Showing posts sorted by relevance for query centrelink debt. Sort by date Show all posts
Showing posts sorted by relevance for query centrelink debt. Sort by date Show all posts

Friday 22 November 2019

ROBODEBT: it's wonderful how the threat of legal action can energize the Morrison Government


Faced with three court cases which will inevitably expose the shaky ground on which the Centrelink income compliance program - aka robodebt - was built in July 2016, the Morrison Government now makes a limited, tactical response ahead of court hearings.

ABC News, 19 November 2019:

The Federal Government is immediately halting a key part of the controversial robodebt scheme to recover debts from welfare recipients and will freeze some existing debts, in what appears to be a major backdown in the operation of the scheme.
In an urgent email circulated to all Department of Human Services compliance staff today, seen by 7.30, the general manager of the debt appeal division wrote:
"The department has made the decision to require additional proof when using income averaging to identity over payments.
"This means the department will no longer raise a debt where the only information we are relying on is our own averaging of Australia Taxation Office income data."
The averaging process has long been one of the most controversial parts of the scheme.
Legal groups have said that it causes inaccuracies in the debt amounts, and wrongly shifts the burden of proof onto alleged debtors.
The email also sets out that the department would undertake a sweeping review of all debts where averaging was used.
"Customer compliance division will methodically work through previous debts identified as part of the online compliance program and respond to their requests for clarification," it said.
The department will also be writing to affected customers.
"For customers who are affected, the department will freeze debt recovery action as CCD identifies them and looks at each debt. The department will also write to affected customers to let them know," the email said.
7.30 has contacted the Minister for Government Services and the Department of Human Services for a response.

The Australian Minister for Government Services Stuart Robert was very careful in his wording of the change in approach to 'debt' collection as was wording on the Department of Human Services website.

It appears that little is altered with regard to robotdebt unless individual welfare recipients fall into the category of a) never having engaged with DHS/Centrelink after having received an initial notice informing them of an "income discrepancy"; b) also ignored any followup letters/emails
/texts/phone calls and c) whose alleged debt did not occur in a time period for which Centrelink still retains all documents concerning cash transfers made to the individual recipient.

It is only this category of welfare recipients who has never offered verbal or written information concerning the alleged debt, therefore they are the only persons who by Mr. Robert's reckoning may have had their alleged debt solely calculated by flawed data matching with the Australian Taxation Office.

The number of people who remain in this category after DHS/Centrelink's debt recovery program has been running for more than three years is not known - it could be as little as est. 6,500 or as many as est. 600,000 individuals.

Make no mistake, the Morrison Government will not easily abandon this lucrative stitch up of the poor and vulnerable.

In the 2018-19 financial year alone the total debt from income compliance activity was valued at $885.8 million and the value since the program began now totals $1.86 billion.

BACKGROUND

The Monthly, 19 November 2019:

Asher Wolf, one of the original grassroots campaigners against the robodebt program, says the government’s move is tactical. “Don’t trust DHS to act in good faith not to ramp up robodebt again. If you back off from challenging the government – for even a minute – on mendacious data-matching schemes, they’ll slide right back into old patterns of cruelty.”
Today’s move could even endanger the government’s projected return to surplus, which relies on some $2.1 billion in prospective debt recoveries under the robodebt program over the 2019–20 to 2021–22 period. “The Coalition’s AAA credit rating is balanced off raising preposterous, erroneous, illegal debts,” says Wolf. “I have no doubt the Coalition will come after the same people they always attempt to hurt: the poor and the vulnerable.”
Gordon Legal, website, 19 November 2019:
You may be aware that the so-called Robodebt issue has been widely reported in the media and has been the subject of both a Parliamentary Inquiry and a report from the Commonwealth Ombudsman. Unfortunately, the Commonwealth Government does not appear to accept that the Debt Notices, issued by Centrelink on its behalf are invalid and that it has an obligation to repay the money it has already collected under the Robodebt Scheme.
Unless the Commonwealth agrees to change its position then our current view is that people with a claim of the kind broadly described above should pursue their rights by commencing a Group or Class Action.
ABC News, 17 September 2019:

A class action will be launched against the Government over the so-called robodebt scandal, arguing the Government's automated debt system is unlawful.

Key points:

  • Lawyers will argue the Government could not rely on the robodebt algorithm to collect money
  • The action will seek both repayment of falsely claimed debts and compensation for affected people, lawyers say
  • The Opposition says the robodebt billing practices are "verging on extortion"
Opposition government services spokesman Bill Shorten announced the action, which will be brought by Gordon Legal, and comes after sustained pressure on the Government over the system.
Peter Gordon, a senior partner at the law firm, said the collection of money based solely on a computer algorithm was unlawful.
"The Commonwealth has used a single, inadequate piece of data — the robodebt algorithm — and used it to seize money and penalise hundreds of thousands of people," he said
Read the full article here.

