Centrelink's new data-matching approach to avoid robo-debt 2.0

Still taxation office data, but this time it won't allow an algorithm to guess an annual income.

Among the claims of legal professional privilege, apology refusals, and debates over the correct way to refer to Centrelink's Online Compliance Intervention (OCI) initiative, the Department of Social Services has explained how it will be determined whether a Commonwealth debt is owed moving forward.

In an attempt to avoid robo-debt 2.0, Centrelink will continue to rely on data from the Australian Taxation Office (ATO), but this time it will be different, according to Department of Social Services acting deputy secretary of social security Shane Bennett.

In 2016, the Department of Human Services cum Services Australia had kicked off a data-matching program of work that saw the automatic issuing of debt notices to those in receipt of welfare payments through the Centrelink scheme.

Colloquially known as robo-debt, the OCI program automatically compared the income declared to 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.

The government ceased using data-matching as its sole method for raising a debt in November, and in May, it admitted to getting around 470,000 debts wrong.

The total value of refunds, including fees and charges, is estimated to be at AU$721 million.

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Despite the error, the responsible departments -- Social Services for policy and Services Australia for the administration -- have continued to say they have an obligation to uphold the integrity of the welfare system in Australia, so the plan is to now use ATO data obtained through Single Touch Payroll (STP).

STP has changed how businesses report wages, pay as you go withholding (PAYG), and superannuation information to the tax office. Previously, businesses would report payroll activity to the ATO once a year. Now, they send a report after each payday, with the reports to be submitted digitally, using a very specific format.

From 7 December 2020, Bennett said the department would move to a more "intuitive" method for confirming income.

"The model is moving from effectively what we call 'earned' to what we call 'received' and what people will report is basically if they get a fortnightly pay in their entitlement period they will report in that fortnight the pay they receive -- that's a big change and I think it is far more intuitive," he told the Senate Community Affairs References Committee on Tuesday.

"The next change, which is just as important, is its going to involve the use of technology and data from the ATO associated with Single Touch Payroll."

The first phase of STP reporting, which kicked off on 1 July 2019, included high-level data such as gross income, tax, allowances, deductions, lump sums, and fringe benefits. The next phase, STP 2, will see the reports move away from annual payment summaries to ones provided on payday.

The department is estimating that for 93% of its customers, their employers will pick up STP 2 data. STP phase two, however, won't go live until 1 July 2021.  

"Eventually it will be a situation where we estimate 93% of people who have to report will effectively have on a screen what the information is that we've got from the ATO associated with their reporting obligations and then they have the ability to confirm or adjust," Bennet said.

"Those two things combined we think will lead to an increase in the integrity of outlays, a better service for Australians because it is more intuitive, it is supported by technology, so that rather than someone having to for example try and find a payslip that they then have to enter, they will have the information presented to them."

"It won't so much be uploading payslips it will be through data-matching through the ATO," he added.

He said the customer will be able to accept or amend the totals.

On amending previous records, deputy chief executive officer of Services Australia's customer service delivery group Michelle Lees said there is now a tool available for customers to make changes to income reported previously.

This function was brought in earlier this year, and Lees took on notice whether it was brought in specifically due to COVID-19.

Committee chair and Greens Family and Community Services Senator Rachel Siewert asked Lees why such a function was not made available previously, highlighting that such an option would have fixed "so many problems" faced by the OCI initiative over the years, such as relying on estimated annual income.

That question was also taken on notice by the department.

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