Centrelink corrected 20,000 robo-debt notices by March: Labor

The Department of Human Services had already been forced to correct almost 20,000 notices issued under Centrelink's automated debt-recovery system robo-debt by March, Australia's Labor party has claimed.
Written by Corinne Reichert, Contributor

According to Australia's Labor party, it has received written confirmation from Minister of Human Services Alan Tudge that the Centrelink robo-debt fiasco had resulted in approximately 19,980 incorrectly calculated debts as of the end of March.

Centrelink's automated debt recovery system, dubbed "robo-debt", had erroneously sent letters demanding repayment from welfare recipients using an automated income averaging data-matching tool.

"In an answer to a question in writing filed by Labor MP Steve Georganas, the minister for Human Services revealed that as at 31 March, 20,000 income support recipients who had been contacted as part of the failed robo-debt debacle had their debts corrected or quashed altogether," Shadow Minister for Human Services Linda Burney and Georganas said in a joint statement on Tuesday afternoon.

Burney and Georganas added that Tudge had informed them that 12,524 people had their debts corrected or reduced, while a further 7,456 Australians had their debts quashed completely.

"These are absolutely shocking results, and reveal the extent to which Mr Tudge has fudged the management of the robo-debt debacle," the Labor MPs argued.

"Over a nine-month period, the government erroneously and unnecessarily set debt collectors on 20,000 innocent and vulnerable Australians who were in need of income support."

Around 200,000 people were sent debt-collection notices between November 2016 and March 2017, with 20,000 letters sent per week.

In June, the Senate Community Affairs References Committee published its report into the robo-debt debacle, saying the Department of Human Services (DHS) needed to "immediately" reassess the Centrelink debts calculated under the automated system.

In its Design, scope, cost-benefit analysis, contracts awarded and implementation associated with the Better Management of the Social Welfare System initiative report [PDF], the Senate committee said the reassessment should be performed by a team of department officers with special knowledge of the Online Compliance Intervention program, using accurate income data sourced from employers.

"This reassessment must include the full range of unpaid, partially paid, and fully paid debts incurred by current income payment recipients, and those debts outsourced to debt collection agencies," the committee said.

DHS should assume full responsibility for calculating verifiable debts manually, the committee recommended, and the onus of proving the debt must remain with the department and not require Centrelink users to prove they do not owe money to the agency.

"What the robo-debt process does is shift the onus onto the client to prove their innocence, and that is unusual ... verification can be done with the assistance of income support payment recipients, but the final responsibility must lie with the department," it said.

Instead of calculating a recipient's income based on a cumulative 26-week snapshot of what an individual was being paid, the robo-debt system had incorrectly based annual salaries off a recipient's fortnightly pay.

Centrelink had then been automatically issuing a debt notice with a 10 percent recovery fee whenever it detected an anomaly between calculated income and income declared to the Australian Taxation Office (ATO).

As a result, the committee asked DHS to halt the fortnightly averaging practice, and to review all cases with an automatically imposed 10 percent recovery fee. The department should also provide all welfare recipients with the debt calculation data required to verify any debts, the Senate committee said.

"A disturbing body of evidence was presented to the inquiry regarding the recovery of purported debts," the committee's report said.

"In some cases, ongoing debt repayments were enforced or coerced, even when the individual claimed the debt amount was wrong."

A redesigned system with a "robust risk assessment process" should be developed in consultation with relevant experts and rolled out, the committee added.

The committee said the agency must adhere to Commonwealth privacy guidelines and consider the adoption of the Victorian Judgement Debt Recovery Act principles, which prevent debt collection from Centrelink payments being used for food, shelter, and other life essentials.

It also asked that DHS be adequately staffed to deliver improved welfare services following claims of severe understaffing.

The Commonwealth Ombudsman's own report into the robo-debt fiasco in April had labelled the calculation of debts "reasonable and appropriate" -- but said the method used was "unfair and unreasonable".

"In our view, this is not reasonable or fair in situations where customers have to collect evidence from several years ago, or where the customer does not have the capacity to obtain the evidence," the Ombudsman's report had said.

Burney and Georganas added on Tuesday that it is "an absolute insult to the thousands of decent and vulnerable individuals who are reliant on income support" that the government has yet to act on the Senate committee's recommendations.

Labor had in February also accused the government of breaching privacy laws by leaking personal information about Centrelink users to media, and had repeatedly asked that the robo-debt system be halted.

Having said that some robo-debt discrepancies were a result of "misunderstanding on the part of recipients", Coalition senators had previously also said input from third parties on the robo-debt debacle were aimed "solely at scoring political points and inflaming the situation rather than offering practical assistance in resolving the issues raised".

The government had forecast in its 2015-16 federal Budget that it would save AU$1.7 billion over five years by identifying overpayments using income data for the 2010-11 to 2012-13 financial years. In December it then announced that it was finding around AU$4.5 million that had gone awry each day since implementation of the system last July.

Editorial standards