Impact of income management on store sales in the Northern Territory

The Australian Government’s Northern Territory Emergency Response (NTER) was instigated in response to the findings of a Northern Territory Government board of inquiry established to find better ways to protect Aboriginal children from widely alleged sexual abuse.1 At least partly in response to the concerns expressed in this inquiry, the Australian Government suspended the Racial Discrimination Act 1975 (Cwlth) in 2007 so as to introduce measures that applied specifically to Indigenous Australians living in remote NT. One such measure of the NTER was the Social Security and Other Legislation Amendment (Welfare Payments Reform) Act 2007 (Cwlth) (No. 130, 2007) Schedule 2 (Income management regime),2 which mandates that 50% of income support and family assistance payments to Indigenous people living in remote areas of the NT, and all of any advances and lump-sum payments, be managed by the government. Under this Act, expenditure of these funds needs to be agreed between the recipient and the government, and the funds can only be used for items considered essential by the government, such as food, clothes, rent, electricity, medicine, and basic household goods.3 Income management was first rolled out in central Australian communities in June 2007, and consecutively thereafter across the Top End communities of the NT. Further legislation introduced with the NTER comprised a store licensing scheme whereby community stores are required to comply with government-prescribed minimum standards in order to benefit from income-managed funds.

As a consequence of remoteness and high cost, Indigenous people in remote NT have been denied equal access to healthy and affordable foods and essential non-food items compared with the general Australian population.4 Many people in remote communities experience widespread food insecurity.5 This situation has encouraged the purchase of low-cost energy-dense and nutrient-poor foods, and is a key contributor to the disproportionate burden of chronic disease experienced by Indigenous Australians compared with the rest of Australia,6 and to poor growth and development of children in early life.7 The diet of Indigenous Australians in remote Australia is characteristically low in fruit and vegetables and high in sugar8 with reports of soft drinks (aerated sweetened drinks) contributing up to 27% of the total sugar available through remote community stores.9

In the year preceding the implementation of income management, the Arnhem Land Progress Aboriginal Corporation (ALPA), an Aboriginal retail corporation, was funded by the Australian government to develop a voluntary food budgeting tool, the “FOODcard”.10 The FOODcard electronically restricted purchase of certain store items such as soft drinks, potato crisps, confectionery, cigarettes and tobacco products. The ALPA FOODcard became the vehicle for the administration of income-managed funds in the 12 ALPA-managed stores in the NT.11 This was the situation until between December 2008 and January 2009, when the government introduced the “BasicsCard”.12 It is illegal for licensed retailers to accept purchases of tobacco, alcohol, and pornography and gambling products with the BasicsCard. In October 2008, the Australian Government announced the Economic Security Strategy Payment (a government stimulus payment), under which government-assisted families were provided with a lump-sum payment of $1000 per child during the fortnight following the 8 December 2008. The payment was also made to eligible pensioners, seniors and others.

Our aim in this study was to examine the impact of income management on store purchasing patterns in relation to tobacco sales and the dietary quality of purchased food and drinks as measured by: (i) total store sales; (ii) food and beverage sales; (iii) fruit and vegetable sales; and (iv) soft drink sales. We used interrupted time-series analysis to examine trends in the sales of these commodities over a period spanning the introduction and continuation of income management. This method allows for the estimation of the effectiveness of an intervention, taking into account underlying trends in monthly sales.

We collected sales data from 10 ALPA stores that had retrospective data available in monthly intervals from 1 October 2006 to 30 September 2009. Communities ranged in size from 247 to 1574 people, representing about 14% of the Indigenous population living in remote NT.13 Two communities had access to a take-away outlet that was separate from the community store. All 10 communities supported a school canteen or “Meals on Wheels” program or both. Alcohol was not permitted in eight of the 10 communities at the time of the study (Box 1).

Data were obtained through the ALPA central database in two report formats — department sales data and individual item sales data. Department sales data were used to examine trends in tobacco sales, total store sales and contribution of food and drink sales to total sales. Each monthly department sales report contained a cumulative monthly dollar value for each of the department lines. Individual item sales data included a barcode for each store item sold, an item description, a cumulative quantity sold and dollar value (sale price) for each item sold.

Department and individual item sales data were imported separately into a Microsoft Access 2003 database (Microsoft Corporation, Redmond, Wash, USA). For individual item sales data, non-food items were removed, weights and volumes for each food and drink item were determined, and food types were grouped.

For department sales data, total store sales and tobacco sales (dollar) values were calculated for each monthly interval based on the dollar value of monthly department sales data for all 10 stores.

For individual item sales data, total food and drink sales values were calculated based on the sum of the value for each food and drink item by store, year and month, as were total sales values for fruit and vegetables combined (including fresh, dried, frozen and canned) and soft drinks. Similar measures with regard to weight (turnover) of the indicator foods were also calculated.

