This article is more than 3 years old

This article is more than 3 years old

Centrelink’s automated debt recovery system relies on a flawed method of data-matching that means people are wrongly identified as owing money, which is exacerbated by the lack of any human involvement to check for errors, a Senate inquiry has heard.

Witnesses who gave evidence to the inquiry in Adelaide on Monday said those features were central to the failure of the “robo-debt” system, which may have wrongly identified thousands of people as owing money to Centrelink.

The chief executive of the South Australian Council of Social Service, Ross Womersley, told the inquiry the only feasible solution was to scrap the system.

“Human involvement is the absent partner in the process,” he said.

On Monday the commonwealth ombudsman released a report that also highlighted numerous flaws in the system.

Centrelink debt scandal: report reveals multiple failures in welfare system Read more

The inquiry heard that the automated system cross-checked payslips provided by welfare recipients with salary information provided by the tax office to identify discrepancies between the recipients’ reported and actual income.

But Womersley and others questioned the logic and accuracy of the system. The ATO provided an average of a recipient’s income over a period of time, whereas a payslip provided information about income on a certain date. Welfare recipients often saw fluctuations in pay depending on hours worked and change in job status.

The Greens senator Rachel Siewert told the general manager of the Department of Human Services’ integrity process, Jason McNamara, that “clients are reporting fact and you’re comparing that against an average”. She said sometimes the ATO did not even identify what period it had taken the average from, making it impossible for recipients to check their own data.

But McNamara responded that both sets of data were “facts”.

He said sending welfare recipients a notice that a discrepancy had been identified was “a reasonable and appropriate response”. But those from the welfare sector and people who said they had been wrongly identified as owing money gave evidence that this put the burden of proof on recipients, who were often vulnerable and lacking resources.

McNamara said that since the department switched to the automated debt recovery sytem in July, 220,000 letters had been issued asking clients to clarify their income or pay back money. He said the failures came from the way the robo-debt system had been administered, rather than flaws in the system itself.

One witness, who could not be named, described how his daughter received notice that she owed the department more than $5,000. Because his daughter lived overseas and did not have an Australian mobile number, she could not log in to the government’s MyGov website, which requires mobile verification. Those who owed money were directed to the MyGov website to contest or pay their debt.

The man, who has 30 years experience working in the public service for state and federal governments, said he spent 30 hours trying to resolve the debt on behalf of his daughter.

“It’s outrageous that I, with my expertise, resources and time, can do that, but 99% of recipients are unable to.”

Centrelink debt collectors threatened to seize wages, inquiry told Read more

His daughter was eventually told she did not owe any money. No explanation was given for the discrepancy by the department.

Another welfare recipient said she was told she owed money from when she was a university student in 2006, even though she had been at high school that year and not receiving payments.

The debt notice arrived a week before she was due to enrol in a master’s degree, she said, and the stress caused her to miss the deadline. The department later told her the debt notice was an error due to a mismatch of data. No apology was given, she said.

The inquiry heard from community legal centre staff and advocates that many people paid up when they were sent a debt notice because they trusted the government to be right, or because they did not have the resources or knowledge to challenge it.

The president of the Law Society of South Australia, Tony Rossi, raised questions about the 10% “debt recovery fee” added to each debt notice.

“Does the 10% really reflect the debt recovery cost?” Rossi said. “If it doesn’t it’s a penalty, and if it’s a penalty it is unlawful. I have seen no evidence this 10% has been derived from a genuine assessment.”

The inquiry continues in Melbourne on Tuesday.