Centrelink has used private debt collectors to pursue 43% of the debts raised by its controversial “robo-debt” system, a rate vastly higher than normal.

New figures show 56,504 of the 132,764 debts raised by the system between July and March were handed to two firms contracted by the Department of Human Services – Probe Group and Dun & Bradstreet.

That’s significantly higher than the 12.5% of non robo-debt cases referred to private debt collectors in 2015-16.

The other main government agency routinely collecting debts, the Australian Taxation Office, only used private debt collectors in 17% of income tax debt cases by mid-2016.

Private debt collectors are working on commission for Centrelink, although the government has refused to disclose what rate it is paying them.

That is a markedly different approach to the ATO, which uses a flat fee, reducing the financial incentive for private firms to pressure debtors into repayment.

External debt collectors have been accused of harassment, intimidation and threats by some welfare recipients, including those who were inaccurately or unfairly lumped with debts by the automated system.

The chief executive of the Australian Council of Social Service, Cassandra Goldie, said she was “horrified” at the frequency with which Centrelink was referring robo-debt cases to private debt collectors.

“This program must be shut down,” she said. “Not only has it inflicted serious distress and harm upon thousands in the community, it is allowing almost half of all alleged debts to be put into the hands of private debt collectors.

“The lack of humanity by the Department of Human Services robo-debt debacle is astounding,” she said.

The department has revealed that it is now recalling some robo-debts from external collection agencies. It began that process in mid-February, about the same time as it made changes to the system to improve its fairness.

It is now contacting individuals referred to debt collectors to remind them that they have the right to ask for their debt to be reassessed or formally reviewed.

The new figures, provided to the Senate inquiry on Tuesday, appear at odds with previous statements by the department about its use of external debt collectors.



The department has previously intimated that it rarely used private firms to pursue debts but has never given any figure specifically related to the robo-debt system.

The department told Guardian Australia in January: “External collection agents are only used to recover a small proportion of total debts.”

It made similar suggestions in its submission to the current Senate inquiry.

“Less than 10% of all debt owed to the department is recovered by external collection agents,” the department’s submission said.

About 6,600 people learnt of their debt when contacted by an external debt collector. Roughly 3,000 have begun paying the money back, despite having no contact with Centrelink.



Those individuals are likely to have had their debts calculated by the error-prone “income averaging” method – which crudely averages an annual income over Centrelink’s 26 fortnightly reporting periods.

This month the department said it was confident that the external debt collection agencies were behaving appropriately. Only debts relating to former recipients are referred outside of the department.

Private debt collectors are subject to consumer law and the ACCC/Asic debt collection guidelines. Those guidelines prevent harassment, intimidation, or unscrupulous behaviour.

They also require debt collection agencies to have evidence that the debt is genuine. The department also helps the firms write scripts for their interactions with welfare recipients and “listens in” on their phone calls after providing advance warning.

Surveys are also conducted with individuals who are targeted by external debt collectors to get a sense of how they have been treated.

A third debt collection agency, Australian Receivables, is also contracted to recover debt, but was yet to begin operating last month.

Department of Human Services spokesman, Hank Jongen, said only former welfare recipients were referred to external debt collectors.

He said these individuals were typically earning an income while receiving payments to which they were not entitled.

“As a high number of these people are former (that is, not current) recipients, if they do not enter into a repayment arrangement their debts have to be referred to external agents for collection,” Jongen said.

He said only about 10% of total outstanding social welfare debts were referred to an external agent.