Exclusive: Coalition needs to include over 65s and other disadvantaged welfare recipients to hit $600m budget plan

This article is more than 1 year old

This article is more than 1 year old

The Morrison government could target thousands of pensioners and other “sensitive” welfare recipients under a proposed expansion of the controversial robodebt scheme needed to achieve a promised $2.1bn in budget savings, according to confidential documents seen by Guardian Australia.

The documents, stamped “PROTECTED CABINET”, show the scheme would fall $600m short of its required budget savings unless it is expanded to hit “sensitive” groups originally quarantined from data matching.

This would include people considered “sensitive” by the department: those aged 65 and over, those living in remote areas, and others considered vulnerable by Centrelink, including people who are homeless and those who have disabilities.

“Estimated savings over the forward estimates cannot be achieved without undertaking sensitive cohort reviews,” says the early draft ministerial submission for the government services minister, Stuart Robert.

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According to the documents, the department would need to carry out an additional 1.6m income reviews over the next three years to reach the promised savings, including 350,000 debt-recovery reviews among “sensitive” or vulnerable groups.

If Robert and the social services minister, Anne Ruston, support the plan, Scott Morrison’s cabinet will next month consider whether to begin what the department calls a “staged approach” to the expansion, according to the documents.

Guardian Australia approached Robert about the plan. Asked if the government planned to include vulnerable people – including those aged 65-74, those living in remote areas, and people with a vulnerability indicator – in the income compliance program, a spokesman would only say: “The government is not considering any proposal to commence online compliance for vulnerable Australians.”

The spokesman would not elaborate on whether over-65s were still being considered.

The proposal seen by the Guardian says the government would:

Conduct a pilot of 40,000 income reviews for people aged 65 to 74 this financial year, checking for welfare overpayments from business income and bank interest as well as pay-as-you-go income

Develop new methodologies to identify “low risk” sensitive customers

And then undertake further “modest pilots” among 10,000 people who live in remote areas or have a “vulnerability indicator” on their Centrelink file in early 2020, before a broader rollout is considered

The proposal would not require legislation and has sparked fresh controversy about the future of the program, which Labor, the Greens and welfare groups say should be abolished. Two Senate inquiries are set to examine the scheme.

Facebook Twitter Pinterest The proposal Illustration: Guardian Design

Responding to Guardian Australia’s story, Labor’s government services spokesman, Bill Shorten, said Robert should “immediately rule out applying a turbo-charged robodebt to vulnerable groups”.

“Mr Robert must now categorically with no weasel words tell the Australian people all these groups will continue to be protected from the cruel menace of robodebt,” he said.

The robodebt scheme has been marred by revelations that thousands of debts have been wiped or reduced since its launch in 2016. Critics argue the program places the onus on past and current welfare recipients to prove they do not owe debts dating back as far as seven years. They also question the methods used to calculate the overpayments, noting that about one in five debts issued have later been wiped, waived or reduced.

The government excluded the “sensitive cohort” of welfare recipients in 2017 at the height of what became known as the robodebt scandal.

If the scheme is expanded, 240,000 older Australians, 40,000 people in remote areas (50% of whom are Indigenous) and 70,000 others considered vulnerable by Centrelink would be subject to the debt recovery program, the documents show.

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Thousands would be likely to incur a debt given that of the 900,000 income reviews carried out so far, 80% have resulted in a debt letter. The department estimates about $430m would be raised from those aged 65 and over.

The Department of Human Services has discussed the proposal with the Department of Social Services and the Department of Finance and note there is “broad support for the proposed strategy”, according to the submission.

The scheme is also the subject of a legal challenge. Noting this, the documents reveal that the commonwealth is reviewing the debt at the centre of the second case brought by Victoria Legal Aid. The department wiped the debt contested in the first case, then argued that it should not proceed.

“The debt in Amato is under further review and may also be recalculated,” the draft submission says. “At that time the department will review its position in that case.”

The department acknowledges public concerns “raised under the ‘robodebt’ banner” may “intensify should sensitive cohorts be included”.

It also tells the minister it looked at “alternative options” but these were opposed because they would “have a significant negative impact on the budget savings” and require “significant cost offsets given the budget rules”.

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One option was to continue to exclude older Australians from future income compliance reviews, which would cost about $430m over three years, while another would introduce a “more ‘nuanced’ approach to compliance officer decision making”.

That would “improve customer experience and engagement, and potentially reduce unnecessary touch/pain points with customers” but was not favoured because it would increase the cost of each income review.

The ministerial submission provided for Robert says he and Ruston are “required to bring forward” the submission to cabinet in the 2019-20 mid year economic and fiscal outlook “as per the authority letter from the prime minister”.

Ruston’s office referred questions to Robert.

Robert’s spokesman said: “‘Income compliance for our targeted welfare system is not new, It has been in place since the 1980s. In fact, online income compliance was ramped up with data matching under the former Labor Government in 2011.”

The spokesman declined to answer further questions posed by the Guardian.