Centrelink debacle hits thousands

In looking to reclaim $4.6 billion of welfare debt over four years, the Government has pushed ahead with a system that many welfare recipients are claiming is fundamentally flawed.

Since the introduction of the automated system in July last year, almost 170,000 letters have been sent to Centrelink customers, past and present, asking them to explain why their income declared to Centrelink differs from that provided by the Australian Tax Office (ATO).

The discrepancy, however, is often due to a flawed algorithm used by Centrelink’s new system, which is failing in two ways. The first is that annual income provided by the ATO is divided by 26, representing Centrelink’s fortnightly reporting period. This has resulted in the system flagging that people have earned too much income to justify benefits paid, even though they may not have received any income during the periods when they were paid these benefits.

The second is when a discrepancy occurs between the ATO and the Centrelink systems in the spelling of an employer’s name, the Centrelink system then deems that the person held two jobs and did not declare their full income.

In some cases the discrepancies can date back six years, yet customers are given only 14 or 21 days to provide the necessary information. This can be difficult due to them not having access to the necessary paperwork, the inability to access Centrelink’s online services, speak to someone over the phone or visit an office in person.

This is where a debt recovery notice being raised for those who do not respond within the stipulated timeframe compounds the issue. Once a debt recovery notice has been issued, Centrelink’s system can’t be amended, even if the customer can disprove the debt.

In some cases, those issued with a debt recovery notice are being advised to start repaying the debt until an internal review can be carried out. And to add insult to injury, are being charged a 10 per cent debt recovery fee for the privilege.

Independent MP Andrew Wilkie claims to have been contacted by more than 100 terrified people who had received letters or debt recovery notices, four of whom said they were considering suicide.

Labor has called for the automated system to be halted until such time as the glitch can be rectified. Speaking to Fairfax Media, Opposition Leader Bill Shorten said, “This farce has to end. This stuff-up has delivered a summer from hell for thousands of people who have done absolutely nothing wrong.

“They are hounding ordinary Australians for debts they do not owe. It’s a toxic mix of incompetence and cruelty. I’m saying to the Prime Minister, just admit you’ve stuffed this up and suspend the program now.”

Yet Social Services Minister Christian Porter claims the system is working well, stating only 276 complaints had been received despite 169,000 letters being sent.

“In 80 per cent of instances the debt is repayable to the Commonwealth, in the final 20 per cent of instances the matter is resolved, generally speaking, by people simply providing information online,” Mr Porter said.

However, an internal Centrelink check is said to have revealed that only 20 per cent are real debts.

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Opinion: Attack on the vulnerable

No one can deny that cracking down on genuine welfare fraud is clearly necessary, but wrongly involving thousands of other innocent and vulnerable people in the process is unforgivable.

In an attempt to cut corners and being seen to be taking positive action, the Government has put its faith in a system that is flawed and, quite frankly, not fit for purpose. A simple compliance check of even a small percentage of the letters sent would have quickly indicated that there was a rogue algorithm at work.

Even the former head of the Goverment’s Digital Transformation Agency, Paul Shetler, said on Radio National this morning that the debacle is as much of a political and management failure as it is an IT problem. Mr Shetler was appointed by Malcolm Turnbull in 2015 to reform the Government’s technical operations, but quit after 18 months. 

And in what is becoming an all-too-common occurrence, the issue is being glossed over by those responsible. Social Services Minister Christian Porter is quoting quite different figures than Centrelink officers on the ‘front line’ for those affected. Department of Human Service general manager Hank Jongen is incredulous at the outcry, saying, “I really am surprised that people are seriously suggesting that when we are obliged under the law to recover outstanding debt when it is identified, that we are being asked to stop doing this. I think you need to keep all of this in context.” Finally, Human Services Minister Alan Tudge, when asked about the debt recovery fee, telling Triple J, that, “A 10 per cent recovery fee is new to me, and I don’t believe that does occur.”

Let’s not forget that a significant percentage of the people who will have received these letters may be disabled, have mental health issues, may have difficulties understanding complex language or quite simply, may be too scared to act for fear of being forced to pay back money they don’t have.

The Commonwealth Ombudsman is already looking into the issue at the request of Andrew Wilkie and it is becoming increasingly likely that a Senate Inquiry will be called on the issue. Yet we know how long this can take and, of course, the adoption of any recommendations is at the behest of the Government.

So, until such time as the issue can be resolved, surely Prime Minister needs to take time out of his holiday to deal with the problem as a matter of urgency. A simple moratorium on all debt recovery requests is all he needs to announce.

Have you received a letter from Centrelink asking you to provide more information? Do you think that if genuine debts are being recovered then the Government is right to push ahead? Or should the system be halted until the glitch can be fixed?

If you’re concerned about your circumstances and are seeking support and information about suicide prevention, you can contact Lifeline on 13 11 14, or beyondblue on 1300 22 4636.

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Written by Debbie McTaggart

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