Thursday, 2 February 2017

Centrelink plays dumb over cases of overpayment caused by its own error

The fact that overpayment of welfare cash transfers are caused by departmental administrative error does occur is recognised in Australian social security law and regulations.

Here is one example of this.

Dept. Of Social Security, Guides to Social Policy Law, Family Assistance Guide, Version 1.191 - Released 3 January 2017: Waiving a Debt Arising from Administrative Error…..

Debts arising solely from administrative error

The part of a debt that can be waived under this provision is called the 'administrative error proportion' of the debt. The administrative error proportion can be up to 100% of the amount of the debt.

The administrative error proportion of the debt must have been caused or contributed to by an administrative error made by the Commonwealth, for example, a decision made by a delegate of the Secretary. If the debtor has contributed in any way to the cause of the debt, that part of the debt cannot be waived under this provision.

The administrative error proportion of the debt must be waived if:

·       the payment was received in good faith and recovery of the debt would cause the debtor severe financial hardship, or
·       the payment was received in good faith and the debt has been raised in either of the periods below (whichever ends last):
o   after the end of the next income year following the income year in which the eligibility period or event which gave rise to the payment of FA occurs, or
o   more than 13 weeks from the day the FA payment was made that gave rise to the debt.

The Dept. of Human Services (Centrelink Included) delivered $115.8 billion in payments to customers/clients in 2015–16 and obviously keeps an account of monies involved in over payments.

Prior to fully automating its data matching and payment discrepancy assessments the department indicated in its 2015-16 annual report that 1.6% of all payments were overpayments due to administrative error. [Dept. of Human Services, 2015-16 Annual Report, Part 3—Management And Accountability, Social Security And Welfare Programme Compliance, Payment accuracy, correctness and integrity, p.114]

Just last year on 20 October 2016 The Daily Telegraph reported:

The Department of Human Services overpaid 1.5 million people a total of $1.5 billion, an average of $1000 each, during 2015-16. It clawed back $920 million by deducting money owed from ongoing social security payments or tax refunds.

But it wrote off $76 million in debts that were solely due to administrative error, were less than $50 “and not cost effective to pursue’’, or in cases where the debtor was subject to “extreme and unusual circumstances that interfere with their capacity to pay’’.

The Administrative Decisions Tribunal holds transcripts of cases which come before it, including those involving overpayment by Centrelink due to administrative error.

In fact Centrelink data on administrative errors has been recorded for many years (probably since 1998-99), as this excerpt from an Australian National Audit Office report in May 2006 shows:

In 2004–05, Centrelink identified one or more errors in 4 552 of the 10 048 RSS reviews conducted, with the total number of 7 037 errors distributed across these 4 552 reviews. Centrelink RSS Reviewers determined that 78 per cent of these errors were due to customer error (that is customer action or inaction). The remaining 22 per cent were categorised as due to Centrelink administrative error (predominately incomplete processing), albeit that only 5.1 per cent of these errors (or 3.4 per cent of reviews) had an immediate impact on the customer's payment.

In 2011-12 the government waived nearly 800,000 other overpayments - totalling $37 million - that were due to administrative error or categorised as "special circumstances" according to

Although Centrelink is frequently expressing overpayments due to administrative errors in percentage terms it seems that there is a specific Dataset 4 which counts the number of “customers” involved. [Social Security Policy Branch, Social Security Assurance Tracking Process Error Using Sample Surveys, 2009 power point presentation]

Yet despite a range of audit information being available to the department it could not even give Senator Siewert a ball park estimation of the number of overpayments due administrative errors which occurred last financial year, according to The Guardian on 31 January 2017:

Centrelink is unable to track how many cases of overpayment are caused by government error, according to responses it provided to a senate committee.

The Department of Human Services provided a series of responses to questions posed by the Greens senator Rachel Siewert on welfare overpayments. 

Siewert asked how many of the 629,917 customers overpaid last financial year were caused through system or administrative error by Centrelink. DHS responded: “The department does not currently capture the portion of overpayments raised as a result of system or administrative error.”

Siewert described that lack of information as outrageous, saying the department appeared not to be keeping track of its own mistakes. “The government must immediately work to establish how many people accessing the social safety net received an overpayment because of an administrative error,” she said.

“For the government to not collate that information is deeply concerning. It means there is no attempt to collect data and analyse how many vulnerable people are stuck with debts they were not responsible for creating.”

Centrelink has always required those who have been overpaid to pay the money back, including when the overpayment was not their fault. That is a separate issue to complaints about the new debt recovery system, which has been criticised for allegedly wrongly pursuing welfare debts from vulnerable Australians…..

The debt recovery system is being investigated by the commonwealth ombudsman, and will also come under the scrutiny of a Senate inquiry.

Siewert’s question on notice also asked whether there was a grace period to allow more time to hand back overpayments paid due to errors by the government. The department said there was no such grace period but customers were allowed to ask for extensions or payment plans because of financial hardship.

Siewert said a grace period, at least, should be introduced. “It’s unfair that people on low incomes have to pay back overpayments when the debt is not their fault,” she said.

“I know the government is hell-bent on making life as difficult as possible for people that access the social safety net, but I think we should show a bit of humanity to people that are stuck in a situation they didn’t create.”

In my honest opinion I don’t believe that Centrelink was acting in good faith when it gave the senator that answer. Hopefully as her question appeared to be on notice Centrelink will have a change of heart and supply the figure requested.

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