Committee wants robo-debt shuttered and independent review immediately launched

The Community Affairs References Committee has asked for the termination of Centrelink's Income Compliance Program.

Although the government ceased the contentious practice of solely relying on data-matching in November, colloquially referred to as robo-debt, the committee is of the belief all debt-raising activities under the greater income compliance banner should no longer continue.

This would mean all income compliance assessments currently under pause due to COVID-19 would not recommence, nor would any new initiation letters be sent to individuals following the pandemic grace period for Centrelink debt-raising and recovery.

"While new initiations have not been sent out following revelations about the program's legality last year, and debt recovery remains paused during the COVID-19 pandemic, it is unclear how or when the Income Compliance Program may recommence," the committee's second interim report [PDF] on the program said.

"The evidence received to date clearly shows that the myriad problems with the Income Compliance Program's operation and its destructive negative impact on individuals have not been resolved.

"Despite several reviews of the program and numerous recommendations made to improve it, nothing has fundamentally changed for those affected over the five years of its delivery."

The committee said uncertainty about the future of the program would likely cause additional distress for individuals who have debts or reviews that are currently paused.

It said it was adamant that people should no longer be subject to "the fundamentally flawed Income Compliance Program, particularly in light of the significant announcements over the past year about the massive number of people who received debts without any legal basis".

The committee has also asked for an independent review to be immediately initiated to look into the policy, design, administration, and impact of the entire program, including robo-debt elements.

In 2016, the Department of Human Services cum Services Australia 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 compliance program automatically compared the income declared to the Australian Taxation Office 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 Income Compliance Program has been through three online iterations since its commencement in 2015: The Online Compliance Intervention (OCI), introduced in July 2016; the Employment Income Confirmation (EIC), which replaced the OCI in February 2017; and the Check and Update Past Income, which replaced the EIC in a staged rollout from mid-2018 until mid-2019.

The government in May 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.

As of 20 August 2020, 213,184 current customers and 84,675 former customers of Centrelink's have received a refund. This totalled AU$568 million in refunds to 297,859 people for 339,720 debts.

The committee also made a recommendation regarding refunds, which was for Services Australia to ensure its communication strategy relating to the "repayment of unlawfully-raised compliance debts" takes into consideration the additional needs of and provides appropriate support to vulnerable populations, such as people with disability, those experiencing homelessness, people with low literacy and numeracy, and people for whom English is not their first language.

The committee further asked Services Australia to immediately allocate additional staff towards contacting customers who have not engaged with the refund process in order to ensure refunds are completed in a timely manner.

Shuttering the system would also give the department time to consider its duties under the Social Security Act 1991, specifically the sections for proving an overpayment debt is due to the Commonwealth, and the Social Security (Administration) Act 1999, which provides an appropriate legal basis for requiring individuals to update income information where there has been no change in circumstances, the committee said. 

The committee also asked Services Australia to "immediately" take a refresher.

"The Income Compliance Program has had an overwhelming and devastating impact on many people's emotional and financial wellbeing and willingness to engage with and trust government services," the committee wrote under a chapter titled "The human cost of compliance".

A class action against the Commonwealth in relation to robo-debt is slated to commence on September 21, provided that legal counsel based in Melbourne are ready amid COVID-19 restrictions.

MORE ON ROBO-DEBT

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.

Social Services secretary apologises for robo-debt

Kathryn Campbell said the department is now aware that averaging ATO income data to determine a debt was a 'flawed assumption'.

Services Australia accused of 'covering up' robo-debt's automation mess

As senators accused Services Australia of engaging in a cover up, the department has refused to say how many debts were the product of erroneous data-matching, or when the fact-checking activities will be complete.