WELFARE recipients could be segregated into different queues at shops under an ''apartheid system'' that will force them to spend at least half of their money on essential items at government-approved retailers.
Business groups have condemned a federal government plan to control the spending of up to 20,000 people across the country by effectively making them shop at a handful of the biggest retail chains. And the Law Council of Australia has warned that the change could be discriminatory.
In a five-year trial to start next July, the government will quarantine between 50 and 70 per cent of welfare payments made to those deemed ''financially vulnerable'' or who have been referred by child protection authorities in five local government areas across Australia, including Bankstown in Sydney.
The quarantined money will be contained on an eftpos-style ''BasicsCard'' that can be used only at certain retailers to buy food, clothes, medicine, bus and train tickets and other ''priority items''. Banned products will include alcohol, cigarettes, pornography and gambling products.
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In the Northern Territory, where income management was introduced by the Howard government in 2007 and mainly affected Aboriginal communities, many shops have forced cardholders to use separate queues as they slow down other shoppers, according to Paddy Gibson, a researcher from the University of Technology, Sydney. A coalition of 40 community and business groups, including the Federation of Ethnic Communities Councils of Australia and the Combined Pensioners and Superannuants of NSW, says the effort and paperwork needed to join the list of designated retailers would make it impossible for all but the most powerful chains, such as Coles and Woolworths, to take part.
''This will drive business from the small operators to the big conglomerates,'' said Violet Roumeliotis, executive director of the Metro Migrant Resource Centre. ''It will isolate and stigmatise people who have to use the card. It's a kind of apartheid system, really. It won't stop people with drug and alcohol problems from getting access to those things.''
At Bankstown grocery store Eastern Delights, which imports most of its products from the Middle East, staff are worried about the potential impact on revenue. ''Many people won't be able to spend money on traditional foods and ingredients here - they'll have to go to Woolworths,'' said the owner, Chadi.
Long-time welfare recipient Janet Short, 60, is a recovering alcoholic on about $600 a fortnight in disability support. ''I haven't had a drink for more than a year, and I've shown that I can manage money perfectly well without being told how I should spend it - what a ridiculous idea,'' said Ms Short, who lived in Bankstown for 25 years, but recently moved to Waterloo. ''Why should the majority have their choices taken away because of a few idiots who blow their money on drinking and gambling?''
The government had planned to wait for an evaluation of the Northern Territory program but has pushed ahead early, expanding it to Bankstown, as well as Logan and Rockhampton in Queensland, Playford in South Australia, and Greater Shepparton in Victoria, before a countrywide roll-out.
A spokeswoman for Jenny Macklin, the Federal Minister for Community Services, said the government chose the regions because they have high unemployment and skills gaps, and many of their residents rely on welfare payments as their main source of income.
She said the spending controls would be imposed on people deemed by Centrelink staff to be ''financially vulnerable'' or parents referred by child protection agencies. Welfare recipients also have the option of joining voluntarily.
''Income management is part of the Australian government's commitment to reforming the welfare system so that income support payments are spent in the best interests of child ren and families,'' she said.
Placing controls on where and how people spend ''ensures that money is available for life essentials like food, clothing and housing, and provides a tool to stabilise people's lives and ease immediate financial stress''.
The manager of Bankstown's Women's Health Centre, Sue McClelland, said rates of sexual abuse and domestic violence in the region were ''worryingly high'', and many women would welcome the intervention.
However, the Law Council of Australia has warned that compulsory application of income management on the basis of location or race is discriminatory - a position supported by the National Welfare Rights Network. The network's president, Maree O'Halloran, said that controlling the way people spend welfare payments was also ''damaging and counter-productive because it reduces the capacity of people to learn the financial management skills necessary for achieving independence and self-reliance''.
Mr Gibson, who is a senior researcher at the University of Technology's Jumbunna Indigenous House of Learning, spent 18 months in the Northern Territory to observe the effect of income management. He said the judgments made by Centrelink staff were ''heavily influenced by prejudice. In the context of a suburb like Bankstown, it will overwhelmingly be migrant communities, along with indigenous and other marginalised groups who will be targeted.''
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