Victoria Legal Aid, 8 September 2019:

The Federal Court has been told that Centrelink has wiped the debt at the centre of a second test case against its robo-debt scheme. The case will go to a hearing in early December.
Our client, Deanna Amato has been told her robo-debt of $2754 had been wiped, after a recalculation process found the true overpayment to be just $1.48.
‘I'm happy that I don't have a big debt looming over me anymore, but on the other hand, I'm stunned that it was recalculated so easily after I took legal action’, said Deanna. 
‘Centrelink will make you jump through hoops to prove your innocence, but it turns out they were capable of finding out if my reporting was correct and that I didn't owe them anything like what the robo-debt claimed I owed. It makes me question the system even more’, she said.
The 33-year-old local government employee says Centrelink has refunded her over $1700, after they took her full tax return earlier this year. At the time, she had never spoken to anyone from Centrelink about the supposed debt.
‘It was scary when Centrelink took my tax return out of the blue. I had no idea what my rights were, or if Centrelink even had this kind of power over my money, so I turned to legal aid for advice.
‘Now that they have wiped the debts of both Victoria Legal Aid cases, it makes me wonder how many people have paid supposed debts that were completely inaccurate.  I hate to think of more people suffering because of incorrect calculations.
People may be handing over money they don't even owe, because they're too afraid, or don't have the means, to challenge them. That's why I think the system needs to change’ said Deanna.
Rowan McRae, Executive Director of Civil Justice Access and Equity at Victoria Legal Aid said our legal challenges to the scheme continued – ‘We cannot accept a system that is so clearly flawed and causing overwhelming hardship to the most disadvantaged people in our community.’
‘We are contacted every day by people who are feeling overwhelmed by this system that puts the onus on them to disprove debts. It is important that a court looks at the lawfulness of the process Centrelink relies on to decide that people owe them money’. said Rowan.
Deanna says she is keen to have the court look at the decisions that led to the debt being raised. ‘It turns out, when I was receiving Centrelink assistance, I reported my income, yet they still were able to raise a debt of almost $3000 and take my tax return. The fact that Centrelink wiped my robo-debt, does not change my feelings about this court case going ahead. The robo-debt process needs to be seriously examined,’ she said.
‘If I hadn't taken this legal action, I don't think Centrelink would have ever realised the problem with my so called ‘debt’, Deanna said.
Deanna Amato’s case will go to a hearing in December with our first client Madeleine Masterton’s to be scheduled for hearing after that case is determined. [my yellow highlighting]

Tuesday 4 October 2022

Royal Commission into the Robot Debt Scheme, Public Hearing 1, excerpt of that section of the transcript giving an outline of what is understood concerning the establishment, design and implementation of the Robodebt Scheme

 

In which Senior Counsel Assisting the Commissioner outlines what is understood concerning the establishment, design and implementation of the Robodebt Scheme at this point in the Royal Commission…...


Royal Commission into the Robodebt Scheme, Public Hearing 1, Transcript of Proceedings, 27 September 2022, excerpt: 


MR GREGGERY: Commissioner, I appear today with Mr Angus Scott, Ms Renee Berry and Ms Salwa Marsh. The Attorney-General appointed each of us to assist this Royal Commission into the Robodebt Scheme as it is described in the Letters Patent.


Less than five weeks ago the Prime Minister announced the establishment of the Royal Commission, and an even shorter period of time has passed since the engagement of counsel assisting the Commission, our instructing solicitors and the appointment of Commission staff. The date by which the Commission is to report, as you have just identified, Commissioner, is 18 April 2023 and there is an obvious need for focus and efficiency to complete the task by the due date.


I will outline the broad context for the nature and scope of the inquiry before I address how the Commission will operate.


Turning firstly to the context for the inquiry, this Commission is not tasked with replicating the various inquiries and investigations into the Robodebt Scheme which have taken place, although much of the content of those inquiries is relevant to the scope of the Commission under the Letters Patent. The reports which have been produced from those inquiries and investigations are also relevant, at least to the history of the Robodebt Scheme and decisions to continue it.


The Letters Patent direct the Commissioner to inquire into the specific factual matters which are set out, with a focus on the “decisions and actions taken or not taken by those in positions of seniority”. The factual inquiry with its focus upon the role played by those in positions of seniority will be the basis upon which the Commission makes recommendations it considers appropriate. Those recommendations may include recommendations needed to prevent a recurrence of any failures of public administration which are identified in this inquiry.


The reference in the Letters Patent to the identification and prevention of the recurrence of any “failures of public administration” bears close similarity to a phrase which appears in the reasons of Justice Murphy of the Federal Court when his Honour approved the settlement of the class action brought in respect of the debts raised and collected by the Robodebt Scheme. His Honour's, reasons published on 11 June 2021, included the observation that those proceedings “… exposed a shameful chapter in the administration of 10 the Commonwealth's social security system and a massive failure of public administration”.


