​Commonwealth defends Centrelink data matching bungle as working 'incredibly well'

Australian Minister for Social Services has said Centrelink's new debt recovery system is working 'incredibly well' despite welfare recipients receiving erroneous letters demanding they pay back money previously provided.

Minister for Social Services Christian Porter has kicked off 2017 by defending the new automated debt recovery process implemented by Centrelink, which has seen some letters demanding money repayment sent in error to welfare recipients.

Speaking on ABC RN Breakfast on Tuesday, Porter stated that of the 169,000 letters sent out to welfare recipients in Australia since the start of the financial year, only 276 complaints have been received by Centrelink -- a complaint rate running at 0.16 percent.

"We expect everyone who receives the letter to come back with the required information. The complaints have been very low about the process," he said.

"People might find that at times inconvenient, but the absolute basic part of a system that requires the person that receives taxpayer funded welfare give us information -- it's an ongoing requirement.

"From what we've seen in a high volume system it's actually working incredibly well."

Of higher importance to Porter is the AU$300 million worth of money that he said will paid back to the taxpayer.

"Over the course of the next four years, it's going to recoup AU$4 billion of taxpayer's money," Porter added. "The question is not whether or not the system is working -- it absolutely is working."

The Department of Human Services (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 has gone awry each day.

At the time, Minister for Human Services Alan Tudge said the new system has been initiating 20,000 compliance interventions a week -- a jump from 20,000 a year previously. He also said he expects the system to carry out 1.7 million compliance interventions within the next three years.

The new system automatically compares the income people declare to the Australian Taxation Office (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.

It was highlighted on Tuesday that one error in the Centrelink system is that it was incorrectly calculating a recipient's annual income, basing a recipient's yearly salary on their fortnightly pay, rather than taking the annual total from each individual fortnight's sum.

"You simply go online, you respond by noting that was the issue that has arisen, and that's the end of the matter," Porter said in response. However, the DHS website acknowledges that if employment is for a part of a year only, averaging over 12 months will not result in a correct result if the customer should have received a full rate at other times of the year.

Some letter recipients have been asked to produce proof of income from back as far as five years; however the Centrelink website suggests those receiving government support save payslip documentation for only six months.

"We don't think updating details is an unreasonable thing to do," Porter said. "Ultimately, if a real discrepancy does exist, then eventually we raise a debt, and that happens much later than this initial letter."

According to Acting Shadow Minister for Families and Social Services Doug Cameron, the entire automated system should be scrapped.

"Certainly it should be suspended because we've already got a Centrelink whistle-blower [who manages the program] saying this is grossly unfair, it's flawed, and overly harsh, it's error prone. It gives the compliance officers no discretion to deal with the issues and people are being told to go and find payslips that are several years old," Cameron said, speaking on RN Breakfast last week.

"Innocent Australians [are] receiving bills for tens of thousands of dollars and during the Christmas period and are being told that there will be a 10 percent penalty if they don't pay up and being told publicly by the minister they could go to jail. This is an outrageous proposition."

With its new debt recovery process, the federal government hopes to improve the nation's Budget by AU$2.1 billion over the next four years.

The automated initiative forms part of a project the Australian government is currently undertaking to transform DHS' 30-year-old payment system that is currently responsible for processing over AU$100 billion in Centrelink payments annually.

According to Tudge, the project, known as the Welfare Payment Infrastructure Transformation (WPIT) program, is the biggest digital transformation the government has embarked on to date and is expected to cost the Australian government at least AU$1 billion.

"Over the next five years, we're going to be progressively building a new system for each one of the major payments to make it simpler, faster, and cheaper to administer," Tudge said previously.

"We're going from a world today where the system is stifled with unnecessary inefficiency and complexity to a world where there will be progressive transformational change."

It was previously announced that from January 1, 2017, DHS will be implementing a "package of initiatives" that it hopes will enhance the integrity of social welfare payments. In addition to WPIT, these will also include expanding and extending data matching activities with the ATO and improving engagement with welfare recipients to ensure that they understand and meet their obligations.

Similarly, the ATO will be given the power to disclose to credit reporting bureaus the tax debt information of businesses who have not effectively engaged with the ATO to manage their debts.

"Businesses that do not pay their tax gain an unfair financial and competitive advantage over those that do," the government said, noting the move will enhance the integrity of the tax system as a result.