Agency pursuing $4.9bn in unpaid debts, including some potentially calculated with controversial method, question to parliament reveals
Services Australia is chasing billions of dollars in decades-old debt, it has been revealed, some of which may have been incorrectly calculated.
Data released under questions on notice shows that, as at the end of October last year, Services Australia was pursuing $4.9bn in unpaid debts from 829,266 customers. The oldest debt dates back to 1979, with thousands from the 1990s.
Across the two last years, Services Australia undertook two investigations, finding 147,773 debts that may have been unlawfully calculated with income apportionment.
Income apportionment was the complex system used by Services Australia when it could not determine whether payslips that were relied on to calculate welfare debts aligned with the fortnightly income reporting periods, such as when a payslip did not show hours or days worked.
In this situation, the agency created a “daily” average, which caused problems as customers were overpaid and then served a debt despite reporting honestly.
Income apportionment was used to calculate debt between the 1990s and 2020, with the government pausing recovery of income apportionment debts last year. The government is waiting on the outcome of an appeal in the federal court after an administrative appeal tribunal found income apportionment meant recipients of social security benefits could end up being “pursued for debts that are either not owed or are for amounts that exceed what is owed”.
A 2023 review from the commonwealth ombudsman found about 100,000 debts were affected by income apportionment debt and called for them to be waived. New data shows this number has increased, with the government finding 147,773 possibly incorrect debts relating to 100,360 customers over two investigation periods over the past two years. Some of these will be included in the 100,000 the ombudsman flagged.
Since 30 October, Services Australia has had 150 staff working on income-apportionment matters, the data revealed.
“Since December 2020, income apportionment no longer occurs,” Services Australia spokesperson Hank Jongen said.
“The [$4.9bn owed] includes outstanding debts that may be impacted by income apportionment.
“A decision to waive or refund debts on the basis that income apportionment was used would need to be made by the government.”
The Greens social services spokesperson, Penny Allman-Payne, said it seemed “very possible that unlawful Centrelink debts have been raised” against tens of thousands of Australians.
“It’s bad enough that government departments hound people on poverty payments for money they need to survive, but it’s unconscionable that they’d invest so much effort in pursuing debts that didn’t even exist,” she said.
“If the robodebt disaster has taught us anything, it’s that we must stop treating people like criminals for using social security and create a fairer and more just system that lifts everyone up.”
The Australian government has agreed in principle to the royal commission’s recommendation to reinstate the limitation of six years on debt recovery but has not said when that will be implemented or if it will apply to current debts. Allman-Payne called on the government to implement it.
“To protect income support recipients from a future conservative government, Labor should act on the recommendations of the royal commission and place a six-year limit on debt recovery,” she said.
Antipoverty Centre spokesperson Kristin O’Connell called for a pause on all debt recovery activities.
“We have been urging the government to pause raising and pursuing Centrelink debts for years so that welfare recipients would be protected from harmful debt collection practices until a safe system can be designed,” she said.
“Extracting billions from people in poverty is the policy outcome they wanted, and they have been wildly successful, even though hundreds of thousands of these debts are not legitimate.”
A Department of Social Services spokesperson said the government would improve social security debt arrangements and was “committed to ensuring debt raising and recovery is undertaken in a timely, fair and respectful manner”.
“Any reform to the approach of raising and recovering social security debts should be undertaken in a systematic way, with careful consideration of the unique circumstances of social security debtors,” the spokesperson said.