Per capita values for each of the outcome measures were determined based on the size of the community served by each store, as shown in Box 1.13 Data were analysed using Stata, version 10 (StataCorp, College Station, Tex, USA).

Against a background of increases in total store sales and in all commodities before income management at a rate consistent with inflation, income management appeared to have no effect on total store sales, food and drink sales, tobacco sales and fruit and vegetable sales, independent of the government stimulus payment. Soft drink sales and turnover dropped initially with income management, but increased thereafter.

These findings suggest that, without an actual increase in income as occurred with the government stimulus payment, income management may not affect people’s spending overall. The findings challenge a central tenet of income management — that people’s spending habits will be modified in a positive way with mandatory restrictions on expenditure alone.

These findings do not support official government reports of improved healthy food and drink purchases in association with income management.15,16 In 2009, of 66 store operators interviewed by the Australian Government, 63.6% reported an increase in store sales with income management, while one-fifth (20.6%) reported a decrease.15 We found that store sales increased markedly in association with the government stimulus payment, but showed no change with income management independent of the stimulus payment.

Furthermore, our study showed that across 10 stores in the NT, income management had no effect on fruit and vegetable sales or turnover, contrary to results reported in official reports.15,16 The average daily turnover of fruit and vegetables throughout the 18-month income-management period was about 152 g per person. This is a low per capita turnover, despite ALPA supporting a nutrition and health strategy and eliminating the freight cost on the mark-up of fruit and vegetables.

Consistent with those reported by the government, our findings indicate that income management has had no effect on the sale of tobacco products. The sale of tobacco products through the 10 study stores in the 18-month income-management period accounted for about a quarter of total food and drink expenditure and was four times that of fruit and vegetable sales.

A reduction in the level of soft drink sales and in the volume sold occurred in the first 4–6 months of income management. There also appeared to be a reduction in sales during this period for all other products for which sales were restricted through the use of the ALPA FOODcard, such as confectionery, crisps and pies (data not reported). After the first 6 months of income management, both soft drink and confectionery sales continued at a rate higher than before income management. Two likely explanations for this downward trend in sales occurring immediately after the introduction of income management and then increasing thereafter are: (i) the restrictions on the ALPA FOODcard influenced people’s spending temporarily but, over time, people adjusted and found alternate means to purchase restricted items; and (ii) the removal of the ALPA FOODcard through the introduction of the BasicsCard removed all such restrictions.

Tobacco use (17%), and high body mass (16%), physical inactivity (12%) and high blood cholesterol (7%), in all of which diet plays an important role, contribute 52% of the health gap reported for Indigenous Australians compared with non-Indigenous Australians.17 In addressing the health gap, effective strategies are needed to restrict tobacco use and to encourage healthy eating for people in remote communities, including increasing people’s consumption of fruit and vegetables and decreasing their soft drink consumption. It is unlikely that mandatory management of people’s income will lead to purchasing of more fruit and vegetables when issues of availability, quality, affordability and home storage remain key issues. This is contrasted with the impact of the government stimulus payment on sales of all store commodities, including fruit and vegetables. Our data cannot be used to ascertain the relative merit of a budgeting tool such as the ALPA FOODcard or additional income on positively influencing people’s spending, but these initiatives do indicate the existence of confounders that need to be considered in assessing the impact of income management on store sales.

Our study has several limitations to the extent to which the findings can be generalised to other remote communities in the NT. First, the 10 stores included in the study were managed by ALPA, so the vehicle for income management (the FOODcard) differed from that used in other communities where government-prescribed minimum standards need to be met in order to benefit from income-managed funds. This difference relates to the restrictions on the FOODcard. In all other respects, the stores are expected to be similar to other community stores in areas where government-prescribed standards apply and where income management has taken effect. Secondly, in communities where the NTER has restricted or moderated people’s access to alcohol, income management may impact on store sales differently to our findings in this study in which eight of the 10 study communities were prescribed “dry” (ie, no consumption or sale of alcohol allowed in the community) before the NTER.

The government’s aim in introducing income management is to ensure that people receiving welfare payments use this money in a government-prescribed “socially responsible” way, and in a way that makes money available to “feed, clothe, house and provide for the education of their children”.18 Our findings suggest that income management may not be associated with healthier food and drink purchases, and may be having no effect on tobacco sales.

3 Three-month rolling average per capita sales for total store sales, total food and drink sales, fruit and vegetables, soft drink and cigarettes and tobacco, for all Arnhem Land Progress Aboriginal Corporation stores combined, 1 October 2006 to 30 September 2009

The introduction of income management occurred in one of the study communities at the 19th month, as shown, and commenced in the other nine study communities in the subsequent 3 months.