The man in charge of Centrelink’s new system, which is sending thousands of automated letters to welfare recipients asking them for money back, says those feeling “lost in the system” should write to him directly: hank@humanservices.gov.au

Last week, Hack spoke to students who say they have reported their income correctly to Centrelink but are now being accused of welfare fraud.

It's the result of a brand new system that matches the income you declared to the Australian Taxation Office (ATO) with the income you declared to Centrelink. It's able to go as far back as 2010. When it detects a disparity, it automatically generates and dispatches a letter. For the Government, it's all about clawing back billions of dollars believed to have been incorrectly paid to welfare recipients.

The number of letters sent since the new system was implemented around six months ago has skyrocketed: from 20,000 claims per year to 20,000 claims per week.

Hank Jongen, the general manager of the Department of Human Services which runs Centrelink, says the system is not designed to accuse people of rorting.

These letters identify anomalies and they give the individual the opportunity to correct the record,” he told Hack.

But 25-year-old Sydney man Dave*, who received Centrelink while studying law at university, says he’s been asked to pay a debt he doesn’t owe.

“I am a lawyer. Being essentially accused of welfare fraud does not sit well with me,” he wrote in a letter sent to Hank Jongen and provided to Hack.

“When I was on Youth Allowance in 2013-14, I reported correctly every single time. Why am I being sent a request for payment of a debt? I do not owe a debt. Centrelink has not proven that I owe a debt. This is essentially an audit, except instead of asking me for information Centrelink has simply asked for money.There is no valid basis for this claim.

“Annual income, as reported by the ATO, is plainly not indicative of fortnightly income (which is what I was required to report). Most students work casually and their annual income is not paid regularly. This was the case for me. Some weeks I earned a lot, others I earned a little. I reported this accordingly!”

Dave* went on to say that Centrelink’s approach is unfair and creates a “great deal of stress for people, especially just before Christmas”. He says he will be complaining to the Commonwealth Ombudsman and has contacted his local MP.

Hank, listen. The onus is not on us to prove that we are not welfare frauds. Centrelink cannot claim that we owe a debt without having a valid basis for that claim. The mere fact that we earned a certain amount in a year is not enough.”

He says he’s frustrated that the website, which the letters encourage people to use to resolve their problems, has been giving him a “service unavailable” message. It’s an issue Hank Jongen acknowledged and apologised for, saying the problem has now been fixed.

“It is something we would factor in (when it comes to deadlines for information) if people have had difficulty putting in their circumstances,” he told Hack.

Dave* is one of hundreds of people who have shared their stories of trying to prove their innocence to a bureaucracy they say is difficult to navigate.

Students accused of welfare fraud say Centrelink's sums are wrong Former and current students say Centrelink is falsely accusing them of being welfare cheats and saddling them with thousands of dollars of debt.

Twenty-nine-year-old Brisbane woman Sarah Fielding described daily calls from an unknown number which she ignored at first, but later discovered was a debt collector working on behalf of Centrelink. She stopped receiving benefits three years ago, after relying on them while studying and working part time for a period of just six months.

“I kept getting calls and I just kept ignoring them because it was a no number and a message came up from Probe (a debt collector) and I thought it was just a spam thing… but my housemate is an accountant and said ‘they’re legit’,” she told Hack.

“So I rang them up and they said ‘we want $4,000 - how are you going to pay it?’

They said I am a fraud with Centrelink… it was all a shock to me.”

“It’s a huge amount this time of year, plus I have other debt so I’m just like ‘I’m never going to get ahead’.”

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Whatsapp A text message sent to Sarah from a debt collector. Sarah initially thought the message was spam.

Sarah insists she reported her income correctly and after discussing her situation with a Centrelink employee, she now thinks a computer glitch is the cause of her troubles.

Two of the companies she worked for while she was studying use a different trading name with the ATO. So while Sarah said she worked at Suncorp and Hair Candy on her Centrelink forms, these names don’t match those listed with the ATO.

“So they think I’ve worked at four jobs when I was just doing two,” she said.

Despite the Centrelink employee recognising the discrepancy, Sarah says she was asked to provide payslips from three years ago. She says while she left some roles on bad terms, she’s a self-described “hoarder” who luckily still had her most of her documentation handy. But she worries that for others who don’t, it could prove incredibly difficult to demonstrate their innocence.

While she has collected her payslips and worked with Centrelink to solve the problem, the debt collectors keep calling. “Every day, it’s just the same thing. I said to them ‘you’re saying the same thing’.

Pay the debt, even if you’re innocent

Sarah says she’s been told to pay the money now and if she is found to be in the right, she will be refunded. She’s worried if she doesn’t pay, her “great credit rating” could be affected.

Hack put her concerns to Hank Jongen from the Department of Human Services. He did not recommend people pay a debt they believe is unfair. Instead, he says people should apply for an extension while they gather their supporting documentation. According to Hank, the minimum extension given should be 21 days.

"What I do know is that there are a lot of people who get letters, follow up text messages and emails and are ignoring them and I have to say my advice is 'don't ignore it, go into the system, have a look at the basis upon which we are saying there is an anomaly and we will work with them to correct it’,” he said.

Why did it get as far as a debt collector?

Sarah says she’s moved five times in the three years since she received welfare and “didn’t think to update (her) address” with them because she was no longer getting benefits.

But while Centrelink may not have been able to reach her at a current postal address, she says they have her email and phone number and she doesn’t understand why she wasn’t told of the problem until now.

Hank Jongen defended the government’s use of debt collectors as a last resort.

"We would have identified a debt quite some time ago to get to a debt collection service.

"(Given Sarah moved house so many times) We would had difficulty identifying the individual and contacting them and under those circumstances, as a last resort, we would go to a debt collection agency to recover that money.

Dr Cassandra Goldie from the Australian Council of Social Service told Hack she’s writing to the government to ask it to stop the automatic letters being sent.

“We are writing to the Minister urgently… to ask for this debt collection system to be paused, to be stopped in its current form and for a communication to go out to people who are directly affected by this to buy people some breathing space.

“Even when we have cases where it does look like people were overpaid through no particular fault of their own, six years ago, and they’re still now struggling to make ends meet, we need debts waived.”

Government announces millions for Centrelink back end

Yesterday the government released its mid-year economic and fiscal outlook (MYEFO), which is basically a review of the figures they put out during the proper budget in May budget.

In MYEFO there was another $313.50 million over four years to spend on Centrelink.

The Human Services minister Alan Tudge was unavailable for an interview with Hack, but has previously said the government’s new system is expected to send 1.7 million “compliance” notices and will recover over a billion dollars of welfare debt.