Services Australia Pursuing Billions in Unpaid Debt – Are Some Calculations Unlawful

Services Australia is aggressively chasing $4.9 billion in unpaid welfare debts owed by more than 829,000 people, some of whom incurred debts as far back as 1979. New analysis shows part of those debts were calculated using a method known as income apportionment, about which there is now concern over their legitimacy.

Controversy

Income apportionment, the method of calculation that was being used from the 1990s until it was stopped as of December 2020, calculates a “daily average” of income when payslips were missing information such as hours or days worked. This led to misallocations of debt to many welfare recipients since there were lots of people who were overpaid money and yet needed to repay money after reporting the same.
A case at the federal court is under appeal, deciding if the above practice led to recovery of wrongful debt.
The Commonwealth Ombudsman review in 2023 indicated that around 100,000 debts had potential issues of income apportionment and subsequent investigations have increased this number to 147,773 dubious debts associated with over 100,000 customers . >

Government Response

Services Australia stopped last year’s recovery of income apportionment debt and gave a task force of 150 staff members the issue. According to spokesman Hank Jongen, no decision was made as for their waiving or refunding because any action would require government approval.

The government has also indicated its willingness to enhance debt recovery procedures and has agreed in principle with a royal commission’s recommendation to reinstate a six-year limitation on debt recovery. However, it has not acted on this measure or indicated whether it will apply to existing debts. >

Calls for reform.

Critics argue that the pursuit of decades-old debts, especially potentially calculated unlawfully, unfairly target vulnerable people on social security.

Penny Allman-Payne, Greens’ social services spokesperson’s spokeswoman Penny Allman-Payne condemned the effort: “It’s unconscionable that [the government] invests so much effort in pursuing debts that didn’t even exist.” She pushed for the government to take action on the recommendation of the royal commission to ensure a six-year limitation on debt recovery. >

Kristin O’Connell, spokesperson for the Antipoverty Centre, demanded an immediate stop to all debt recovery operations. She mentioned the damage that aggressive collection operations were causing: “Extracting billions from people in poverty is the policy outcome they wanted, even though hundreds of thousands of these debts are not legitimate.

“Lessons from Robodebt

The Robodebt scandal saw the government raising billions of dollars in automated debt claims unlawfully. The after-effect of the Robodebt scandal underlined the importance of fairness and accuracy in welfare debt systems. The critics claim that lessons from the Robodebt scandal have not been implemented completely, and the vulnerable citizens remain at risk of unjust treatment. >

Path Forward

The Department of Social Services has stated its commitment to ensuring fairness in debt recovery processes, emphasizing the need for systematic reform. While steps are being taken to improve the system, advocacy groups continue to push for greater protections for welfare recipients.
The outcome of the pending federal court appeal on income apportionment debts could determine future policy. For now, the government is under intense pressure to come up with a fairer, more transparent method of recovering social security debt.

FAQs:

What is income apportionment?

A method averaging income for debt calculation, often inaccurately.

How much unpaid debt is Services Australia pursuing?

$4.9 billion across 829,266 individuals.

Why is income apportionment controversial?

It led to inaccurate debts, with some recipients overcharged.

What is the six-year debt recovery limit?

A proposed cap on recovering debts older than six years.

Leave a Comment