Australian government to return AU$550m from false robo-debts: Report

It reportedly comes from over 400,000 welfare debts that were found to be incorrectly issued due to the automated income-matching process.
Written by Asha Barbaschow, Contributor

The federal government will reportedly be forced to refund around AU$550 million to recipients of welfare through Australia's Centrelink scheme.

According to a report from The Guardian, over 400,000 debts were incorrectly issued under the Department of Human Services cum Services Australia's Online Compliance Intervention (OCI) initiative.

In 2016, the department kicked off the data-matching program of work that saw the automatic issuing of debt notices to those in receipt of welfare payments through the Centrelink scheme. The OCI program automatically compared the income declared to the Australian Taxation Office (ATO) against income declared to Centrelink, which resulted in debt notices, along with a 10% recovery fee, being issued whenever a disparity in government data was detected.

One large error in the system was that it incorrectly calculated a recipient's income, basing fortnightly pay on their annual salary rather than taking a cumulative 26-week snapshot of what an individual was paid.

Centrelink's OCI program from 1 July 2016 through 31 August 2019 saw 1,159,662 assessments be initiated using the automated data-matching technique.

The federal government in November paused the automated data-matching element of robo-debt, but Services Australia is still using income information from the ATO to identify "significant discrepancies" with income information.

Services Australia has been undertaking an analysis of all income compliance reviews to identify where income averaging was used to determine a debt and was meant to have a solid number of how many people were affected by automation activities, as well as a plan of attack, by the end of January.

The Guardian, having sighted a ministerial submission to cabinet from ministers Stuart Robert, Anne Ruston, and Christian Porter, said Services Australia expects to refund the debts over the next 12 months.

"Services Australia estimates that it will administer 449,500 refunds determined under the programme, and their associated repaid debts would be refunded commencing in July 2020 and concluding within 12 months," it wrote, quoting the leaked document.

"$555.6m in cash payments have been received from recipients to date for those in-scope debts".

The report also said that around 80,000 debts would be reassessed before "refunding or reaffirming the debt".

With a class action currently underway, the report also said the government expects to lose and intends to settle.


The Australian government in 2016 introduced the trial of a welfare quarantining system, via a Cashless Debit Card (CDC), that aimed to govern how those in receipt of welfare spend the money, with the idea being to prevent the sale of alcohol, cigarettes, and some gift cards, as well as block the funds from being used on activities such as gambling.

80% of the recipient's funds are placed on the CDC, which is managed by Indue, with the remaining 20% to be paid into a bank account.

There are currently 12,150 participants in the CDC trials across Bundaberg and Hervey Bay, the East Kimberley, Ceduna, and Goldfields regions, and the government is planning on extending the trial into the Northern Territory and Cape York.

Services Australia is charged with oversight of the initiative, and as the department is currently inundated with a new wave of welfare payments in the wake of the COVID-19 outbreak, the government earlier this week announced it would place a temporary pause on transitioning new participants onto the CDC.

"The government's absolute priority is to make sure eligible Australians can access the financial support they need as we face devastating job losses across the country," Minister for Families and Social Services Anne Ruston said.

"We remain committed to the Cashless Debit Card trials which are aimed at reducing social harm associated with drugs, alcohol, and gambling addiction and helping people to manage their finances.

"However, during this challenging time we must make difficult decisions about how to best prioritise Services Australia's workforce."

It was reported that those currently on the CDC will not be able to access the AU$750 coronavirus stimulus payment as cash, as it will be quarantined onto the debit card.

There will be no change to arrangements for existing Cashless Debit Card participants and support services will continue to operate business as usual, Ruston added.

During Senate Estimates earlier this month, Ruston, alongside other departmental representatives, including secretary Kathryn Campbell, was asked that due to them "talking so favourably about it", whether they might like to be moved onto the CDC themselves.

"I think there's a number of reasons we talk about some of the benefits of the CDC," Campbell said in response.


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