Key points

• The Social Security and Other Legislation Amendment (Technical Changes No. 2) Bill 2025 (the Bill) will:
  • retrospectively validate social security payment rate calculations which used the unlawful income apportionment method, and establish lawful methods for assessing employment income prior to 7 December 2020
  • establish an Income Apportionment Resolution Scheme for those with debts affected by income apportionment from 20 September 2003 to 6 December 2020
  • amend social security debt waiver provisions, including expanding the scope for special circumstances waivers, increasing and indexing the small debt waiver thresholds, and providing a one-off waiver for around 1.2 million small undetermined debts.
• The explanatory materials do not provide a clear justification for retrospectively validating the use of income apportionment. The use of the unlawful method dates back more than 30 years and could affect debts held by more than 3 million people totalling $4.4 billion. Recalculating or waiving all affected debts would be costly, time‑consuming and difficult.
• Key details for the operation of the proposed Resolution Scheme are to be included in delegated legislation.
• At the time of writing, the Bill had not been reported on by any parliamentary committees.
• The Bill has been referred to the Senate Community Affairs Legislation Committee for inquiry and report by 21 October 2025.

Introductory Info

Date of introduction: 4 September 2025
House introduced in: House of Representatives
Portfolio: Social Services
Commencement: Parts 2 and 3 of Schedule 2 commence on the later of the 14th day after Royal Assent and 20 March 2026. Part 1 of Schedule 2 and Schedules 1, 3 and 4 commence the day after Royal Assent.

Purpose of the Bill

The purpose of the Social Security and Other Legislation Amendment (Technical Changes No. 2) Bill 2025 (the Bill) is to amend the A New Tax System (Family Assistance) (Administration) Act 1999 (the FA Admin Act), the Paid Parental Leave Act 2010 (the PPL Act), the Social Security Act 1991 (the SS Act), and the Student Assistance Act 1973 (the SA Act) to:

• retrospectively validate social security payment rate calculations that apportioned employment income across payment instalment fortnights prior to 7 December 2020
• establish lawful methods for assessing employment income to determine payment rates in respect of entitlement periods prior to 7 December 2020
• expand the scope for debt waivers in special circumstances
• increase the threshold for waiving small debts to $250 and index the threshold to the Consumer Price Index
• provide for a one-off waiver for around 1.2 million small undetermined debts, where debt amounts have not been raised prior to commencement.

The Bill will also establish and appropriate funding for an Income Apportionment Resolution Scheme for those with debts affected by income apportionment from 20 September 2003 to 6 December 2020 inclusive.

Most of the measures in the Bill were announced on 27 August 2025. The measure to expand special circumstances debt waivers was announced on 31 August 2025.

Structure of the Bill and Bills Digest

The Bill comprises 4 Schedules:

• Schedule 1 provides for the retrospective validation of income apportionment and establishes methods for apportioning employment income
• Schedule 2 provides for the debt waiver measures
• Schedule 3 establishes the Income Apportionment Resolution Scheme
• Schedule 4 provides for a special appropriation for the Resolution Scheme.

This Bills Digest provides background information on income apportionment. The Key Issues and Provisions section focuses on the measures in Schedules 1 and 3, and provides summary information on the debt waiver measures in Schedule 2.

Background

Income apportionment

Income apportionment is an unlawful method used to calculate social security debts for payment recipients with employment income prior to December 2020. The Explanatory Memorandum to the Bill states that use of the unlawful method dates back more than 30 years and could affect debts raised against more than 3 million people totalling $4.4 billion (pp. 1–3).

Before changes were made in December 2020 to the way Services Australia assesses employment income, social security recipients had to report their gross earnings on days that fell within their social security payment fortnights – known as ‘instalment periods’.

Income apportionment was applied when Services Australia reviewed a person’s social security entitlement, and it was unclear exactly when income was earned, or their work period did not line up with their instalment period (p. 10). Employment income was ‘apportioned’ or averaged across the days in 2 or more payment instalment fortnights. The method was applied in situations where social security law did not permit averaging across instalment fortnights.

