As of July, welfare recipients will need to report their income as it appears on their payslip, rather than having to estimate a figure based on hours worked over a fortnight, after legislation passed the Senate on Thursday.
The changes to Centrelink reporting are expected to save the federal budget $2.1 billion over four years.
Gone are the days of people reporting income to Centrelink by estimating pay amounts based on how many hours worked in a fortnight and rate of pay, taking into account penalty rates.
Under the new system, welfare recipients will be able to enter details on their payslips and their employment and income data can be pre-filled online, the same as occurs with tax returns.
The new system will also be the beginning of single-touch payroll for welfare recipients, where income data from the Australian Taxation Office will be automatically uploaded to the government system so bureaucrats can double check figures.
In theory, this will prevent incorrect debts being issued as occurred with the government’s robo-debt scandal, as payments should become more accurate, preventing people being owed money or paying too much.
After one year, there will be a review of the new system and it will return to the lower house for final approval.
Centrelink will set up an online portal to help people with the change, which is expected to affect about 550,000 Australians.
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