The reasons for judgment in the settlement of the class action are, as I indicated earlier, one of the many previous findings of others which are relevant to the Commission's task. The decision of Justice Murphy marked a significant occasion when the Australian Government 15 admitted that asserted debts based solely on income averaging from Australian Taxation Office data were not validly established.


In that context, the Commission is to enquire into a number of specific matters which were read out at the commencement of this initial hearing. In summary: the establishment, design and implementation of the Robodebt Scheme which raised and recovered debts for the Australian Government and which it later admitted it could not validly establish; who was responsible for the scheme and why they considered it necessary or desirable; the use of third party debt collectors in the scheme; the responses to concerns raised about the scheme, the systems implemented to address those concerns and what was known by persons in seniority as the basis for those responses; and the intended and actual outcomes of the scheme.


Can I turn now to what is known about the Robodebt Scheme. The Commission has already started its work and I will provide a brief overview of some of the relevant events which ultimately concluded with the admission made by the Australian Government to which I referred earlier.


The existence of Centrelink and its role is common knowledge amongst members of the public. It is the service delivery agency for a majority of Australia's social welfare payments.


In 1991 it gained the ability to crossmatch its data with data from the Australian Taxation Office. Crossmatching data enabled Centrelink to compare income declared to the ATO with income declared to Centrelink by persons who claim social welfare payments. The ATO continued to provide data to Centrelink since that time under various processes. For the purpose of this inquiry, the ATO disclosed income information to Centrelink which reflected the income information provided to the ATO by employers in the form of a PAYG summary. That summary often covered the whole of the financial year but in some cases the information related to a shorter period of time within the financial year. In contrast to the information provided to the ATO by an employer, Centrelink required information which usually related to a person's actual fortnightly income when it decided whether a person was entitled to social security payments.


Prior to the implementation of the Robodebt Scheme Centrelink's calculation of overpayments or debts by analysing the ATO data and the Centrelink records involved direct human oversight by compliance officers according to the processes established within Centrelink. That process included the requirement that “evidence was required to support the claim that a legally recoverable debt exists”.


Debts which were established according to Centrelink's processes were able to be recovered in a variety of ways, including withholding social security payments or a portion of those repayments, the garnishee of annual tax returns and orders made on successful criminal prosecution for debts which amounted to a fraud against the Commonwealth. Often the overpayment of social security resulting in a debt did not involve dishonesty, although the allegation of a debt can attract the stigma of fraud. The complexity of Australia's social welfare system was the subject of at least one report publicly released in February 2015. That report directly addressed the many types of social welfare payments, the related complexity of the claims and administration processes in respect of each payment.


On 1 July 2011 Centrelink was absorbed into the Department of Human Services. The Department of Human Services was responsible for the administration of the social welfare system through Centrelink. The Department was renamed Services Australia in May 2019, but its function of administering the social welfare system through Centrelink remained unchanged.


Going back to 2011, a Government initiative announced improvements to the debt recovery process which included the automation of crossmatched data between Centrelink and the ATO on a daily basis. That automation was expected to increase the ability of the Government to identify and then recover debts. The Commission understands that the identification of a debt continued to be subject to Centrelink's processes which involved compliance officers using Centrelink's statutory powers to obtain evidence from employers and other sources to sufficiently and therefore validly raise a debt. The decision to raise a debt turned on the assessment by a compliance officer after undertaking that investigation.


From 2011 the data matching program identified approximately 300,000 discrepancies annually between the ATO data and the Centrelink data, and of those approximately 20,000 were the subject of assessment and decisions by a compliance officer.


In 2013 the Department of Social Services was created. It replaced the majority of the functions of the Department of Families, Housing, Community Services and Indigenous Affairs.


The Department of Social Services worked closely with the Department of Human Services. Broadly speaking, the Department of Social Services was responsible for the development of social policy advice for the Australian Government, which was administered by the Department of Human Services through Centrelink.


On 12 February 2015, according to the report of the Commonwealth Ombudsman into the Robodebt Scheme dated April 2017, the Department of Human Services sent an executive minute to the Minister For Social Services which was copied to the Minister for Human Services. That Executive Minute proposed a new online approach to compliance with the social security system which would allow the Department of Human Services to review all discrepancies going back in time to the 2010-2011 financial year. The new online approach to compliance was soon described as the Online Compliance Intervention Scheme. It was the first form of the Robodebt Scheme. That Executive Minute must have been produced after some planning, but it has not yet been made public by the Australian Government. According to the Ombudsman's report, the intended main efficiencies of the Robodebt Scheme reflected in the executive minute by identifying discrepancies between the ATO data and the Centrelink data were as follows: The capacity to undertake hundreds of thousands of compliance interventions automatically generating letters to customers notifying them of the discrepancy in reported income; relieving Centrelink of its responsibility from obtaining information from employers and third parties pursuant to its statutory powers before raising a debt; transferring the responsibility of proving a debt from Centrelink to a customer who then had the responsibility of disproving a debt; and moving much of the debt management process to an online process in which customers had to enter information directly into the online system.


