Centrelink office

Centrelink will make no effort to ensure that money paid to the organisation as a result of robo-debt notices is money actually owed to Centrelink, a Senate inquiry has heard.

In many situations, those who were given incorrect debt notices by Centrelink as part of its automated debt recovery system rolled out last year were encouraged to make repayments even if they were disputing the debt. 

But the Department of Human Services says if a Centrelink recipient begins a payment plan with the agency after receiving a debt notice, the recipient has conceded that the debt calculated by Centrelink is correct. At a hearing of the Senate committee investigating the robo-debt notice system in Melbourne this morning, national manager of DHS’ whole of government division Marc Mowbray-d’Arbela said debts repaid directly through Centrelink or through debt collectors were not reviewed, even though they might be incorrect.

“If they started repaying [the debt] then we accept it at face value,” he said.

“So you’ve never audited the records?” Labor Senator Louise Pratt asked. Mowbray-d’Arbela said he would need to take the question on notice.

He said that it was up to those making the repayments to raise questions about the debt with the department.

The Commonwealth Ombudsman said yesterday in a report into the robo-debt notice system that Centrelink should examine whether it had been over-recovering debts as a result of the new system:

“The risk of over-recovering debts from social security recipients and the potential impact this may have on this relatively vulnerable group of people, warrants further consideration by DHS. We suggest DHS test a sizeable sample of debts raised by the OCI (Online Compliance Intervention). The samples should include people who did not respond to the initial letter, as well as people who went online and people who contacted DHS via other channels. We also suggest DHS re-evaluate where the risk for debts calculated on incomplete information should properly lie and investigate whether there are ways to mitigate this risk.”

Acting Ombudsman Richard Glenn recommended that DHS reassess whether debts were accurate where a 10% recovery fee was applied automatically. In response, department secretary Kathryn Campbell said the department agreed to all of the recommendations made in the report, but said the 10% fee was only applied “in limited circumstances,” where there was no contact from the recipient. Problems with debt notices going to old addresses of recipients have been well-documented in media reports.

Campbell said that the department had written to everyone who had a debt levied on them that they had review rights, placing the onus back again on the recipient, rather than having debt reassessed by the department itself.

The Ombudsman also found that the letters sent before January 20 this year did not include a phone number to call for help about a debt notice, and they did not explain how recipients could ask for an extension of time on the repayment or for a reassessment to be made. Senators on the committee today said that much of the evidence received from people who had been sent the original letters said that they had been fishing in the dark, and recipients had not known how to begin disputing the assessment. 

A sample debt notice letter

Human Services has argued that the new notice letters offer much more information and make it clear they aren’t debt notices. The new letter includes employment information from the ATO and is sent via registered mail, meaning that it must be signed for before Centrelink can progress to the next notice stage.

The letter sent to Centrelink recipients now

It was also not fair on Centrelink recipients to be forced to obtain pay slips and other evidence from employers to prove they didn’t owe the debt claimed when those recipients didn’t have the same information-gathering powers that DHS has under law, the Ombudsman said:

“In the OCI context, it may be reasonable for customers to retain their employment and payroll records for a similar period, but not for six or seven years, particularly where they have not been forewarned about this requirement. Some customers may face challenges collecting this information where their employer no longer exists, is being unco-operative or has not retained payroll records.”

The Ombudsman slammed the department over its project planning for the compliance system before the system was rolled out in September last year. Key stakeholders were not effectively consulted during the planning stages, or when the full roll-out happened in September. This resulted in confusion and inaccuracy in public statements made by NGOs, journalists and individuals, the Ombudsman said. Usability was also not properly tested, and should have been rolled out slower with the assistance of the Digital Transformation Agency, the Ombudsman said.