operation. Merchants participated in seminars to ensure that they understood and could comply with the BasicsCard application and approval process.

Describe how and when the initiative was implemented by answering these questions
a. What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The new Australian Government made the implementation of a new and improved solution a priority, setting in place key objectives for its successful delivery. The initial strategy focused on the 20,000 customers that were subject to income management under the Northern Territory Emergency Response and was subsequently extended to include a small trial in Western Australia for Child Protection Measures and Cape York. It was also intended that the initiative could be extended to include other regions after appropriate reviews. A key consideration for the solution was that the sourcing and implementation of the initiative had to be undertaken in a very short period of time and in remote areas. The overarching objectives of the BasicsCard Income Management initiative were to: 1. reduce the costs and risks associated with delivering income managed funds to customers; 2. deliver payments in a secure manner that does not increase the management costs to the Government; 3. ensure the solution is as easy to use as possible and allows customers to purchase priority goods and services from approved merchants of their choice; 4. reduce the administrative overhead for approved merchants under the current arrangement; 5. be scalable in terms of other Income Management arrangements and geographical distribution of the population; and 6. provide the capability for the Government to introduce new programs that require payments to be restricted to specific merchants, specific locations and/or specific goods and services. These objectives were derived from experiences with the original manual payment delivery mechanisms such as store cards and direct payments and the assessment of these mechanisms against the desired policy outcomes. In addition, the solution was required to support the following: 1. no cash out at Automated Tellers or with purchases; 2. no customer transfer of funds between accounts; 3. reloadable; 4. useable only at approved merchants; 5. PIN protected; and 6. allows customers to purchase goods or services using the EFTPOS network. In order to meet the tight timelines, DHS utilised existing financial industry technology and infrastructure rather than creating new platforms and operations. A tightly controlled project plan was developed and, given the tight timeframes involved and urgent nature of the issues to be resolve, a direct source procurement strategy was developed and executed. A stakeholder engagement/communications plan was developed in collaboration with the three agencies to ensure extensive consultation with merchants, customers and regulatory bodies. A comprehensive implementation strategy was developed that detailed precise implementation activities, logistics and a roll-out timetable. The roll-out had to be structured to take account of the tropical wet season and scheduled visits of the Centrelink Remote Visiting Teams to remote communities. In addition, the roll-out had to be integrated with Centrelink’s IT release schedule to ensure interface development was not compromised. DHS seconded Centrelink staff, and the overall effort was carried forward by a broader ‘virtual’ team across the agencies. All was overseen by a high-level cross-agency executive steering committee chaired by DHS, providing direction, advice and the coordination point of information for the two Ministers involved.

b. What were the key development and implementation steps and the chronology? No more than 500 words
In response to the limitations of the original income management initiative, DHS was asked to find a more effective solution for income management. DHS quickly assembled the project team and put in place formal high-level cross-agency governance arrangements to provide oversight and advice to the project throughout the phases. The successful delivery of the BasicsCard was achieved through strategic cross-agency governance and by undertaking project streams in parallel. A business case was developed and endorsed by the Government and resourcing was allocated. The Government announced the funding for the new payment card in the Australian Federal budget in May 2007 A procurement strategy was developed to address the procurement needs of the project and a detailed statement of requirements was developed. Regulatory approvals commenced, contract negotiations for a card and transaction provider was conducted, and on 23 July 2008 a contract was signed with the card and transaction provider. The branding and design of the BasicsCard, and for the merchant and customer information packs, commenced during the procurement phase and ran in parallel with procurement and system design activities. An easily identifiable and sensitive brand concept was developed following consultation with stakeholder groups. A stakeholder engagement strategy was developed encompassing major retailers, retail associations, community groups and financial industry and regulatory authorities. There was ongoing consultation, feedback and advice sought from the different stakeholders throughout the phases of the project. A communications strategy was developed very early in the project to support Ministerial briefings and statements, Parliamentary processes, stakeholder meetings, and media communications. A Centrelink media and communications officer was seconded to the project team to facilitate responsive communication between the project team, the Centrelink media and communications team, other Departments and Ministerial Offices. The card system design work was based on leveraging existing EFTPOS standards and was refined following workshop discussions with key stakeholder groups. The card system design was completed on 7 August 2008 and testing was undertaken between 28 July and 3 September 2008. The internal Centrelink system configuration and development of interface was undertaken in parallel. The implementation phase covered the logistics of deploying all aspects of the solution prior to the launch, including: • systems build (including the Card Transaction Provider and Centrelink), • initial production and delivery of cards/customer information packs; • engagement with merchants and activation of a significant number of merchants within the target areas; • delivery of staff training; and • implementation of customer and merchant support services (phone support, training, and online information). The phased deployment schedule was developed by Centrelink and took account of community needs, readiness of merchants, training requirements and seasonal tropical conditions. The first BasicsCard was issued in Katherine on 8 September 2008, and was progressively roll-out to other areas in the Northern Territory during October, November, and December 2008. The successful implementation of the project is illustrated by the fact that the contract was signed on 23 July 2008 and roll-out of the BasicsCard began just 6 weeks later on 8 September 2008.