Figure 1 shows a hypothetical single JobSeeker Payment recipient with no dependent children and casual employment paid fortnightly, as an example of how income apportionment worked. The 28-day period depicted includes 2 JobSeeker Payment instalment fortnights, overlapping with 3 employment periods.

Figure 1  Example of how income apportionment was applied

Source: Parliamentary Library estimates based on examples in Commonwealth Ombudsman, Lessons in lawfulness (Canberra: Commonwealth Ombudsman, August 2023), pp. 9–11.

Applying the settings in place on 20 March 2020 (including relevant supplements) to the 2 instalment fortnights in Figure 1:

• reported earnings would have calculated a total JobSeeker Payment rate of $526.50
• apportioned earnings would have calculated a total JobSeeker Payment rate of $463.80.

If a review applied the apportioned earnings method, it would have calculated an overpayment of $62.70 across these 2 instalment periods.

Income apportionment across instalment periods was unlawful

In August 2023, the Commonwealth Ombudsman found that the process of income apportionment across 2 or more instalment periods was unlawful (p. 1). According to the Ombudsman, Services Australia and the Department of Social Services (DSS) ‘have accepted [income apportionment] is unlawful because of an incorrect application by decision-makers of section 1073B of the Social Security Act 1991 prior to 7 December 2020’ (p. 9).

Section 1073B was inserted by the Family and Community Services Legislation Amendment (Australians Working Together and other 2001 Budget Measures) Act 2003 to enable the Working Credit scheme.

In November 2024, officials from DSS advised the Senate Community Affairs Legislation Committee that the unlawful use of income apportionment predates the 2003 amendments and dates back to at least 1991 (p. 100). The historical use of the apportionment method was inconsistent with the rate calculators in the SS Act in force between 1 July 1991 and 6 December 2020 and would also have been inconsistent with earnings credit schemes in place from 1991 to 1997 (pp. 1–2).

DSS officials told the Senate Community Affairs Committee that the department had not determined when the practice started or its rationale (p. 100).

Changed income assessment method from December 2020

From 7 December 2020, the way that income was assessed under the social security income test was changed so that rather than assessing income ‘first earned, derived or received’ during an instalment period, the income test assesses employment income that is paid during the instalment period.

The new assessment model provides for employment income to be assessed over multiple instalment periods depending on the period of employment the income is paid for (pp. 18–22).

Identification of the issue

Government agencies became aware [p.104] of the income apportionment issue following questions raised in a Senate Estimates hearing in October 2020 and several Administrative Appeals Tribunal (AAT) decisions in early 2021 [p. 7]. DSS and Services Australian first sought external legal advice on the issue in March 2021 [p. 95].

The unlawfulness of the practice became public in August 2023 when the Commonwealth Ombudsman published a statement.

Government worked on a lawful method to recalculate debts

A separate issue arose while the government was developing a lawful method to recalculate affected debts. A 2024 AAT decision conflicted with DSS’s preferred interpretation of key income test provisions, and was appealed to the Federal Court. The Federal Court’s judgment on 15 July 2025 rejected the AAT’s interpretation and endorsed DSS’s.

The method DSS proposed for recalculating debts affected by apportionment involved gathering updated income information. Services Australia would prioritise payslips showing daily income, followed by evidence of when the individual was paid, and then what the individual previously reported. The proposed method would not have apportioned income across multiple instalment periods.

The amendments in the Bill will validate debts calculated using income apportionment and establish a new method for assessing employment income and calculating debts prior to December 2020. This new method differs from that initially proposed by DSS as it will allow for income apportionment. Priority will be given to daily income evidence, followed by employment period income evidence allowing for apportionment, and then evidence of the date paid.

