Centrelink Auto-Debt Recovery Warnings Ignored

A senate inquiry into Centrelink’s controversial auto-debt recovery from welfare recipients has been told the system created a serious climate of fear and distress and the federal government ignored warnings about its impact.

CEO of welfare peak body ACOSS Dr Cassandra Goldie, who was the first witness before the inquiry chaired by Greens Senator Rachel Siewert, said many thousands of Australians had been seriously affected by the automated debt-collection compliance letters sent out just seven weeks before Christmas demanding repayment.

“By the government’s own figures, at least 20 per cent of discrepancy notices are incorrect. It is unknown how many more have been sent in error, resulting in debts that don’t exist. It is also unknown how many debts are higher than what is actually owed,” Goldie said.

“The notices were unleashed at a time when other services were understaffed making it an extremely difficult situation to respond to.

“Thousands have been worried sick about this notice… in some cases there has been a perception that if there was no compliance with the debt repayment you will go to jail.”

In February the Greens and Labor secured support for a Senate inquiry into the government’s controversial Centrelink automated debt recovery system.

Goldie said ACOSS warned of the consequences when the government announced its welfare integrity measures before the federal election.

“We said if we see aggressive debt collection we would see this level of distress. We were not consulted about this or any discussions about the [debt-recovery] design,” she said.

“We believe that for over 6,500 people, the first time they heard about any debt was through debt collectors because the debt letters were sent to old addresses.”

Goldie called on the inquiry to consider the powers that apply to the Commonwealth around debt collection and whether those powers were appropriate for Centrelink welfare recipients.

“The Commonwealth has debt collection powers in contrast to other entities established in laws and regulations,” she said.

“While Centrelink could not track down people, debt collectors seemingly have had no trouble and there have been many reports of debt collectors acting inappropriately and making improper threats.”

Goldie said the government completely ignored the impact of the system on people who also needed assessment help through legal centres.

She said government attempts to recover $4 billion in budget saving measures was added to serious cuts to community services generally and community legal centres in particular.

“We urge the minister to shut it down and bring together people with deep experience to look at the way data matching can be used to better interact with people,” she said.

“The minor changes announced by the minister [Tudge] do not address the fundamental problems and serious concerns expressed by [ACOSS] and a broad range of stakeholders.”

Goldie also called on the inquiry to establish how the automated system was instigated, who was responsible for the process and to see whether technology was available to ensure it didn’t happen again.

ACOSS called on the government to ensure a “human element” and confirm whether or not the debts exist, and said the committee should also consider whether there was a need for appropriate compensation to address people’s wellbeing.

“There must be human involvement in the detection and calculation of debts. Without this step, many people will be paying back debts they do not owe, or paying a debt higher than what they owe,” Goldie said.

“We need the right checks and balances in place.”

Siewert said in a statement: “Evidence provided by ACOSS shows how detrimental the automated debt recovery system has been to members of the community so far.

“It is extremely concerning that people are being approached by private debt collectors who are apparently threatening to seize assets. This is vicious tactics and once again demonstrates the government’s heartless approach to raking back dollars from the social safety net.”

Outside the inquiry a consortium of 38 community sector organisations called on the government to “immediately pull the plug on Centrelink’s auto-debt process, cease the intimidation and bullying of Centrelink clients and their families caught up in the automated debt recovery debacle, and provide a commitment that people’s protected information will not be publicly released”.

Later in the inquiry hearing, the federal government revealed that almost 218,000 welfare recipients received letters of demand for alleged overpayment of Centrelink benefits – with two thirds of the demand letters going out between October and December 2016.

The Department of Human Services (DHS) tabled a document entitled Online Compliance Intervention Information and Statistics.

The document showed that between July and December 2016 the auto-debt recovery system sent out letters to 217,400 welfare recipients with the majority of first-notification letters sent between October and December totalling 154,089 letters.

The document also revealed that almost 92,000 people who received letters of overpayment were further issued with a debt recovery fee from the costs incurred by debt collectors employed by the government to secure repayments.

DHS secretary Kathryn Campbell agreed during questioning that the government had targeted people with earned income using information provided by their employers to the Australian Tax Office (ATO).

She said a second cohort would be targeted by the department covering welfare recipients who earned income based on the ATO’s own files.

Campbell said under questioning from Senator Siewert that there was no data yet that pensioners would be targeted in the second tranche of letters to go out.

She said the department could not publically disclose the total cost of debt collection because the information was commercial-in-confidence.