c. What were the main obstacles encountered? How were they overcome? No more than 500 words
In response to the limitations of the original income management initiative, DHS was asked to find a more effective solution for income management. DHS quickly assembled the project team and put in place formal high-level cross-agency governance arrangements to provide oversight and advice to the project throughout the phases. The successful delivery of the BasicsCard was achieved through strategic cross-agency governance and by undertaking project streams in parallel. A business case was developed and endorsed by the Government and resourcing was allocated. The Government announced the funding for the new payment card in the Australian Federal budget in May 2007 A procurement strategy was developed to address the procurement needs of the project and a detailed statement of requirements was developed. Regulatory approvals commenced, contract negotiations for a card and transaction provider was conducted, and on 23 July 2008 a contract was signed with the card and transaction provider. The branding and design of the BasicsCard, and for the merchant and customer information packs, commenced during the procurement phase and ran in parallel with procurement and system design activities. An easily identifiable and sensitive brand concept was developed following consultation with stakeholder groups. A stakeholder engagement strategy was developed encompassing major retailers, retail associations, community groups and financial industry and regulatory authorities. There was ongoing consultation, feedback and advice sought from the different stakeholders throughout the phases of the project. A communications strategy was developed very early in the project to support Ministerial briefings and statements, Parliamentary processes, stakeholder meetings, and media communications. A Centrelink media and communications officer was seconded to the project team to facilitate responsive communication between the project team, the Centrelink media and communications team, other Departments and Ministerial Offices. The card system design work was based on leveraging existing EFTPOS standards and was refined following workshop discussions with key stakeholder groups. The card system design was completed on 7 August 2008 and testing was undertaken between 28 July and 3 September 2008. The internal Centrelink system configuration and development of interface was undertaken in parallel. The implementation phase covered the logistics of deploying all aspects of the solution prior to the launch, including: • systems build (including the Card Transaction Provider and Centrelink), • initial production and delivery of cards/customer information packs; • engagement with merchants and activation of a significant number of merchants within the target areas; • delivery of staff training; and • implementation of customer and merchant support services (phone support, training, and online information). The phased deployment schedule was developed by Centrelink and took account of community needs, readiness of merchants, training requirements and seasonal tropical conditions. The first BasicsCard was issued in Katherine on 8 September 2008, and was progressively roll-out to other areas in the Northern Territory during October, November, and December 2008. The successful implementation of the project is illustrated by the fact that the contract was signed on 23 July 2008 and roll-out of the BasicsCard began just 6 weeks later on 8 September 2008.

d. What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
The Australian Government invested $17 million to improve the delivery of income management through the introduction of an income management card. The Department of Human Services (DHS), Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and Centrelink jointly implemented the BasicsCard and funds were distributed between the participating government bodies. DHS had primary responsibility for the development of the BasicsCard technical capability and development and implementation of this capability, as well as for managing the relationship with the card transaction provider. FaHCSIA had responsibility for income management policy as it relates to the BasicsCard, including the development of policy guidelines for merchant approval, product design, trademark of card and implementation. Centrelink had responsibility for rolling the solution out to income managed citizens, including communication with customers and communities, issuing cards, processing merchant applications and approvals and undertaking compliance activities. Given the urgent timelines associated with the implementation, a high-level steering committee (chaired by DHS) was established to oversee the project and quickly marshal resources. Resources from across all participating agencies were utilised to deliver the BasicsCard. An over-arching project plan was developed – together with underpinning strategies covering procurement, stakeholder engagement, communications and implementation in order to ensure optimal resource utilisation in a project that had several inter-dependent streams running in parallel. In order to ensure that resources were maximised, existing service delivery resources were utilised. For example, existing Indigenous call centre staff and Indigenous case officers in area offices were a critical success factor in the engagement with the community and in formal front line service delivery of the BasicsCard. A number of non-Commonwealth third parties were also engaged to provide advice and services to the project, including Retail Decisions (ReD), who is currently the card transaction provider. ReD is responsible for providing the card, activating approved merchants, providing merchant IT support and the processing required to facilitate transactions by customers on income management through the EFTPOS system. As published on the Australian Tender website, the annual value of the contract with ReD is AUD$2.5m. The use of an existing service provider ensured that the BasicsCard could be delivered within the tight timeframe. An implementation strategy was developed to ensure that resources were engaged at critical times and that there were an appropriate mix and amount of resources to handle enquiries and facilitate training. This is demonstrated by the progressive roll-out card over a three month period.