Debt review and recovery pauses

Some reviews and explanations of debts affected by apportionment were paused in July 2021 (p. 2). Debt recovery on income apportionment-affected debts was paused in October 2023 [p. 311]. More affected debts were identified in April 2024 [pp. 311–312].

As at November 2024, debt recovery for 100,360 people was paused. There are pauses on around 16,000 reviews, 6,000 decision explanations and the processing of 87,000 undetermined debts (p. 5). The government intends to apply the Bill’s proposed new method to these paused cases (p. 5).

Prosecutions affected by income apportionment

The government has contacted 159 individuals whose criminal prosecutions in the period from May 2018 to May 2023 were affected by apportionment.

All income apportionment-affected matters before the courts were adjourned by August 2023 and the Commonwealth Director of Public Prosecutions (CDPP) advised Services Australia that all active criminal prosecutions and outstanding warrants affected by income apportionment had been withdrawn by 4 December 2023 [p. 108].

In November 2023, the CDPP advised Services Australia that there were 2 people convicted for matters affected by income apportionment who were, at the time, subject to custodial sentences (p. 2). In December 2023, DSS stated that one of these people had since been released from jail.

Sampling of historical cases

The Government has examined samples of historical records to determine the extent of income apportionment-affected debts. Most sampled records with employment income were affected (Services Australia FOI release LEX 76245 and LEX 78943). Only a minority of the sampled cases across both exercises could be recalculated. Most recalculations resulted in lower debts and a small number resulted in individuals being owed money.

Policy position of non-government parties/independents

At the time of writing, non-government parties and independents had not indicated their position on the Bill.

On 27 August 2025, Australian Greens Senator Penny Allman-Payne described the announcement of the income apportionment resolution scheme as a ‘win’ for people on income support. The Greens had previously called for paused income apportionment-affected debts to be waived.

Financial implications

The Explanatory Memorandum states the amendments will have a financial impact of $286.4 million over the forward estimates (p. 6). It is unclear if this amount includes the value of around 1.2 million undetermined debts to be waived by Part 3 of Schedule 2.

Key issues and provisions

Validating income apportionment

Schedule 1 amends the SS Act to provide a legal basis for income apportionment as it was used prior to 7 December 2020, and sets out a method for assessing employment income for entitlement periods before 7 December 2020.

Validating the historical use of income apportionment

Item 2 of Schedule 1 inserts new Part 3.11 to the SS Act which sets out how to treat income earned from employment between 1 July 1991 and 6 December 2020 for social security purposes.

New sections 1117, 1117A and 1117B validate the historical use of income apportionment in relation to social security payments, payments of the former Youth Training Allowance (paid under the SA Act between 1 January 1995 and 1 July 1998), and payments under the Farm Household Support Act 1992 (which was replaced by the Farm Household Support Act 2014), respectively. These sections provide that any action or decision taken prior to commencement cannot be invalid or ineffective merely because income apportionment was used to work out a person’s ordinary income.

Validating the use of income apportionment in relation to these payments also validates its flow-on or indirect effects on other payments such as supplements and family assistance payments.

Retrospectivity

The Parliament has powers to pass retrospective legislation (pp. 426–428), but it is usual for governments to justify the need and ensure the legislation does not unduly impinge on a person’s rights. The proposed amendments are not intended to change previous decisions, but to validate previous decisions that were made on an unlawful basis.

The Explanatory Memorandum does not set out any justification for the amendments providing for retrospective validation.

