Economic Justification of Cashless Debit Payment System in Australia

This article discusses the economic justification of the cashless debit payment system in Australia and its impact on welfare distribution. It explores the benefits of the system in terms of access to basic necessities, security, time-saving, and accountability. The article also considers the consistency with standard economic arguments and ethical frameworks, as well as the potential drawbacks and arguments against consequentialism. Finally, it analyzes the balance of justifiability of income management via the cashless debit card system.

Microeconomics
Students Name
Institution

Microeconomics 1
Economic Justification
Undoubtedly, the cashless debit payment system is fast gaining momentum in the
Australian welfare distribution. The fact that this cashless system has strict budgetary measures,
it guarantees access to basic necessities1. The fact that the disbursement of the funds prioritizes
access to basic needs such as food rent makes it easier for vulnerable groups of people to enjoy
better livelihoods. The cashless system is secure due to the online nature of the transactions. The
welfare recipients do not handle cash but have access to debit cards with which they purchase
budgeted products hence enhancing the security of the process. There is no need for recipients to
queue for cash handouts thus the assertion that it is time-saving in an economic sense. Welfare
recipients do not have to carry cash around thus reducing loss instances. Also, this system
promotes accountability in public expenditure. This is because there is a paper trail on how
welfare payment is used. In addition, the cashless debit card system is faster due to the fact that it
is done online2.
Consistency with the Standard Economic Argument
Usually, in-kind payments have lesser value as compared to cash payments. For welfare, a
welfare recipient budget line (A-B).In the case that the recipient receives 1000 USD worth of
clothes, he could buy more clothes illustrated by 0-E instead of O-B. Worth noting, there is no
increase in the purchase of other goods of the recipient spends all of his income on one type of
good. However, a cash gift of the same worth illustrated by budget line A-C-E will increase the
possible number of clothes bought alongside other goods (D-C-E). The Dotted line is a
1 Langton,”The cashless debit card trial is working and it is vital”-
2 Dave, “ Here are the advanatges of cashless payments”

Microeconomics 2
representation of other kinds of goods that could be bought with cash payment3. In a way,
welfare benefits should not be cashless. This is because in-kind payments restrict the number of
goods a person can access. However, cash payment provides the leeway to access more goods as
compared to payments in kind for welfare distribution. Overall, cash payments are ideal for
welfare distribution. For maximum benefit of welfare benefits, it is important that recipients of
the same be allowed to choose what they need to spend money on rather than be decided for.
2.a .Ethical Frameworks
Notably, consequentialism perspective on ethics advocates for the cashless debit card system
for the distribution of welfare benefits. Essentially, the Consequentialism approach to ethics
dictates that the rightfulness or rightfulness of actions or decisions depends on the
consequences4. Subsequently, actions with good consequences are good and the reverse is true.
3 Ingrymayne, “In kind and Cash transfers”
4 BBC.Com, “Consequentialism”

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In this scenario, the cashless debit card system seeks to enforce budgetary constraints which aim
at reducing the temptation of welfare recipients to engage in activities identified as social ills.
These activities include gambling and alcoholism among others. The debt payments do not allow
welfare recipients to purchase alcohol or gamble on the payments thus upholding some morality
on social responsibility. The fact that freedom of choice has been snatched away from the
recipients makes it wrong according to human rights perceptions. However, the consequence to
clear society from perceived social ills justifies the means according to consequentialists.
2(b). Is the cashless system making recipients worse off?
Owing to the fact that welfare payments through the cashless debit system restrict
consumer choice or preferences. Also, this system effectiveness depends on the timely payments
of the welfare benefits. This goes to say that delayed payments have the effect of negatively
affecting the recipient's access to basic necessities. The delay might be due to late payments, the
technological hitch of the debit card reading machines. Also, the implementation of restricted
goods depends on the merchant stores and not so much on the budgetary restrictions. For
instance, a merchant shop that sells both restricted and unrestricted goods might charge
unrestricted goods along with side unrestricted goods thus defeating the purpose of the system5 .
Also, in other cases, the recipients are required to use specific outlets which might be far from
the recipient thus making it time-consuming and costly. This might happen due to failure of card
reading machines thus delaying access to basic necessities6. Whereas the card system is intended
to curb behaviors considered socially harmful, it might deny recipients access to adequate basic
necessities due to the fact that the income is budgetary and restrictionary in nature.
5 Arthur,”The computer says no;automatic product blocking for the cashless debit card”
6 Prichard,”The pros and cons of moving to a cashless society”

