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……..
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.
