Commonwealth Ombudsman, media release, 10 April 2017:
Ombudsman publishes report on Centrelink’s automated debt system
Acting Commonwealth Ombudsman Richard Glenn today released a report into the Department of Human Services – Centrelink’s (DHS) implementation of the automated debt system known as the Online Compliance Intervention (OCI).
‘We found there were issues with the usability and transparency of the system. There were deficiencies in DHS’ service delivery and communication to customers and staff when implementing the system. These issues affected the quality of decisions made by the OCI. Many of these problems could have been reduced through better project planning, system testing and risk management,’ Mr Glenn said.
Since the Ombudsman’s office began its investigation in January 2017, DHS has made positive changes to the system, in response to the office’s feedback.
‘However more improvements are needed to ensure the system reflects good public administration,’ Mr Glenn said.
The Ombudsman’s office made recommendations in the report about clearer letters and system messaging to customers, more help for customers when gathering income information, improving service delivery and communication, more assistance and support for vulnerable customers and reviewing automated recovery fee decisions.
DHS and the Department of Social Services (DSS), which is responsible for the relevant legislation and policy, responded positively to the Ombudsman’s investigation, agreeing to all recommendations.
Mr Glenn said the Ombudsman’s office would continue to work closely with DHS and DSS to monitor the implementation of the recommendations in this report. He also acknowledged DHS’ assistance during the investigation.
The Ombudsman will make no further comment on the report.
Excerpts from the 110 page report illustrating just some of the shortcomings in Centrelink’s automated debt recovery program:
We asked DHS whether it had done modelling on how many debts were likely to be over-calculated as opposed to undercalculated. DHS advised no such modelling was done.16 In our view the absence of modelling means DHS cannot say how many debts may be under-calculated or overcalculated and by what margin.
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. 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……
In the OCI, the automatic application of the ten per cent recovery fee occurs when there is no contact from the customer, or the customer specifically indicates they did not have personal factors which affected their ability to accurately declare their income. 3.8 This raised concerns for customers who may not have had an adequate opportunity to provide a reasonable excuse, for example if they did not receive the initial letter, or did not understand the connection between reasonable excuse and the recovery fee.
In the initial letters used from July 2016, customers were warned a recovery fee may be applied, however there was no information in the letter about the ‘reasonable excuse’ exception. DHS advises that an explanation of ‘reasonable excuse’ was added from August 2016. However, reminder letters and debt notification letters did not include this information. A copy of these letters can be found at Appendix D.
In response to concerns raised by our office, DHS will no longer apply the fee automatically where there is no contact from the customer, or the customer responds that they had personal factors which affected their ability to accurately declare their income. DHS has taken steps to ensure that customers receive the initial letter, including the use of registered post……
Our investigation revealed the letters DHS sent to customers before 20 January 2017 to alert them about the income discrepancy were unclear and deficient in many respects. The letter did not include the 1800 telephone number for the compliance helpline. It did not explain that a person could ask for an extension of time or be assisted by a compliance officer if they had problems. It asked the person to ‘confirm’ their income information, possibly giving the impression that, if the figure was the correct annual figure, merely confirming the information would suffice. The letter did not provide a clear explanation that applying ATO income to the person’s record may negatively affect the amount of any debt. Copies of these letters are at Appendix D……
We received other complaints where people were told by DHS staff that payslips were the only acceptable form of evidence and bank statements would not be accepted. In our view, DHS should have more clearly communicated to customers the evidence they needed to provide, and what they could do if they had problems obtaining this evidence. In particular, DHS should have given customers a clearer and more consistent message that it would accept alternative forms of evidence, such as bank statements, where a customer was having difficulty gathering payslips or other evidence directly from the employer. As illustrated by Ms H’s complaint, in some cases, DHS can consult its own records for employment information it may have previously verified.
DHS has always accepted bank statements as reasonable evidence of historical income where other evidence is unavailable. As customers do not have the same information gathering powers as DHS, it is critical for DHS to give some customers additional support and assistance to obtain this evidence when they have made genuine and reasonable attempts and other available information is not sufficient. The accuracy of debts relies on the customer’s ability to obtain and input historical income information into the OCI. DHS should take into account the potential cost to customers to obtain bank statements. We suggest that where a customer cannot obtain the information despite genuine and reasonable attempts, DHS should use its information gathering powers to request the information directly from the employer or the financial institution. We suggest the Department of Social Services should include guidelines about the process for obtaining employment income evidence in the Guide to Social Security Law…..
Poor service delivery was a recurring theme in many of the complaints made to our office about the OCI system. Key problems customers experienced were:
* the compliance helpline number was excluded from letters and hard to find within the OCI system itself, meaning customers called the general customer service lines resulting in longer wait times than the compliance line
* not getting a clear explanation about the debt decision and the reasoning behind it
* being required to go online to resolve their situation when they had already indicated they were having difficulties
* instances where there should have been a more thorough manual intervention by a compliance officer but the customer was still referred back online
* difficulties getting information and assistance from service centre staff, either on the phone or in person, or when they tried to go online to use the system
* staff not having sufficient knowledge about how the OCI system works.
The far-right Turnbull Government's response to the Commonwealth Ombudman's report reeks of a defensive inability to face the consequences of its ongoing ideological class war.
In a statement, Tudge repeatedly noted the parts of the report that defended the automated system and said the government was already making improvements that, in some cases, went further than what was suggested by the ombudsman.
“The unfortunate reality is that while most welfare recipients do the right thing, some deliberately defraud the system while others inadvertently fail to accurately declare their income and consequently receive an overpayment,” he said.
“We want to be fair and reasonable to welfare recipient but also fair to the taxpayer who pays for the welfare payments.”
The shadow human services minister, Linda Burney, said the report raised “serious questions about Alan Tudge’s oversight of his department”.
“While some changes have been made to Tudge’s robo-debt system, the ombudsman is clear they don’t go far enough,” she said. “The minister has no one to blame but himself. According to the ombudsman, all of these issues could have been avoided with proper planning and consultation.”
The shadow treasurer, Chris Bowen, said Labor maintained the system should be suspended for a review.