The scheme was foreshadowed in a press release in May 2015 by the then Minister for the Department of Social Services in conjunction with a budget release of the 2015-2016 Budget Measures by the then Treasurer. The scheme was projected to create savings of $1.7 billion over five years.


A small two-stage pilot program was carried out in 2015, and the scheme commenced on 1 July 2016. It was fully implemented two months later, on 1 September 2016.


There were a number of flaws in the system which, if not actually known at the commencement, were publicly identified soon after the implementation of the scheme. The flaws, including the fundamental flaw which was admitted by the Australian Government in the Federal Court, were specifically drawn to the attention of the then Minister for Human Services by the Australian Council of Social Service, ACOSS, in their letter of 21 December 2016. That letter identified consistent reports of debt creation by averaging annual income over 26 fortnights contrary to the actual fortnightly entitlement test with the consequence of “a false notice of overpayment”. In a follow-up letter to the Minister on 19 January 2017, ACOSS called for an immediate end to the automated debt recovery system and reiterated its deeply held concerns that the scheme involved the following: The reversal of the onus of proof onto people receiving payments; a failure to properly investigate the accuracy of automated data matching; a lack of human involvement in the detection of and calculation of overpayments; the requirement for people to gather evidence from up to six years earlier; an automated debt recovery and deduction of amounts from people's income support without human intervention; and practical difficulties for recipients speaking with a Centrelink staff member.


The Robodebt Scheme continued from that point in time for almost three years until November 2019. On 28 February 2017, the financial assumptions underlying the objectives of the Robodebt Scheme were questioned in a report produced by the Auditor-General. Questions too were raised about the budget assumptions on which the financial objectives of the scheme were based.


Those questions are relevant to the scope of the topic of the intended and actual outcomes of the scheme in a financial sense, and also to the questions of the process in which the scheme was developed.


The Administrative Appeals Tribunal, the AAT, is the tribunal which decides appeals against Robodebt decisions amongst others. On 8 March 2017, a Member of the Tribunal decided an application to review an automatically generated debt under the Robodebt Scheme. The debt was set aside by the tribunal member on the basis that there was no evidence of a debt. The Decision was remitted to Centrelink to decide afresh according to further directions. Those directions were two-fold: No debt or debt component is able to be found on extrapolations from ATO records; and the earnings component of recalculated debts as may be raised must be based on and confined to any fortnightly salary records obtainable in the exercise of Centrelink's statutory powers.


In short, the legal framework for the AAT's decision on the merits of the debt was that the online compliance process involving income averaging did not provide evidence of a debt. That finding ought to have been of significance to the departments of social services and human services because of its pre-Robodebt policy which required evidence “to support the claim that a legally recoverable debt exists”.


More AAT decisions followed to the same effect. The Commission expects to receive evidence that more than twenty such decisions of the AAT were delivered up to 30 May 2017 in which it was found that income averaging based on ATO data did not validly establish a social security debt.


The Department of Human Services made changes to some aspects of the online compliance system to overcome other inadequacies in the transparency and usability of the online system, however, the fundamental flaw remained.


In the face of public questions about the process, Ministers and those in senior roles in the Australian Public Service asserted that the system worked well.


On 2 March 2018, the Robodebt Scheme alleged a debt against Deanna Amato who then applied for declarations in the Federal Court, including that the debt was not lawfully raised.


On 27 November 2019 orders were made with the consent of the Australian Government to the effect that the demand for payment of the alleged debt was not validly made to Ms Amato because the information relied upon was not capable of proving a debt. That is the declaration referred to in the Letters Patent. On 18 November 2019, that is less than two weeks before the Government consented to the order in Ms Amato's case, Services Australia - formally the Department of Human Services - announced that it would not raise debts in sole reliance of apportioned ATO data, that is averaged income.


On 20 November 2019, the class action was commenced in the Federal Court.


It was a further six months before Services Australia announced it would repay approximately $721 million in debts raised by the Robodebt Scheme against approximately 381,000 Australians and it was in July 2020 when it announced that it would withdraw all debts raised of approximately $398 million based on income averaging from Australian Taxation Office data.


The settlement of the class action involved the remaining claims for interest and costs which amounted to a further $112 million to be paid by the Australian Government. The reasons of the Court referred to evidence which showed that the Commonwealth Government asserted debts totalling at least $1.7 billion against 453,000 Australians during the life of the Robodebt Scheme.


