Centrelink office

Human Services Minister Alan Tudge told A Current Affair last week that people who owed debts to Centrelink could end up in jail, but the government’s new automated computer system chasing welfare debts makes a basic mistake that is leading people to believe they have been unfairly targeted.

“We’ll find you, we’ll track you down and you will have to repay those debts and you may end up in prison,” Tudge told the program. The government says it is chasing up $4 billion in welfare debts through a new automated system that matches people’s income declared to the Tax Office with their income declared to Centrelink over the same financial year. The Australian reported the system was generating 20,000 “compliance interventions” each week, with debt notices worth $650 million issued since the computer system came on board in July this year.

One anonymous source received a Newstart payment for part of the 2014-15 financial year but not the whole year, but the government told the person to pay a debt of more than $3000, because the person’s full-year earnings were above what was declared while on Centrelink.

Crikey asked the Department of Human Services if the program was able to differentiate between people who spent a full financial year on Centrelink and those who were on it for part of the year. General manager Hank Jongen told us: “There have been examples where some employers automatically report employees’ income as being earned over the full financial year, even if the income was earned for only part of the financial year.”

“If an employer has not accurately reported the time period for which income was earned, customers are able to correct this information themselves using the online tool,” Jongen said in a statement.

Crikey understands that some employees report monthly or quarterly incomes to the Tax Office, but the ATO doesn’t hold onto detailed fortnightly earnings — which is what is needed to work out if Centrelink has overpaid someone.

Richard Winzor, an Adelaide teacher, told Crikey he had received a letter from Centrelink six weeks ago saying he needed to cross-reference his Newstart payments received in the 2011-12 financial year with his tax records. At the time, Winzor was in his first year of his career as a teacher, working casually as a relief teacher, and receiving payments when he didn’t get any shifts, or when it was school holidays. Winzor logged into the computer system and was told he owed Centrelink $4000, including two recovery fees because he had two jobs that year. He says there is no explanation of how the computer program came to that figure. “I was livid, absolutely livid. What really got me was the fact that the mentality behind it. It was like I was getting asked to pay back a loan.”

“What got me was the secrecy around it. There was no transparency around and no information to know how they arrived at that figure.”

Winzor has gone through the process of disputing the figure and was told yesterday that the debt had been reduced to $2000, but he still had no explanation of how that figure was calculated. He is continuing to dispute the debt and has not discussed a payment plan with Centrelink. He says he was lucky his former employers co-operated, providing him with payslips from five years ago to help him in his claim.

Kiloran Hiscock in Melbourne has been told she needs to provide more information to Centrelink for the 2010-11 financial year, when she received Youth Allowance as a student. She has been asked to explain her earnings for just one month of that year because her Tax Office earnings don’t match her Centrelink details. Hiscock says there was a mistake in her reporting at the time, but she has already paid that debt and can’t provide payslips from six years ago as not all of them were issued digitally. “It’s still not clear to me what is going and why it is reasonable to ask someone for information from six years ago,” she said.

“You do feel really powerless. It feels like they can do whatever they want and make these absurd requests, but it doesn’t work both ways.”

These experiences are similar to others described to Crikey and to independent MP Andrew Wilkie, who has been contacted by many people saying they have been told they have debts up to $7000.

“Centrelink is treating people as guilty until proven innocent, rather than saying ‘there’s a reason to suspect a problem’ they are just saying ‘you have to pay the money back unless you can prove otherwise’.”

Wilkie says one man who contacted him has been asked to provide pay slips from a business that has since gone into liquidation, and he can’t produce the documentation demanded by Centrelink to clear his name.

“Some people are angry, more often they are frightened, they’ve got the weight of the federal government, the weight of Centrelink acting like bullies.”

Centrelink contacts people at the address they lived at while receiving payments, meaning that letters are not reaching people who have since moved away from that address. If people do not respond to Centrelink’s letters, their details are handed to a debt collector, making disputing the debt even more difficult.

While Winzor and Hiscock are educated and informed about their rights, many of those contacted by Centrelink or debt collectors are not as confident in taking on the giant government agency.

“This will have a disproportionate effect on disadvantaged people,” Wilkie said. “People feel very small and powerless and frightened.”

Centrelink says the new automated system “generates a letter advising people of a difference in the data when this has been identified, and asks them to either confirm or update their details online using myGov” but does not change the way debts are calculated. People have 21 days after receiving a letter to update their details, but Jongen says “there is no time limit to request a review of the decision with regards to debts raised by the department”.

Jongen says anyone who has received an income-tested payment and is identified as having different income data could be contacted, but that there “has not been a significant increase” in the number of requests for formal reviews. Jongen also said debt collectors are only used for about 10% of debts, the use of which has not been increasing. “Recovery agents may be brought in as a last resort when a person with a debt is no longer receiving a Centrelink payment, where we have been unable to contact the person, and they have failed to make or maintain a recovery arrangement.”