Is the initiative sustainable and transferable?
The sustainability of the initiative is evident from the support of the communities, merchants and Government agencies in its operation. There has been strong take-up by customers, with many going into Centrelink specifically asking for a ‘green card’ (the colour of the card) after seeing friends and family use them. This is because the BasicsCard is significantly more flexible and creates greater access to a wider variety of merchants and services than was previously available. Customers have more choice in where they wish to shop, making it easier to put food on the table for their children. Customers can choose to have the value of their BasicsCard reloaded immediately or regularly without going into a Centrelink office. The BasicsCard provides greater security for customers. The BasicsCard is PIN protected, providing additional security against unauthorised use that is not present with store cards. If a customer’s BasicsCard is lost or stolen the card can be stopped, preventing unauthorised access and a new BasicsCard and PIN is issued immediately. The sustainability of the initiative is further supported by the use of industry standards, the national EFTPOS network and compliance with regulatory standards. The BasicsCard has resulted in significantly more flexible and streamlined access to income managed funds for disadvantaged customers, creating greater access to a wider variety of merchants and services than previously available. Customers are able to get information about the BasicssCard through Centrelink Agents within communities, through Centrelink’s Remote Visiting Teams and call centres. The BasicsCard has reduced the administrative burden on businesses, resulting in the broad uptake of the card by merchants. One Northern Territory business praised the introduction saying ‘BasicsCard is flavour of the month…’ and that it was ‘100% better’ than the previous system with ease of access, usage and less time consuming for business and customers. The initiative is sustainable because merchants anywhere in Australia can apply to be able to accept the card, subject to them accepting the merchant terms and conditions (including not selling prohibited items). In addition to administrative benefits for the merchant, there are significant administrative benefits for Government. For example, as more customers are issued with their BasicsCard and more merchants approved, the number of store cards that issued is declines markedly. The BasicsCard system for income management delivery is both sustainable and robust. The BasicsCard was recently used in the delivery of the 2008 Australian Government Economic Security Strategy payments to customers on income management (the Government’s response to the Global Financial Crisis). The BasicsCard was quickly used to credit a one-off ‘economic stimulus payment’ to income managed customers. Since 9 December (the day the first economic stimulus payment was made to customers) some $15.47m was spent using their BasicsCard out of a total of $22.5m spent on BasicsCard since its inception. As far as can be ascertained, the Australian BasicsCard is only the second implementation in the world of an electronic card for quarantined benefit payments, the other is the EBT card issued by the US Department of Agriculture.

What are the impact of your initiative and the lessons learned?
There are a number of critical success factors that led to the successful implementation of the BasicsCard solution: strategic governance; ongoing engagement with Ministerial sponsors; tight project management and scope management; early and regular consultation with stakeholders; a merchant engagement strategy; on-the-ground visits by the project team; consistent and coordinated communications; and the use of industry standards and national infrastructure. The implementation of the BasicsCard in very tight timeframes to the unique customer group, demonstrated the effectiveness and benefits of a coordinated cross-agency effort. Importantly, the Government demonstrated the ability and action-orientation to deliver a financial product as a new platform for service delivery in a timeframe the private sector would find hard to match. Since the BasicsCard’s introduction, customers, merchants and staff have all experienced positive outcomes and have enjoyed the benefits of a more streamlined and secure service delivery mechanism. Customers have expressed strong support for the BasicsCard initiative. The BasicsCard can be used at a wider range of stores than with the previous Income Management arrangements, providing customers with more choice for shopping, while maintaining the policy intent of restricting purchases to everyday needs such as food and clothing as mentioned previously. The card is now accepted at a wider range of stores than the existing store cards and merchants who were once precluded from the income management process can now participate. For many local merchants, the BasicsCard provided a significant increase in sales, as customers are now able to use income managed funds in their stores. Merchants indicated that the previous administration of providing goods for income managed cards was burdensome and difficult. Feedback from merchants indicates that merchants have found the new BasicsCard process very easy and are enthusiastic about customers being able to use their BasicsCard in their stores. The implementation of the BasicsCard also demonstrates that modern financial products have a significant role in the delivery of Government services to even the most disadvantaged, remote and financially illiterate customers. They benefit through greater security, increased choice and increased financial awareness through the ability to monitor their balances and make decisions about expenditure. One of the learnings from the implementation is that merchants are not a homogenous group - there are at least three significant groupings of merchants: major/national merchants, small merchants and local merchants and all have different responses to information and different requirements. This better understanding and awareness of merchant segments enables better tailoring of information and consultation. However, one of the most important leanings arising from the BasicsCard implementation was the dependency on the take-up of merchants in the overall strategy to participate as ‘approved’ merchants to provide BasicsCard customers with the widest possible choice as to where they make their purchases. This is not only beneficial for customers, but is beneficial for competition and the local economies.


Institution Name:		Department of Human Services
Institution Type:		Government Agency
Contact Person:		Marie Johnson
Title:		Chief Technology Architect
Telephone/ Fax:		+612 6223 4723
Institution's / Project's Website:		+612 6223 4699
E-mail:		marie.johnson@humanservice.gov.au
Address:		65 Canberra Avenue GRIFFITH
Postal Code:		2603
City:
State/Province:		Australian Capital Territory
Country:		Australia

The Problem

Solution and Key Benefits

Actors and Stakeholders

(a) Strategies

(b) Implementation

(c) Overcoming Obstacles

(d) Use of Resources

Sustainability and Transferability

Lessons Learned

Contact Information