It has been revealed that some of the debts Services Australia has been pursuing may have been potentially calculated incorrectly or unlawfully.
The data, which surfaced under questions on notice, indicated that as of the end of October last year, Services Australia was chasing $4.9 billion in unpaid debts from 829,266 customers, with the oldest debt dating back to 1979. Thousands of which were reportedly from the 1990s.
In the past two years, Services Australia conducted two major investigations, uncovering 147,773 debts that may have been unlawfully calculated due to a process known as income apportionment.
This complex system was employed when there was uncertainty about whether payslips used to calculate welfare debts matched up with the fortnightly income reporting periods.
Services Australia reportedly created a ‘daily’ average for days when payslips lacked clear hours or days worked. This often led to customers being overpaid and subsequently served with a debt notice, despite having reported their income honestly.
The use of this system to calculate debt spanned from the 1990s to 2020.
The government halted the recovery of income apportionment debts last year as the federal court awaited the outcome of an appeal after an administrative appeal tribunal ruled that income apportionment could result in individuals being pursued for debts they did not owe or for amounts greater than what they actually owed.
A review by the Commonwealth Ombudsman in 2023 highlighted approximately 100,000 debts affected by income apportionment and recommended that they be waived.
The latest figures showed an increase, with the government identifying 147,773 potentially incorrect debts related to 100,360 customers over two investigation periods in the last two years.
As of October 30, Services Australia has dedicated 150 staff members to address income apportionment matters.
Hank Jongen, a spokesperson for Services Australia, stated, ‘Since December 2020, income apportionment no longer occurs. The [$4.9 billion owed] includes outstanding debts that may be impacted by income apportionment.’
‘A decision to waive or refund debts on the basis that income apportionment was used would need to be made by the government.’
Meanwhile, The Greens’ social services spokesperson, Penny Allman-Payne, expressed concern that ‘unlawful Centrelink debts have been raised’ against tens of thousands of Australians.
‘It is bad enough that government departments hound people on poverty payments for money they need to survive, but it is unconscionable that they would invest so much effort in pursuing debts that did not even exist,’ she said.
‘To protect income support recipients from a future conservative government, Labor should act on the recommendations of the Royal Commission and place a six-year limit on debt recovery.’
Likewise, Antipoverty Centre’s spokesperson Kristin O’Connell called for a halt on all debt recovery activities, arguing that welfare recipients should be shielded from aggressive debt collection practices ‘until a safer system is established.’
‘Extracting billions from people in poverty is the policy outcome they wanted, and they have been wildly successful, even though hundreds of thousands of these debts are not legitimate,’ she explained.
The Department of Social Services has responded through a spokesperson, saying, ‘Any reform to the approach of raising and recovering social security debts should be undertaken in a systematic way, with careful consideration of the unique circumstances of social security debtors.’
With the government reviewing these debts, you could be among the many Australians owed money by Services Australia.
Our YourLifeChoices readers, what are your thoughts on this issue? Let us know in the comments section.
Also read: Uncover how the ATO’s $52 billion collectable debt problem could affect you!
