Labor will push for a Senate inquiry into the Centrelink automated debt notice “debacle”, warning that thousands of innocent people are being pursued for debts they don’t owe.



Labor will ask the Senate in February to set up an inquiry into whether the system, which asks welfare recipients to explain discrepancies between their incomes declared to Centrelink and tax office information, is fit for purpose. It would require the support of the Greens and three crossbenchers to be established.

Labor will also target government ministers, by asking whether they or their offices were involved in the design, testing and implementation of the system.



Labor has already called for the suspension of the automated system and referred it to the Australian National Audit Office.

The automated system has come under significant criticism because the onus is on individuals to correct discrepancies in government data and they are told to begin paying alleged debts even when they dispute them.

In many cases, welfare recipients are not receiving initial letters owing to changes of address, or are unable to track down years-old information about their income to prove they were entitled to benefits.

The shadow human services minister, Linda Burney, said the system had been a “disaster from the start”.

“We need an inquiry to get to the bottom of how the government got this so wrong, how people have been impacted and what can be done to fix this mess,” she said. “Government ministers can’t be allowed to keep saying the system is working fine. It clearly isn’t. It’s a total debacle.

“They are so out of touch, they don’t seem to understand the anger in the community at this stuff-up.”

The inquiry would consider the impact of errors on consumers including the aged, families with young children, students, people with disabilities and vulnerable jobseekers.

It would consider Centrelink complaint processes and measures by the government to address the issues, after reports that people who received notices have been hampered from updating information due to the absence of a centralised complaints line and under-resourcing.

Some Centrelink staff have reportedly been advised not to assist customers at the first instance but rather direct them to online self-service options.

The human services minister, Alan Tudge, has defended the system on the basis the first letter sent is “not a debt letter” but rather notes and asks people to explain the discrepancy between their income data held by the tax office and what they had declared to Centrelink.

“On 20% of occasions, the recipient is able to validly explain the discrepancy in the data,” he said. “In the other 80% of occasions, a debt notice is subsequently issued.

“This is not an error rate. This is the system as it was designed to work.”

On Thursday Guardian Australia reported that before Centrelink adopted an automated system an internal analysis showed that 15% of detected discrepancies were not debts owed.

The Labor opposition has said debts are issued on an unfair, indiscriminate and inaccurate basis to low-income and vulnerable people, including one case of a cancer survivor told to repay $4,500 he claimed while recovering from chemotherapy.

Although the first tranche of data-matching has focused on recipients of Newstart, youth allowance and Austudy, the scope of the system is set to expand to the more than 3m Australians receiving the aged pension and disability support pension.

Burney said the government’s attitude had been “disgraceful” with ministers who “don’t seem to care that their decisions are really hurting thousands of people who have done nothing wrong”.

“Potentially thousands of innocent people have been caught up in this mess, being chased for debts they do not owe,” she said. “And now the government wants to go after elderly pensioners as well.

“They can’t hide from scrutiny forever. Labor will make sure the government fronts up and takes responsibility for this.”