An audit of the Turnbull government's cashless welfare card system has questioned whether it reduced social harm or was value for money for taxpayers.
In December 2014, the government agreed to trial the card system to test whether social harm caused by alcohol, gambling and drug misuse could be reduced by placing up to 80 per cent of a participant's income support payment onto a card that cannot be used to buy alcohol or gambling products or to withdraw cash.
The initial $18.3 million trial in Ceduna, South Australia, and East Kimberley, Western Australia, which has since been extended, would also inform the development of a lower-cost welfare quarantining program.
An auditor-general report released on Tuesday found the Department of Social Services' monitoring and evaluation of the trial was "inadequate".
"As a consequence, it is difficult to conclude whether there had been a reduction in social harm and whether the card was a lower-cost welfare quarantining approach," the report says.
Also, the department did not document a value for money assessment for the card provider's IT build tender.
The department said in its response it accepted the audit's recommendations in relation to risk management, contract management arrangements and better using data to measure performance.