The Statement of Compatibility with Human Rights provides some justification for the proposed amendments’ engagement with the rights to social security and an adequate standard of living under international conventions. The Statement acknowledges validating past decisions to raise and recover debts on the basis of income apportionment imposes limits on a person’s entitlement to social security, ‘including reducing a person’s social security entitlement in some circumstances’ (p. 3). The Statement holds:

… these limitations are proportionate to the objective of ensuring that public money which has been incorrectly paid is able to be recovered, and compatible with Australia’s obligation to recognise the right to social security to the maximum of Australia’s available resources. These limitations seek to provide an appropriate balance between the significant cost and effort that would be involved in recalculating all debts affected by income apportionment, with the resources required to administer Australia’s social security system to provide essential support to individuals and families. Further, where affected debts have been recalculated to remove the use of income apportionment, the debt amount has not significantly changed in the vast majority of cases. (p. 3)

DSS’ Impact Analysis, tabled with the Explanatory Memorandum, considers the ‘fairness’ of retrospective validation noting: ‘There may be objection to debts being validated which are higher than they otherwise may have been due to income apportionment’ (p. 26). The Impact Statement asserts:

However, income apportionment was a reasonable means of assessing a person’s need for support at a given time, based on evidence supplied by the individual such as payslips. This is evidenced by the fact income apportionment went largely unnoticed and unchallenged for decades. (p. 26)

The Minister for Social Services’ noted in her second reading speech that validating the use of income apportionment will avoid the need to manually recalculate potentially millions of debts, a process that ‘would cause distress and protracted uncertainty for the people affected’. The Minister stated that recalculating debts ‘would also divert critical government resources totalling billions of dollars from frontline services that help people who need support now’.

Amendments will not validate Robodebt

New subsection 1117(5) (inserted into the SS Act by item 2 of Schedule 1) specifies that the retrospective validation of the use of income apportionment does not apply to the treatment of employment income for raising and recovering debts under the income compliance programs which comprised the Robodebt scheme (p. xxxiii).

The use of averaged Australian Taxation Office (ATO) data to raise a debt under the Robodebt scheme was declared unlawful by the Federal Court (p. 6). Robodebts—those raised wholly or partially using the averaging of ATO data—have been refunded or reduced to zero. Other debts raised as part of the same compliance programs, but calculated without using ATO data, remained subject to recovery.

Some individuals responded to the notices issued as part of the Robodebt programs or sought reviews and submitted information such as payslips and bank statements (pp. 4–6). These individuals had their payment rates recalculated using this information rather than averaged ATO data. Debts raised using this information were not ‘Robodebts’. Services Australia’s sampling indicates that the majority of historical debts involving employment income are affected by income apportionment (p. 3). It is therefore likely that many of the debts raised under Robodebt programs using payslips and bank statements relied upon income apportionment.

New subsection 1117(5) is intended to make clear that the averaging of ATO employment income information used as part of the Robodebt programs is not retrospectively validated. However, it is unclear how this provision will apply to debts raised as part of the Robodebt programs that were calculated using income apportionment rather than averaged ATO data. The proposed subsection does not specifically refer to debts raised using averaged ATO data.

It is unclear how many people had debts raised as part of the Robodebt program which were calculated without the use of averaged ATO data. There were around 648,000 Robodebt class action groups members, of whom around 202,000 were ineligible group members because their debts were based on payslips, bank statements or other information provided by them (pp. 4, 6). A 2020 Cabinet brief on the refunding or zeroing of Robodebts stated there were an estimated 225,792 ‘out-of-scope’ reviews where no ATO averaging was applied (p. 2).

Method for new calculations involving pre-December 2020 employment income

Further amendments will provide for income apportionment to be lawfully applied to new payment rate calculations which relate to employment income earned prior to the December 2020 changes. This will allow for new reviews and debt-raising activities for those receiving income support prior to December 2020.

New sections 1117D, 1117E and 1117F set out methods for allocating pre-December 2020 employment income to instalment periods for the purposes of calculating payment rates for social security benefit and pension recipients, Youth Training Allowance recipients and recipients of payments under the Farm Household Support Act 1992, respectively. For pension recipients, the method only applies to employment income earned, derived or received during periods when fortnightly income testing of pensions was part of the social security law (pp. 23–24).