That brief overview provides a sufficient factual context for the specific questions which are set out in the Letters Patent. That said, we are aware of the temptation to prejudge matters based on previous reports and inquiries and we will avoid doing so. Counsel assisting will consider the subjects of this inquiry with fresh eyes to assist the Commission to determine these matters according to your position of independence.

[my yellow highlighting]


Monday 11 February 2019

Morrison & Co off to the Australian High Court to defend the indefensible - Centrelink's robo-debt



The Guardian, 6 February 2019:

Centrelink has now wiped, reduced or written off 70,000 “robo-debts”, new figures show, as the government’s automated welfare compliance system scheme faces a landmark court challenge.

Victoria Legal Aid on Wednesday announced a challenge to the way Centrelink evaluates whether a person owes a welfare debt under the $3.7bn system. It will argue the “crude calculations” created using tax office information are insufficient to assess a person’s earnings and, therefore, are unlawful….

Victoria Legal Aid’s court challenge was also welcomed by the Australian Council of Social Service chief executive Cassandra Goldie, who said the scheme was a “devastating abuse of government power…..

Alternative Law Journal. Emeritus Professor of Law (Syd Uni) Terry Carney, Robo-debt illegality: The seven veils of failed guarantees of the rule of law?, 17 December 2018:

The government's on-line-compliance (robo-debt) initiative unlawfully and unethically seeks to place an onus on supposed debtors to ‘disprove’ a data-match debt or face the prospects of the amount being placed in the hands of debt collectors. It is unlawful because Centrelink, not the supposed debtor, bears the legal onus of ‘proving’ the existence and size of any debt not accepted by the supposed debtor. And it is unethical because the alleged debts are either very greatly inflated or even non-existent (as found by the Ombudsman), and because the might of government is used to frighten people into paying up – a practice rightly characterised as a form of extortion. How could government, accountability avenues, and civil society have enabled such a state of illegality to go publicly unidentified for almost 18 months and still be unremedied at the date of writing?

This article suggests the answer to that question lies in serious structural deficiencies and oversights in the design and operation of accountability and remedial avenues at seven different levels:

1. In a lack of standards to prevent rushed government design and introduction of machine learning (‘smart’) systems of decision-making;
2. In a lack of diligence by accountability agencies such as the Ombudsman or Audit Office;
3. In a lack of ethical standards of administration or compliance by Centrelink with model litigant protocols;
4. In a lack of transparency of the first of two possible tiers of Administrative Appeals Tribunal review (AAT1), resulting in a lack of protections against gaming of review by way of agency non-acquiescence or strategic non-contestation;
5. In a lack of guarantees of independence and funding security to enable first line Legal Aid or community legal centre/welfare rights bodies (CLC/WRC) to test or call out illegality in the face of thwarting of challenges by Centrelink settling of potential test cases;
6. In a lack of sufficient pro-bono professional or civil society capacity to mount ‘second line’ test case litigation or other systemic advocacy; and
7. In tolerance, especially in some media quarters, of a ‘culture’ of political and public devaluing of the significance of breaches of the rule of law and rights of vulnerable welfare clients.

It is argued that a multifaceted set of initiatives are required if such breaches of legal and ethical standards are to be avoided in the future.

Why is it clear that robo-debt is unlawful?

The pivot for this article is not so much that Centrelink lacks legal authority for raising virtually all debts based on a robo-debt ‘reverse onus’ methodology rather than use its own information gathering powers – for this remains essentially uncontested. Rather it is extraordinary that this went unpublicised and uncorrected for over two years. So first a few words about the illegality as it affects working age payments such as Newstart (NSA) and Youth allowance (YA).

Robo-debt is unlawful because Centrelink is always responsible for ‘establishing’ the existence and size of supposed social security debts. This is because the legislation provides that a debt arises only if another section creates a debt, such as one based on the difference between the amount paid and the amount to which a person is entitled. And because Centrelink bears a ‘practical onus’ to establish this. If Centrelink cannot prove up a debt from its own enquiries or information supplied to it, the status quo (no debt/lawful receipt of payments) applies. This has been the law since 1984 when the full Federal Court decided McDonald. Unless the alleged debtor is one of the rare employees who had only a single job paid at a constant fortnightly pay rate, Centrelink fails to discharge this onus when its robo-debt software generates a debt by apportioning total earnings reported to the Australian Taxation Office (ATO) from particular jobs to calculate average earnings. Robo-debt treats fluctuating earnings as if that income was earned evenly at the same rate in each and every fortnight. Mathematically this is wrong because an average for a fluctuating variable never speaks to its constituent parts. And it is the actual income for constituent fortnights that as a matter of law is crucial for calculating the rate of a working age payment such as NSA or YA.

