Services Australia is currently undertaking an analysis of all income compliance reviews to identify where income averaging was used to determine a debt.
In 2016, the Department of Human Services cum Services Australia had kicked off a data-matching program of work that saw the automatic issuing of debt notices to those in receipt of welfare payments through the Centrelink scheme.
The Online Compliance Intervention (OCI) — robo-debt — program automatically compared the income declared to the Australian Taxation Office (ATO) against income declared to Centrelink, which resulted in debt notices, along with a 10% recovery fee, being issued whenever a disparity in government data was detected.
One large error in the system was that it incorrectly calculated a recipient’s income, basing fortnightly pay on their annual salary rather than taking a cumulative 26-week snapshot of what an individual was paid.
Centrelink’s OCI program from 1 July 2016 through 31 August 2019 saw 1,159,662 assessments be initiated.
The government then paused the automation element of the controversial program in November, which relied solely on data-matching with the ATO.
Following the announcement that averaged income data alone would not be used to raise debts, the department said, in response to Questions on Notice from the Senate Standing Committee on Community Affairs’ Inquiry into Centrelink’s Compliance Program, it would continue to use income information from the ATO to identify “significant discrepancies” with income information.
Former Labor leader and now Shadow Minister for Government Services Bill Shorten previously said relying on a computer algorithm was a stupid idea.
In undertaking an analysis of all income compliance reviews, Services Australia said it does not expect its staff workload to increase. It is also currently unable to determine any associated financial impacts, including what kind of hit the estimated AU$2.1 billion in savings robo-debt was meant to give the government.
As of 25 October 2019, there were no OCI reviews in progress.
“All OCI reviews have been finalised. As a result, no new debt will be raised under the OCI process. At any time, a customer may seek a reassessment of a debt, at which time a review would then be undertaken by Services Australia,” the department said.
While the government entity does not have a definition for “vulnerable”, it said the OCI program was revised so that it would not initiate income compliance reviews for customers who are identified as vulnerable, remote, or older Australians.
“In implementing the refinements announced by the government on 19 November 2019, Services Australia will consider the best way of supporting vulnerable customers. The agency takes a customer-centric approach to the design and implementation of changes, and user-tests any new products, processes and correspondence with customers, staff and third-party organisations before implementing,” it wrote.
While it didn’t say this practice has always been in place, Services Australia also said staff are not required to meet targets for debt raising.
After it was revealed earlier this year that the department spent AU$129.5 million on labour hire arrangements, the department expanded on the process for engaging external debt collection agencies.
Services Australia said the alleged debtor must no longer be in receipt of a social welfare payment, must have an outstanding debt amount of AU$50 or more, and must not have entered into or maintained a suitable recovery arrangement with Services Australia.
From 1 July 2019 to 31 December 2019, 12,487 income compliance debts were referred to external collection agents. The total value of the debts was AU$2.29 billion.
The total value of all social welfare debts recovered by external collection agencies during this period was approximately AU$467 million.
Illion Australia Pty Ltd, trading as Milton Graham; Probe Group Pty Ltd; and ARL Collect Pty Ltd were the collection agencies used during this period by the department.
“Services Australia has not sold any compliance debts to debt factoring providers,” it added.
Despite Minister for Government Services Stuart Robert having his claim of “legal professional privilege” refused by the committee, the department used his claim as a basis to leave many questions unanswered.
In one instance, Services Australia was asked if it was satisfied that its net-to-gross calculations provided a legal basis for raising a debt.
“The minister has made a public interest immunity claim with respect to any legal advice obtained in relation to the income compliance program and to the circumstances surrounding any legal advice obtained in relation to the income compliance program,” it wrote.
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