Welfare Payment through Cashless Debit Card

This article discusses the introduction of the cashless debit card as a means of controlling income spending and distributing welfare payments. It explores the benefits of the card, such as reducing harmful spending habits and promoting expenditure towards health and education. The article also examines the impact of the card on income distribution and evaluates its effectiveness in achieving its objectives.

MICROECONOMICS

Microeconomics
Answer – 1 (a)
Welfare payment through the cashless debit card is one of the important initiatives that will
enable to distribute the welfare payments. The major justification for the introduction of the
cashless debit card is the control over income spending. Moreover, this scheme uses the split
of 80:20 with 20% moving into the bank account of the recipient and 80% moving to the card
where the card can be used for point of sale facilities. The major benefit is that the card
cannot be utilized to withdraw cash. The cashless debit card will help in the reduction of the
harmful impact in communities with dependence on high welfare, by essentially influencing
expenditure towards health, as well as maintenance of education. This can be a major boost
when it comes to the welfare of a child and other forms of expenditure because the usage of
the card will lead to benefits in terms of income distribution and keep the uneven expenses
from the bay (Australian government, 2019). Further, the distribution of cashless debit card
leads to an appropriate arrangement because it can be implemented properly. The
performance of the card can be ascertained in a better fashion, evaluated and reporting can be
done from time to time. Examination and evaluation of the card help to understand where the
payment is being linked. Hence, this leads to a fuller development of the economic scenario.
Answer - 1(b)
No, payment in kind is not inferior to payment in cash because the weaker section of the
society tends to exhaust the cash in different activities and ends up in losing money. When it
comes to the normal scenario, it is seen that the weaker section of the society tends to use
cash for gambling, alcohol, etc. Payment in kind is made in exchange for the goods and
services for the performance of the work. The value of the goods or services is deemed to be
equal in terms of the work performed. Payment in kind might be in terms of rent, grocery, etc
as it helps in the distribution of wealth in an effective manner. One of the major benefit of
this scheme that cash tends to be exhausted by the common classes that put a heavy burden
on the day to day necessities (Klien, 2018). Moreover, the introduction of the cashless card is
an important initiative that helps to ensure the payment in kind in a different manner. This
means that the payment can be done for the home essentials while cannot be used to
withdraw cash. Providing cash to the poor is not an effective plan as it can be
counterproductive. In this scenario, providing cash can lead to more harm than it does good.
Hence, under this scenario, providing cash in kind is a better option because this will help in
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Microeconomics
maximization of the productive capacity (Iwarsson, 2018). People will be able to have more
goods and this is a great step towards a lower level of debt, avoidance of alcohol, etc. Giving
cash is superior but that might lead to extravagant use and this can ultimately bring more
problems. To avoid such a position, the policy of providing in-kind can be said to be a better
option.
Answer 2(a)
The cashless debit card is based on the premise that alcohol, drug abuse, and gambling can be
reduced through it. Further, it poses a major movement in terms of removing poverty. It is
based on the principle of distributive justice. This was introduced to compensate people in a
different way that will help to save and spend. The system aims at the allocation of goods and
enables to shed light on the equitable distribution of income (Mankiw, 2010). The welfare of
the common masses is the main point of discussion when it comes to a cashless debit card.
The officials introduced it so that the bad behavior of the population can be curbed (Mankiw
& Taylor, 2011). This policy aims to strengthen the spending nature of the people and to
provide a balancing act. Further, this will lead to more savings as the income will be spent
only on useful motives.
Answer 2(b)
Yes, it will matter if the people using the cashless debit card do not get the desired advantage
and worse when compared to the allocation of their own expenditure. The main motive of the
introduction of the card lies in the fact that such will lead to a better perspective. The cashless
card aims to provide a better view of the expenses and in short, aims to benefit the
population. Hence, if this provision fails to create an impact and the policy fails to create the
desired result in terms of welfare then it will hurt the sentiments of the people and the
officers. The policy aims to create a better income distribution scenario and in short a better
one in comparison to the self allocation of expenditure. If this scenario is unattained then the
policy will fail (Reinhardt, 2011). Hence, the success of the policy matters so that proper
distribution of income happens. What matters is the method of income distribution and
policies that can handle poverty and inequality. But, if the policy fails to create the desired
