ECON111, Session 1, 2019: Analysis of the Cashless Debit Card System

This report provides a detailed analysis of the cashless debit card system implemented by the Australian government for welfare payments. The assignment begins by examining the economic reasoning behind the system, highlighting its role in promoting financial management, reducing crime, and saving time. It then contrasts the cashless system with standard economic arguments related to in-kind payments and target efficiency. The report delves into ethical frameworks, specifically consequentialism, and its implications for individual choice and human rights. It discusses the challenges faced by cashless recipients, including the cost of accessing services, technological reliance, and privacy concerns, as well as the potential for welfare loss due to limited production. The report also explores the arguments against consequentialism and the strengths and weaknesses of deontology. Finally, it presents arguments for and against the cashless debit card system, considering its justification for income management and its potential application to all welfare recipients. The report concludes by offering a balanced perspective on the system's benefits and drawbacks, supported by references to relevant literature and economic concepts.

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Economics Assignment 1
Q.1 (a) Economic Reasoning for the Cashless Economy
In recent years, the Australian government has introduced the debit card system for the
payment of welfare benefits. The debit system is considered accountable and transparent. This is
because there is an electronic trail of transactions. Also, the debit card system encourages
financial management due to the fact that the income is strictly budgeted for specific goods. Only
allowed goods can be purchased using the debit card system in this case hence there is income
management (Langton 2017). Also, the debit system is meant to discourage crime such as money
laundering due to the fact that there is no cash to trade places. Activities such as gambling,
alcoholism have been successfully reduced thus extending the labor participation rate responsible
for economic growth (Bickers 2017). Such social behaviors negatively affect labor outcomes if
not checked. Economically, the debit cashless system is time-saving due to the fact that the
transaction occurs online and there are no reasons for the recipients to queue. The debit card
system reduces wastage of resources by stipulating what should be bought and the quantity to
which it is bought.
Q. (b).Standard Economic argument
Noteworthy, the payments in kind are in line with the standard economic assertion that
payment in kind is effective in welfare distribution as compared to the payment in cash. This is
because cashless payments are target efficient. The fact that in-kind payments do not provide
room for recipients to spend cash on other products and services considered luxurious. The fact
that welfare payments are meant to improve the livelihood of the recipients makes it justifiable to

Economics Assignment 2
require recipients to spend more of their income on basic necessities rather than luxurious habits
such as alcoholism and gambling. Also, the fact that welfare payments are target based on
vulnerable members of society means that the personal needs of this group have been identified.
Also, payments in kind harbor less risk of undue inducement as compared to cash payments thus
the assertion that in-kind payments are the best. In addition to lower risk, payments in kind
ensure uniformity in the distribution of welfare payments thus the assertion that there is a
likelihood of collective benefits accruing to the targeted welfare distribution.
2 (a) Ethical Frameworks
Worth noting, consequentialism is one of the most notable ethical perspectives which is
premised on the notion that the end justifies the means. Specifically, consequentialism implies
that the wrongfulness and the uprightness of action or decisions are based on the consequences
(BBC.Com 2019). The debit system is aimed at controlling the expenditure of welfare benefits
to basic necessities and not luxuries ends such as gambling and alcoholism among others. The
fact that the card restricts the purchase of alcohol and gambling activities denies the recipients
the right to spend the benefits on whatever the recipient chooses to spend the income on. From a
human rights perspective, the principle of choice, which is one of the universally recognized
principles of natural justice contradicts with this ethical approach. According to
consequentialism, the more good consequences emanate from an action, the right the action or
decision is and vice versa (Ingrymayne N. d ).

Economics Assignment 3
2(b) Are Cashless recipients worse off
Despite the noble intentions behind the enrollment of the debit card system for
welfare payments, there are several challenges that make the recipients worse off. For instance,
the fact that the debt system works in specified outlets makes it costly and time-consuming for
recipients residing far away from the specified outlet (Prichard 2019). Also, the online nature of
the payments relies on technological gadgets which are subject to technological hitches which
are likely to lead to delayed access to welfare payments hence delayed access to basic
necessities. In addition to technological reliance, the debit system exposes the recipient's data to
privacy concerns due to the fact that the recipient's personal details are available online.
In the case of a data security breach, recipients might end up losing more than a meal ticket
to fraudsters who might use their confidential information online. Also, the fact that restricted
goods can be bought alongside unrestricted goods can lead the recipients worse off in the event
that merchant shops sell both restricted and unrestricted goods under the same roof. Due to
limited production, there will be a welfare loss as illustrated in the figure below. In the case that
there is reduced production and consumption of basic commodities, there will be a loss in
welfare. This goes to show that despite the debit card system, in the case of limited production or
limited consumption, welfare recipients will not benefit from the system.

Economics Assignment 4
Economics online.2019). Net welfare loss. Economics online.Available
athttps://www.economicsonline.co.uk/Definitions/Net_welfare_loss HTML
3. Arguments against Consequentialism
Notably, the consequentialist approach to ethics has several setbacks. Specifically,
consequentialism denies the freedom of choice to welfare recipients. Recipients are bound to
receive basic necessities and not choose luxurious activities such as gambling. In a way, this
approach is a moral compass to which it is impractical in today's world. Not all actions and
policies are based on a moral compass (Wright 2015). This approach leads to uncertainty of the
outcomes hence not the best approach to decision making. Some opinions say that the
consequentialism perspective is rigid in nature (Misselbrook 2013). According to

