Government calls halt to key part of robo-debt scheme

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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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Written by Janelle Ward


Total Comments: 40
  1. 0

    “Further refinement”? Caught with their hands in the cookie jar, more like it! Good on those, and Victorian Legal Aid, who are challenging this unconscionable debt scheme!

    • 0

      Caught out badly using the paradigm of averaging – any fool could have seen that was wrong.

      “In politics, nothing happens by accident – if it happens at all, it was planned that way” – FDR…

      ….and Fat Hank, operating under direct orders from the Fuhrerbunker in Canberra, did not accidentally stumble on this one.

      There are no ways out of this on…

    • 0

      So, one nasty extortion racket folds another waits with baited breath around the national socialist government’s corner.

    • 0

      I agree with disillusioned, Trebor and Arvo. All well said.

    • 0

      You are all absolutely right!
      The government have known all along that this was WRONG WRONG WRONG.
      Fancy causing all these people this amount of grief.
      Our very own government and Centrelink should be held to account for doing this to the Australian people. I don’t know about everybody else, but setting Debt Collectors onto people for debts they do not owe, and if it is true that as a result of not having the money to pay the debt, their Newstart was reduced, leading some people to commit suicide, then both the government and Centrelink should be dissolved.
      What type of government sanctions doing this to its own people??????

    • 0

      Now they must re-check and pay back all who didn’t agree with their extortion attempts! With interest & a suitable compensation!

    • 0

      Play Fairly wrote: ” I don’t know about everybody else, but setting Debt Collectors onto people for debts they do not owe, and if it is true that as a result of not having the money to pay the debt, their Newstart was reduced, leading some people to commit suicide, then both the government and Centrelink should be dissolved.”
      Another way of putting it would be that it was sheer thuggery as practiced by standover merchants and the orchestrators and practitioners of it should be severely punished – perhaps even jailed.

  2. 0

    Running scared now

  3. 0

    If I remember correctly it was the Labor Party not the legal aid

    • 0

      Cup of tea. legal aid is taking Centrelink to court. I think the labor party has just very recently I might add, come along and have said they support legal aid. But it is just all talk, they have no involvment with it at all.
      There have been a few court cases, but centrelink pay the people out and the cases are closed. 1 very very brave lady has been paid out(or offered on the table) BUT said she would continue the court case for everybody else.
      no court cases have actually made it to court where the lawyers can fight centrelink. They have been itching to get into court, but centrelink keep on dropping the debts of the cases.
      Can’t wait for the Lawyers to have their day in court!

    • 0

      leek – and you obviously have to ask ‘why’? WHY does Centrelink always drop the case before it gets to court? Can’t stand the scrutiny? Know it is fraudulent? All bluff until someone takes them on?
      I personally don’t know of ANY other business where you are judged guilty right from the start, that the accuser does not have to provide any proof of the debt (just an amount), that you have to prove your innocence, and that can go back years?
      I’ve been caught up in it twice – luckily only mildly. But they were wrong in both instances. In one instance, I started a new casual job (2 days a week), but before hand, told CL that the first week I would be working full time for training. So of course, they immediately ‘averaged it out’ and assumed I was working 5 days a week, full time, and totally cut off my part pension. And this was despite my having provided all details, with reference numbers, before hand. Took weeks to rectify, and then my back pay was hugely underpaid. But again, they do not have to justify how they worked out the back payment. Their lack of understanding of the Work Bonus was appalling, constantly having to ‘speak to a supervisor’. In the end, chucked in the job. Couldn’t trust CL.

    • 0

      If fraud is found then all those families of loved ones who died over this should seek compensation. This whole exercise was flawed.

      People forced to give up work should also have a class action mounted to reimburse them for the financial losses they suffered.

  4. 0

    Saw this one last night…

    OOPS…. now for the sacking of Fat Hank and the reversion of the senior public service dodos to employees full and under discipline and control and to restore independence of the public service by abolition of contracted positions.

