The government has ordered an immediate stop to a key part of Centrelink’s controversial robo-debt scheme and is freezing existing debts. The announcement comes less than two weeks before former welfare recipients are due to challenge their debts in court in a test case being run by Victoria Legal Aid.
Centrelink staff were told in an email yesterday that debts would no longer to be raised where the only evidence of an overpayment was averaging income data from the tax office.
The general manager of the debt appeal division wrote in the email: “The department has made the decision to require additional proof when using income averaging to identity over-payments.
“This means the department will no longer raise a debt where the only information we are relying on is our own averaging of Australia Taxation Office (ATO) income data.”
The department also appears to have reversed a practice that meant the recipient had to prove there wasn’t a debt.
The scheme, which has been in place since 2015, matches a person’s declared income to Centrelink with annual data reported to the ATO. If more income has been reported to the ATO, welfare recipients were required to prove they didn’t owe a debt.
The system was widely condemned for averaging a person’s income across 26 fortnights, not recognising casual, part-time or intermittent work and forcing people to find pay slips and bank statements from years ago.
Anglicare Australia said that commonsense had finally prevailed and that anyone caught up in “the debacle” would be breathing a sigh of relief.
Executive director Kasy Chambers said: “Many of our clients can now hope to recover money that they’ve falsely paid – although they will not get back the price they’ve paid in time and trauma.
“The wrongs and personal pain caused by robo-debt could have been avoided if the government had listened to the community sector, academics, lawyers, judges and, most importantly, the people affected by the system.”
The Australian Council of Social Service (ACOSS) said that while the news was welcome, “the devil will be in the detail, which remains to be seen”.
Chief executive Cassandra Goldie said ACOSS had repeatedly warned the government that the scheme was grossly unfair and contrary to basic legal principle.
“While we’re relieved to hear that the government is finally halting the use of averaging to calculate debts, we call on the government to replace the entire error-ridden program with a humane form of debt recovery,” she said.
“At the government’s own admission, at least one in five robo-debts are reduced or waived. Many more people have likely gone ahead and paid knowing the debt is incorrect but without being able to prove this.”
Rowan McRae, executive director of Civil Justice Access and Equity, said robo-debt was clearly flawed and had caused hardship to hundreds of thousands of Australians, including some of the most disadvantaged members of the community.
Minister for Government Services Stuart Robert said in a statement: “This program has been refined a number of times over the years. This is a further refinement …
“It’s important for Australians to understand they don’t need to contact the department. That small cohort of Australians that have a debt crystallised solely on income averaging, my department will reach out and contact them over the coming weeks.
“We’ll continue to use income averaging, with other proof points, as the basis to identify the possibility of a debt. The key refinement is that income averaging, plus proof points, will be used to crystallise or finalise the debt.”
Do you believe commonsense has prevailed? Do you think that the court cases prompted the announcement?
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