The method provides for 3 approaches:

• The first approach (daily earnings) applies where there is information identifying which entitlement period the income was earned in (for example a payslip showing daily earnings). In this case, the total earned income for this instalment period should be divided by the number of the days in the instalment period. This method aligns with that set out in the SS Act prior to December 2020 (and how Centrelink advised recipients to report earnings for the days in the instalment fortnight in which they were earned).
• The second approach (income apportionment) applies where there is insufficient information to identify in which entitlement period income was earned, but the information shows the ‘payroll period’ or employment period in which it was earned. In this case, the income apportionment method is applied (set out in new sections 1114–1116). Income is averaged across the payroll period. Income assessed in a particular instalment period is determined by the payroll period days that fall within the instalment period.
• The third approach (income received) applies where there is insufficient information to apply the first or second approach. The employment income will be averaged across the days in the instalment period in which the income is received.

Stakeholder views

Anglicare Australia is opposed to the retrospective validation of income apportionment as it ‘denies people the chance to have their cases properly considered and undermines confidence in the rule of law’ (p. 2).

The Australian Council of Social Service (ACOSS) recommended outstanding or paused income apportionment debts be waived (pp. 9–10).

The Commonwealth Ombudsman is concerned the Bill and Explanatory Memorandum do not address cases where income apportionment has wrongfully resulted in or affected a criminal prosecution (p. 6).

Income Apportionment Resolution Scheme

Schedule 3 to the Bill establishes an Income Apportionment Resolution Scheme. The scheme will make reparation payments to eligible individuals who had a debt affected by income apportionment. Key details of the scheme are to be determined via a legislative instrument made by the Minister for Social Services.

Items 2 and 3 set out entitlement conditions for the scheme. Individuals are entitled if:

• they owe or owed a debt to the Commonwealth because of an overpayment under social security law, family assistance law, the Farm Household Support Act 1992, or any other Act determined by the Minister (the debt must have been raised prior to commencement of the Schedule) and
• the debt relates to one or more periods beginning on 20 September 2003 and ending on 6 December 2020 and
• the debt arose wholly or partly, or directly or indirectly, because the employment income of the person or a partner was worked out using income apportionment.

Individuals may also be entitled if their income apportionment affected debt is covered by circumstances set out in a legislative instrument.

Scheme details are missing

The Bill proposes to leave much of the operational detail of the scheme to a legislative instrument. While the instrument will be disallowable, this limits the Parliament’s ability to scrutinise the proposal. The Minister will be able to determine additional eligibility criteria, the application process, payment rates, payment methods, and review processes via the instrument.

It is unclear how Services Australia will determine if a debt arose from the use of income apportionment. The Explanatory Memorandum states that ‘applicants will only need to provide basic information in an application form, as Services Australia will be able to rely on existing customer information to assess applications’ (p. 47). The Impact Analysis notes that some people will not have sufficient information to demonstrate they had a historical social security debt and will therefore not have access to the scheme (p. 32).

The Explanatory Memorandum states that the scheme will be time-limited with applications open for 12‑months (p. 43).

Payment amounts

The payment amounts are to be set out in a legislative instrument. In her second reading speech, the Minister stated that payment rates would ‘reflect the size of the original debt’:

• for debts under $200, the full debt amount would be repaid
• for debts between $200 and $2,000, the payment would be $200
• for debts between $2,000 and $5,000, the payment would be $400
• for debts above $5,000, the payment would be $600.

The Explanatory Memorandum states that individuals with multiple debts will be eligible for resolution payments for each affected debt (p. 49). This means that an individual with many small debts may receive a higher amount from the resolution scheme than an individual with a single large debt. For example, under the payment rates set out by the Minister above, a person with 5 debts worth $300 each ($1,500 in total) could receive resolution payments worth $1,000 while an individual with a single $15,000 debt would receive a resolution payment of $600.

