Human services department forecasts up to 1.3m robodebts will be created to meet $2.1bn savings target

This article is more than 1 year old

This article is more than 1 year old

Centrelink could inflict more than one million new robodebts on welfare recipients over the next three years as the government seeks to meet the controversial data-matching scheme’s budget targets, departmental projections provided to a Senate inquiry suggest.

The projections are contained in a Department of Human Services submission defending the scheme, which also concedes compliance staff who carry out robodebt reviews are given “aspirational targets” by their managers.

Budget projections provided to the inquiry confirm figures in leaked confidential documents, revealed by Guardian Australia last month, showing the government would need to significantly ramp up the scheme to hit its $2.1bn fiscal savings target.

Robodebt collector's parent company harassed consumers, ACCC says Read more

The Senate submission says the department has now conducted 955,000 income reviews, of which 81% led to a debt being raised, but that it would need to carry out 1.6 million over the next three years to meet its budget projections.

The department has projected it will conduct 500,000 in 2019-20, increasing to 550,000 in the following two financial years. It has averaged about 230,000 – or 4,500 a week – since 2015.

On current trends, the 1.6 million projected income reviews would result in about 1.3 million robodebts being issued to past and current welfare recipients.

This comes as the scheme faces fresh scrutiny following the announcement of a potential class action and as Centrelink increasingly uses new approaches, such as the use of tax garnishee notices, to claw back alleged debts.

In its submission to the inquiry, the peak welfare body, the Australian Council of Social Service , said the scheme must be abolished.

“People have reported their life being ruined as a result of robodebt,” it said in its submission.

Data provided by the department also shows that a tiny proportion (4%) of disability pensioners and older Australians (3%) have been subjected to income reviews, and Centrelink has primarily targeted Newstart and Youth Allowance recipients, who made up 75% of all reviews completed so far.

But the confidential documents, seen by Guardian Australia, revealed the department has recommended to the government services minister, Stuart Robert, that Centrelink now turn its sights to age pensioners and other welfare recipients considered vulnerable by the agency.

This was the only way to meet the projected $2.1bn in savings, the department told Robert in the documents. The minister has said there is “no proposal” to expand the scheme to vulnerable Australians.

Much of the criticism of the scheme, including an ongoing federal court challenge, has focused on the use of income averaging, whereby a person’s annual pay reported to the tax office is spread across 26 fortnights to calculate a potential debt.

But there have also been claims that staff are required to conduct a set number of reviews each week, while Nine News reported the existence of a whiteboard containing targets for income reviews within a Centrelink call centre.

In the submission, the department repeated its position that staff “are not required to finalise a prescribed number of reviews each week”.

But it added: “Staff are coached regularly and will set aspirational targets for review finalisations in line with their individual learning and development needs.”

Huge rise in Centrelink seizing tax returns to repay robodebts Read more

The department said the “fundamental elements” of its approach to income compliance had been in place for decades and noted the Commonwealth Ombudsman had “commented positively” on the scheme, which it has reformed three times since it was established in 2015.

“The customer experience of today, with the current iteration of the online system, our improved letters and correspondence, and our dedicated support services, is vastly different to the experience when the program commenced in July 2015,” the department said.

The debt recovery program has reaped $1.9bn in fiscal savings since 2015, but with many of debts being paid back over plans, only $642.7m has actually been recovered. The scheme has cost $606m to administer over the same period.

Departmental data submitted to the Senate inquiry suggests that a 10% recovery fee is currently being applied in about 30% of cases and that it has been used at least 200,000 times since 2016.