Claire Clutterham (Sturt, Australian Labor Party) Share this | Hansard source

I rise today to speak on the Social Security and Other Legislation Amendment (Technical Changes No. 2) Bill 2025, which is part of the Albanese Labor government's drive to further strengthen Australia's social safety net.

Social safety nets are designed to provide a basic level of financial and social support to individuals and families in need, helping to alleviate poverty and prevent economic hardship. Social safety nets play a critical part in reducing income inequality by providing a safety net for low-income individuals and families, helping to ensure a minimum standard of living. An effective social safety net can help break the poverty trap by providing resources and support to individuals and families, enabling them to access opportunities and improve their economic situation.

Even in this great and successful country, not everyone has the same opportunity to contribute, to access paid work, to work as much as they want to. Illness, disability, accidents or acting as a carer for others—things that no-one wishes for—sometimes intervene to limit the contribution an individual can make. Sometimes it is simply a case of lightning strikes, meaning access to a fair and effective social safety net is critically important. It is also important to strike a balance between the optimal level of government intervention to provide support and the promotion of agency and individual self-reliance. In this respect, this bill is a significant step towards a fairer, more efficient social security system that better supports Australians when they need it most.

This bill also represents the government's response to the full Federal Court case of Matthew Chaplin v the Department of Social Services, which addressed the method for recalculating robodebt related welfare debts. The case was an appeal on a question of law under section 44(1) of the Administrative Appeals Tribunal Act 1975, where Mr Chaplin received youth allowance payments under part 2.11 of the Social Security Act 1991, and the question of how and when a person's ordinary income would be considered in the fortnight in which it is first earned, derived or received. In examining this question, the full Federal Court also keenly observed:

As a general proposition, the purpose of benefits under the Act is to "maintain a basic level of income for those who [are] unable to receive sufficient income to provide for themselves".

This is a very articulate expression of the purpose of the social safety net.

Mr Chaplin received youth allowance from 10 July 2014 to 24 June 2015, at a time where a person's entitlement to youth allowance generally ascertained and paid on a fortnightly basis was determined by various matters, including by applying an income reduction to reduce the rate of youth allowance by reference to the person's income. The relevant method statement for calculating the income reduction required the secretary of the department to determine the amount of the person's ordinary income on a fortnightly basis and required ordinary income to be taken into account in the fortnight in which it is first earned, derived or received. It was the operation of these provisions, and the phrase 'first earned, derived or received' in particular, which was the issue that went to the heart of the case.

Over the period he received youth allowance, Mr Chaplin consistently reported his net, not gross, income and thereby received more in youth allowance payments than he was entitled to. In doing so, there was no suggestion of wrongdoing by Mr Chaplin. When it was brought to the attention of the department in 2019, section 1223 of the Social Security Act was enlivened. It provides that:

… if a person receives the benefit of a "social security payment" and was not entitled to obtain that benefit, the amount of the payment (or the relevant part thereof) is a debt due to the Commonwealth, taken to arise when the person obtains the benefit of the payment.

Ascertaining the existence of a debt therefore involves ascertaining a person's entitlement. The next step involves calculating whether the person has received more than that to which they were entitled.

The department therefore set about determining how much Mr Chaplin had been overpaid by reassessing his entitlement by reference to his actual income rather than the lower amounts he had reported. Having determined the amount it considered to have been overpaid, the department issued a demand for repayment. To do this, the department needed to reach a view about the rate of Mr Chaplin's entitlement to youth allowance at the relevant time. The material before the department established that and also established Mr Chaplin earned or derived that income before it was received.

However, for certain amounts of income the evidence was insufficient to reach a conclusion about whether the income was earned and received in the same youth allowance fortnight or was earned in the youth allowance fortnight immediately before that income was received. This then led to income apportionment, which was a practice that was previously used to evenly divide or apportion a person's employment income across two or more Centrelink fortnightly reporting periods to work out the appropriate level of income support a person was entitled to each fortnight. The practice was used if a person's employer pay period didn't line up with the person's fortnightly Centrelink reporting period or if the person's payslip or income report showed total earnings but did not show which days were worked or how much was earned each fortnight and there was no other information available. A person's payment rate was still based on the total income that the person reported across those fortnights, but eligibility or payment rates may have been impacted if the actual days worked in those fortnights were not evenly spread out.

