The cashless welfare card is set to be terminated after a new report found that the program failed to prove a reduction in social harm.
Social Services Minister Amanda Rishworth announced that the report, released by the Australian National Audit Office (ANAO), highlighted the "lack of evidence to demonstrate the effectiveness" of the card.
In a statement released on Friday afternoon, Ms Rishworth said briefings have already begun to discuss the termination of the cashless welfare cards "delivering on Labor's election commitment".
"The former Coalition government spent more than $170 million on the privatised Cashless Debit Card - money that could have been spent on services locals need," Ms Rishworth said.
The scathing report from Auditor-General Grant Hehir said the government had not "demonstrated that the cashless debit card program is meeting its intended objectives".
The Department of Social Services also failed to implement previous recommendations made about evaluating the program and undertaking a cost-benefit analysis.
Mr Hehir labelled the department's oversight "largely effective" but criticised the former Morrison government's lack of internal performance monitoring for the scheme.
"The cashless debit card program extension and expansion was not informed by an effective second impact evaluation, cost-benefit analysis or post-implementation review," the report reads.
The federal government started a trial of the program in 2016, placing up to 80 per cent of a welfare recipient's payments on the card. They cannot withdraw money placed on the card to buy alcohol, gambling or cash-like products.
The trial affected many of the larger Indigenous populations in Ceduna in South Australia; the East Kimberley region in Western Australia; the Goldfields region in Western Australia; the Bundaberg, Hervey Bay, and Cape York regions in Queensland; and the Northern Territory.
The card had been spruiked by previous Coalition government as a solution to encouraging socially responsible behaviour by limiting the amount of cash that can be spent on drugs and alcohol.
In response, the Department of Social Services accepted a recommendation to develop internal performance measures and targets to evaluate whether the program is effective.
But it rejected an external review of the second evaluation of the expansion of the trial as the department believed it wouldn't give taxpayers bang for their buck.
"An external review will not generate additional evidence or insights and would only reiterate data availability and accessibility constraints," the department's response said.
The cost of the program in 2020-21 reached $36.5 million, with 16,685 people participating as at February 2022.
A report by the ANAO in 2018 found the monitoring and evaluation of the program by the department was "inadequate".
The Albanese government promised it would scrap the card but said it would first consult with communities where the scheme has been trialled.