Read the full article here.

Wednesday 7 February 2018

CENTRELINK ROBO-DEBT: the nightmare continues


Given that the Turnbull Government continues to apply a faulty algorithm to Centrelink debt collection in 2018, private debt collectors remain financially incentivised to aggressively chase debts which may not actually exist, former welfare recipients may still receive debt recovery fee demands and government intends to expand collection to other groups/forms of declared income, while Minister for Human Services Alan Tudge is yet to fix the problems with ‘phone wait times, perhaps a reminder of what the title Online Compliance Intervention actually hides and what the alternative term robo-debt  describes……..

Cory Doctorow writing in Boing Boing, 1 February 2018:

In a textbook example of the use of big data to create a digital poorhouse, as described in Virginia Eubanks's excellent new book Automating Inequality, the Australian government created an algorithmic, semi-privatised system to mine the financial records of people receiving means-tested benefits and accuse them of fraud on the basis of its findings, bringing in private contractors to build and maintain the system and collect the penalties it ascribed, paying them a commission on the basis of how much money they extracted from poor Australians.

The result was a predictable kafkaesque nightmare in which an unaccountable black box accused poor people, students, pensioners, disabled people and others receiving benefits of owing huge sums, sending abusive, threatening debt collectors after them, and placing all information about the accusations of fraud at the other end of a bureaucratic nightmare system of overseas phone-bank operators with insane wait-times.

GillianTerzis writing in Logic, a magazine about technology, 2017:

Automation is dehumanizing in a literal sense: it removes human experience from the equation. In the case of the robo-debt scandal, automation also stripped humans of their narrative power. The algorithm that generated these debt notices presented welfare recipients with contrasting stories: the recipients claimed they’d followed the rules, but the computer said otherwise.

There were few official ways to explain one’s circumstances: twenty-nine million calls to Centrelink went unanswered in 2016, and Centrelink’s Twitter account seems explicitly designed to discourage conversational exchange. One source of narrative resistance is notmydebt.com.au, a website run entirely by volunteers that gathers false debt stories from ordinary Australians so that the “scandal can't be plausibly minimised or denied.”

Over time it was revealed that many of these debts were miscalculated or, in some cases, non-existent. One man I’d read about was on a government pension and saddled with a $4,500 bill, which was revised down months later to $65. Another recipient, who was on disability as a result of mental illness, had a debt notice of $80,000 that was later recalled. A small proportion of recipients were exclusively in contact with private debt collectors and received no official notice from Centrelink at all.

Soon it emerged that social services were a lucrative avenue for corporate interests: this year’s Senate inquiry revealed that some private agencies tasked with recouping debts were working on a commission basis, pocketing a percentage of the debts they had recovered for the government regardless of their validity. (All debt notices issued by private agencies were eventually rescinded after government review in February 2017.)

The methodology of the algorithm itself was riddled with flaws. It calculates the average of an individual’s annual income reported to the Australian Tax Office …..and compares it with the fortnightly earnings reported to Centrelink by the welfare recipient. All welfare recipients are required to declare their gross earnings (income accrued before tax and other deductions) within this fourteen-day period. Any discrepancy between the two figures is interpreted by the algorithm as proof of undeclared or underreported income, from which a notice of debt is automatically generated.

Previously, these inconsistencies would be handled by Centrelink staff, who would call up your employer, confirm the amount you received in fortnightly payments, and cross-index that figure with the one calculated in the system. But the automation of the debt recovery process has outsourced authority from humans to the algorithm itself.

It’s certainly efficient: it takes the algorithm one week to generate 20,000 debt notices, a process that would take up to a year if done manually. But it’s not a reliable method of fraud detection. It’s blunt, unwieldy, and error-prone. It assumes that variations in the data sets are deliberate, and that recipients have received more than what they are entitled to. What’s more, the onus is on the welfare recipient to prove their income has been reported correctly and that the entitlements they have received are commensurate within twenty-one days.

Yet, as many critics have noted, this income-averaging method is porous. It fails to accurately account for the fluctuating fortunes of casual or contract workers, which often results in variations between the two figures. There’s also no way for the algorithm to correct for basic errors in the system’s database. It cannot yet discern whether an employer’s legal name has been used instead of its various business names—it treats them as separate entities, and therefore separate sources of income—or whether conflicting reports are caused by basic mistakes, such as spelling errors or typos. These seemingly small distinctions are ones that only a human could make. It’s no wonder, then, that conservative estimates of its error rate hover at 20 percent……

Yet the irony of stigmatizing welfare recipients is that better-off Australians are major beneficiaries of social spending. The Australian writer Tim Winton notes that the country’s middle class has “an increasing sense of entitlement to welfare,” which is “duly disbursed largely at the expense of the poor, the sick, and the unemployed.” These include tax concessions on contributions to “superannuation,” which are funds designed to help Australians save for their retirement. Such concessions are distortionary: they’re levied at a flat rate of 15 percent, rather than at a progressive rate according to one’s income, which means their benefits are reaped overwhelmingly by the rich.

