Tanya Plibersek (Sydney, Australian Labor Party, Minister for Social Services) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The Albanese government is committed to further strengthening Australia's social safety net.

The Social Security and Other Legislation Amendment (Technical Changes No. 2) Bill 2025 is a significant step towards a fairer, more efficient social security system that better supports Australians when they need it most.

The bill builds on the substantial investments the government has made since the 2022 election. These include:

We also established the Economic Inclusion Advisory Committee, ensuring expert advice on the social security system is delivered directly to our government.

And we've improved the experience of engaging with the social security system, treating those needing support with dignity, transparency and respect.

Under the leadership of the government services minister, Senator Gallagher, call wait times at Services Australia are down, and claims processing at Services Australia is up.

We have worked hard to rebuild the system following the legacy of robodebt. The government accepted, or accepted in principle, all 56 recommendations made by the Royal Commission into the Robodebt Scheme and 75 per cent of those—three-quarters of those—are either already implemented or well progressed. And we're committed to implementing the recommendations that remain.

This hard work has meaningfully improved the way we manage social security debts.

But we recognise, of course, that there is more to do, and this bill is another important step by the government to reform the way we manage social security debts.

It includes provisions that:

Debt r eform

The bill will standardise and increase the threshold for waiving small social security debts for the first time in over 30 years, up from the current thresholds of either $50 or $200 to a single, unified amount of $250.

Because we know that, often, the administrative cost of recouping small, accidental debts is higher than the value of the debt itself, making the process of debt recovery often uneconomical.

As a result of this change, we will wipe almost half of Australia's social security undetermined debt backlog. This backlog has grown exponentially in recent years, including due to pandemic-era measures. But, through the amendments in this bill, around 1.2 million undetermined debts are expected to be waived or will no longer need to be raised in 2025-26 alone.

It will mean that Services Australia does not waste time or resources chasing small debts that are uneconomical to recover, and it will spare Australians with these small debts from significant stress. Setting the new threshold at $250 recognises that people generally engage with the social security system in good faith, while continuing to ensure responsible fiscal management.

As well as increasing the debt waiver threshold to $250, we will now index it annually in July, in line with changes to the consumer price index.

This change means that people will no longer be disadvantaged by the decline in the waiver value over time.

At the same time, we will strengthen existing safeguards to ensure the waiver system cannot be manipulated. This includes situations where someone is found to be cheating the system to regularly have debts waived in this way.

The bill also includes amendments to help deliver on our election commitment to embed safety in our Commonwealth systems. Financial abuse and coercive control are serious forms of family and domestic violence, and these changes will better protect victims-survivors from coercive social security debt by expanding access to the special circumstances waiver.

This will mean that the waiver can be applied more widely and more fairly in situations where a person has genuine limitations on their ability to comply with their reporting requirements.

This includes cases of family and domestic violence, where a debt arises due to coercion or financial abuse.

To give just one example—and, sadly, I have heard very many examples—a woman, who we will call Ashley, was receiving the disability support pension and family tax benefit while she was experiencing severe mental illness. During her illness, her former partner who was acting as her nominee incorrectly declared their family income, and a debt of $7,000 was raised against Ashley. Under the system as it exists at the moment, Ashley would be denied the special circumstances waiver because her former partner knowingly made a false declaration.

But, under the change that we are proposing to this legislation, Services Australia staff would be given the discretion to take into account Ashley's illness as well as the controlling and abusive behaviour of her former partner, meaning she would be eligible for a waiver.

This is a very significant and important change. The social security system should be there to assist vulnerable people when they need it most, not to punish them further.

This change responds to calls from stakeholders and addresses a recommendation of the 2024 parliamentary inquiry into financial abuse. It also delivers on our commitment to support victims-survivors under the National Plan to End Violence against Women and Children 2022-2032 and responds to recommendation 18.1 of the Robodebt Royal Commission, which called for the government to 'take each person's circumstances into account before commencing recovery action' and to 'respond appropriately and proportionately to cases of hardship'.

Income apportionment

The bill also includes provisions to provide legal clarity to the historic practice of income apportionment.

Income apportionment was used to assess income earned between 1991 and 2020. This is a practice that has never been used by the Albanese government.

Income apportionment was a practice that was used for many decades to determine social security debts for some income support recipients who also received some employment income.

The method involved using evidence from the individual, such as payslips, to determine their entitlement to a social security payment as part of calculating a debt. In circumstances where it wasn't clear what a person's daily earnings were from their payslip, Centrelink would sometimes spread a person's reported income across the payroll period so that it better matched their systems. On occasion, when this income was spread, it overlapped to social security payment periods.

Around 5.5 million social security debts, previously or currently held by around three million people and worth a total of around $4.4 billion, may potentially be affected by the practice of income apportionment—'potentially affected' because we can't know whether a debt is actually affected without an individual, manual review of every debt.

The vast majority of these debts were paid off many years ago.

We know that income apportionment was adopted in good faith, with the Commonwealth Ombudsman stating that it reflected a genuinely held incorrect understanding of the law. This was not robodebt.

It's very important to remember that, based on sampling by Services Australia, in almost every case individuals still owed a debt, but the amount owing was slightly miscalculated at the margins.

But we do need to deal with the legacy of income apportionment in the most responsible and cost-effective way we can.

This bill will resolve the historic use of income apportionment with a twofold approach, including:

By validating the use of income apportionment, we will avoid the need to recalculate potentially millions of debts, many of which date back many decades.

Reopening debts and manually recalculating them would cause distress and protracted uncertainty for the people affected. In many cases, the debts are decades old, they've been repaid, and people have moved on with their lives.

It would also divert critical government resources totalling billions of dollars away from frontline services that are helping people who need support now.

That's why we have to validate the past practice of income apportionment and embed it for future decisions that relate to debts from the pre-2020 period.

Resolution scheme

Alongside these amendments, the bill will establish the Income Apportionment Resolution Scheme.

People with historic debts potentially affected by income apportionment from 20 September 2003 to 6 December 2020 will be eligible to apply for a resolution payment of up to $600, in recognition of the fact that we now know this method of calculating entitlements was not valid.

Once established, the scheme will provide those affected a clear pathway to seek fair and reasonable compensation from the government.

The bill provides that the minister may determine provisions related to the scheme in a legislative instrument following commencement of schedule 3. Operationalising the requirements of the scheme in a legislative instrument provides flexibility for dealing with historic debts and the different circumstances of individuals impacted by income apportionment. The instrument will detail eligibility criteria, how to apply for the resolution payment, how to accept an offer of a resolution payment, how much the resolution payment will be and other important administrative details to ensure the effective delivery of the scheme.

The amount received will reflect the original size of the debt.

The instrument will prescribe the amount of resolution payments. For debts under $200, the full debt will be repaid. For debts between $200 and $2,000, the payment would be $200. For debts between $2,000 and $5,000, the payment will be $400. And for debts above $5,000, the payment would be $600.

No-one is obliged to participate in this scheme or prevented from exercising any legal right to pursue a claim relating to their debt.

The Albanese Labor government believes in a strong social security system.

We won't demonise people for needing support, but we'll also 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.

This bill almost halves Australia's social security undetermined debt backlog. It extends supports for victims of coercion and financial abuse. It brings resolution to the long-running issue of income apportionment, with a pathway for compensation for those potentially affected.

And it protects the integrity of the social security system.

I commend the bill to the House.

Debate adjourned.