    The worm slowly turns on Howard’s Way.

    • 0

      Did not a member of Parliament get a big payout for a similar thing

    • 0

      Not up on that one, cuppa… but it’s sure to exist… always a huge payout for the Lairds… even when they are fired for something that should land them in prison..

    • 0

      Parties feel it is their duty to ensure that one of theirs voted out by the public (who are supposed to own the game) must be handed a lifetime earner somewhere – either in a nicely formed ‘independent’ Quasi-autonomous Non-government Organisation (QANGO) or with a ‘board’ somewhere, either with a government body or a mate’s business…

      Thus no bad apple ever gets out without a hefty golden handshake… and another lifetime earner…

  5. 0

    part of this story is a bit odd. the government has halted the system every year at this time of the year allowing for the Christmas break. The averaging is good news though. I know from my own dealings with centrelink, they cannot cope with people like me that does casaul work. They expect people to be earning the same money every fortnight. i don’t know from 1 minute to the next if I am going to be called up to do an emergency shift. I have had phone calls where I have had to drop everything i am doing and run out the door. I then have to “guess” what I am going to be paid, and report it before I even get a pay slip. people like me make mistakes all the time. one of my work agencies actually gives us pay rises and doesn’t tell us. I have reported income, and then get my pay slip and find I have been paid more than expected. i then have to add the extra amount onto my next fortnights pay. a crazy system.

  6. 0

    I think that commonsense has prevailed. The averaging system is unfair in most cases and should never have been used. A recent query in YLC showed a casual teacher had income over the year and the answer accepted that averaging was acceptable to establish eligibility for a spouse for an age pension. The flaw is that the teacher, being casual, was not paid for the 12 weeks of holidays during the year so the spouse would have been eligible for a higher pension for those 12 weeks.

    People who are receiving Newstart are, in a lot of cases, not full time employed and as such do not receive the same amount each pay period. They may receive, say, $26000 for the year and be unemployed for half the year so are eligible for Newstart for half the year. The system of averaging makes this person earning $500pw when that is incorrect.

    The robo-debt system seems to be premised on the basis that everybody keeps immaculate employment records for 7 years and the penalties imposed are not for cheating the system but for sloppy bookkeeping.

  7. 0

    Leek as long as this government is taken to court I don’t care who it is

  8. 0

    Hi, one of the main problems with robodebt is that the employees of Centrelink kept saying that each fortnight a form had to be sent to them with the amount of money paid in that fortnight as wages. As a seasonal worker the wages were sometimes paid weeks after the due date to Centrelink, so we were told to “guess how much you earned”. This is where the trouble started. How do you guess when you have no idea how many hours you will be working during that period. Also when the wages were paid they were paid up to the date the employer was paying them not the date Centrelink wanted.

    Is this the Administration’s fault or the Centrelink employees fault?

    • 0

      The Centrelink employees would have been acting under instructions from management who would have been acting according to the Governments wishes that a certain amount be claimed back through this system.
      Those at the top must bear responsibility.

    • 0

      The Centrelink employees would have been acting under instructions from management who would have been acting according to the Governments wishes that a certain amount be claimed back through this system.
      Those at the top must bear responsibility.

    • 0

      This entity is run like any government department, the people in the trenches do not get to make policy decisions. They follow the orders of their managers who are followind thevpolicy of the government.
      The fault is fairly and squarely with the government, no excuses.

  9. 0

    Will the Families of those who suicided have a voice in what has been a vile attack on the Human rights of People. And will those who have been complicit in the reprehensible hunting down of those deemed innocent of any charges be Brought to account.

    • 0

      I certainly hope so. It will only be when prison sentences and harsh fines apply that this Government will think twice before enacting nasty policy.

  10. 0

    The whole thing was so wrong, even long term Centrelink employees hated it. Unfortunate that it has taken threatened Legal action to reverse it, rather than common sense and understanding. Those responsible for this debacle should lose their jobs.

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