Changes to welfare system compliance and ICT systems

Budget Review 2015–16 Index

Don Arthur

Welfare Payment Infrastructure Transformation—Tranche one

The Government will provide $60.5 million over four years from 2015–16 for Tranche One of the Department of Human Services’ (DHS’s) Welfare Payment Infrastructure Transformation (WPIT) program.[1]

In April 2014, the Treasurer, Joe Hockey, said that the Government had no choice but to replace Centrelink’s information and communication technology (ICT) system arguing that problems with the system were affecting the quality of service to customers.[2] According to the budget papers: ‘Changes to policy and processes over the past three decades have made the system extremely complex, inflexible, costly to maintain and difficult to ensure compliance’.[3]

According to DHS, this will be one of the world’s largest social welfare ICT system transformations. It is designed to:

  • provide customers with faster, more connected and automated digital services
  • give staff a modern ICT platform that makes it easier for them to do their jobs and
  • position the Department to meet future policy needs of government.[4]

The Government expects the WPIT program to be completed in 2022. The work will be completed through multiple work packages with each stage expected to deliver tangible benefits to customers.[5] The Treasurer has indicated that the total cost of the project will be in the billions.[6]

National Welfare Rights Network (NWRN) President, Kate Beaumont, has welcomed the WPIT program and said it should reduce the administrative burden on recipients and result in reductions in overpayments and debt recovery.[7]

DHS’s Income Security Integrated System manages income support payments and supports Centrelink’s customer service and compliance activities. The system relies on the Model 204 database management system, a system the Department of Social Security began using in 1983. At the time, Model 204 was the only product that could meet the Department’s performance and capacity requirements.[8]

Even as the number of Model 204 users around the world declined, Centrelink defended its continued reliance on the system.[9] In 2009, DHS’s Chief Information Officer, John Wadeson, said Centrelink would only replace Model 204 if the Government wanted to move to a new welfare system model.[10]

In February 2015, the final report of the Reference Group on Welfare Reform (the McClure report) proposed a new income support model and explained that the Government would not be able to implement the reforms it recommended without replacing the ICT system.[11]

Strengthening the integrity of welfare payments

The Budget provides $204.9 million over five years to DHS to improve its capacity to detect and deter welfare fraud and non-compliance.[12] Together with improvements in the capacity of other agencies such as the Office of the Director of Public Prosecutions, the Government expects this investment to produce net savings of $1.5 billion over four years.[13]

DHS expects to undertake 900,000 additional fraud investigations and compliance interventions over four years; an increase on recent years.[14] For example, in 2013–14, DHS:

  • undertook 869,082 compliance interventions (which included early interventions, such as reminders to report information) resulting in 77,272 payment reductions and 101,331 debts raised
  • undertook 27,632 reviews as a result of data matching with other agencies and
  • conducted 3,107 investigations into fraudulent activity and referred 1,158 cases to the Director of Public Prosecutions (1,071 cases related to social security or family assistance payments).[15]

In 2010, the Australian National Audit Office found that around 80 per cent of prosecuted welfare fraud in Australia related to a failure to declare or an under-declaration of employment income.[16]

According to DHS, ‘a more streamlined and cost-effective approach will be used to manage inconsistencies in income tax payment summaries and income declared to the Department of Human Services during the 2010-2011, 2011-2012 and 2012-2013 financial years.’[17]

NWRN President, Kate Beaumont, argues that many overpayments are the result of errors rather than fraud: ‘The social security system is so complex that many people find it difficult to understand the rules and make errors which can lead to significant levels of overpayment,’ she said.[18]

Beaumont also claims that language such as ‘welfare cops on the beat’ creates ‘the false impression that social security fraud is rampant’. As noted above, NWRN has welcomed the Government’s WPIT program as it is likely to reduce overpayments due to errors.[19]

According to media reports, the Minister for Human Services, Marise Payne, has announced that the Government plans to appoint a senior Australian Federal Police office to lead a welfare fraud taskforce. According to Ms Payne, ‘The taskforce will analyse risk factors to identify geographic hot spots and lead the associated investigations of fraud and non-compliance.’[20]

[1].          Australian Government, Budget paper no. 2: budget measures: 2015–16, p. 117.

[2].          J Hockey (Treasurer), Interview with Neil Mitchell, 3AW, transcript, 24 April 2104.

[3].          Australian Government, ‘Welfare integrity measures’, Budget 2015: Fairness in tax and benefits.

[4].          Department of Human Services (DHS), ‘Budget 2015–16: Welfare Payment Infrastructure Transformation –Tranche One’, DHS website.

[5].          M Payne (Minister for Human Services) and S Morrison (Minister for Social Services), ‘Coalition IT reboot to drive welfare reform’, media release, 10 April 2015.

[6].          J Hockey, op. cit.

[7].          National Welfare Rights Network, Media release, Centrelink computer upgrade welcomed, but questions over fraud remain, media release, 13 May 2015.

[8].          M Payne and S Morrison, op. cit.

[9].          B Woodhead, ‘Architecture the key to Centrelink ’ s data base’, The Australian Financial Review, 27 September 2005, p. 30.

[10].       R Gedda, ‘Centrelink ups IT reform, keeps Model 204 “legacy”’, TechWorld, 14 May 2009.

[11].       Reference Group on Welfare Reform, A new system for better employment and social outcomes: report of the Reference Group on Welfare Reform to the Minister for Social Services, 2015, p. 150.

[12].       Budget paper no. 2: budget measures 2015–16, op. cit., p. 116.

[13].       Australian Government, Fairness in tax and benefits, op. cit. According to Budget paper no. 2: budget measures: 2015–16, the savings over five years will be $1.7 billion.

[14].       DHS, ‘Budget 2015–16: strengthening the integrity of welfare payments’, DHS website.

[15].       DHS, Annual report 2013–14, DHS, Canberra, 2014, pp. 148–52.

[16].       Australian National Audit Office (ANAO), Centrelink fraud investigations, Audit report, 10, 2010–11, ANAO, Barton, ACT, 2010, p. 63.

[17].       DHS, ‘Budget 2015–16: strengthening the integrity of welfare payments’, DHS website.

[18].       National Welfare Rights Network, op. cit.

[19].       National Welfare Rights Network, op. cit.

[20].       S Maiden, ‘AFP welfare cop to target cheats’, Sunday Tasmanian, 24 May 2015, p. 2.


All online articles accessed May 2015. 

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