Centrelink's Miscalculated Debts: A decade-long nightmare for welfare recipients
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For years, welfare recipients have been caught in a bureaucratic nightmare, waiting for Centrelink to rectify thousands of miscalculated debt notices.
The issue, which has been ongoing for nearly two decades, has left many Australians in financial uncertainty and distress.
Between 2003 and 2020, as many as 100,000 welfare debts were miscalculated by Services Australia and the Department of Social Services (DSS), according to the Commonwealth Ombudsman.
The departments' 'income apportionment' practices, which misinterpreted and unlawfully applied the Social Security Act, resulted in some Centrelink customers' employment income being assessed in the wrong fortnight.
Services Australia temporarily halted its examination of approximately 20,000 debts to seek legal counsel and pinpointed around 87,000 additional cases potentially impacted by the erroneous calculations related to ‘income apportionment’.
The issue, unrelated to the controversial ‘Robodebt scheme’, resulted from agencies holding an incorrect understanding of relevant legislative provisions.
However, despite the severity of the issue, a report by the Ombudsman released on December 4 found that the two agencies were still unable to advise how many people were affected or how many payments went up or down because of unlawful calculations.
The Ombudsman's Report: A Call for Urgent Action
The Ombudsman's report highlighted the slow response of Services Australia and the Department of Social Services to the issue. The agencies were also finalising their legal stance on the lawful calculation of employment income before resuming the evaluation of cases.
'Services Australia and DSS did not act promptly to address this issue—in the three years the agencies have known about this issue, we expected more action to have been taken to address it,' the report said.
The Ombudsman emphasised that when ‘agencies make a mistake that impacts people, they should acknowledge it and develop a fair way to address the mistake’.
‘They should also clearly explain the mistake and what they intend to do to fix it. The public deserves no less,’ the report read.
The report made eight recommendations, all of which have been accepted by the two agencies.
These included developing a strategy to assess a sample of historic debts, underpayments, Administrative Appeals Tribunal decisions and debts referred to the prosecutor that were potentially affected by unlawful income apportionment and a way to manage remedies for affected customers.
‘Given the scale of income apportionment and the length of time involved...(an option) might be an approach involving large-scale waiver of debts...rather than seeking to re-calculate over 100,000 individual debts,’ the Ombudsman also suggested.
In its response, Services Australia mentioned that as of October, the Commonwealth prosecutor's office began informing individuals who were prosecuted in the last five years about the discoveries made by the Ombudsman.
Last November 6, the agency initiated mailing letters to customers impacted by the suspension of debt collection efforts.
The Human Cost of Miscalculated Debts
The miscalculated debts have had a profound impact on the lives of welfare recipients. Greens spokeswoman Janet Rice said the report showed the need to scrap all debt recovery because of its unacceptable human cost.
'Services Australia has broken the law by chasing people, across two decades, for debts they do not owe, and has then failed to produce any remediation or communication plan in the three years they’ve been aware of the issue,' Senator Rice stated.
'It is a complete failure that has left income support recipients in a distressing limbo, unable to live their lives without the shadow of debt hanging over them,’ she added.
Have you been affected by Centrelink's miscalculated debts, members? Share your experiences in the comments below.
The issue, which has been ongoing for nearly two decades, has left many Australians in financial uncertainty and distress.
Between 2003 and 2020, as many as 100,000 welfare debts were miscalculated by Services Australia and the Department of Social Services (DSS), according to the Commonwealth Ombudsman.
The departments' 'income apportionment' practices, which misinterpreted and unlawfully applied the Social Security Act, resulted in some Centrelink customers' employment income being assessed in the wrong fortnight.
Services Australia temporarily halted its examination of approximately 20,000 debts to seek legal counsel and pinpointed around 87,000 additional cases potentially impacted by the erroneous calculations related to ‘income apportionment’.
Almost 10,000 welfare debts were miscalculated by Services Australia and the Department of Social Services. Credit: Google Maps
The issue, unrelated to the controversial ‘Robodebt scheme’, resulted from agencies holding an incorrect understanding of relevant legislative provisions.
However, despite the severity of the issue, a report by the Ombudsman released on December 4 found that the two agencies were still unable to advise how many people were affected or how many payments went up or down because of unlawful calculations.
The Ombudsman's Report: A Call for Urgent Action
The Ombudsman's report highlighted the slow response of Services Australia and the Department of Social Services to the issue. The agencies were also finalising their legal stance on the lawful calculation of employment income before resuming the evaluation of cases.
'Services Australia and DSS did not act promptly to address this issue—in the three years the agencies have known about this issue, we expected more action to have been taken to address it,' the report said.
The Ombudsman emphasised that when ‘agencies make a mistake that impacts people, they should acknowledge it and develop a fair way to address the mistake’.
‘They should also clearly explain the mistake and what they intend to do to fix it. The public deserves no less,’ the report read.
The report made eight recommendations, all of which have been accepted by the two agencies.
These included developing a strategy to assess a sample of historic debts, underpayments, Administrative Appeals Tribunal decisions and debts referred to the prosecutor that were potentially affected by unlawful income apportionment and a way to manage remedies for affected customers.
‘Given the scale of income apportionment and the length of time involved...(an option) might be an approach involving large-scale waiver of debts...rather than seeking to re-calculate over 100,000 individual debts,’ the Ombudsman also suggested.
In its response, Services Australia mentioned that as of October, the Commonwealth prosecutor's office began informing individuals who were prosecuted in the last five years about the discoveries made by the Ombudsman.
Last November 6, the agency initiated mailing letters to customers impacted by the suspension of debt collection efforts.
The Human Cost of Miscalculated Debts
The miscalculated debts have had a profound impact on the lives of welfare recipients. Greens spokeswoman Janet Rice said the report showed the need to scrap all debt recovery because of its unacceptable human cost.
'Services Australia has broken the law by chasing people, across two decades, for debts they do not owe, and has then failed to produce any remediation or communication plan in the three years they’ve been aware of the issue,' Senator Rice stated.
'It is a complete failure that has left income support recipients in a distressing limbo, unable to live their lives without the shadow of debt hanging over them,’ she added.
Have you been affected by Centrelink's miscalculated debts, members? Share your experiences in the comments below.
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