Government softens debt recovery system after backlash over recipients being required to pay back money even if they are disputing the debt

Centrelink will no longer demand immediate payment from individuals who are disputing debts issued under its controversial automated recovery system.

The change is one of a number of amendments designed to improve the fairness of the controversial system, which were announced by human services minister, Alan Tudge, on Tuesday night.

Other changes include allowing individuals to use bank statements – instead of hard-to-obtain payslips – to prove their income, making it easier to contact Centrelink, and allowing people to by-pass the troubled MyGov portal to review their debt.

But unions, community groups, Labor, the Greens and the campaigning group GetUp have warned the changes do not address fundamental flaws with the system.

The groups came together outside Parliament House in Canberra on Wednesday to renew their calls for the system to be shut down.

“The kind of approach this government has taken to debt recovery is unprecedented and would not be tolerated by any private corporation in Australia,” Australian Council of Social Service chief executive Cassandra Goldie said.

“The announcements made by the government overnight do not address the fundamental problem in this system,” she said. “The government is avoiding the reality of this, [but] it cannot avoid the deep distress of the voices of people in the Australian community.”

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The system faces inquiries by the commonwealth ombudsman and a Senate committee, prompted by repeated complaints that the system is wrongly issuing debts before putting the onus on the recipient to prove their innocence through a complicated, unfair and at times broken system.



A key criticism is that the system forces individuals, often vulnerable and on low incomes, to begin paying the money back even if they are disputing the debt. That would now change, Tudge said.



“This has been a longstanding practice for successive governments, whereby – and not just for this online compliance system, but for all debt which is owed to the government – that as soon as a debt notice is issued you have to enter into a repayment schedule,” Tudge told the ABC.

“I’ve recently made the decision to say that, well, if you ask for a review then you don’t have to enter into a repayment schedule. It’s only after the review is completed and you still owe the debt that you’ll have to enter into that repayment schedule.”

Tudge has previously defended the system as fair and working as intended. He said the government would also attempt to make it easier for individuals to get in contact with Centrelink once they received the initial letter generated by the automated debt recovery system, which notifies them that a discrepancy has been detected between income reported to Centrelink and income reported to the tax office.

People targeted by the debt recovery system have complained of being unable to reach Centrelink through its overloaded phone system to dispute discrepancies within the required 21-day window. That has led to many being landed with inaccurate debts.

Users will now no longer need to use the MyGov portal to confirm their income details with Centrelink, but instead will be able to log on directly to the online service that allows them to check and confirm their income details. Bank statements can also now be used to prove income, reducing the onerous requirement on welfare recipients to retrieve years-old payslips from past employers.

The government estimates 75% of welfare recipients would be able to access bank statements online. A new website upgrade also included “simpler language and better screen flow”, the government said.

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It’s the second round of changes the government has announced to the system since problems began to emerge in early December. Last month, Tudge announced the system would take further steps to ensure that initial letters generated by the debt recovery system were being received. He said registered post would be used, as would more current addresses from the electoral roll. That sought to prevent debts being raised automatically against people who had not received Centrelink’s initial letter.

Tudge said he had always said the system would be constantly refined.

“I’ve always said all along that we’ll constantly make refinements to the system so that we can be reasonable to the Centrelink recipients, but also fair and reasonable for the taxpayer who’s paying for it,” he said on Tuesday.

Tudge defended Centrelink’s phone system, which has previously been found to have let a quarter of all calls go unanswered. The minister said he had been calling Centrelink’s phone line personally to check wait times. He said he had never had to wait to get through.

“I have been calling it almost every day myself to check on this, and I have never, ever had to wait,” he said. “Now, I’m not saying that that will be the case for evermore, but it is a very short wait time to be able to get through to somebody for them to give you a bit of reassurance as to what the process is.”

The national secretary of the Community and Public Sector Union, Nadine Flood, said the flaws with the system were the result of bad policy and significant cuts to the Department of Human Services.

Flood said the department now had 5,000 fewer staff and relied heavily on casual workers.

“This system has been a disaster for Australians, for clients, but also for the workers who have had to implement it,” Flood said. “What we have seen is bad policy backed in by the government’s decisions to slash resourcing out of Centrelink and these services.

“The announcement by the government overnight, while welcome, will not fix the problem, given there are 5,000 less staff, which is why we ended up with robots doing the work.”

Labor MP Linda Burney and Greens senator Rachel Siewert, who have led the campaign for a senate inquiry into the system, renewed calls for the system to be shut down on Wednesday.

Siewert said Tudge and other ministers still appeared oblivious to the impacts of the system.

“People talk about being scared, feeling threatened, being bullied, and in fact we’ve had phone calls where people seriously talk of their mental health,” she said.

“If the government had heard these people, they would have heard that this is a heartless, demonising, bullying approach to vulnerable Australians who have done nothing wrong.”



Greens leader Richard Di Natale said the government’s priorities were “warped”, targeting vulnerable people to balance the budget, but going easy on multinational corporations who were avoiding paying tax.

Di Natale said the changes announced overnight were “tinkering at the edges”.

“People are still treated as criminals, and its up to them to prove their innocence,” he said.