Centrelink robo-debt fiasco an attack on the poor

The federal government's push to get Centrelink to crack down on the most vulnerable is facing a backlash.
Wednesday, January 11, 2017

It would surprise the federal Coalition government — that assumes we dislike welfare recipients as much as it does — that one of its biggest problems at the start of the year is the Centrelink debt fiasco.

Over the past six months, 170,000 people received debt notices from Centrelink, with the number gradually rising to 20,000 a week.

By comparison, only 20,000 debt notices were issued for the whole of 2015.

The government’s method of detection is to match Australian Tax Office (ATO) data with Centrelink data, and to use inconsistencies found to calculate how much welfare recipients were over paid.

Earnings reported to ATO are averaged out over 26 weeks by the government’s computers, and then compared with earnings reported to Centrelink. This is where the problems started.

Casual, part-time and seasonal workers, whose incomes fluctuate, who spend large parts year receiving only a part-payment (or no payment at all) and other parts of the year receiving the full rate of their payment, have been assessed as being overpaid — despite having correctly reported their income each fortnight.

Did the government know its new “robo-debt” system would lead to these sorts of mistakes? You bet.

“If employment is for a part of a year only, averaging over 12 months will not result in a correct result if the customer should have received a full rate at other times of the year,” a Department of Human Services document noted.

Before July, Centrelink workers checked discrepancies, following up with letters and telephone calls to customers, asking them to discuss the discrepancy with them.

If the customer did not have payslips, Centrelink would write to the employer, asking them to provide information. Only once all evidence had been collected and a debt calculated would a debt notice be issued. No earlier. The system worked well, according to Centrelink workers.

Manual oversight has since been removed. The data-matching has been entirely automated.

This reflects the government’s increasing desperation to find budget savings by speeding up debt detection or its keenness to make life even more stressful for welfare recipients. It also comes during a period of continuous job cuts at Centrelink (810 jobs were axed at Centrelink in the previous federal budget and more than 5000 jobs have been cut from the Department of Human Services — including Centrelink, Child Support and Medicare — over the past five years).

The result has been a high rate of incorrect debt notices, with between 20-38% of letters being wrong, according to best estimates. A Centrelink compliance officer told the Guardian that these might be generous estimates.

Aggressive, unfair, illegal

Much of the backlash against the government has not only been for its mistaken debt notices, but also for its heavy handed approach.

The initial letter is sent to MyGov, the online system used by Centrelink customers. MyGov has been widely criticised for being difficult to use and unreliable.

The government claims this is not a debt letter. But with a debt amount boldly displayed and payment options included beneath (BPAY, credit card, direct deposit transfer) it certainly looks an awful lot like one.

Disputing the debt is no easy matter. Centrelink call centre staff have reportedly been instructing individuals that unless a minimum repayment plan is entered into (15% of fortnightly income which for those on below poverty-line welfare payments is an alarmingly high amount), debt collectors will be activated (three companies won government contracts to pursue debtors). 

Outrageously, the onus of proof is not on Centrelink but on the individual. They are required to find payslips, often dating back five or six years, potentially many jobs ago, to prove they are not guilty of being overpaid.

Given this, it is no surprise that many recipients, feeling overwhelmed, have chosen not to contest debts that might have been incorrect and have started making repayments.

Benedict Coyne, president of Australian Lawyers for Human Rights, has been scathing. “At the most basic level, no entity should be issuing legal demands for money unless they are absolutely certain the money is owed and can substantiate this in court. It is for the creditor to prove any debt. It is also up to the creditor to ensure the alleged debtor receives the repayment demand.

“It is entirely wrong for Centrelink to put alleged debts in the hands of debt recovery agents when the debts are not proved and/or the alleged debtor never received the original claim, or to claim interest or process fees on money that is very probably not owing at all.”

No less critical was Paul Shetler, the former head of the government’s Digital Transformations office. He described the debts saga as “cataclysmic” and that “if they were a commercial company, you would go out of business, with a 20% failure rate, a known 20% failure rate, you would go out of business, any other kind of matching service would”.

Over the past few weeks, stories of people being hit with demands to repay have flooded a media not renowned for being sympathetic towards those receiving Centrelink payments.

A $4500 debt notice was sent to a cancer survivor, after they took sick leave in 2010 to undergo chemotherapy.

An Aboriginal elder’s debt notice for $7800 was waived after she spoke out.

A young person with autism was hit with a $14,700 debt and threatened with police action.

A single mother and her toddler were brought to the brink of homelessness because of a $4000 debt.

Another young person with autism was hounded by private debt collectors for a $3000 debt, highlighting concerns about the complex, cruel debt-recovery system and its implications for people living with disabilities or mental health issues.

Labor’s assistant Human Services spokesperson, Linda Burney, has asked the Australian National Auditor's Office to investigate (despite Labor having voted for legislation which facilitated the current crackdown in September) and the Commonwealth Ombudsman has launched its own investigation.

Double standards

Even more staggering than the litany of administrative errors and failures in due process are the glaring double standards.

Where are the automated debt notices for the one-third of corporations that pay no tax? Or for politicians who rort Parliamentary Travel Entitlements?

Minister Christian Porter, who says Centrelink’s new system “is about as reasonable a process as you could derive”, wants to save $4 billion over four years through his Centrelink debt crackdown. Meanwhile, aggressive tax minimisation schemes cost Australia $50 billion per year.

Get Up has reported that 679 companies paid no tax in 2014-15.

Imagine an Australia if there was a government that took tax fraud as seriously as welfare “fraud” (much of which is not fraud, but entirely accidental). Or a government that was as concerned about the 36% of welfare recipients living in poverty as the small number who were being overpaid their meagre payments.

[Pas Forgione is a founding member of Anti-Poverty Network, South Australia.]

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