The government's Centrepay debit system was established to provide a secure and convenient way for welfare recipients to pay for necessities such as housing and healthcare.

However, an investigation has uncovered significant flaws in the system, prompting a major government review.



The Centrepay system, a service designed to help Australians manage their welfare payments by allowing direct deductions for essential services, has become a tool for exploitation in the hands of 'unscrupulous' businesses.

Advocacy groups have raised the alarm, claiming that these businesses have been siphoning welfare money from deceased individuals and vulnerable Indigenous women escaping domestic violence.


Economic Justice Australia (EJA) and the Financial Rights Legal Centre (FRLC) have submitted harrowing examples of abuse to the review.

In one case, a business continued to deduct payments from a deceased woman's welfare funds for months, ignoring the family's attempts to resolve the issue while they were still grieving and managing her estate.

‘When the legal service advocated on behalf of their client to end these Centrepay arrangements, the payee business refused to acknowledge they had received the money after the client’s relative’s death,’ the EJA said.

‘The legal service engaged in lengthy advocacy including letters of demand to the business. It was months until the business agreed to refund the overpayment.’

Another disturbing report from the EJA highlighted the plight of Indigenous women in remote communities who were trapped in indefinite Centrepay arrangements with a transport company, which they had initially used to escape family violence.

‘The clients couldn’t check, change or stop these arrangements—they didn’t have the phone, access to phone credit to call and wait on hold to check their Centrepay,’ the EJA said.

‘These arrangements led their clients to not having enough money to afford essentials.’



The misuse of Centrepay is not a new concern. Advocates have been warning the government for years, and the corporate regulator, ASIC, has also repeatedly highlighted the problem.

Despite these warnings, little action has been taken to address the predatory practices that continue to exploit the most vulnerable members of society.

The EJA has called for urgent reforms, including the prohibition of never-ending deductions, a mechanism to alert users of excessive deductions, and the protection of at least 25 per cent of a person's income from Centrepay deductions.

They also advocate for stronger enforcement, greater transparency, and more support for First Nations and culturally and linguistically diverse communities.



The FRLC has described the failings of Centrepay as a 'national shame' and an 'embarrassment’.

They have called for stricter enforcement of Centrepay rules and swift action against those who breach them.

‘Historically, the system has been used by some providers to extract millions of dollars in profits for poor value services that people could ill afford,’ the FRLC said.

‘This is a privilege that should not be given lightly. There must also be repercussions and mechanisms for enforcement when businesses breach these requirements and objectives, and the capacity to take quick and decisive action to prevent further harm and create a public deterrent.’

The advocacy groups are pushing for payday lenders and debt collectors to be excluded from the system and for utility companies to be prevented from selling high-cost products, such as top-range phones and solar panels, through Centrepay due to cases of systemic mis-selling.

‘In both cases (telecommunications devices and solar panels), we see egregious cases of systemic mis-selling,’ the FRLC said.
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