Conclusions and recommendations
The question that we ask the committee to consider in its
deliberations is: where is good government, good decision-making and leadership
when a system is failing? Where is the leadership that is bold enough to say:
'We got this wrong. We will pull it back. We will rework it. We will review it.
We will talk to the stakeholders who know best to try and get it right.' Where
is good government in understanding and taking seriously its duty of care to
its citizens to protect the most vulnerable and not cause vulnerability or harm
its own citizens?
It was made clear to the committee during the course of this inquiry,
that the evidence consistently demonstrated a key flaw in the Online Compliance
Intervention (OCI) program, a flaw which filtered throughout the OCI debt
recovery process: a fundamental lack of procedural fairness.
This lack of procedural fairness is evident in every stage of the OCI
program. It can be seen in the drafting of the policy where there was a lack of
consultation with key stakeholders who could give feedback on the potential
impact to vulnerable Australians. It is evident in the testing phase for the
program website which did not include an adequate cross section of users,
including those with vulnerabilities or communication barriers. It is in the
failure to carry out a risk assessment before the process started. In sending
letters without checking addresses and taking a lack of response as a refusal
to engage. In the averaging of income data, which invents a fortnightly
income-earned sum for the purposes of then charging people with a debt knowing
full well it is going to be wrong. In the millions of calls that went
unanswered, as people tried to contact the Department of Human Services (department)
to discuss their debt matter, at the request of the department itself. In the
lack of information released to individuals which they required in order to
challenge a debt. In the imposition of an automatic 10 per cent debt recovery
fee. It can be seen in the institution of a debt recovery program reaching back
six years, despite online departmental advice that welfare recipients need only
retain records for six months. A lack of procedural fairness is evident in all
these stages. The system was so flawed that it was set up to fail.
This lack of procedural fairness disempowered people, causing emotional
trauma, stress and shame. This was intensified when the Government subsequently
publicly released personal information about people who spoke out about the
What also become clear through the inquiry is that the department has a
fundamental conflict of interest – the harder it is for people to navigate this
system and prove their correct income data, the more money the department
Government departments must at all times act with 'best practice', and
in legal issues must also act as a 'model litigant.' This principle is not just
established to set an appropriate benchmark for the private sector to live up
to. This principle of 'best practice' is also in recognition of the fundamental
power imbalance between a government department and a single private citizen.
Government departments must take all possible steps to ensure that the power
imbalance that exists between an individual Australian and a large entity, such
as the Department of Human Services, does not inadvertently favour the powerful
to the extent that it becomes an infringement of each person's right to
Witnesses and submitters unambiguously stated their support for a social
security system that is fair and sustainable, which necessarily includes
recovering income support payments from those who knowingly or inadvertently
received overpayments. But the manner in which overpayments are recovered must
also be fair and sustainable.
The department itself has agreed that there are improvements to be made
to the OCI system:
It is fair to say that this process has highlighted a number
of issues with debt collection that will benefit from review, because we have
done more of them and we have had some exposure to have a look at some of these
things. I think the officers at the table would agree that there is some
opportunity for us to improve how we go about these things.
The recommendations made in this chapter seek to address the procedural
fairness problems within the OCI system. They are presented in the same order
as the report itself was structured, to cover the key stages of the OCI
process. The first two headline recommendations are made to address the issue
of individuals being charged, or who may soon be charged, debts which have been
calculated using the initial and current flawed model.
The committee recommends the Online Compliance Intervention (OCI)
program should be put on hold until all procedural fairness flaws are
addressed, and the other recommendations of this report are implemented. If
these issues are addressed, the OCI should only be continued in its new form
after the new One Touch Payroll system is implemented in 2018.
The committee strongly recommends that the rollout of a redesigned
system must include a robust risk assessment process, which includes
consultation with relevant expert stakeholders.
The committee recommends that all people who have had a debt amount
determined through the use of income averaging should have their debt amounts
re-assessed immediately by a team of departmental officers with specialist
knowledge of the Online Compliance Intervention program, using accurate income
data sourced from employers. This re-assessment must include the full range of
unpaid, partially paid and fully paid debts incurred by current income payment
recipients and those debts outsourced to debt collection agencies.
Government departments must, in all aspects of work, maintain 'best
practice' in procedures, which includes publicly verifiable adherence to all
relevant legislation, guidelines and protocols.
It is a basic legal principle that in order to claim a debt, a debt must
be proven to be owed. The onus of proving a debt must remain with the
department. This would include verifying income data in order to calculate a
debt. Where appropriate, verification can be done with the assistance of income
support payment recipients, but the final responsibility must lie with the
department. This would also preclude the practise of averaging income data to
manufacture a fortnightly income for the purposes of retrospectively
calculating a debt.
The committee recommends all data-matching guidelines and protocols be
adhered to, including the Data-matching Program (Assistance and Tax) Act 1990,
regardless of whether the department is using tax file numbers. This will
require the department to halt the Online Compliance Intervention process while
steps are taken to ensure compliance with all mandatory and voluntary
provisions. Adherence to these provisions should be verifiable by the public in
order to maintain trust in the social security system.
ensure that it does not publicly release sensitive information it holds about
individuals, for any reason.
The committee recommends the department resume full responsibility for
calculating verifiable debts (including manual checking) relating to income
support overpayments, which are based on actual fortnightly earnings and not an
Debt recovery fee
In response to the Commonwealth Ombudsman's recommendations, the
Department has ceased the automatic charging of a 10 per cent debt recovery
fee, and now provides information on how individuals can apply not to have this
fee imposed where they have a reasonable excuse. The committee believes that
barriers to communication which impact a person's ability to complete income
reporting should be included in the reasonable excuse framework for waiving the
debt recovery fee.
