New system replaces manual checks and has led to explosion in the number of ‘compliance interventions’

This article is more than 3 years old

This article is more than 3 years old

Centrelink has been urged to temporarily stop collecting debts from welfare recipients following further reports of errors with its “absurdly crude” new automated compliance system.

The agency has been using the new compliance system since July, which gives it the ability to automatically match data from multiple sources, including the tax office, to detect instances where benefits were wrongly claimed.

The new system replaces manual checks by staff and has seen an explosion in the number of “compliance interventions”, up from 20,000 per year to 20,000 per week, according to the human services minister, Alan Tudge.

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But the independent Andrew Wilkie warned last week that his office was receiving reports the new system was generating debt notices in error.

Wilkie said his office had now received several dozen reports from individuals who were wrongly told they owed money to Centrelink.



He said one of the worst examples reported to his staff involved a man who suffered from anxiety, who was told he had a debt of $10,000. He said the man reported being suicidal.



Wilkie’s office queried the department and the debt was found to be wrong. Wilkie said Centrelink had actually owed the man $700.

“It’s just a shambles; $10,000 is a lot of money for anybody,” Wilkie said. “Some of these smaller figures … that’s equally big for them.”



The department is using yearly taxable income information from employers, held by the Australian Taxation Office, to track down cases where it may have wrongly paid welfare benefits.

But in some cases employers have incorrectly recorded an employee as having earned income over a full year, even if the individual had only worked a shorter period.

The Department of Human Services’ general manager, Hank Jongen, told Crikey that customers were “able to correct this information themselves”.

“If an employer has not accurately reported the time period for which income was earned, customers are able to correct this information themselves using the online tool,” Jongen said.

Jongen, in a statement to Guardian Australia, said the department was not aware of any problems with its automated compliance system.



He said the government had not seen any increase in the number of appeals against debt notices.

“The department is confident the online compliance system, and associated checking process with customers, is producing correct debt notices,” Jongen said.

“If a person thinks a decision is wrong they have a right to ask for a review, and have further appeal options. These review and appeal rights are outlined in the department’s letters and in the online compliance system.”

But Wilkie fears the new system has put an unfair onus on welfare recipients.

The new system is spitting out debt notices from as far back as six years, Wilkie said, leaving people unable to track down payslips or other information to contest Centrelink’s claimed debt.

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“If there’s a significant taxable income for that year, and they got a benefit, then they’re assumed to be guilty until proved innocent,” Wilkie said.



“It is such an absurdly crude system, that they’re, as much as six years later, matching annual taxable income with specific periods from six years ago.”



The Australian Council of Social Service (Acoss) said the reports were “very concerning”, particularly 10 days out from Christmas.

Acoss’s chief executive officer, Cassandra Goldie, said the government should consider suspending the compliance system if widespread problems were found.

It’s a call echoed by Wilkie, who also wants a temporary suspension of referrals to debt collection agencies.

“In first instance, the minister needs to understand it’s a problem, and tell his department to fix it, and pause all further action, including pausing any instructions that have gone out to debt collectors,” he said.

Goldie said the extra debt notices being sent out by the government were creating pressures on welfare services across the country. “If there are problems with the system and people are being inaccurately issued with a debt, the program should be suspended until those issues are rectified,” Goldie said.

“No one should be slapped with a phantom Centrelink debt 10 days out from Christmas,” she said.



Wilkie said many people were not receiving a letter or other forms of communication about the debt. The first that many knew about it, he said, was when a debt collector contacted them.

Individuals are given three weeks to provide evidence that they do not owe the debt, although they can seek extensions. Goldie said Centrelink’s staffing cuts made contact very difficult for welfare recipients, with call times stretching out beyond an hour.

She said that presented a serious risk that they would not be able to get the assistance they need to properly dispute the debts within 21 day timeframe. “Many of these households are worrying about how they’ll afford some kind of holiday time and presents for their kids,” she said. “They should not have the added burden of trying to clear their name with Centrelink.”