Income apportionment resulted in unfairness, and this bill addresses that. The Albanese Labor government will wipe almost half of Australia's social security debt backlog and roll out resolution payments of up to $600 for those impacted by this historic debt calculation method of income apportionment. Further, a new $300 million package will see investment in a range of measures to ensure our social security system is producing fairer outcomes for Australians. Australians expect and Australians deserve our social security system to be fair and transparent. In situations where the department says there is a debt, it must provide proper and fair evidence and use clear and robust processes that minimise financial distress and confusion for those affected.

Importantly, the threshold for waiving small accidental debts will be increased for the first time in over 30 years, to $250, with around 1.2 million debts expected to be waived or no longer needing to be raised in the 2025-26 financial year as a result. This makes sense. It is often the case that the administrative cost of recouping small accidental debt is higher than the value of the debt itself, making the process of debt recovery inefficient from both a time and a cost perspective. This decision will mean Services Australia can spend more time on significant matters and upholding the integrity of our social security system. To ensure that this waiver is applied fairly, existing safeguards will be strengthened to ensure it cannot be manipulated. For example, it will not be available in circumstances of significant noncompliance or fraud. In those cases, every cent of debt will be pursued.

People with historical debts effected by income apportionment from 2003 to 2020 will also be eligible to apply for a resolution payment in recognition of the fact that we now know that this method of calculating entitlements was invalid. To assist those effected to navigate this resolution scheme, Economic Justice Australia and the Australian Council of Social Service will each be provided with $400,000 of funding. The Albanese Labor government never practiced income apportionment, but we are dealing with its legacy in the most responsible and cost-effective way that we can, and this bill is an important step in the process of systemic reform. In this respect, the bill necessarily also includes a measure to provide legal clarity to this historical practice, which ran through the early 1990s all the way until 2020, to avoid the need to recalculate potentially millions of debts at a significant cost to Australia's social security system. Recalculation of debts would place significant burden on individuals and employers and would involve a significant diversion of resources, effecting Services Australia's ability to help Australians who need assistance now.

I recently met with the team at the Norwood branch of Services Australia, located in my electorate of Sturt. Led by Nico, that team includes several dedicated staff members who told me they had been working for Services Australia and its previous equivalence for over 30 years. They know the system, they know the customers and they know how to assist their customers to navigate the system. They know how to help vulnerable Australians in need and they are motivated to do it. Their time is best spent helping Australians who need that help now, and that is where this government wants their time to be dedicated. That is where Australians expect their time to be dedicated, including Australians like Carole and Kay, who are part of a Sturt based group called Grandmas for Action and who came to see me recently to talk about JobSeeker, which is another important part of the social safety net. I raise Carole and Kay because they are an example of Australians who, like the team at Services Australia at Norwood, care deeply about the welfare of their fellow Australians and who want a better, fairer and more equitable social safety net that provides effective support to people who need it. Carole and Kay understand that, when lightning strikes, a meaningful and accessible social safety net is critical.

In recognition of the fact that lightning sometimes strikes in unpredictable and cruel ways, the changes proposed by this bill also give Services Australia extended powers to waive social security debts that have been incurred because of coercion or financial abuse. What this means is, when considering a debt waiver, a Services Australia official will be able to consider all the circumstances that led to someone knowingly making a false statement to Services Australia or not complying with the law. This includes coercion or financial abuse, which are serious forms of family and domestic violence. This change directly responds to a recommendation of the 2024 joint parliamentary inquiry into financial abuse and further demonstrates the government's resolve on delivering on its commitment to support victims-survivors under the National Plan to End Violence against Women and Children. It is also an important part of the government's commitment to embed safety in Commonwealth systems.

The Albanese Labor government believes in a strong social security system. This government will not disparage people for needing support, but we will make sure that we are achieving value for every dollar of taxpayer money spent. Australia's social safety net should be there for people when they need it, and this bill protects the integrity of Australia's social security system. I commend the bill to the House.

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