Centrelink’s Flawed Robo-Debt System is Killing Our Most Vulnerable

The story of Devi Barker, one of Centrelink’s robo-debt victims has put the flawed Government automated debt-recovery system back into the spotlight.

Her story is not dissimilar to thousands of other Australians in the same predicament: accused of racking up significant financial debts with the Department of Human Services, which remain accruing interest, until debtors pay up, or prove otherwise.

Death toll in the wake of robo-debt introduction

According to recently to reported data, more than 2000 people died after receiving a robo-debt notice between July 2016 to October 2018.

While no cause for death has been recorded, almost a third, 663 people – were classified as “vulnerable”, which means they had complex needs like mental illness, drug use or were victims of domestic violence.

It’s difficult not to believe that there may be a significant link between these deaths and alleged debts owed to Centrelink.

The Department of Human Services suggests otherwise, saying that the figure was more than ten times lower than the overall death rate for all of the department’s customers during the same period, which was 3.64 per cent, and that the number of days that elapsed between customers receiving a debt letter and their death was 222 days, or almost eight months, during which time any number of factors in an individual’s life could have contributed to their death.

“It would be foolhardy to draw a link to one particular cause without evidence to support such a claim,” the Department says.

But many who’ve had their own experiences with the system say otherwise.

Certainly, in January 2017, alarm bells were raised across the nation when Centrelink began tweeting the contact number for Lifeline. The new automated debt recovery system had been in place for about 6 months, and at the time, the government had hailed it as a huge triumph which would crack down on dole bludgers and welfare rorters, recovering billions of dollars in funds over a period of just a few years.

Ironically, those who have been most affected are not welfare cheats, but ordinary Australians who, through error, and administrative malfunction have found themselves on the receiving end of aggressive debt-recovery processes for debts they didn’t even realise existed, and which are not the result of intentional attempts to swindle the system.

The robo-debt scheme matches income data from the Australian Tax Office with income reported to Centrelink by welfare recipients. If a discrepancy is detected, people are automatically sent a letter asking for further information such as payslips and bank statements, often from years earlier.

The old non-automated system generated about 20,000 letters a year. But in the early days of the new automated system, that number skyrocketed to around 20,000 letters a week.

The sheer volume of people around Australia who have received debt notices is staggering.

Many debt notices are sent in error

What’s more, many have received notices in error, asking them to pay debts they don’t owe. Many more have received notices with inflated debt figures based on incorrect calculations or misinformation within the system. Others, receiving payments such as Youth Allowance and Newstart have been asked to verify their income dating back as far as 2010.

The Department says individuals receive a letter asking them to explain why the information they have provided doesn’t match the department’s records. This doesn’t always lead to a formal debt notice because recipients can provide additional information that clears the discrepancy, and can request an internal review before the formal process of debt recovery begins

But herein lies the problem.

Centrelink staff have been inundated. Cases are taking some time to resolve, and in the meantime, people are living under severe duress. Having debt you cannot repay is a daunting concept. For people with depression, illness or other life stress, as well as those struggling to find work and those with no permanent home, it can be virtually impossible to go back and find previous’ years’ worth of data to prove your case. Many also don’t know where to turn for help.

In some cases, Centrelink has threatened to deduct money from a recipient’s current salary until the money is paid. Legislation introduced in 2016 now also bans anyone from owing Centrelink money from travelling overseas.

An audit of the system in 2017 resulted in thousands of debts being wiped or revised down, but was subsequently defended by the Ombudsman as accurate “based on the information which is available to the department of human services at the time”.

But Terry Carney who served as a member of the Administrative Appeals Tribunal’s social security division for 39 years until his term ended in September 2017, believes otherwise.

The system could be unlawful

The crux of the problem is that Centrelink estimates debts when welfare recipients do not provide historical records of fortnightly income. Mr Carney says the robo-debt program averages income over fortnightly periods rather than discovering welfare recipients’ actual income for each period.

He says the system is not only inaccurate, it’s unlawful, and that social security legislation clearly outlines that the onus to prove a debt lies with Centrelink, and not on the beneficiary of welfare payments, as outlined in the Social Security Act 1991.

The lawfulness of the scheme is soon to be tested in Victoria, with Victoria Legal Aid currently preparing to take a second case to the Federal Court.

The organisation’s first attempt at litigation appeared to be thwarted last month when the Department of Human Services wiped a $4000 debt it claimed was incurred by a Melbourne nurse who received youth allowance payments while studying.

Moving forward with the second case, Victoria Legal aid says while the robo-debt system is obviously flawed, it is keen test whether or not it is actually legal, and this will only happen in a court of law.