Ombudsman to probe Centrelink in wake of debt recovery debacle

The Commonwealth Ombudsman Colin Neave has opened an investigation into the Centrelink automated debt recovery system that has come under fire for sending some letters demanding money repayment in error to welfare recipients.

A spokesperson for Neave told ZDNet the Ombudsman is aware of the concerns raised about the automated data matching system used by Centrelink, and has commenced an own-motion investigation into the matter.

Although the Ombudsman is considering the issues on a systemic level, as own-motions are conducted in private, Neave nor his office cannot comment on any specific details, the spokesperson added.

Previously, the Office of the Australian Information and Privacy Commissioner made contact with the Australian Ombudsman -- as well as with the Department of Human Services (DHS) -- regarding the Centrelink crisis; however Privacy Commissioner Timothy Pilgrim said on Friday that no investigation into the matter was opened as a result.

"My office works closely with DHS and other government agencies to ensure they understand their privacy obligations and adopt best practice when undertaking data-matching activities," Pilgrim said in a statement.

Independent Member for Denison Andrew Wilkie had written to the Commonwealth Ombudsman about the debt recovery process, noting he has personally received over a hundred complaints from citizens who have recounted "deeply disturbing" stories about their experience.

"The government has terrified countless people, ruined the Christmases of many, and even driven some people to contemplate taking their own lives," Wilkie said in a statement.

"I'm appalled by all this, appalled that the government has been aware of the problem for many weeks and taken no action, and appalled that the minister is claiming that there are no problems."

On Monday, Wilkie said many members of the community would gain "some comfort" from the news that the Ombudsman would be investigating the controversial debt recovery process.

"The scale of this problem is beyond doubt, not least because Centrelink itself has admitted knowingly sending out as many as 4,000 incorrect debt notices a week," he said. "[The Ombudsman's investigation] is a victory for common sense and appropriate oversight of government policy."

The Australian politician previously called on the coalition to halt the "flawed" debt recovery process as the government continued to tout the debt recovery system as "actually working incredibly well".

Speaking with RN ABC Breakfast last week, Minister for Social Services Christian 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," Porter 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."

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. 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 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.

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.