August 2017

The Nation Reviewed

Debt. Recovery.

By Alex McKinnon
A parliamentary committee’s report on the Centrelink robo-debt debacle makes for damning reading

In October last year, Phoebe received a text message telling her to check her old myGov email inbox. There, she found three letters from the Department of Human Services (DHS), informing her that Centrelink had overpaid her to the tune of $14,576.

It was the first Phoebe had any idea she may have a Centrelink debt at all. She had not received any correspondence advising that her welfare history was being reviewed, or asking that she clarify her income. But her confusion was only just beginning. In her words to a public Senate inquiry in Sydney, “I have learned a lot about Centrelink since then.”

Two weeks after receiving the text message, she was contacted by the Dun & Bradstreet debt-collection agency. Phoebe claimed that the debt collector, undeterred by her explanation that she was submitting her case for review in the belief the DHS had made an error, threatened to dock “at least a third of [her] fortnightly income” until the debt was paid and demanded a minimum on-the-spot payment of $500. Panicked and intimidated, Phoebe complied, making the payment on her credit card.

Phoebe estimates she spent “probably 100 hours, if not more”, trying to prove she did not owe the debt – a process frustrated at every turn by Centrelink’s opaque, bug-riddled and infuriatingly complex debt-recovery process. Documents submitted through the myGov online portal were swallowed up, never to be seen again. Phoebe turned up at her local Centrelink office to submit documents in person, only to be told she could only do so through the online portal. When she tried again, the portal had somehow ceased to exist – a vanishing act only solved after hours spent listening to Mozart’s Divertimento in F Major (K138), Centrelink’s infamous hold music.

The debt-collection agency continued calling her while the DHS reviewed her debt, threatening to garnish her wages and demanding up-front payments. When she asked Centrelink to tell Dun & Bradstreet her debt was under review, she was told: “The debt’s onsold; we can’t get it back off the debt-collection agency now.”

Eventually, after Phoebe chased up old payslips from past employers, hired an accountant and researched her legal rights when dealing with debt collectors, her debt was reduced to $8000, which she still believes she does not owe. Centrelink calculated her debt by averaging out her yearly income over periods when she was working full-time and not receiving benefits, as well as a six-month span where she dropped out of university for health reasons.

Hundreds of stories like Phoebe’s have surfaced since the government’s “robo-debt” automated welfare debt recovery system began issuing notices in November. From March to May, the Senate Community Affairs References Committee heard from more than 60 community and social workers; legal-aid representatives; disability, youth, migrant and Aboriginal and Torres Strait Islander rights advocates; and 25 welfare recipients with outstanding, contested or settled debts. Many more made submissions, with most choosing to remain anonymous or submit confidentially. As the inquiry’s final report concluded, they paint a picture of a badly designed, poorly implemented and deeply unfair system that has had “a profoundly negative impact on the lives of thousands of Australians”.

Robo-debt’s flaws are many, but the crux of them is that it outsources the work of establishing the veracity of a debt from DHS employees to individual welfare recipients. The government’s rationale for doing so was financial, citing “improved employment income and non-employment income data matching” as a vital part of budget repair. Federal human services minister Alan Tudge claimed the shift would claw back $1.9 billion in welfare overpayments over four years, “[allow] people to repay Centrelink debts in a couple of clicks”, and “[free] up skilled staff to focus on identifying and recovering more significant debts or fraudulent activity”.

That it did. Freed from the time-consuming process of checking the accuracy of debts before issuing them, DHS employees now had time to deal with the increased number of debt notices to send out, which skyrocketed from around 20,000 a year to up to 20,000 a week. Meanwhile, the drudgework of calling up employers to track down old payslips and tax invoices was handballed from a workforce of paid public servants to an army of unpaid welfare recipients – a vast press-ganging that, in Tudge’s words, “[put] the individual rather than the service provider at the heart of the discussion”.

Compounding that central problem was the algorithm used to calculate so-called debts in the first place. Robo-debt averages out a person’s yearly income into fortnightly earnings, thus producing inaccurate results for anyone whose weekly pay, employment or study situation has changed at all in the course of a year. An agency that routinely works with casual workers on fluctuating hours, people sliding in and out of short-term employment, and students finishing, changing or dropping out of degrees somehow failed to anticipate that a one-size-fits-all algorithm might not fit its clientele. The Senate inquiry found around 20% of all debt claims issued by the DHS since November were quickly dismissed, while noting the Australian Council of Social Service’s assessment that “we certainly do not know how many people have entered into agreements to repay debts that they did not owe” out of fear, intimidation, or not being willing or able to challenge their debt.

Geoff, a 67-year-old bus driver, told the inquiry’s public hearings that he received his debt notice a day before going into surgery for a heart condition, and had to submit a Freedom of Information request to understand the process Centrelink used to calculate his debt. In his words, he got back “a thick wad of papers” that amounted to “total gibberish”. Tom, a qualified accountant who contested a family member’s debt notice, found Centrelink’s calculations to be “pure Kafka”. Michelle, who testified in Adelaide, was told by a Centrelink worker to settle her case via the phone system, despite the fact that she is deaf. Out-of-date myGov details saw debt notices issued to people who had died.

The Senate committee report is filled with testimony from people who had the time, resources and confidence to speak in front of a parliamentary inquiry. Other stories are even more harrowing. The website #NotMyDebt has collated more than 500 unofficial complaints and claims of inaccurate or non-existent debt, ranging from the outraged to the desperate. One father claims his 21-year-old son was forced into agreeing to pay back $18,000 by a collection agency, and quickly amassed further debt from taking out short-term loans with high-interest lenders – a phenomenon the inquiry noted was common among young, financially vulnerable people. His parents only found out when they “found a Pawnbrokers ticket for a $300 loan against his watch”.

A disturbing number of #NotMyDebt submissions mention depression, anxiety and severe mental-health conditions being exacerbated by the robo-debt system. “Tired of this system, suicide is a common thought,” reads one. “I once even wrote a suicide note that mentioned the government can have their wish, they can take this money from my cold dead hands,” says another. The inquiry also found widespread evidence of such despair, especially among people with pre-existing financial, medical or cultural vulnerabilities.

By contrast, the Coalition Senators’ Dissenting Report, from the government’s two committee members, Linda Reynolds and Jonathon Duniam, is a masterclass in obfuscation and euphemism. On most of its flaws – the mass coercion of unpaid labour, the circling of debt collectors, the needless fear and uncertainty – the government is adamant that there has been no failure. “Coalition Senators recognise that there are elements of the current welfare system integrity process which are being further improved, clarified and modernised,” their assessment reads. In the most technical sense of the word, “improved” is correct, in that belatedly recognising and lessening the impacts of a rolling disaster can be described as an “improvement”.

In an otherwise belligerent report, it’s easy to miss the dissenters’ grudging central concession, that sending out automated debts without human oversight has not worked:

DHS ought to draw upon all information available to it, to both verify the calculations made by DHS and reduce the requirement for recipients to seek information held by various Commonwealth authorities which can also be accessed by DHS.

That realisation, at least, appears to have dawned at Centrelink. One of the inquiry’s biggest concerns was the prospect of the program being expanded. In June, Centrelink announced it would not use the automated debt recovery system to target aged pensioners, and belatedly begin hiring more permanent staff to cope with the workload of manually checking more discrepancies flagged by its expanding data-matching program. The government nevertheless maintains that its debt recovery system needs only technical and servicing tweaks.

Alex McKinnon

Alex McKinnon is Schwartz Media’s former morning editor, and a former editor of Junkee and the Star Observer.

August 2017

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