​Government to use data matching to improve Budget bottom line by AU$2.1b

The federal government will be cracking down on welfare in attempt to improve the Budget by AU$2.1 billion over the next four years.

Australia's Mid-Year Economic and Fiscal Outlook 2016-17 states that the government will attempt to "enhance the integrity" of Australia's social welfare system by ensuring only people in genuine need receive support, and leverage its data to cross-check Centrelink claims via an automated system.

"Enhanced employment and non-employment income data matching, ensuring accurate disclosure of assets and investments, improved engagement with welfare recipients to better ensure they meet their obligations, and improved identification and recovery of debts will improve the Budget by AU$2.1 billion over the forward estimates," it said.

The government expects to achieve overall savings of AU$3.7 billion, which it explained is AU$2.1 billion in underlying cash terms, over four years from 2016-17 by expanding the Department of Human Services' (DHS) fraud prevention and debt recovery capability.

For the 2016-17 financial year, the government will have handed DHS AU$49 million to implement the initiative, with AU$179.3 million to be handed out in 2017-18; AU$142.1 million in 2018-19; and for 2019-20, the government expects to spend another AU$130.5 million on the project.

Earlier this month, DHS announced it had implemented the online compliance system in July and said that approximately AU$4.5 million that has gone awry is being pointed to each day by the automated system.

At the time, Minister for Human Services Alan Tudge said the new system has been initiating 20,000 compliance interventions a week -- a jump from 20,000 a year previously. He also said he expects the system to carry out 1.7 million compliance interventions within the next three years.

Welfare recipients are required to update Centrelink with changes in their income or personal situation; however in the past, DHS staff had to manually check customer records against data provided by other government agencies such as the Australian Taxation Office (ATO) to ensure the department was paying recipients correctly.

Payment anomalies were previously identified as recoverable after letters were sent and phone calls to welfare recipients were made. The new online compliance system automates part of this process, and sees a letter automatically generated that asks people to check and update their details online using myGov when data inconsistencies are detected.

The initiative forms part of a project the federal government is currently undertaking to transform DHS' 30-year-old payment system that is currently responsible for processing over AU$100 billion in Centrelink payments annually.

According to Tudge, the project, known as the Welfare Payment Infrastructure Transformation (WPIT) program, is the biggest digital transformation the government has embarked on to date and is expected to cost the Australian government at least AU$1 billion.

"Over the next five years, we're going to be progressively building a new system for each one of the major payments to make it simpler, faster, and cheaper to administer," Tudge said previously.

"We're going from a world today where the system is stifled with unnecessary inefficiency and complexity to a world where there will be progressive transformational change."

It was revealed on Monday that WPIT would be receiving a AU$313.5 million, four-year funding injection to help it move in tranche two, which Tudge explained will focus on developing new welfare payment processes and services, starting with a revamp of how AU$3 billion in student payments is administered and delivered each and every year.

Spanning 18 months, tranche two will also lay the groundwork for the majority of student claims to be completed entirely in the digital channel.

In October, DHS announced it had shortlisted Capgemini -- who was recently blamed for the leak of over 780,000 email addresses belonging to global recruitment firm Michael Page -- and Accenture to provide systems integration services for the overhaul, with the pair of consultancy firms to battle it out for the final rights to the contract.

In a "try before you buy" scenario, Capgemini and Accenture will work with the agency's main software vendor SAP to deliver the next tranche involved in the project.

Tudge said Monday that DHS is currently in the final stage of the selection process.

From January 1, 2017, the government said DHS will be implementing a "package of initiatives" it hopes will enhance the integrity of social welfare payments. In addition to WPIT, these will also include expanding and extending data matching activities with the ATO and improving engagement with welfare recipients to ensure that they understand and meet their obligations.

Similarly, the ATO will be given the power to disclose to credit reporting bureaus the tax debt information of businesses who have not effectively engaged with the ATO to manage their debts.

"Businesses that do not pay their tax gain an unfair financial and competitive advantage over those that do," the government said, noting the move will enhance the integrity of the tax system as a result.