Accepting a resolution payment will discharge the Commonwealth’s liability

Subitems 2(5) and (6) of Schedule 3 provide that an effective acceptance of an offer, by a person or their agent, will release the Commonwealth and forever discharge all liability in relation to a claim arising from employment income being worked out using the income apportionment method. No person, representative or party will be able to bring a claim against the Commonwealth to the extent that it relates to the recipient.

Only debts from September 2003 to December 2020 are eligible

The Bill limits entitlement to the scheme to individuals with debts that relate to one or more periods beginning on 20 September 2003 and ending on 6 December 2020. According to the Impact Analysis:

This timeframe aligns with legislative changes in 2003 that made income apportionment clearly unlawful for most payment types and unrelated legislative changes in 2020 that resulted in the practice ceasing. (p. 16)

This refers to the addition of section 1073B to the SS Act in 2003 (see Background section).

The Explanatory Memorandum states that the method did not align with SS Act provisions from 1991:

Income apportionment is also recognised to be inconsistent with the provisions set out in rate calculators in Chapter 3 of the Social Security Act which applied to social security benefits from 1991 to take income into account “in the fortnight in which it is first earned, derived or received”. (p. 1)

No clear rationale is provided for limiting entitlement to the Resolution Scheme to post‑September 2003 debts, when the government has recognised that the unlawful use of the income apportionment method dates to at least 1991.

Some scheme elements are based on a small sampling exercise

The Impact Analysis states the proposed resolution payment amounts are based on one of the historical debt sampling exercises conducted by Services Australia (p. 32). The Impact Analysis also relies on this sampling exercise to assess the fairness of different options for responding to income apportionment. This sampling exercise was undertaken to determine the extent of income apportionment and only examined records from 2003 onwards (FOI Release LEX 78943, p. 2). The sampling exercise was not designed to inform a reparation scheme. It only examined income support payments, and excluded ABSTUDY, Family Tax Benefit and child care payment debts (FOI Release LEX 78943, p. 11).

The Impact Analysis draws on Services Australia analysis of 970 determined debts relating to employment income in the second sampling exercise (this sampling exercise examined 2,150 cases in total, including AAT decisions and arrears records). This sample represents a miniscule proportion of the estimated 5.5 million debts which may have been affected by income apportionment—noting the count of potentially affected debts excludes those belonging to deceased people (Impact Analysis, p. 4).

Table 1 sets out the findings from the second sampling activity as reported in a summary report released under FOI. The summary report has minor differences to the data presented on page 26 of the Impact Analysis.

Table 1  Summary of second income apportionment sampling exercise

	Determined debts	AAT decisions	Arrears
Sampled cases	1,000	150	1,000
Related to employment income	970	109	38
Relied upon income apportionment	614 (63%)	87 (80%)	13 (34%)
% of apportionment cases with evidence available	67%	48%	38%
Recalculations conducted	410	42	5
Downward variations	264 (64%)	28 (67%)	3 (60%)
Average variation	$194.11	$608.14	$21.72
Median variation	$99.14	$351.99	$11.38
Average debt period	121 days	480 days	106 days
Upward variations	119 (29%)	11 (26%)	2 (40%)
Average variation	$179.80	$234.35	$27.48
Median variation	$66.88	$125.52	$27.48
Average debt period	207 days	442 days	111 days
Arrears	15	0	0
Average arrears amount	$105.36	-	-
Maximum arrears	$372.72	-	-
Minimum arrears	$1.60	-	-
NIL change	12 (3%)	3 (7%)	0

Source: Services Australia, Income apportionment: Sampling activity #2 November 2023 – February 2024, FOI Release LEX 78943, p. 3.

Only around 5% of recalculations were based on information which showed the exact days income was earned (FOI Release LEX 78943, p. 3). Most recalculations assessed earnings in the instalment fortnight in which it was paid.

The sampling exercise does not provide any insight into debts that may have flowed from the use of income apportionment such as Family Tax Benefit debts.

Expected uptake

The Impact Analysis states:

Take-up of the [resolution] scheme is highly uncertain, but a best estimate is that around 1.35 million people inform themselves about the resolution scheme.