The Australian Bureau of Statistics calculates that nearly one third of these concessions are claimed by the top 10 percent of income earners in Australia. Then there are policies like negative gearing, a tax concession that allows you to claim a deduction against your wage income for losses generated by any rental properties you own. (Australia and New Zealand are the only countries in the world to hold such a policy.) In addition, Australian homeowners are entitled to a capital gains tax discount of 50 percent once the property is sold.

Critics have argued that the combination of these two policies only serves to fuel investor speculation, entrench housing unaffordability, and lock first-time home buyers out of the market. But it’s easier to attack the poor than to tax the rich.


EXECUTIVE SUMMARY

In July 2016 the Department of Human Services (DHS) - Centrelink launched a new online compliance intervention (OCI) system for raising and recovering debts. The OCI matches the earnings recorded on a customer’s Centrelink record with historical employer-reported income data from the Australian Taxation Office (ATO). Parts of the debt raising process previously done manually by compliance officers within DHS are now done using this automated process. Customers are asked to confirm or update their income using the online system. If the customer does not engage with DHS either online or in person, or if there are gaps in the information provided by the customer, the system will fill the gaps with a fortnightly income figure derived from the ATO income data for the relevant employment period (‘averaged’ data). 

Since the initial rollout of the OCI, the Commonwealth Ombudsman’s office has received many complaints from people who have incurred debts under the OCI. This report examines our concerns with the implementation of the OCI, using complaints we investigated as case study examples. 

We acknowledge the changes DHS has made to the OCI since its initial rollout. The changes have been positive and have improved the usability and accessibility of the system. However, we consider there are several areas where further improvements could be made, particularly before use of the OCI is expanded. We have made several recommendations to address these areas......

Planning and risk management

In our view, many of the OCI’s implementation problems could have been mitigated through better project planning and risk management at the outset. This includes more rigorous user testing with customers and service delivery staff, a more incremental rollout, and better communication to staff and stakeholders. DHS’ project planning did not ensure all relevant external stakeholders were consulted during key planning stages and after the full rollout of the OCI. This is evidenced by the extent of confusion and inaccuracy in public statements made by key non-government stakeholders, journalists and individuals.

A key lesson for agencies and policy makers when proposing to rollout large scale measures which require people to engage in a new way with new digital channels, is for agencies to engage with stakeholders and provide resources for adequate manual support during transition periods. We have recommended DHS undertake a comprehensive evaluation of the OCI in its current form before it is implemented further and any future rollout should be done incrementally.

Centrelink website, 5 February 2018:

If you don’t pay your debt by the due date, we may ask the Australian Taxation Office (ATO) to send us your tax refund. If we do we’ll send you a Recovery of your Centrelink debt letter.

If you aren’t repaying your debt over time or if we haven’t agreed to extend the payment time, we may also:

* add an interest charge to your debt

* refer your debt to an external collection agency

* reduce your income support payments to help pay the amount owing

* recover the amount from your wages, other income and assets, including money you may hold in a bank account

* refer your case to our solicitors for legal action

* issue a Departure Prohibition Order to stop you from travelling overseas....

The rate of interest we apply to your debt is consistent with the current rate applied by the ATO to tax debts. 