Microeconomics 4
3.Arguments Against Consequentialism
Basically, the inadequacies of the consequentialism have been embraced in the deontological
perspective on ethics. According to deontological views, an act is right or wrong from the outset.
Consequences do not determine the uprightness or otherwise of an act7. Consequentialism has
been faulted for overriding the freedom of choice principle. According to the universal Human
rights declaration, every human being has the right to choose to which the consequentialists
ignore8 Consequentialism might lead to bad outcomes due to the fact that that the act or decision
might lead to either good or bad consequences. There is uncertainty as to the outcomes because
different persons make different decisions. The fact that not all decisions are morally inclined
makes the consequentialist approach to ethics impractical Also, consequentialism lacks
flexibility in the sense that it applies general perceptions hence the assertion that it might not
provide better outcomes for the individual situation.
4 Arguments for and Against the program on an opposing ethical framework
7 Misselbrook, “Duty,Kant,Deontology”
8 Wrigjht, ”An introduction to moral frameworks,”

Microeconomics 5
Noteworthy, consequentialism is hinged on emotions and intentions unlike a deontological
approach to ethics. Basically, deontology is advocated for because of the fact that it encourages
freedom of choice which is a fundamental human right principle9 The fact that deontology looks
at the act itself rather than the consequences makes the act or decision predictable rather than the
consequentialism which is assessed based on the outcomes of the act or decision10 In way,
deontology follows a moral compass . However, morality is subjective hence a limitation to this
ethical approach Arguably, deontology is not practical in the real world due to the fact that not
all actions or decisions are guided by morality11. The freedom of choice has been eliminated in
the cashless debit system. This is because recipients of welfare proceeds are expected to spend
the benefits in a way dictated by the system. Through the system, there are budgetary constraints
as to the type of goods the recipient of welfare benefits can use the allocation for. This is a denial
of freedom of choice.
5. Is income management via the cashless debit card justifiable on balance or not?
Arguably. Moral justifications for income management outweigh economic justifications12 One
of the reasons for the implementation of the cashless system is to prevent the use of welfare
benefits for social ills such as alcoholism, prostitution, and gambling. On moral ground, all
9 Barrow & Khandar”,Deontology”
10 Chakrabarty,”Comparing virtue,consequentialist and deontological”
11 O’Gorman et.al, ‘What is the difference between deontological and consequentialist theories of
medical ethics?
12 Cohen,”On health and welfare”

Microeconomics 6
human beings are entitled to basic necessities to which governments are obligated to provide.
The fact the government discharges benefits through a cashless system, social morality is easily
achievable, unlike a cash economy where recipients have the choice due to the physical cash in
their possession. Economically, income management is good due to the fact that it prevents
finance-related crimes such as money laundering13 The fact that there are no cash trading places
makes it easier to curb the vice. Also, income management helps to stabilize macroeconomic
factors of the economy. With cash, oversupply in the economy might lead to higher pricing for
goods and services which derails economic growth thus advocating for a cashless economy.
On a balance of possibilities, controlling a cashless economy is much easier than
controlling a cash economy. With a cash economy, the implementation of contractionary
monetary policy will take time to yield results, unlike a cashless economy. Overall, income
management is justified under the cashless debit system.
5(b)
Owing to the restricted nature of the consumption choices of cashless debit syatem for welfare
benefits,it is advisable that the same be applied to all persons,students and penshioners alike.This
is because all these persons have different needs but similar vulnerabilities hence it is vital to
deal with the case equally. In the event that students are issued with welfare enefits through
13 Marria, “What a cashless socity could mean for the future”

Microeconomics 7
cashless economy.,they will be able to acquire financial discipline in the sense that there are
budgetary restrictions. The fact that cashless sytems has been implemnetd towards penshiioners
is because of the desire to control social evils such as gambling,alcoholism. Students also fall
pray to these socially behaviours of alcoholism and gambling hence this measure will reduce
such instances.
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