…

Of the 1.35 million people who inform themselves about the scheme, around 900,000 people with 1.6 million debts (noting some people have multiple debts) are expected to put in an application. (p. 34)

It is unclear how these estimates were calculated.

Stakeholder views

ACOSS submitted that the resolution scheme ‘falls short of what is required to compensate many people for the income they have lost because of income apportionment’ (p. 6). ACOSS recommended the scheme allow for higher payments, a longer period for claims and minimal proof requirements (p. 8).

Economic Justice Australia (EJA) recommended a note be added to the Schedule stating that a person’s right to merits review would not be affected by their acceptance of a resolution payment [pp. 5–6].

The Minister for Social Services previously announced that ACOSS and EJA would each receive $400,000 ‘to assist those affected navigate the Resolution Scheme’.

Anglicare Australia raised concerns that many people on low incomes would ‘feel they have no choice but to accept what is offered, even though it falls far short of the amount they wrongly paid’ (p. 2).

Debt waivers

Schedule 2 makes changes to debt waiver provisions, to:

• allow decision-makers to consider a debtor’s broad circumstances when considering a special circumstances debt waiver
• increase the threshold for waiving small debts to $250 and index the threshold to the Consumer Price Index (CPI)
• provide for a one-off debt waiver for currently undetermined debts valued under $250.

Write-offs and waivers

Services Australia has 2 non-recovery options for debts raised under the SS Act, FA Admin Act, PPL Act and SA Act: a write-off or a waiver.

Write-offs stop debt recovery actions but do not extinguish a debt. They can be reversed and recovery actions begun when circumstances change. Write-offs can occur when a debt is irrecoverable at law, the debtor has no capacity to pay, the debtor’s whereabouts are unknown, or it is not cost effective to recover the debt.

A waiver is a permanent bar to the future recovery of the debt. Waivers can be issued in limited circumstances including debts arising from administrative errors, smalls debts, in relation to settlements and in special circumstances.

Special circumstances debt waiver

Special circumstances for a debt waiver are not specifically defined in the SS Act, FA Admin Act, PPL Act or SA Act—only that the DSS Secretary must be satisfied there are special circumstances other than financial hardship alone which make it desirable to waive the debt, and it is more appropriate to waive than write off the debt or part of the debt (for example, section 1237AAD of the SS Act). The Secretary cannot waive a debt if it resulted wholly or partly from the debtor or another person knowingly:

• making a false statement or false representation
• failing or omitting to comply with a provision under the relevant legislation.

The limitations on special circumstances waivers have long been identified as an issue for victims/survivors of family and domestic violence. A Sydney Welfare Rights Centre submission to a 2010 Senate committee inquiry set out examples where a victim/survivor may have made a false statement or failed to comply with a legislative requirement under duress from an abusive partner. Similarly, an abuser may intentionally make a false statement or fail to comply with a requirement without the victim/survivor’s knowledge so that a debt is raised against the victim/survivor. The Senate Committee’s report recommended the debt waiver provisions be reviewed [p. 8]. A 2011 Australian Law Reform Commission discussion paper, Family Violence and Commonwealth Laws, made proposals to amend the special circumstances waiver provisions (p. 271) and the National Welfare Rights Network/Economic Justice Australia has published multiple reports recommending changes to these provisions (including the 2021 report, Debt, duress and dob-ins: Centrelink compliance processes and domestic violence, pp. 27–30). The Explanatory Memorandum states (p. 34) that the amendments respond to part of Recommendation 58 of the 2024 Parliamentary Joint Committee on Corporations and Financial Services’ inquiry into Financial Abuse.

