310,000 Centrelink payments were cut illegally before anyone realised

Jane thought she was safe.

She had the paperwork confirming she was exempt from job agency meetings.

But when Centrelink’s computers failed to recognise it, her payments vanished overnight.

When Jane from Melbourne enrolled in a government program to start her own business in 2021, she believed she was on solid ground.

She had been told in writing she did not need to attend job agency meetings, yet her phone still buzzed with persistent calls and texts from her employment provider.

Ignoring them should not have mattered, but Centrelink’s automated system cancelled her payments anyway.

She suddenly found herself relying on bread, cereal, and flour for homemade muffins to survive in public housing.

Jane’s struggle was not an isolated case.

New analysis from Economic Justice Australia revealed that around 310,000 Australians had their Centrelink payments unlawfully cancelled between 2020 and 2024 because of a flaw in the automated mutual obligations system.

The scale of the cancellations

The official numbers told a far smaller story.

The Department of Employment and Workplace Relations previously admitted that 964 people had their payments unlawfully cancelled, before later acknowledging 1,326 cases of ‘financial penalties being applied incorrectly’ due to an IT error.

Yet, the independent analysis showed the true figure was hundreds of times higher.

The illegal cancellations were not limited to JobSeeker recipients.

Youth allowance, parenting payments, and even disability support pensions were all affected, impacting families who relied on this money—including seniors whose adult children depended on it.

The 28-day safeguard ignored

The heart of the problem lay in a simple legal safeguard.

By law, payments could not be cancelled until 28 days after a person missed a mutual obligation.

The grace period existed to protect people facing illness, family crises, or simple misunderstandings about requirements.

But Centrelink’s system ignored the rule, stripping people of income before the legal period expired.

For Jane, the consequences were immediate and crushing.

Her payments were cut in late 2020, leaving her with just $800 in savings to cover months of bills.

‘I didn't pay my power bills, I didn't pay my rent, I just couldn't afford to pay it,’ she said.

She tried to appeal but gave up, overwhelmed by bureaucracy and financial pressure.

She was one of nearly one million people who faced compulsory mutual obligations under Workforce Australia and Disability Employment Services in 2025.

Each case represented a life balanced on the reliability of a computer system.

A pattern of system failures

This was not the first time technology had failed welfare recipients.

From January 2025, repeated IT problems forced the government to extend pauses on compliance activities day by day, leaving 900,000 people in limbo.

Then in May 2025, a separate glitch generated false debt notices of $2,356 for thousands of Centrelink recipients after a software update malfunctioned.

Though swiftly labelled an error, it deepened concerns about reliability.

The government eventually paused payment cancellations in July 2024, but suspensions continued.

Between January and April 2025 alone, there were 157,680 suspensions.

Several reviews were underway, including a $439,142 Deloitte investigation due in May 2026 .

Meanwhile, advocacy groups such as Community Legal Centres Australia and Economic Justice Australia demanded the immediate suspension of the entire Targeted Compliance Framework.

People affected were urged to check records of cancellations between 2020 and 2024, keep correspondence proving exemptions or reasonable excuses, and seek advice from legal or financial support services.

The government response

Economic Justice Australia estimated about 20 per cent of people could qualify for remediation.

Although no class action had been launched, litigation was on the table.

Employment Minister Amanda Rishworth avoided direct answers when asked about the findings.

She stated only that the department had ‘assured’ her issues were ‘quickly paused’ once identified.

For many, that assurance did not match the scale of the damage.

A Workforce Australia Employment Services report had already described the compliance framework as ‘excessive’ and ‘very punitive’ with little evidence it helped people back into work .

One community legal centre spokesperson summed it up: ‘It is impossible for the public to have any trust in the Government if systems put in place to protect people are found to be deficient, and we continue to receive revelations of unlawful practice’.

From Robodebt to this new scandal, the message was clear—computers must never be allowed to make decisions that even humans are not legally permitted to make.

Payment errors and unlawful cancellations are not the only issues causing stress for people who depend on Centrelink and related services.

Alongside system flaws, there are also growing risks outside the government’s control, with scammers targeting those who rely on welfare payments and essential benefits.

One recent warning highlights just how sophisticated these scams have become, showing the importance of staying alert to both official errors and criminal activity.

Read more: Centrelink and Medicare warn Australians of new data scam risk

Losing access to essential income overnight can push people into crisis—how can trust ever return when the very systems meant to protect them are breaking the law?