Commonwealth Ombudsman uncovers two decades' worth of Centrelink debt miscalculations in shocking report
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Could you be one of the 100,000 potentially affected by Centrelink's miscalculated debt system?
In a shocking revelation, a report has unearthed that an error in the state welfare system might have led to the incorrect calculation of up to 100,000 debts or potential debts over the past twenty years.
These miscalculations were allegedly conducted by ‘unlawfully apportioning’ welfare recipients’ income.
The report released found that from at least 2003 to December 2020, the Department of Social Services and Services Australia miscalculated debts due to an ‘incorrect’ understanding of social security law.
Ombudsman Iain Anderson stated that this was due to a 'genuinely' held belief that their calculation method was accurate, unlike the infamous Robodebt scandal that caught so many Australians off guard.
Robodebt ‘initiated and continued without legislative changes the agencies knew were required’, Anderson pointed out.
The issue was first brought to light by the brave efforts of then-senator Rex Patrick after a $1,600 debt was drawn into suspicion.
Patrick’s tenacity led to an administrative appeals tribunal ruling that this purported debt had ‘not been proved’.
The mechanisms behind these debt calculations are anything but straightforward. Centrelink, being the chief provider of Australia's welfare payments, often relies on employment payslips for its debt calculations.
However, this doesn't account for cases where payslips don't align with the fortnightly income reporting periods.
In such situations, the agency has been found to create a ‘daily’ average.
The Ombudsman found that a process of ‘apportionment’ was used to spread welfare recipients’ employment income across two or more fortnightly periods, which were then used to calculate entitlement to government payments such as JobSeeker.
‘This was not permitted by section 1037B of the Social Security Act as it was in force prior to 7 December 2020,’ the report stated.
‘Apportioning income across multiple Centrelink fortnights caused problems with calculations, as customers could be over- or under-paid if employment income were apportioned into Centrelink fortnights when it was not earned, derived or received,’ it continued.
Ombudsman Anderson also reassured that the practice is ‘not related’ to Robodebt, where recipients’ yearly income was averaged across 26-fortnight payments.
According to the report, the ‘Robodebt calculation methodology frequently switched the burden of proof away from Centrelink to prove a debt existed, and onto the customer to prove a debt did not exist’.
Despite this, the upshot remains troubling for thousands of Australians, with the Ombudsman concluding that the apportionment ‘likely affected social security payment rates and may have [led] to unfair debts against customers’.
With this issue exposed, the Department of Social Services and Services Australia are taking steady steps towards a resolution.
The exact scope of the debts affected remains unclear. Services Australia has paused roughly 13,000 debt reviews, while an additional 87,000 cases could potentially be affected.
Meanwhile, Rex Patrick's comments on the issue are particularly noteworthy: ‘Whilst technically different to Robodebt, the effect it had on those who received debt notices was the same.’
‘It left many already struggling people in great distress,’ he stressed.
Now here's the most important part what's being done about it? The Ombudsman has recommended the agencies seek counsel from the Solicitor-General and, as a last resort, suggested a federal court test case.
This was only ‘partially’ accepted by Services Australia, and a warning was, in turn, issued, stating that the resolution process could take up to two years.
The ministers of social services and government services, Amanda Rishworth and Bill Shorten, have pledged their commitment to resolving this complex issue.
‘The practice of income apportionment has not been used to calculate social security payments since July 2021,’ Rishworth said.
‘Agencies have confirmed this has not happened under the Albanese Labor government’s watch. However, there may be potential debts or overpayments that remain unresolved.’
We urge all of you at the Seniors Discount Club who may be affected to keep an eye on this development.
If you’d like to share your story to raise awareness and help others, then please get in touch in the comments section below.
In a shocking revelation, a report has unearthed that an error in the state welfare system might have led to the incorrect calculation of up to 100,000 debts or potential debts over the past twenty years.
These miscalculations were allegedly conducted by ‘unlawfully apportioning’ welfare recipients’ income.
The report released found that from at least 2003 to December 2020, the Department of Social Services and Services Australia miscalculated debts due to an ‘incorrect’ understanding of social security law.
Ombudsman Iain Anderson stated that this was due to a 'genuinely' held belief that their calculation method was accurate, unlike the infamous Robodebt scandal that caught so many Australians off guard.
Robodebt ‘initiated and continued without legislative changes the agencies knew were required’, Anderson pointed out.
Up to 100,000 Centrelink debts or potential debts miscalculated over two decades, ombudsman finds. Credit: Shutterstock
Patrick’s tenacity led to an administrative appeals tribunal ruling that this purported debt had ‘not been proved’.
The mechanisms behind these debt calculations are anything but straightforward. Centrelink, being the chief provider of Australia's welfare payments, often relies on employment payslips for its debt calculations.
However, this doesn't account for cases where payslips don't align with the fortnightly income reporting periods.
In such situations, the agency has been found to create a ‘daily’ average.
In some cases, payslips don't always match up with the fortnightly income-reporting periods that can be used by Services Australia to calculate welfare debts. Credit: Shutterstock
The Ombudsman found that a process of ‘apportionment’ was used to spread welfare recipients’ employment income across two or more fortnightly periods, which were then used to calculate entitlement to government payments such as JobSeeker.
‘This was not permitted by section 1037B of the Social Security Act as it was in force prior to 7 December 2020,’ the report stated.
‘Apportioning income across multiple Centrelink fortnights caused problems with calculations, as customers could be over- or under-paid if employment income were apportioned into Centrelink fortnights when it was not earned, derived or received,’ it continued.
Ombudsman Anderson also reassured that the practice is ‘not related’ to Robodebt, where recipients’ yearly income was averaged across 26-fortnight payments.
According to the report, the ‘Robodebt calculation methodology frequently switched the burden of proof away from Centrelink to prove a debt existed, and onto the customer to prove a debt did not exist’.
Despite this, the upshot remains troubling for thousands of Australians, with the Ombudsman concluding that the apportionment ‘likely affected social security payment rates and may have [led] to unfair debts against customers’.
With this issue exposed, the Department of Social Services and Services Australia are taking steady steps towards a resolution.
The exact scope of the debts affected remains unclear. Services Australia has paused roughly 13,000 debt reviews, while an additional 87,000 cases could potentially be affected.
Meanwhile, Rex Patrick's comments on the issue are particularly noteworthy: ‘Whilst technically different to Robodebt, the effect it had on those who received debt notices was the same.’
‘It left many already struggling people in great distress,’ he stressed.
Now here's the most important part what's being done about it? The Ombudsman has recommended the agencies seek counsel from the Solicitor-General and, as a last resort, suggested a federal court test case.
This was only ‘partially’ accepted by Services Australia, and a warning was, in turn, issued, stating that the resolution process could take up to two years.
The ministers of social services and government services, Amanda Rishworth and Bill Shorten, have pledged their commitment to resolving this complex issue.
‘The practice of income apportionment has not been used to calculate social security payments since July 2021,’ Rishworth said.
‘Agencies have confirmed this has not happened under the Albanese Labor government’s watch. However, there may be potential debts or overpayments that remain unresolved.’
We urge all of you at the Seniors Discount Club who may be affected to keep an eye on this development.
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