Friday 20 January 2017

Centrelink's monumental clusterf*ck continues


As the Turnbull Government response grows more heavy-handed, community resistance grows......
Crikey, 19 January 2017:
Just as Australians were ringing in the new year and the public campaign against Centrelink's massively scaled-up debt recovery program was beginning to pick up steam, a legislative change removed a time limit that meant a certain number of welfare debts used to expire.
Previously, unlike other debts to the government, notably those owed to the Australian Taxation Office, welfare debts would lapse if no action was taken to recover them in six years.
Agencies like Centrelink could fairly easily restart the six-year limit, by taking a basic action like opening the client's record and doing a basic review, but nonetheless it resulted in some debts expiring because the agency did not have enough resources to pursue them all.
From January 1 it was removed entirely by the Budget Savings (Omnibus) Act, shortly after the government asked Centrelink to identify and recover hundreds of thousands more debts than it ever has before by significantly decreasing the amount of administrative effort spent on each one.
The various pieces of legislation amended by the act now say welfare debt recovery actions can take place "at any time" and according to the act's explanatory memorandum:
"This will align social welfare debt recovery with the arrangements applied by other government agencies involved in the recovery of Commonwealth debts, where there is no such limitation.
" … Removing this limitation will prevent debts from 'ageing' out of recovery, and will improve the ability to recover old debts. Debt recovery will be able to commence at any time."
The Mandarin has heard a significant number of relatively senior Department of Human Services staff are under the impression that the removal of the six-year limit has opened up a very large number of potential debts to recovery action that were previously off-limits.
There's apparently a view in the agency that now there is nothing stopping the automated compliance program from going back through tax and welfare records "indefinitely" to find new debts to raise.
But an independent expert in social security law said this was not quite right; the six-year limit only ever applied to debts after they were raised. The clock started when the agency became aware of the debt (or when it reasonably should have — for example, if it was notified of an overpayment but failed to actually raise a debt for six years or more).
The legal interpretation was that Centrelink could always chase a debt from any time in the past — provided it could argue there was no reasonable way to have found out more than six years prior — but in practice it always raised more debts than it could recover, so it prioritised the biggest ones and did not go looking for new ones especially hard.
The Mandarin also understands that debts that expired after no action was taken for more than six years before the change on January 1 cannot be resurrected.
The further back Centrelink goes looking for past discrepancies between taxable income and support payments, the less chance there is that the people advised of potential debts will be able to produce payslips or other records to prove they were not overpaid.
The National Social Security Rights Network (previously the Welfare Rights Network) opposed the removal of the six-year expiry date. In a recent statement, it says a lot of people are contacting it in distress because they do not realise "the system does not necessarily require people to have documentation from many years ago" and think that "without it they cannot provide the information being sought" by Centrelink. The body recommends:
"If it continues, the system should be applied to the most recent financial years first. Many people would be able to readily check information against their recent records, reducing their distress and anxiety about the process. This would also give more time for Centrelink and other stakeholders to assess how the system is working and make a considered decision whether it is fair and reasonable to roll out for earlier years."
In any case, DHS spokesperson Hank Jongen told The Mandarin there are no plans to check the records any further back than six years ago:
"As part of the compliance measures announced in the 2015-16 budget, 2015-16 MYEFO and in the 2016-2017 MYEFO, compliance reviews will not be undertaken prior to 2010-11 financial year."

The Canberra Times, 19 January 2017:
Centrelink is deliberately ripping-off thousands of Australians caught up in its data matching "robo-debt" program, with managers telling public servants at the agency to enforce debts they know are bogus, according to explosive new claims…..
Pensioners and other struggling members of the community are being hounded for "recovery fees" unfairly added on top of their debts by Centrelink, according to the whistleblower's statement, published on Thursday by left leaning advocacy group Get-Up and Centrelink's main workplace union the CPSU.
The union says it has independently verified some, but not all, of the whistleblower's allegations.
The insider, who has defied public service bosses' threats on leaking against the program, also alleges that Centrelink managers are well aware that bogus debts are being pursued and are ignoring pleas from compliance staff to take a fair approach to the debt recovery process.
"We are struggling with our consciences and pushing back against our leaders daily," the whistleblower wrote.
"We are telling the...helpdesk that what we are doing is wrong.
"I see these reviews every day and I am horrified at what I am being directed to do."
Centrelink has been contacted for comment on Thursday morning.
The insiders alleges that the rip-offs operate in five main ways:
Doubling income​, where a person's entire income from the same employer is counted twice, creating an "overpayment".
Non-assessable Income, where​ money that should not be counted as assessable income by Centrelink is counted and overpayments raised against the victim.
Fictitious payments​; where system generates debts based on payments that Centrelink never made. The whistleblower alleges it is even possible to have a debt claim larger than a person's total Centrelink payment.
False recovery fees; recovery fees are being regularly applied when they shouldn't and can be much larger than the set fee of 10 per cent.  
Corrupted review​; compliance officers are directed not to fix these errors, even when there is evidence, and their work is rejected when they do.
But Centrelink media spokesman Hank Jongen denied the accusations in a statement posted online on Thursday, saying the claims about doubling income, non-assessable income, fictitious payments, false recovery fees and corrupted reviews were all incorrect.

The Sydney Morning Herald, 17 January 2017:
Public servants at Centrelink have been threatened with disciplinary action or even criminal prosecution as their bosses at the welfare agency try to stem the flow of internal leaks about the agency's "robo-debt" campaign.

Several workers have gone public about the debt recovery debacle since the controversy emerged last month and now Centrelink's parent department, Human Services, has issued a stark warning to its 36,000 staff about the consequences of leaking.

The department, which has gone to extraordinary lengths and expense in the past to track down and crush internal dissent, issued its latest warning on Tuesday after several media stories featuring insider accounts of the data matching program's failings.

Excerpt from whistleblower letter released by GetUp! on 19 January 2017:


The letter can be found at:
https://www.dropbox.com/s/7cszry1mjjjsndj/2029-img-113185553-0001.pdf?dl=0

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