result then it will be a major jerk to the authorities.
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Microeconomics
Answer – 3
As discussed in point 2, it can be said that the program aims to reduce useless expenditure
and to have a strong welfare system. Majorly, this was designed to eliminate the wastage of
money in alcohol, drug abuse, and gambling. An opposing argument that can be made in this
regard is that the people are better concerned with their expenditure and hence, self
expenditure is the best option. When it comes to the concern of self expenditure people are
better in managing their own expenses. Moreover, through the survey, it is ascertained that
the sites where this policy was done people are not addicted to alcohol, gambling, and drug
abuse.
Answer – 4
The policy of welfare payment and distribution of wealth is better viewed with the aid of this
system. It can be commented that the policy aims to reduce the disparity and create an
environment that is structured to meet the needs of the people. It can be supported on the
premise that the framework will lead to the proper distribution of income and reduce the
usage of cash in alcohol, gambling, etc (Kahneman & Deaton, 2010).
However, the same can be questioned on the fact that policies will lead to a harmful impact as
the common masses will be unable to utilize their cash in their own manner. This framework
can only suit when people are drug or alcohol addicted. However, if the same is not evident
then this policy will fail to create an impact. Payment in kind is not a better option as it
reduces the spending power in the hand of the public. It is the public that should be allowed
to ascertain the payment and spending (Nielsen, Bjerrum & Nielsen, 2018). The government
regulation in tune to this is not a viable option.
Answer 5 (a)
Income management via the cashless card is not a valid option because it will reduce the
purchasing power in the hands of the public (Reinhardt, 2011). When it comes to income
management, the cashless debit card can be said to be a harsh option as 80% of the money
will be blocked in it and only 20% will be transferred to the bank. Hence, this is a harsh
action and should not be implemented. This cannot be termed as income management
because poor people will be left with nothing. Even if this policy is done it should be done in
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Microeconomics
the ratio of 50:50 that will help in keeping a balance. An overall analysis gives an expression
that income management through the cashless card will not fit the public as it tends to
diminish the presence of money in the hands of the public (Donaldson, 2018). Furthermore,
curbing drug abuse and alcohol usage is not a viable option when it comes to this method.
Answer 5 (b)
No, this method should not be applied in other cases because it will tend to deteriorate the
situation and leave the public with the paltry amount. Other recipients’ should not be
attached to it because this option tends to curb the purchasing power in the hand s of the
public and creates utmost pressure. In times of contingencies, it will be a difficult action on
the part of the public. Pensioner, students should not be linked to this option as this will
create an unwanted issue. Based on the assumption of drinking and drug abuse this will be a
harsh action. Moreover, the practice will create immense pressure on the savings ability
because only 20% will be transferred to the bank. Overall, this would not be a perfect option
because this only leads to segregation of the income and hence, lead to overburden in terms
of financial capacity (Donaldson, 2018). Further, the resources that are spent on the cashless
debit card can be spent on other important works and this can be invested in job creation and
education.
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Microeconomics
References
Australian government. (2019). Cashless Debit Card – Evaluation. Retrieved from
https://www.dss.gov.au/families-and-children-programs-services-welfare-
quarantining-cashless-debit-card/cashless-debit-card-evaluation
Donaldson, D. (2018). Difficult to conclude’: impact of cashless debit card trial. Retrieved
from https://www.themandarin.com.au/95938-difficult-to-conclude-impact-of-
cashless-debit-card-trial/
Iwarsson, S. (2018). The ageing population – challenges and opportunities. Retrieved from:
https://journals.sagepub.com/doi/10.1177/0308022618787411
Kahneman, D. and Deaton, A. (2010). High income improves evaluation of life but not
emotional well-being. Proceedings of the National Academy of Science, 107 (38):
16489–93. Doi: https://doi.org/10.1073/pnas.1011492107
Klien, E. (2018). The Cashless Debit Card causes social and economic harm – so why trial
it again. Retrieved from https://theconversation.com/the-cashless-debit-card-causes-
social-and-economic-harm-so-why-trial-it-again-74985
Mankiw, N.G and Taylor, M.P. (2011) Economics (2nd ed). Andover: Cengage Learning
Mankiw, N.G. (2010). Macroeconomics (7th ed). New York Worth Publishers
Nielsen, TL, Bjerrum, M and Nielsen, CV. (2018). Older adults’ experiences and
expectations after discharge from home-based occupational therapy. British Journal
of Occupational Therapy 81(8), 450–459. Retrieved from:
https://doi.org/10.1177/0308022618756217
Reinhardt, U. (2011). Provide Cash, or benefits in cash?. Retrieved from
https://economix.blogs.nytimes.com/2011/01/21/provide-cash-or-benefits-in-kind/
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