The committee recommends the department review all debt cases where the
10 per cent recovery fee was automatically imposed, and in line with procedural
fairness, allow each person a fully-informed opportunity to apply to have the
debt recovery fee waived.
The committee recommends personal or technical barriers to communication
which impacted an individual's ability to undertake income reporting, should be
included in the reasonable excuse framework for waiving the debt recovery fee.
The committee has found that a key impediment to procedural fairness in
the OCI process has been a deficiency of appropriate and effective
communication. This has presented both in the type of information available as
well as the communication channels themselves. Barriers to communication
throughout the OCI process have included:
a lack of appropriately detailed information at each stage, from
explaining the OCI process, through to providing the relevant debt calculation
data required to challenge debts;
a deficiency in the communication strategy to address the needs
of vulnerable people and/or people with a communication barrier, including
people with English as a second language and people with cognitive
a shortage of sufficient communications portals. This included
people not being able to reach the department via phone or online, not being
able to access OCI specialist teams when finally speaking with the department,
and no appropriate face-to-face assistance for people unable to use phone or
internet communication channels; and
a deficiency in the design of the OCI online portal, which is
difficult to navigate even for computer literate users.
The committee recommends Accessible Information, in particular Easy
English versions, be made available in all debt recovery programs, including
online portals. The committee strongly recommends this should be a
whole-of-department change, to ensure that producing Accessible Information
versions of all Centrelink communications material become standard operating
The committee recommends the department ensure that in the re-design of
the Online Compliance Intervention system, if it continues, the new system has
the necessary protocols to protect vulnerable cohorts, including people
experiencing mental health issues. The committee strongly recommends this
should be a whole-of-department change, including reconvening the Consumer
Consultative Group, the Service Delivery Advisory Group and the Mental Health
Advisory Working Party.
The committee recommends that the department provide all Online
Compliance Intervention participants with the debt calculation data required to
be assured any debts are correct.
The committee recommends the Department of Human Services be adequately
resourced to implement all recommendations of this report, and to improve the
level of service provided to Centrelink recipients. In particular, the
committee recommends increased investment in communication channels and staff,
to ensure calls are answered in a more timely manner. The committee strongly
recommends this as a whole-of-department change.
When faced with a purported debt, many individuals were unaware of the
possibility of an error in the calculations, their right to have a review of
that purported debt or how to undertake a review. Many individuals were so
daunted by what they saw as an insurmountable task, to challenge a large
government department, they simply gave up and paid what they felt was a debt
they did not owe.
For many people, the department deadlines for people to provide evidence
to challenge the purported income reporting discrepancy was simply not enough
time to gather income documentation – resulting in a default debt amount being
generated by the department and imposed.
Evidence presented by legal services also indicated an increasing burden
on their services, which they could not meet due to funding cuts. Evidence also
indicated an impending surge in workload for the Administrative Appeals
Tribunal which has not been adequately planned for.
Of equal concern is the evidence presented which shows that where an
individual has an OCI-related purported debt, even if that debt amount is being
challenged, that person is not eligible for an advance payment, which is
designed to assist people in financial crisis.
The committee recommends that clear and comprehensive advice on the
internal and external reassessment, review rights and processes are made
available to all Online Compliance Intervention-impacted individuals.
The committee recommends that clear and comprehensive advice on the
ability to seek an extension of time to provide income documentation is made
available to all Online Compliance Intervention-impacted individuals.
The committee recommends that community legal service funding be
reviewed in the next budget, to ensure community legal services are able to
meet the community need for legal advice relating to Online Compliance
The committee recommends the operating budgets for the Administrative
Appeals Tribunal be reviewed to plan for an increased workload on Online
Compliance Intervention-related matters, to ensure these cases are progressed
within appropriate timeframes.
The committee strongly recommends that an outstanding debt should not
exclude a person from advance payments needed for essential goods and services.
A disturbing body of evidence was presented to the inquiry regarding the
recovery of purported debts. In some cases, ongoing debt repayments were
enforced or coerced, even when the individual claimed the debt amount was
wrong. Evidence showed that many income payment recipients often first found
out about a debt when their payments were garnished. In many cases, these
enforced debt payments meant the person could no longer pay for basic
necessities, such as travel or food for their children. In other cases,
individuals felt coerced to pay off debts using their credit card, resulting in
payments of both debt recovery fees as well as credit card interest rates.
The evidence also showed that the department is not bound by all debt
collection legislation and guidelines, and in its procedures does not engage in
'best practice' nor is it a 'model litigant.' This extends to the debt recovery
practices it engages external contractors to undertake on its behalf, which in
many cases presented to the committee, appear to be coercive practices used
against some of the most vulnerable Australians.
The committee recommends the department voluntarily undertake to be
bound by all debt collection and consumer law legislation and guidelines, and
ensure regular external scrutiny to ensure compliance. This should explicitly
include the actions of external contractors working on behalf of the
The committee recommends the department ensures an independent review of
internal and external debt collection practices is undertaken, to ensure all
procedures are adhering to industry standards, such as the suspension of debt
collection where debt liability is disputed, and the provision of accurate and
relevant information to debtors.
The committee recommends the department consider adoption of the
principles of the Victorian Judgement Debt Recovery Act which precludes debt
collection to be made from Centrelink payments that are recognised minimum
payments required for food, shelter and other life essentials.
The committee further recommends the department develop guidelines on
appropriate levels of debt repayment to income ratios, to ensure that debt
repayment amounts do not impact any individual's ability to purchase life
Senator Rachel Siewert
Navigation: Previous Page | Contents | Next Page