With approximately 20,000 letters sent out per week, the Senate Committee has requested that the department reassess debts that have been previously raised and potentially incorrectly paid, and pause the debt collection process until it is satisfied welfare recipients have been correctly billed.
A Senate Community Affairs References Committee has recommended that the Department of Human Services (DHS) “immediately” reassess Centrelink debts that have been raised using the agency’s income averaging data-matching tools.
In its Design, scope, cost-benefit analysis, contracts awarded and implementation associated with the Better Management of the Social Welfare System initiative report [PDF] , the Senate Committee has asked that the reassessment of debts be performed by a team of departmental officers that possess specialist knowledge of the Online Compliance Intervention program, and that they use accurate income data sourced from employers to do so.
“This reassessment must include the full range of unpaid, partially paid, and fully paid debts incurred by current income payment recipients, and those debts outsourced to debt collection agencies, ” the committee said.
As it is a basic legal principle that in order to claim a debt, a debt must be proven to be owed, the committee said it believes the onus of proving a debt must remain with the department.
“This would include verifying income data in order to calculate a debt. Where appropriate, verification can be done with the assistance of income support payment recipients, but the final responsibility must lie with the department, ” the report explains.
The committee asked that DHS assume full responsibility for calculating verifiable debts — including manual checking — relating to income support overpayments.
“What the robo-debt process does is shift the onus onto the client to prove their innocence, and that is unusual, ” it said.
The data-matching system had automatically compared the income people declared to the Australian Taxation Office against income declared to Centrelink. When it detected a disparity, Centrelink was automatically issuing a debt notice along with a 10 percent recovery fee.
One large error in the system was that it was incorrectly calculating a recipient’s income, basing a recipient’s fortnightly pay on their annual salary rather than taking a cumulative 26-week snapshot of what an individual was paid.
Between November 2016 and March 2017, at least 200,000 people were affected by the system. During this period, the department sent approximately 20,000 letters per week generated by an automated system that came to be known colloquially as “robo-debt”.
As a result, the committee asked that DHS preclude the practice of averaging income data to manufacture a fortnightly income for the purposes of retrospectively calculating a debt, and has urged the department to review all debt cases where the 10 percent recovery fee was automatically imposed.
The practice of charging an automatic 10 percent debt recovery fee has already been stopped.
The first recommendation the committee made asked that DHS put its Online Compliance Intervention (OCI) program on hold until all procedural fairness flaws are addressed and the 21 recommendations of the committee’s report are implemented.
“If these issues are addressed, the OCI should only be continued in its new form after the new One Touch Payroll system is implemented in 2018, ” the report said.
Halting the system has been requested at length by the federal opposition since it first emerged over the 2016-17 holiday period that the system was producing erroneous results .
The committee recommended that the department redesign the OCI system so it possesses the necessary protocols to protect vulnerable recipients, including people experiencing mental health issues.
“The committee strongly recommends this should be a whole-of-department change, including reconvening the Consumer Consultative Group, the Service Delivery Advisory Group, and the Mental Health Advisory Working Party, ” the committee said.
“Many individuals were so daunted by what they saw as an insurmountable task — to challenge a large government department — they simply gave up and paid what they felt was a debt they did not owe.”
The committee also wants the department to provide all welfare recipients with the debt calculation data required to be assured that any debts are correct.
“A disturbing body of evidence was presented to the inquiry regarding the recovery of purported debts, ” it said. “In some cases, ongoing debt repayments were enforced or coerced, even when the individual claimed the debt amount was wrong.”
“The committee repeatedly heard from individuals that the OCI system had caused them feelings of anxiety, fear, and humiliation, and dealing with the system had been an incredibly stressful period of their lives.”
The committee strongly recommended that the rollout of a redesigned system include a “robust risk assessment process”, which it wants to be shaped following consultation with relevant experts.
In April, the Commonwealth Ombudsman’s report into the robo-debt debacle said the practice was “reasonable and appropriate”, but deemed the method used for raising a debt “unfair and unreasonable”.
Although calling the overall system acceptable, the Ombudsman said placing the onus on the customer to gather all required income proving evidence was unacceptable.
“In our view, this is not reasonable or fair in situations where customers have to collect evidence from several years ago, or where the customer does not have the capacity to obtain the evidence, ” the Ombudsman’s report said.
The department advised the committee that it had accepted all eight recommendations of the Ombudsman’s report and, as of June 2017, has implemented approximately half of the recommendations, with implementation of the remainder having commenced ahead of expected completion by August 2017.
With reports of personal information of welfare recipients being leaked outside the agency, the committee wants DHS to update its privacy policy to prevent the future release of sensitive information. It also wants the agency to adhere to Commonwealth privacy guidelines despite Australian Information and Privacy Commissioner Timothy Pilgrim previously telling a Senate Estimates hearing that there are particular circumstances where laws that govern the operation of a government organisation are able to override those present in the Privacy Act.
“The committee recommends all data-matching guidelines and protocols be adhered to, including the Data-matching Program (Assistance and Tax) Act 1990, regardless of whether the department is using tax file numbers, ” the report explains. “Adherence to these provisions should be verifiable by the public in order to maintain trust in the social security system.”
As such, the committee recommended that the department consider adoption of the principles of the Victorian Judgement Debt Recovery Act, which precludes debt collection to be made from Centrelink payments that are recognised minimum payments required for food, shelter, and other life essentials. It also wants to see the development of guidelines on appropriate levels of debt repayment to income ratios, to ensure that debt repayment amounts do not impact any individual’s ability to purchase such life essentials.
