80% of Centrelink recipients fail to repay debts

Fewer than 20 percent of former Centrelink clients who were lumped with a debt during the April government crack-down have repaid what they owe.

Thousands of people have been slugged with major debt during a Centrelink crackdown.

FEWER than 20 percent of former Centrelink clients who were lumped with a debt during the April government crack-down have repaid what they owe.

More than 28,000 people have entered into payment plans to pay off their Centrelink debt of the 170, 000 former clients who collectively owe the government $905 million.

In some cases, debts owed are more than a decade old and there are people who owe hundreds of thousands of dollars.

This includes people who deliberately defrauded the system and have been prosecuted for their actions.

Those who ignored the letters from The Department of Human Services are facing interest bills of 8.77% of what they owe.

About 14,000 people, including several who owed more than $20,000 each, paid their debts in one hit.

The letters inform them they have 28 days to contact the department and enter into a repayment plan, otherwise interest would be charged until they did.

Of the 45,000 people who are now beyond the 28 day cut-off, almost two thirds (28,000) have begun repaying what they owe. The remaining third are now being charged interest at the rate of 8.77%.

Queenslanders owe the third highest amount, $200, 709, 077, with more than 37,000 people ordered to pay.

Human Services Minister Michael Keenan said he was pleased so many people had agreed to start meeting their obligations.

"But I strongly encourage those who have refused to engage with us to move swiftly in order to avoid seeing their debt grow even further," he said.

"Given that these people are no longer receiving welfare benefits and are predominantly back in the workforce, the government believes they have the capacity to pay up.

"The early results we are seeing support this view and show that the strong action we are taking is justified.

"Australia has a generous social safety net that helps people who genuinely need it. But if someone receives a benefit they are not entitled to, the Government has a responsibility to recover these amounts to ensure the system remains viable."

The amount people are required to pay back under a repayment plan will depend on their individual circumstances and exemptions can be provided for those who can demonstrate genuine hardship.

"Charging interest on government debts is also not new. The interest rate will be comparable to other government and non-government entities; currently 8.77%," Mr Keenan said.

Originally published as 80% of Centrelink recipients fail to repay debts