Robodebt agency fails to halt fiasco

A Commonwealth Ombudsman’s report into Services Australia’s income compliance program found the agency continued to recollect debt inappropriately from Australians.

A Commonwealth Ombudsman’s report into Services Australia’s income compliance program found the agency continued to recollect debt inappropriately from Australians, and has more than 200,000 claims outstanding.

The federal government announced in November 2019 that Services Australia would no longer raise debts solely based on averaged income received from the tax office, following a bungle that led to hundreds of thousands of Australians being hit with debt notices falsely accusing them of being overpaid by Centrelink.

A settlement worth $1.2bn was reached, under which the commonwealth was forced to pay $112m in compensation to more than 430,000 victims. It was also forced to repay more than $720m in debts collected invalidly, and ordered that outstanding claims for about $398m in debts should be dropped.

A recent investigation by the ombudsman has found “significant administration issues” continue to affect the work to refund eligible debts relating to hundreds of thousands of people.

“During this investigation, our office raised concerns with Ser­vices Australia about its decision to continue recovery action on ­income-compliance debts while it undertook its identification process, rather than freezing all ­income-compliance debts before undertaking the process,” the report read.

“Despite this, there was a ­period of some months during which debt recovery action was continuing in relation to many debts which Services Australia knew had a high likelihood of being raised on ‘legally insufficient’ grounds.

“We consider this created a high degree of risk for Services Australia and unnecessary hardship for individuals affected.”

Considering the agency knew that the identification process for the debts would be largely manual and take some time to complete, the ombudsman had recommended that it should freeze all debts charged.

Services Australia said a freeze of debts could not be completed “en masse” because any individuals with non-compliance debts would have also had debts frozen, and this may have caused “greater confusion at the time”.

In November 2019, Services Australia estimated there were 240,000 income-compliance reviews still under investigation. One year later, the number had dropped by 40,000.

To speed up the process, the ombudsman has recommended better indicators to track what information is relied on to determine which individuals were charged inappropriately for debt.

“If Services Australia had recorded reliable system indicators to track what information was relied on to raise the debt, including whether a debt had been raised relying wholly or partially using averaged data, this would have reduced the intensive and manual nature of this process and reduced the adverse impact upon affected individuals,” the ombudsman said.

The ombudsman also has concerns there could be a large number of individuals who still do not know if they have been affected.