Centrelink automated debt recovery based on a 27-year-old process: Tudge

The federal government has again defended Centrelink's debt recovery system, saying the practice is not new and has been in place since 1990.

Minister for Human Services Alan Tudge has defended the issue-plagued Centrelink automated debt recovery system again, claiming the practice that has seen some letters demanding money repayment sent in error to welfare recipients has been in place for almost 27 years.

Addressing the House of Representatives on Tuesday, Tudge explained that the federal government has long fact-checked welfare recipients and that the process actually began back in 1990, when Labor introduced the Data Matching Act.

"We check the self reported income to Centrelink with the income data held with the Australian Taxation Office (ATO) and where there is a discrepancy between those two sets of data, an enquiry is made of the recipient as to why there might be a discrepancy," Tudge said. "[This process] has been around for a very long time."

According to Tudge, the 27-year-old process was then refined in 2011 when opposition leader Bill Shorten introduced some automation to the practice.

"Then in our 2015-16 Budget we decided to further expand this amount of work to cover more people," Tudge explained. "But at all times, the basic methodology of the data checking has been exactly the same."

The minister's comments came in response to a suspension motion that was requested by Independent Member for Denison Andrew Wilkie on the grounds that the "crude" data matching process was taking a severe financial and emotional toll on citizens, amongst other concerns.

Wilkie called on Tudge to ensure that all Centrelink debt recovery activities moving forward are timely and accurate, and are conducted in a fair and humane manner; and that he convene, as a matter of urgency, an expert stakeholder roundtable to design a fair and humane system of debt detection and recovery.

Earlier this year, Wilkie wrote to the Commonwealth Ombudsman asking for an investigation into the debt recovery system, while simultaneously calling on the Coalition to halt the practice, noting he personally received over a hundred complaints from citizens who have recounted "deeply disturbing" stories about their experience.

"While the Minister for Human Services has indicated that some minor changes will be made, the program remains deeply flawed and must be shut down immediately," Wilkie said Tuesday.

Wilkie condemned Tudge for "not only refusing to admit that there is a problem with the system, but also for insisting that the system will continue to operate despite it incorrectly targeting thousands of innocent Australians and its failure to treat people fairly and humanely".

Acting national secretary of the Community and Public Sector Union (CPSU) Michael Tull recently asked Tudge to meet with union members employed at the Department of Human Services (DHS) to discuss why the Centrelink process was causing "extraordinary" stress in staff.

Speaking on behalf of the union representing public sector staff, Tull explained that DHS staff workload is so unmanageable thanks to the error rate in the letters, that they do not feel they can serve their fundamental role of helping those in need.

"People work at Centrelink because they want to help -- but the systems work so badly, and DHS is so understaffed, that they simply cannot," he said at the time. "The resulting reduction in safety for DHS workers and the public must be addressed without delay."

DHS announced in December it had implemented the online compliance system in July and said that it was finding approximately AU$4.5 million that had gone awry each day. With this, the federal government hopes to improve the nation's Budget by AU$2.1 billion over the next four years.

The new system automatically compares the income people declare to the ATO against income declared to Centrelink. When it detects a disparity, Centrelink automatically issues a debt notice and that debt comes with a 10 percent recovery fee.

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

"Sometimes people can explain why there is a discrepancy between the two sets of data ... and that occurs in about 20 percent of occasions," Tudge said on Tuesday. "In the other 80 percent of the cases there has not been a response or there has not been a valid explanation as to why there might be a discrepancy and in that instance a debt notice may be given."

Member for Melbourne Adam Bandt also highlighted the error rate in debt recovery letters, with the Greens representative calling out Tudge for underestimating the number of incorrect debt collection notices issued.

In a similar vain to Tudge, Prime Minister Malcolm Turnbull called the debt recovery system "quite appropriate" and said it boils down to the fact that the government has an obligation to ensure that Australia's "very extensive and generous" social welfare system is allocated correctly.

"Centrelink has a responsibility where it identifies a discrepancy between what the recipient has reported and what the employer has reported to seek an explanation and that is what is being done," Turnbull said in January.

"The letters that go out in the first instance are simply saying, there is a discrepancy: 'Your employer is saying you earned this, you say you earned that, can you explain what that discrepancy is' -- and that is entirely responsible and appropriate."