Data shows 7,456 debts were reduced to zero and another 12,524 partially reduced between July last year and March

This article is more than 3 years old

This article is more than 3 years old

At least 20,000 Centrelink debts were either wiped or reduced in a nine-month period, newly released figures show.



The data, tabled in parliament this week, confirms what was already known about extent of problems with the so-called “robo debt” system.

It shows 7,456 debts were reduced to zero and another 12,524 were partially reduced but not wiped entirely, between July last year and March.

For the first time, the data gives a geographic understanding of where debts were issued. It shows high numbers of inaccurate debts in areas of western Sydney, Bundaberg, Mackay, Toowoomba, the New South Wales central coast and around Cranbourne in Melbourne’s south-eastern fringes.

Outer suburbs of the Gold Coast, Hervey Bay and Ipswich in Queensland were also listed in the top 20, as were Ballarat and Werribee in Victoria.

But lawyers have warned the statistics do not give a complete picture. The data only reflects debts where a review or appeal took place.

Victoria Legal Aid’s executive director of civil justice, Dan Nicholson, said the most vulnerable and disadvantaged groups were less likely to have appealed.

“I think on the face of it, it’s a shocking number of wrong debts to be alleged but in fact the most concerning thing is the very large number of people who would not have challenged their debts, and would now be paying back debts that were wrongly or unlawfully raised against them,” Nicholson said.

“We know those people are most likely to be the most disadvantaged in the community, and therefore the people that it may affect the most.”

The human services minister, Alan Tudge, has insisted the system is capable of calculating debts fairly. He pointed to to the ombudsman’s report earlier this year, which made a string of criticisms of the system but found it was able to accurately raise a debt, so long as it was provided with the proper information.

“Of course, if someone provides new accurate information, then a different debt figure is calculated. This has always been the case,” Tudge said. “The percentage of online compliance system debts subsequently reduced to zero after the welfare recipient has provided further information is almost identical to under the old manual system – about 3%.”

Criticism of the system began just before Christmas last year. From July last year, the government introduced a new way of clawing back debts from welfare recipients.

It removed a layer of human oversight from an automated data matching process, which compares an individual’s tax records with the earnings they have reported to Centrelink.

Where previously compliance teams would manually check discrepancies in tax and Centrelink records, the new system immediately sent a letter to the welfare recipient.

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That shifted the onus to disproving the debt on to vulnerable Australians. It also allowed the government to significantly ramp up the scale of its debt recovery program.

It shifted people to use a new online tool to prove their entitlement to welfare, often forcing people to find payslips that were up to six years old.

Thousands of letters were sent to the wrong address. Others were either ignored or not understood.

If no response was received, a debt was raised against the individual. A longer period of non-response would see the debt referred to an external debt collector.

“The [online compliance intervention] project effectively shifted complex fact-finding and data entry functions from the department to the individual and its success relied on its usability,” the ombudsman’s report found earlier this year.

The process also led to flaws in the calculation method.

If no response was received, Centrelink would use an “income averaging” method to calculate the debt.

The method takes an individual’s annual income and averages it over Centrelink’s 26 fortnightly reporting periods, thereby assuming an individual had worked for the entire year and was ineligible for welfare.

“The obligation on Centrelink is not to raise a debt unless it is satisfied it exists in the relevant amount,” Nicholson said. “Its job is to use its powers fairly and accurately, not to go on a fishing expedition and expect people to do hours work to correct Centrelink’s basic mistakes.

“We think there are real doubts about the lawfulness of the approach they have used.”

In a joint statement, the shadow human services minister, Linda Burney, and the Labor MP Steven Georganas called on Tudge to apologise to the 20,000 individuals.

“These are absolutely shocking results and reveal the extent to which Mr Tudge has fudged the management of the robo-debt debacle,” they said. “Minister Tudge made them feel frightened, anxious and like criminals, and he should apologise.”