Forcing welfare recipients to disprove their own debts has made the error-prone, previously rare practice of “income averaging” commonplace, welfare advocates say.

The National Social Security Rights Network has used its submission to the “robo-debt” Senate inquiry to provide a forensic and detailed account of the problems with the new system.

The network said that, despite the government’s claims otherwise, the method of debt recovery has undergone “fundamental” changes.

One of the most controversial aspects of the new system is its tendency to average a person’s annual income over 26 fortnightly periods and then assume they were ineligible for benefits at any point during the year.

The network’s executive officer, Matthew Butt, said that practice was previously rare but is now prevalent.

He attributed that to a shift in the onus of proving or disproving a debt, away from Centrelink compliance teams and on to the individual welfare recipient.

Previously, where a discrepancy was found between income reported to Centrelink and the Australian Taxation Office, Centrelink staff would investigate.



A screenshot showing how Centrelink’s automated system is crudely averaging out an annual income over fortnightly reporting periods, creating a debt

They would contact the individual to gain a more reliable and accurate picture of the individual’s fortnightly income, rather than simply relying on the ATO’s annual income figure.

Where the individual did not have the information, they would go to the individual’s employer and use coercive information-gathering powers to obtain the information they needed to reliably calculate any welfare debt.

“As a result, most debts were calculated reliably and accurately using actual fortnight-by-fortnight income,” Butt told Guardian Australia.

Now, individuals are given less than a month to track down information on their fortnightly pay from up to six years ago, either by obtaining old payslips from past employers, or – under recent updates to the system – using bank statements.

Many are either unable to track down past pay information, confused by the process, or do not receive or understand Centrelink’s initial correspondence about their debt.

Butt said that led many people to simply confirm that the ATO’s annual income figure was accurate, without understanding the consequences. Others simply did not respond.

He said that was leading to an increased use of income averaging.



“Averaging was not the norm under the old process,” he said. “You’ll notice that the department keeps saying there’s always been averaging. That’s true... but it was a rarity.



“It’s quite clear that averaging has become much, much more prevalent because far more debts are being raised without proper information.”

The Department of Human Services and the human services minister, Alan Tudge, argue that welfare recipients are given repeated opportunities to enter accurate information. Doing so would prevent income averaging.

The department’s submission to the Senate inquiry says income averaging only occurs when a welfare recipient either allows it to happen, accepts the ATO’s employment dates are accurate, or fails to respond to correspondence.

“If the department seeks to engage with the recipient and they do not respond, and there is still a discrepancy and the department has exhausted every opportunity to talk to the recipient, the department may have to average income based on the information it has,” the department said.

“It is incorrect to imply that the department always averages, or that the system always averages over the full year. Averaging of income is applied when people do not contact the department with their information.”

The department said that, if it held information suggesting that a recipient had only worked for less than a year, it would average over that shorter period.

It has previously stated that “intensive support” was still available for people who need help clarifying their income information.

A spokeswoman said welfare recipients were not routinely asked to provide payslips. When they could not contact past employers, find payslips, or bank statements, a staff-assisted process was available to help them.

Extensions were also available automatically on two occasions, she said, to give more time for welfare recipients to track down information.

“If further extensions are needed, people should contact 1800 086 400 and discuss their situation with a compliance officer,” she said.