Liberal senator admonishes representatives from community legal centres for using the term at inquiry

This article is more than 11 months old

This article is more than 11 months old

The Coalition’s controversial debt recovery scheme should not be called robodebt, Liberal MPs say, in part because the phrase is causing anxiety in the community.

A day after the Liberal senator Matt O’Sullivan told the first hearing of a Senate inquiry into the scheme “robodebt” was a “misnomer”, his colleague, Hollie Hughes, admonished representatives from Western Australia’s community legal centres for using the term.

Hughes also told the inquiry on Friday the term robodebt was “a bit of a misnomer, particularly under the current system”.

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“And I think using that term is probably creating a bit more anxiety than is required,” Hughes said. “If we’re trying to reduce the anxiety around this, probably not using that term particularly in these sorts of settings would be helpful.”

Despite noting improvements to the program, including increased involvement from Centrelink staff and outreach to affected welfare recipients, the WA legal centres said on Friday that the scheme was still having an adverse impact on vulnerable people.

They called for debts raised under past iterations of the scheme to be reviewed, arguing people who had overpayments raised under the old system, which involved very little oversight from staff, would have paid back money they did not owe.

And they said they were dealing with a backlog of welfare recipients who had received debt letters under past versions of the scheme.

“I think it’s passing strange that such a massive scheme can be introduced and now we’re trying to fix it as we go along,” said Jackie Wallis of Peel Community Legal Services.

Critics of the scheme have long said that it causes stress and anxiety among the country’s most vulnerable people. Research has shown welfare recipients are more likely to report mental health issues and in the submissions to the inquiry, Australia’s peak body for mental health organisations says the debt recovery scheme has “exacerbated” the existing hardship and symptoms of mental illness of affected people.

“The extreme and unnecessary stress caused by the manner in which the Centrelink compliance program has been undertaken is deeply concerning and well documented through previous inquiries and reviews,” Mental Health Australia said.

In a bid to curb growing outrage at the data-matching scheme, the Department of Human Services introduced more human involvement in 2016 when thousands of debt letters were being automatically sent to welfare recipients each week.

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Hughes referred to these changes and argued that the scheme’s latest iteration, known as Check and Update Past Income, issues registered letters and “read receipted” emails asking people to update their past income using payslips and bank statements.

“It’s incorrect to suggest that this debt is somehow generated without human intervention, without there being some sort of discussion with an actual person,” Hughes said.

Although staff are involved in the process, the Department of Human Services says that staff conducting data-matching use a “debt predictor” to determine whether a person should face an income compliance review.

When the computer finds a discrepancy of up to $1,000 between a person’s income reported to Centrelink and data held by the tax office, staff will send a letter asking them to provide payslips and bank statements to prove their past earnings.

Critics say the process reverses the onus of proof onto welfare recipients, and that those who do not engage with the process or are unable to provide such evidence are likely to get a debt notice because compliance staff will then use a “controversial averaging” tool to predict their fortnightly income using their annual tax return.

On Thursday, the inquiry heard evidence that Centrelink issued a $14,500 robodebt to a disability pensioner with an intellectual impairment and then failed to offer him support to deal with the alleged overpayment.