The head of the Department of Human Services has blamed the “robo debt” scandal largely on welfare recipients’ failure to engage with Centrelink.

The Senate inquiry into Centrelink’s “robo-debt” system began on Wednesday, hearing from the community sector, the community and public sector union, tax office officials and the secretary of the Department of Human Services, Kathryn Campbell.

Critics of the system say its many flaws have combined to create a debt recovery process that is unfair, inaccurate and inhumane.

The inquiry heard that the system has only recovered $24m so far, although it has raised, or identified, $300m. It sent 217,403 letters between July and December demanding explanations from welfare recipients, 36,305 of which did not result in a debt.

The system raised 133,282 debts, 12,733 of which were either reduced to zero, reduced, or written off or waived.

The system, which began last year, places a greater reliance on data matching to detect discrepancies between income reported to Centrelink and the Australian Taxation Office.



It removes human oversight over that data-matching process and allows it to automatically generate letters demanding an explanation from welfare recipients.

If no response is received, the debt is automatically imposed, often using a crude calculation that averages an individual’s annual income over Centrelink’s 26 fortnightly reporting periods. More than 6,500 of the initial letters were sent to wrong addresses.

Centrelink was relying on addresses it held on its own records, not the electoral roll, to target people who had stopped receiving benefits years ago.

Campbell blamed the problems with the system on a failure of welfare recipients to engage with those letters or other communications from the department.



“I think what we underestimated was how many people would not clarify, and would not engage, and so I think if I was to sum up what the problem has been it is that, when we wrote those initial letters, that recipients and former recipients didn’t engage,” Campbell said.

“Now a small part of that, 6,600, was because they didn’t know anything about it. But there was a large proportion of people who didn’t engage with us through those initial letters.”



Campbell said a pilot of the program conducted early last year did not suggest that was likely to be a problem.

Centrelink, in changes announced last month, now uses registered post to ensure the letters are being received.

Campbell also said media reporting of the “robo debt” system in the lead-up to Christmas had caused distress to individuals and led them to believe they had been wrongly targeted.

Earlier, tax office officials said they were not approached by the Department of Human Services over the new system before it was launched.

The tax office asked the department whether it could help with the system in December, when problems began to publicly emerge, but was rebuffed. It later met with the department in February.

It sought to distance itself from the robo debt program, saying it only supplied the data to Centrelink and helped to match it.

The tax office’s deputy commissioner for debt, Robert Ravanello, said it was not the agency’s place to comment on how Centrelink then uses its data.

“We are required to provide the data, which we’ve done, how DHS uses that data and matches it and converts annual to fortnightly … I think is really better asked of DHS.”

Earlier, the Australian Council of Social Service (Acoss) said it feared the system’s treatment of welfare recipients was scaring individuals away from exercising their right to claim income support.

Acoss described the system as an abuse of government power that was undermining confidence in public administration.

The director of the ACT Council of Social Service, Susan Helyar, said cynics believed that may have been the government’s intent.

“All of these things compromise the public’s confidence in systems, and some of our members have wondered whether partly what individuals are being encouraged to do is stay out of the welfare system,” Helyar said. “They are being discouraged from exercising their entitlements in the income support system by this poor public administration.

“Some people cynically suggest that might be the point of the process.”



“I just think it’s really dangerous for the government to implement programs in a way that is so flawed because it has long term impacts on the public’s confidence.”



Those comments were echoed by the chief executive of Acoss, Cassandra Goldie, who said public confidence in the social security system had been undermined.

Goldie said Centrelink should be creating an environment of support and help for the nation’s most vulnerable.

“It is really important to understand the power dynamic here,” Goldie said. “The Department of Human Services plays such a critical, powerful role in Australian society. We call it a safety net, let’s not forget the importance of that.



“What this system has done is create a climate where people have been frightened, indeed people have been bullied, into complying.”

Many reports have emerged of individuals being hit with inaccurate debts, which largely arise from the system’s crude averaging of an individual’s income across a certain time period. That leads the system to assume an individual has worked constantly during the period and was therefore ineligible to claim welfare.



Campbell said that averaging process only occurred when a recipient failed to engage with Centrelink.

Reports have also been received of the system double-counting income when an employer name that has been reported to Centrelink does not match that on tax office records.

Individuals have also faced difficulties using the new online compliance system to correct their details or explain a discrepancy. Changes have now been made to simplify the language and make the system easier to use, Campbell said.

Acoss issued a statement on Wednesday morning, signed by 37 community sector organisations, repeating calls for the system to be shut down. Goldie also wants the government to convene a roundtable with experts to develop a more humane and fair system.

Goldie told the inquiry that she had met with the human services minister, Alan Tudge, once but had otherwise not received replies to correspondence.

“The one outcome from the engagement to date, is as we say, we have met with the department about the next round of technology design [the welfare payment infrastructure transformation],” Goldie said. “But none of the other requests have been responded to.”

Campbell was asked whether she would meet with Acoss. She said she had decided not to previously because the contents of the organisation’s meeting with Tudge had ended up in the media. She said she would need the permission of her minister before meeting with Acoss in the future.

The Community and Public Sector Union, which represents Centrelink workers, also gave evidence to the inquiry on Wednesday morning.

The CPSU national secretary, Nadine Flood, said years of funding cuts and poor policy decisions had reduced the department’s ability to act as a cornerstone of the welfare system and Australian society.

The department has lost 4776 full time equivalent positions since 2010-11.

Flood said 36m calls to Centrelink went unanswered last year. She said staff were reporting an increased level of client distress and frustration.

“What we see currently is a very human price being paid, both by clients … and the people who work for the department themselves,” Flood said. “It is not an exaggeration to say that the Department of Human Services is an agency in crisis, and it’s not something I say lightly,” she said.

Flood said she felt that staff and delegates could not give evidence to the inquiry because of the current climate within the department. She said staff reported having their emails and social media monitored by the department, including emails from work accounts to Cpsu addresses.

The inquiry’s chair, the Greens senator Rachel Siewert, said the evidence on Wednesday morning showed how serious the impact of the system had been. She said Acoss’s evidence showed how the system had reversed the onus of proof onto the welfare recipients to prove they did not owe a debt.

“Acoss are right in pointing out the absurdity of recipients having to investigate their own debt and prove their innocence,” Siewert said. “That job belongs to the department, the department should clearly point out the nature and details of the debt.”

The CPSU had also requested a briefing from the department secretary, Kathryn Campbell. The deputy national president of the CPSU, Lisa Newman, said those requests had been rejected.

Witnesses from the Department of Human Services are expected to give evidence on Wednesday afternoon as the inquiry continues.

