Centrelink changes set to take effect today will put hundreds of thousands Australians on notice, as the pandemic debt reprieve ends.
Around 1.3 million debts were paused in April last year to help households get through the economic lull caused by COVID lockdowns. That pause ended on 11 January and repayments are set to begin over the next week or so.
“From the start of February, we’ll begin contacting people who owe money to let them know why they have been overpaid, the amount of the overpayment and their due date for repayments to commence,” said Services Australia chief Hank Jongen.
Debts totalling approximately $5 billion are currently owed, with the average frozen debt around $3485 and a major chunk of the total attributable to Family Tax Benefit payments.
According to Services Australia, these debts are not related to the 400,000 or so raised by its failed robo-debt scheme.
“What we are talking about here are legitimate debts,” Mr Jongen told 9News.
“Let’s not lose sight of the fact this is taxpayers’ money.”
Services Australia seems conscious of its checkered past in relation to debt recovery.
In November last year, the federal government agreed to pay $112 million in compensation to around 430,000 individuals in a robo-debt class action settled in the Federal Court.
That settlement brought the total remuneration from the failed debt-collection scheme to $1.2 billion.
The robo-debt scheme had also been heavily criticised since its inception, with multiple examples of incorrect debt notices and bullying vulnerable Australians.
The department had also been accused of using strong arm tactics in the form of threats to charge daily compound interest, seize funds from bank accounts and garnishee wages.
That certainly doesn’t seem to be the case this time, with SA ostensibly handling debtors with kid gloves.
“If you find yourself in a difficult situation and you believe that you’re not going to be able to start repayments on the date we’ve nominated, don’t ignore the letter, don’t panic, just give us a call,” said Mr Jongen.
“We’re here to help and guide you through the process.”
Anyone who owes money is not required to pay back the full amount in one go and is instead being encouraged to implement a repayment plan.
“The earliest anyone will need to start repaying money is 28 February 2021,” he said.
“We want people to know they don’t need to repay their debt all at once – most people set up a payment arrangement and repay it over time.
“The easiest way to manage repayments is online – using their Centrelink online account through myGov or the Centrelink app.”
Services Australia is also urging recipients who may not have owed a debt prior to April 2020 to take heed of this information.
“We may have noticed you were overpaid in the past. Because we weren’t raising debts between April and October 2020, you may not know this. Now the pause is ending, we’ll write to you if you’ve been overpaid,” said Mr Jongen.
“Even though it may be stressful to hear you’ve been overpaid, we know it’s important for you to find this out. This helps you understand if you need to change how you manage your payment. For example, understanding how to report your income correctly or what changes to tell us about. It also helps you plan for the future.
“If you’ve been overpaid, we’re here to help you.”
Unpaid debts can attract interest charges above 7 per cent and involve debt collection agencies and, should Departure Prohibition Orders be issued, they can prevent people from leaving Australia.
Visit the Services Australia website for more information on debts and overpayments.
Do you owe Centrelink money? How has your experience been this time around? Do you have a question for Hank Jongen? Send it to [email protected] and will pass it on to him.
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Related articles:
https://www.yourlifechoices.com.au/age-pension/talking-covid19-with-hank-jongen
https://www.yourlifechoices.com.au/finance/important-details-on-how-your-income-stream-information-is-updated
https://www.yourlifechoices.com.au/news/services-australia-strikes-back
