Centrelink's coronavirus debt recovery pause set to end

Centrelink’s debt recovery program will recommence next month following a pause as part of the federal government’s coronavirus response.

The pause was implemented on 3 April 2020 to help ease budget pressure on welfare recipients.

“Early next month, we’ll start contacting people who have a debt to let them know the due date for their repayments and how to start repaying money,” Services Australia said in a statement.

“We’ll provide information to help people understand the reason for their overpayment and set up the best repayment options for their situation.”

The debt pause for Victorians ceased on 11 January, but repayments won’t be mandatory until February.

“As debt activity starts again, Services Australia will work with people to make the process as clear and simple as possible,” said government services minister Stuart Robert. “The agency will explain how debts arose, where to go for more information, how to self-service and offer other support.”

Centrelink’s debt recovery program became infamous when an automated system that started in 2015 accused at least 370,000 Australians of owing money to the government. This became known as ‘robo-debt’.

“The robo-debt scheme automatically issued notices to welfare recipients identified as having debts through a process of income averaging,” the ABC reported.

“This compares a person’s reported income with their income as measured by the Australian Tax Office.”

In November 2019, the Federal Court found that it was unlawful to use income averaging to issue debts and in November 2020 the law firm representing the victims announced they had struck a $1.2 billion compensation deal with the Commonwealth.

The $1.2 billion is made up of:

  • $721 million the government had already agreed to pay to more than 370,000 people who were wrongly pursued
  • $112 million in compensation
  • a decision to drop a further $398 million in debts wrongly raised.

“The money covers repayment of the debts illegally raised by the government, interest on the money paid by victims, and legal fees.”

Despite the controversy, Services Australia has continued to contract private debt collectors. The Guardian reports that these companies will face penalties if they don’t claw back enough money.

“Tender documents show the three collection agencies who win three-year contracts to pursue individuals over Centrelink debts will be subjected to ‘specific performance targets’, including the performance of other collection agencies.

“One criticism of the program was that welfare recipients were harassed by private collection agencies over debts, including many which turned out to be unlawful.”

Kristin O’Connell, a spokesperson for the Australian Unemployed Workers’ Union, said there was no reason for Services Australia to outsource debt collection.

“We know that through [the] robo-debt program people were having horrific experiences,” she said.

“They weren’t being told all the information and they were being lied to as well.”

Ms O’Connell said the union was appalled that the government had not learnt from the robo-debt scandal.

The scrapped robo-debt program focused on undeclared employment income.

“But the agency still recoups billions from other debts related to family tax benefit, childcare subsidy, and across all payments for people accused of not declaring assets or other changes to their circumstances.”

Here’s what Services Australia says about the recommencement of debt recovery:

There are four things to know:

  • you don’t need to pay anything back until February, but you can if you want to
  • if you don’t understand why you’ve been overpaid you can talk to Services Australia. Call them on your regular Centrelink payment line and ask them to explain. If you disagree with the decision, you can ask for a review
  • when you need to start repaying the money there will be options. You’ll be able to work with Services Australia to find the best one for you
  • if you’re worried about this, Services Australia can give you support. It has social workers who can provide short-term counselling, information, and referrals to other services.

Did you fall foul of the robo-debt scheme? Are you confident this version will tick all the boxes?

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Related articles:
https://www.yourlifechoices.com.au/government/centrelink/centrelink-news/cuts-to-hit-older-australians-hardest
https://www.yourlifechoices.com.au/work/older-australians-pessimistic-about-employment-prospects
https://www.yourlifechoices.com.au/government/centrelink/compensation-payments/compensation-payments-australia

Written by Will Brodie

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