Centrelink Debt Recovery System

The Hon. G.E. GAGO (15:27): Since July 2016, Centrelink has implemented a new online compliance intervention system which was designed to match income data provided by the Centrelink recipient with the income provided to the Australian Tax Office. When the income does not match, recipients receive a letter advising them to update their details. If the updating of details does not solve the discrepancy, Centrelink will issue a debt letter if it is deemed that the customer was overpaid. Since this system was implemented it is estimated that Centrelink has issued up to 20,000 debt letters per month, with the burden of proof falling on the welfare recipient.

A whistleblower from Centrelink has stated that the matching system is riddled with errors. According to this source, there are instances of Centrelink generating debt based on payments that have never been made, as well as cases of recipients receiving debts larger than the amount of Centrelink payment they had been paid. The whistleblower also states that the system was often duplicating portions of a person's income incorrectly, considering leave, termination and maternity leave payments in the calculation of a payment.

The system is averaging out a payment that someone may receive only for a portion of the year and assuming that the payment has lasted the entire year. This, of course, has led to grossly inaccurate debt accounts for thousands of Centrelink recipients. Disputing these debts has become increasingly difficult as, according to the whistleblower, compliance teams are being instructed to not fix errors in the system and that errors should only be looked into if the customer specifically identifies them.

Review officers are also being told that they cannot accept evidence of a person's financial position and history if those documents had already been provided to Centrelink. Therefore, despite the matching system manufacturing incorrect assessments, a customer is unable to show payslips or documents that prove their real situation.

The source has stated that these errors have produced millions of dollars of incorrect debts. For those affected by this fraud system it is an extremely difficult process to resolve the errors, as customers have to spend hours on hold trying to contact someone. In an open letter from the commonwealth Public Service Union, Centrelink department staff stated:

Many of us warned the Department of Human Services that the debt system wouldn't work. Despite our combined 100 years of experience in welfare systems, the department is still not listening.

The inability of the matching software to do its job has not been helped by the cutting of 5,000 workers by the federal government. The CPSU Centrelink staff state:

We need more staff who are permanent and well trained and who are genuinely consulted about how things work so they can help you.

The Department of Human Services does not record the number of errors made at the fault of the department, which means there is no accountability for these mistakes.The brunt of the customers' understandable anger is landing on front-line staff at Centrelink call centres and offices around the country, and it is the responsibility of the federal minister to resolve this issue immediately.

The seriousness of these debts cannot be overstated. It is impossible to know at this point how many in our community have paid a debt that was raised in error. It is also hard to believe that all of these people will be remunerated in the future.

There are serious consequences for customers when they feel they have to pay unjustified debts. These are already some of the most financially vulnerable people in our community—students, aged, disability pensioners—who are losing out because of the incompetence of this federal government. The emotional as well as the financial pressure that can be put on a person is extreme. Twitter users who have commented on their deteriorating mental health due to these debts have been advised by Centrelink—get a load of this—to contact Lifeline.

The federal government must immediately investigate these serious flaws in their system to ensure that no-one else has to pay an unfair and unjustifiable debt. My message to South Australian Centrelink recipients is: if you receive a debt letter that you believe to be incorrect, make sure that you persist in making contact with Centrelink and ask an authorised review officer to re-examine your debt.