Economics Assignment 5
consequentialism, only the consequences determine the rightfulness or wrongfulness of the
action or policy directive.
Arguably, consequentialism has been criticized for presenting better outcomes for the
general audience rather than the individual outcome. Also, consequentialism is restricted to
actions as compared to decision hence the limitations of applications to decisions. The approach
to ethics fails to provide a measure for” goodness” hence it is difficult to know how much good
is enough to justify the actions. Lastly, consequentialism doesn’t apply to special needs interest
groups in the sense that it fails to adhere to feelings.
4 Arguments for and against Deontology
Worth noting, the deontological approach to ethics has been praised for addressing the
inadequacies of consequentialism such as upholding the freedom of choice principles.
Specifically, deontology advocates the uprightness or wrongfulness of an act based on the act
itself (Barrow & Khandor 2019). As contrasted with deontology, consequentialism assesses the
goodness or badness of an act from its consequences rather than the act itself unlike
consequentialism, deontology advocates for human dignity by allowing that persons be involved
and consulted in actions and policies that directly affect them(Chakrabarty 2013 ). Worth noting,
deontology provides certainty as to what actions are to be followed and what actions are not to
be followed based on established principles.
As compared to consequentialism, deontology is simple and tradition-inspired. However,
deontology is hinged on morality (Studebaker 2012). Essentially, deontology ethics is founded

Economics Assignment 6
on moral absolutism. The fact that not all policy directives are guided by morality makes this
ethical perspective not so practical in this day and age makes this approach impractical. Also,
deontology lacks details regarding public matters hence the fact that it is an idea for individual
scenario rather than public interest scenario. Essentially, deontology focuses on individual
responsibility and value.
5(a) Is there a justification for cashless debit card system income management
Owing to the benefits accruing to the society due to the cashless debit system income
management. Through income management, there are no wastages of resources (Cohen 2017). In
this case, there is no wastage of cash due to the fact that recipients receive what they need and
not any luxuries. Also, through this income management, recipients are able to access basic
necessities mandatorily. In the event that some recipients were given cash, some of them might
opt for more luxurious preferences instead of basic human necessities such as food, shelter as
opposed to gambling and alcoholism. The fact that the government is the distributor of the
welfare benefits justifies the income management.
This is because the government has a duty to provide basic human needs to all its citizens
but also make other allocations to public necessities .lack of income management might lead to
account deficits if welfare benefits are not regulated. Through the management of income, the
government is able to maintain a stable financial environment due to the fact that there is no cash
in circulation (Marria 2018 ).

Economics Assignment 7
5(b) Should it be applied to all recipients
In my humble view, the implementation of the debit card system to all welfare recipients
is well thought out. This is because the debit card system instills the discipline of financial
management to which all members of the society need to be well versed in orders to have better
currents and future financial outcomes(Riji 2016). Through the debit card system, recipients are
spared the temptation of engaging in social and economic evils such as gambling, alcoholism,
money laundering e.t.c. All these social evils make all members of the society students,
pensioners are vulnerable to financial mismanagement. Also, financial stability is easily
achievable in a cashless economy as opposed to an economy running on physical cash. With
physical cash, it is impossible to control money laundering and other vices as compared to a
cashless economy.

Economics Assignment 8
References
Barrow, M.J. & Khandar, B .P. (2019).Deontology. NCBI. [Online]Available at
https://www.ncbi.nlm.nih.gov/books/NBK45929[Accessed 29 April 2019]
BBC.Com.2019.Consequentialism. BBC.com. [Online] Available at
http://www.bbc.co.uk/ethics/introduction/consequentialism_1.shtmlany[Accessed 29 April 2019]
Bickers, C. (2017). Cashless welfare card ‘a success’: report. News.Com.[Online].Available at
https://www.news.com.au/national/politics/cashless-welfare-card-a-success-report/news-story/
23af606451b27348a54c6a463ce15924[Accessed 29 April 2019]
Chakrabarty, S. (2013).Comparing Virtue, consequentialist and Deontological Ethics-Based
Corporate social responsibility: Mitigation microfinance risks in institutional voids. , Journal of
Business Ethics, Vol 126, issue 3, PP 487-512
Cohen, P. (2017).On health and welfare, moral arguments can outweigh economics. New York
Times.[Online].Available at https://www.nytimes.com/2017/05/07/business/economy/congress-
benefits-fairness.html [Accessed 29 April 2019]
Ingrimayne. (N .d).In a kind and Cash Transfers. Ingrimayne.com.[Online].Available at
http://ingrimayne.com/econ/MaximizingBeha/InKind.html [Accessed 29 April 2019]

Economics Assignment 9
Langton, M. (2017).The Cashless Debit Card Trial is working and it is vital – here’s why. The
Conversation. Accessed 24 April 2019,https://theconversation.com/the-cashless-debit-card-trial-
is-working-and-it-is-vital-heres-why-76951[Accessed 29 April 2019]
Marria, V. (2018).What a cashless society could mean for the future. Forbes.Com.
[Online].Available at https://www.forbes.com/sites/vishalmarria/2018/12/21/what-a-cashless-
society-could-mean-for-the-future/#2326b9073263[Accessed 29 April 2019]
Misselbrook, D.(2013).Duty, Kant, and Deontology.NCBI.Gov.[Online].Available at
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3609464[Accessed 29 April 2019]
Riji, D. (2016). Here are the advantages of cashless payments and the pitfalls you should beware
of. Economic Times[Online].Available at
//economictimes.indiatimes.com/articleshow/55908649.cms?
from=mdr&utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst[Accessed
29 April 2019]
Studebaker, B. (2012).Moral absolutism: The detriments of Deontology.
Benjaminstudebaker.com.[Online].Available at
https://benjaminstudebaker.com/2012/08/27/moral-absolutism-the-detriments-of-deontology/
[Accessed29 April 2019]
Wright, B.J.(2015). An introduction to moral frameworks. Stanford University. 2015 pg 3-21