Govt removes expiry limit on welfare debt, allowing Centrelink to hound you forever
Before January 1, Centrelink debts expired if the agency ignored them for six years. Now it can pursue them at any time like the Tax Office, but within the agency there is confusion about the implications, writes Stephen Easton, journalist with The Mandarin.
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 Mandarin has also heard some of the controversial letters have queried people’s past welfare payments based on income they earned working for the department itself, later on in the relevant financial years — but when they asked if DHS could provide copies of their old payslips, the department’s records did not go back far enough. But Jongen says this is not true as far as he knows:
“The above statement is not accurate. The Department of Human Services retains all of its payroll information in accordance with the Archives Act and is unaware of any current or former staff member who has requested information regarding their income and has not been able to receive it.”
As of the recent Mid-Year Economic and Fiscal Outlook, the government expected to save $700 million from parents’ income support, $400 million from the disability support pension, $1.5 billion from jobseeker support and $1.1 billion from the aged pension over four years, “primarily due to measures to enhance the integrity of social welfare payments, including expanding and extending data matching activities with the Australian Taxation Office”.
The debt recovery measures in the Budget Savings (Omnibus) Act were expected to improve the government’s underlying cash balance by $157.8 million in total, but the full costs and benefits of “expanding and extending data matching activities” is far from clear.