With a flagged $4 billion to be recovered over four years, Centrelink’s demand letters over alleged debts could be just the start.

The Turnbull government’s mass invoices – constructed from data matching to claim discrepancies exist with Centrelink’s casual, disabled and vulnerable income earners – are expected to be used across the entire pensioner and social security sector. New discrepancies can be created over a recipient’s claimed asset values to substantiate invoices for ‘over-payments’.

Data matching and garnishee was originally implemented by Labor in government, but it was the Turnbull government that devised the more aggressive, presumptive and system-wide invoicing strategy.

While a responsible government has every right on behalf of taxpayers to eliminate fraud and ensure financial control in a country under deficit distress, the anecdotal hypocrisy of MPs who are extended travel allowance indulgences under lax rules adds fuel to what is becoming an explosive backlash across Australian postcodes.

A crowdfunded court challenge to the legality of the alleged debt invoices is now expected.

Often stereotyped by tabloid media as ‘dole bludgers’ exploiting a sense of entitlement, this time many articulate Centrelink recipients are fighting back.

Using the Not My Debt website they are sharing their stories of having been coerced by the Department of Human Services to agree to fortnightly repayments even though many dispute any debt exists.

They have taken their income statements and their Centrelink letters to A Current Affair, other TV shows and Facebook to give public evidence of unfairness.

Distressed and agitated when they have received what appears to be a letter of demand, they have hit the phones to (when they can get through) dispute the claimed amount of Centrelink ‘overpayment’.

The automated matching of their Centrelink-declared casual or irregular incomes, when averaged over 12 months with the amount declared on their Australian Tax Office income tax returns, has created what appears to be a discrepancy or ‘overpayment’.

The onus of proof is immediately placed on the recipient, many of whom have to scramble to find pay slips from employers from five or more years ago, or pay their banks to recover archived bank statements showing the date and amount of income received.

Off to Dun and Bradstreet you go!

A series of Centrelink letters have initiated what looks like a ‘Catch-22’: a bureaucratic entrapment made famous by Joseph Heller’s wartime novel where a paradoxical situation is created from which an individual cannot escape because of contradictory rules.

The first letter logged on a recipient’s MyGov account politely asks recipients to check online that their income details are correct.

Many recipients do not regularly access their MyGov accounts. If or when no response is logged a second Centrelink/ATO data matching letter quantifying the ‘overpayment’ is dispatched. Distress quickly ensues, as the quantum of the ‘debt’, in many cases thousands of dollars, is boldly displayed in what looks like an invoice, with credit card and Biller payments options listed at the bottom.

But instead of resolving the factual accuracy of the data matched quantum, the Centrelink call centre staffer says that unless the recipient immediately agrees to at least a minimum repayment (say $15 a fortnight for three months) of the disputed amount, under DHS policy the staffer has no alternative but to send the ‘debt’ for collection to outsourced collectors Dun and Bradstreet or Probe Group. Hence, ‘Catch-22’.

These debt collectors are on multi-million-dollar contracts with DHS. It remains commercial-in-confidence whether or not these companies receive a percentage of the money successfully collected. Opposition spokesperson Linda Burney has asked for the outsourcers’ incentive details to be released.

The strategy has enabled DHS’s Hank Jongen to claim, in an ABC interview, that debt recovery is working and had “identified” up to $300 million in overpayments since 169,000 letters were dispatched.

Mr Jongen claimed eight out of 10 “customers” had thus acknowledged the “overpayment”.

This official claim from DHS will be tested in coming weeks and months. The Australian National Audit Office, which coincidentally is due to report next month on DHS, has been asked to conduct a performance audit of Centrelink’s methodology.

‘This is cruelty’

In the current clawback, Centrelink has repeated its customer risk protocol by referring any distressed recipients to Lifeline for psychological support. More petrol on the fire.

One Centrelink senior staffer, who asked not to be named, told The New Daily the anger and rage generated by the data matching strategy had placed counter staff under confronting pressure.

“They just want to spit on us,” he said.

He asked why DHS had not quarantined vulnerable recipients, many of whom were intellectually disabled, from the more able casual income earners.

If DHS had a genuine “customer focus” the entire casual income reporting process would be “bulletproof” for recipients so they could neither calculatedly defraud nor inadvertently fall into error. A department wanting to engender trust with Australians striving to earn sustaining incomes in a now highly casualised economy would act protectively towards them.

“One intellectually disabled bloke screamed, ‘I’ve had a go mate … I did some work’.”

Our informant said the Centrelink data matching strategy would soon be exposed as counter-productive, with recipients now likely to desist in seeking any paid work for fear of losing any of their welfare payments.

With a Newstart allowance at $34 a day and city rents now at extortionate levels, many vulnerable people had little money left with which to clothe and feed themselves.

“We are dealing with the most impoverished and vulnerable sectors of the community. This is cruelty.”

Quentin Dempster is a Walkley Award-winning journalist, author and broadcaster with decades of experience. He is a veteran of the ABC newsroom and has worked with a number of print titles including the Sydney Morning Herald. He was awarded an Order of Australia in 1992 for services to journalism.