The proposed amendments in items 1–4 of Schedule 2 will allow the Secretary to waive a debt where there are special circumstances (other than financial hardship) and:

• they are satisfied the debt did not arise from the debtor or another person making a false statement or a false representation, or failing or omitting to comply with a provision under the relevant legislation unless:
  • the debtor’s act or omission was justified in the circumstances
  • the debtor did not know about the other person’s act or omission or
  • the debtor knew about another person’s act or omission but it was justified in the circumstances for the debtor not to correct that act or omission.

The Explanatory Memorandum notes that the proposed amendments provide for waivers in circumstances other than domestic and family violence. For example, a person’s mental capacity, the impact of natural disaster or homelessness may be considered (p. 34).

EJA raised concerns that the phrase ‘justified in the circumstances’ could become an additional hurdle for victims/survivors of family and domestic violence. It recommended removing all conditions on special circumstances waivers [p. 3].

Small debt waiver

Currently, the small debt waiver provisions in the FA Admin Act, the PPL Act, and the SS Act all require the Secretary of the Department of Social Services to waive the right to recover a debt where:

• the debt is, or is likely to be, less than $200; and
• it is not cost effective for the Commonwealth to take action to recover the debt.

However, each Act contains an exception to this requirement if the debt is at least $50 and could be recovered by deductions. The Acts differ slightly in terms of the deduction rules. For example, the SS Act exception only applies where the amount could be recovered by deductions from a social security payment while the FA Admin Act exception applies where the debt could be recovered from a family assistance payment or a social security payment.

Items 6–11 of Schedule 2 propose to change the small debt waiver provisions in each of these Acts so that the Secretary must waive the right to recover a debt if the debt is likely to be less than $250 (and this threshold would be indexed to the CPI on 1 July of each year starting in 2026). The waiver requirement relating to cost-effectiveness will be removed. The exception for debts over $50 that can be recovered via deductions would no longer apply under any of the Acts. The FA Admin Act and PPL Act will refer to the threshold set in section 1237AAA of the SS Act rather than a specific amount. The indexation provisions are also set out in the SS Act.

The SA Act, which provides for the ABSTUDY scheme and the Assistance for Isolated Children Scheme, is different from these other Acts. It contains a small debt waiver threshold of $50 and there is no exception in relation to debts that could be recovered via deductions.

Item 12 of Schedule 2 repeals and substitutes new section 43D into the SA Act so that the Secretary must waive the right to recover a debt if the debt is likely to be less than the threshold set at section 1237AAA of the SS Act.

The new small debt waiver threshold will apply to debts raised after commencement, or to debts varied after commencement (item 13 of Schedule 2).

The Minister stated in her second reading speech that the higher, standardised threshold ‘will mean Services Australia does not waste time or resources chasing small debts that are uneconomical to recover and will spare Australians with these small debts from significant stress’. The Minister stated the government would ‘strengthen existing safeguards to ensure the waiver system cannot be manipulated’. It is unclear what this will involve.

ACOSS recommended the threshold be made even higher (over $440) in line with CPI movements since the threshold was first introduced (p. 4).

One-off waiver for small undetermined debts

Item 14 of Schedule 2 provides for one-off waiver of undetermined debts under the FA Admin Act, the PPL Act, the SS Act and SA Act with a value that would, or would likely be, worth less than $250 if raised as debts to the Commonwealth.

Services Australia currently has a backlog of 2.3 million undetermined debts, of which around 860,000 are below $250— the backlog is ‘largely a product of successive pauses on debt raising activity during COVID-19 and periods of natural disasters’ (p. 14). These are amounts that have been identified as potential overpayments but are yet to be investigated. Figure 2 shows the growth in the number and value of undetermined debts from 2019 to 2024.

Figure 2  Growth in Services Australia's undetermined debts backlog

Source: Department of Social Services, Incoming Minister’s Brief—Government Services, 17 January 2025, FOI Release LEX 52719, [p. 52].

The Minister for Social Services stated that the proposed waiver would wipe almost half of this backlog: ‘around 1.2 million undetermined debts are expected to be waived or will no longer need to be raised in 2025–26 alone’.