Centrelink's Robo-debt Fail Provokes a Senate Inquiry and a Private Members Bill

Thursday 16 February 2017 @ 11.36 a.m. | Legal Research | Taxation

The news has made much of the Centrelink Robo-debt program's issues and in recent times there have been two new developments in the process of resolving those issues. The first is that there has been a reference to the Senate Standing Committee on Community Affairs of the matter, and the second is the introduction of a private members Bill to try and deal with at least one of the issues arising from the matter, namely, what is reported as the the unfair manner in which some of the alleged debts are being recovered.

Reference to Senate Standing Committee for Inquiry and Report

On 8 February 2017 the Senate made a reference to Senate Standing Committee on Community Affairs to look into the matter following on earlier calls for such an inquiry from the opposition and crossbench senators, including the Greens, the Xenophon team and One Nation.

As a result, there is now an inquiry in progress entitled: "Design, scope, cost-benefit analysis, contracts awarded and implementation associated with the Better Management of the Social Welfare System initiative".

The Committee's terms of reference for the inquiry are to investigate the:

  • impact of Government automated debt collection processes upon the aged, families with young children, students, people  with disability and jobseekers and any others affected by the process;
  • administration and management of customers’ records by Centrelink, including provision of information by Centrelink to customers receiving multiple payments;
  • capacity of the Department of Human Services and Centrelink services, including online, IT, telephone services and service centres to cope with levels of demand related to the implementation of the program;
  • adequacy of Centrelink complaint and review processes, including advice or direction given to Centrelink staff regarding the management of customer queries or complaints;
  • process of data-matching between Centrelink and the Australian Taxation Office (the ATO) and the selection of data, including reliance   upon Pay-As-You-Go income tax data;
  • process of awarding any contracts related to the debt collection system;
  • error rates in issuing of debt notices, when these started being identified and steps taken to remedy errors;
  • Government’s response to concerns raised by affected individuals, Centrelink and departmental staff, community groups and   parliamentarians;
  • Centrelink’s Online Compliance Intervention (OCI) and its compliance with debt collection guidelines and Australian privacy   and consumer laws;
  • adequacy of departmental management of the OCI, including:
    • the adequacy of staff numbers to manage the workload associated with the OCI, including customer complaints;
    • what impact the roll-out of the OCI has had on other areas of work and whether resources have been diverted from other areas;
    • training and development provided to staff who are working on this program or in related areas (for example, telephony and complaints);
    • how the Department of Human Services and Centrelink are tracking the impact of the OCI rollout on staff, including stress and incidents of customer aggression;
    • any advice and related information available to the Department of Human Services in relation to potential risks associated with the OCI and what action was taken as a result, including feedback arising from system testing and staff; and
    • decisions taken in relation to IT systems and service design that may have contributed to problems experienced by Centrelink clients; and 
    • any other related matters. 

The Committee is currently taking submissions and submissions close on 22 March 2017. By its terms of reference, the Committee is required to report back to the senate by 10 May 2017.

Fair Debt Recovery and the Private Member's Bill

On Monday (13 February 2017), Mr Andrew Wilkie MP introduced the Social Security Legislation Amendment (Fair Debt Recovery) Bill 2017 (Cth) (the Bill) as a partial response to the Federal government's and Centrelink's automated debt-recovery program. This is a program which in broad terms matches Centrelink's and the ATOs records and which has in recent times issued as many as 170,000 notifications (namely, since July 2016). These notifications that have resulted in what is reported to be thousands of Australians being incorrectly told they owe the Federal government money.

In some of these cases, welfare recipients who have received the notices have been forced to start repaying fortnightly instalments to Centrelink for the alleged debts despite being in the process of contesting their records and the alleged debts. Mr Wilkie's Bill seeks to prevent the Department of Human Services (responsible for Centrelink) from recovering a social security debt or a family tax benefit debt from an individual if the debt is under review. The Bill is said by Mr Wilkie to respond to ". . . significant community concern about false debt notices being issued by the Department and individuals being required to repay the debt immediately, even if it is later found to be incorrect".

According to Mr Wilke the Bill is trying to formalise and hold the government to satements recently made by the Minister. In his second reading speech Mr Wilkie stated that the Bill:

". . . seeks to formalise and legislate that commitment from the government—to formalise and to legislate that from now on if anyone is disputing an alleged debt then, in law, no debt recovery action will proceed while that review is occurring. I think that is an entirely reasonable thing, and it is entirely consistent with what the minister said only a few weeks ago."

Some of the Amendments in the Proposed Bill

The Bill proposes to amend three Acts as follows:

  • The A New Tax System (Family Assistance) (Administration) Act 1999 (81 of 1999) (Cth) is amended by inserting a new section 105C allowing the Secretary to continue payments pending  the outcome of a review under section 105, and by inserting a new section 109AA also dealing with the Secretary being allowed to continue payment pending outcome of and application for review;
  • The Social Security (Administration) Act 1999 (191 of 1999) (Cth) is amended with various changes being made to section 131 including the insertion od subsection 131 (1A) which would provide that if (a) a determination is made under subsection 1231(1A) of the Social Security Act 1991 of the amount of a deduction that is to be made from: (i) any social security payment; or (ii) any payment of arrears of a social security payment; and (b) the determination is reviewed under this Part (whether on the application of a person under section 129 or otherwise); the Secretary must declare that the payment of the social security payment or arrears is to continue pending the determination of the review as if the determination under subsection 1231(1A) of the Social Security Act 1991 had not been made; and
  • The Social Security Act 1991 (46 of 1991) (Cth) is amended by adding at the end of subsection 1231(2) a new paragraph (c) that provides that a declaration under subsection 131(1A) of the Social Security (Administration) Act 1999 is in force in relation to a determination of the Secretary under subsection (1A) of the amount of the deduction (social security payment to continue, and arrears to be paid, until internal review complete)

Prospects of the Bill Passing

In his second reading, Mr Wilkie makes the point that his Bill is merely picking up on the government's own spoken intentions in regard to the matter and called on the government to support the legislation. Mr Wilkie is also confident of support from the opposition and the crossbench, saying:

"So I am actually quite hopeful that the government will see fit to support this bill. I suspect the opposition and the crossbench will support this bill. I do not mind if it is amended; I do not mind if it is improved. I do not mind if the government actually grabs it and puts its name on it and progress it as its own bill. All I want is the outcome. The public interest would be best served by the outcome. So I say to the minister: get behind this bill, or at least progress your own bill in its likeness."

Ahead in this Matter

First, it will be interesting to see if Mr Wilkie's Bill actually progresses any further. It is most likely the Bill will wait for the results of the Senate Committee and its report and then be supplanted by government legislation on the matter. Second, it will be interesting to see what the Senate Committee comes up with by way of recommendations. Some head start on this might be gained by a look at the article "Errors in Centrelink’s debt recovery system were inevitable, as in all complex systems" appearing in the Conversation which clearly points to the flaws which can occur and be magnified in their impact, when human input and supervision is removed from the process:

"Also, expanding the data-matching system and removing the human element from the case-selection process has undermined the system’s performance even further."

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