Conditional welfare has become a prominent policy tool in recent years. One of the harshest forms of conditional welfare in Australia is arguably compulsory income management (CIM) which involves the quarantining of between 50 and 90 per cent of a participant’s benefit payment for spending on food, rent and other essential items. A leading aim of all Australian income management (IM) programs since 2007 has been the reduction of alcohol and other drug (AOD) abuse by participants, which is expected to reduce associated social and community harms. Building on the mixed findings of official evaluations of IM, this qualitative study examines the views of both compulsory and voluntary IM participants and community stakeholders concerning AOD abuse in four IM sites. It concludes that there is little evidence to support the view that IM per se contributes to a significant reduction in AOD abuse.