In a bid to recoup $900m in fraudulent claims, the department is also considering garnishing wages

This article is more than 2 years old

This article is more than 2 years old

Almost 170,000 Australians with welfare debts racked up through false claims are being warned to sign repayment plans or pay interest charges.

The federal government is pursuing the former welfare recipients in an effort to recoup more than $900m.

One Queensland resident allegedly pocketed $800,000 by lodging fraudulent claims for “fictitious children” and an undeclared business income. The rorter, who earns an income and is not entitled to welfare, has made a one-off $3,000 repayment but is refusing to negotiate any further arrangements to clear the debt.

Another allegedly incurred $400,000 in debt about 10 years ago by claiming unemployment benefits under false identities. They later repaid about $10,000 but have fallen off the radar.

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“All those being contacted no longer receive a benefit but previously received payments they were not entitled to and have made no effort – in some cases for over a decade – to repay what they owe,” the human services minister, Michael Keenan, said on Friday.

“For those who refuse to take action, interest charges are only the beginning. My department will also look at other measures such as garnishing wages and tax refunds or referring matters to external collection agents.”

People have been given 28 days to commit to a repayment plan or be hit with interest of 8.77%.

Centrelink robo-debt program accused of enforcing 'illegal' debts Read more

“As none are currently receiving welfare, the government believes most are now working and have the means to start paying back what they owe,” Keenan said.

Labor’s human services spokeswoman, Linda Burney, said the government blitz would force people to go searching for pay slips dating back 15 years. She said those who did the wrong thing should be penalised but the government was hell-bent on demonising vulnerable Australians who relied on social security.

“This government isn’t interested in finding out people who actually owe debt. They’re interested in debt recovery as a means of revenue raising,” Burney said. “This government is interested in debt recovery as a means of making claiming income support a scary and difficult process in the hope Australians just give up.”

The Coalition government’s crackdown on welfare fraud has backfired in the past, with its Centrelink robo-debt program resulting in people wrongly pursued for social security payments.