Wendy Askew (Tasmania, Liberal Party) Share this | Hansard source

I rise today to speak on the matter of importance raised by Senator Polley regarding Centrelink's income compliance program. It is important for Senator Polley and those opposite to keep in mind that in a circumstance where Australians have received money from the taxpayer to which they were not entitled the government would seek to recover that money. The Australian public expect the government to do that, and that is what has been done and continues to be done.

Our social security system requires income support recipients to meet eligibility requirements around income and assets to ensure support is being provided to those who need it most. The welfare system is an important safety net but, equally, it requires compliance measures to be undertaken so people receive the correct payment and meet their obligations. Such compliance includes checking discrepancies in reported income to identify potential overpayment and, as appropriate, recover debt. This is a welfare system that is sustainable and that has integrity.

However, before I speak further about debts raised by the income compliance program, I wish to address a serious issue that has been repeatedly brought up in parliament in relation to this program and has been again this afternoon. I'm speaking about mental health and specifically the claims around suicides resulting from this income compliance program. Mental health is one of the biggest challenges of our society. The Australian government take mental health seriously, so seriously that the Prime Minister appointed Christine Morgan as the National Suicide Prevention Adviser last year. We are taking action on mental health so families, communities and people experiencing trauma can get the support they need.

The suicide prevention task force briefed the Senate Community Affairs References Committee inquiry into the Centrelink compliance program. Task force representatives told the committee, of which I'm the deputy chair, that research indicates there is no single reason why someone dies by suicide. Drawing mental health into this debate does not help matters. In fact, it hinders them. It is time for my parliamentary colleagues on all sides to treat this issue with sensitivity so as to not place undue stress and trauma on those impacted by it. In dealing with mental health at the agency level, Services Australia has an extensive social worker network to support those in such critical situations. This social worker network can be reached by calling 132850. Too much is at stake to make people's mental health a political issue.

Activities and policies relating to the recovery of money from social security recipients who have been over paid either inadvertently or through deliberate fraud are known as the income compliance program. The specific income compliance program we're discussing today was established in 2015 through the better management of the social welfare system measure announced in the 2015-16 budget. Resolving discrepancies and errors in social security payments, including errors of over payment, is a routine path of the administration of Australia's social security system. This has been the case for many decades with a range of integrity measures adopted during that time, including the income compliance program. As a result of feedback, the program has been through various iterations. The income compliance program was built on existing previous income compliance programs, and was designed to identify social security overpayments through discrepancies between the annual income reported by an individual to Centrelink up to seven years before the date of review, and income assessed by the Australian Taxation Office for that same period. Discrepancies were identified by averaging a lump sum income assessed by the ATO over the period the income was earned in and compared to earnings reported to and income support received from Centrelink across the same period.

Data matching and income averaging processes, like the practice I have just described, have been used as a tool to help identify potential social security overpayments since at least the 1990s, with taxation information used to inform the practice since 2004. The methodology of averaging income was provided for in the Social Security Act 1991 and its predecessor, the Social Security Act 1947. The first data matching program was established under the Data-matching Program (Assistance and Tax) Act 1990 and involved an exchange of data about an individual's taxable income between the ATO and relevant government departments. Services Australia undertook a review of income compliance debts raised in 2009 and 2011 using a random sample of 500 cases in each year. The analysis found that 16.8 per cent of the sample debts in 2009 were raised through the use of average ATO income data and 24.4 per cent in 2011, noting that averaging of ATO income information was used when other information was not available or when people did not engage with Centrelink.

Minister Stuart Robert announced changes to the income compliance program in November 2019 when announcing that averaged ATO income by itself was an insufficient basis on which to raise a debt. Further proof points were needed. Since Minister Robert's announcement about changes to the program, Services Australia has engaged with more than 35 organisations and advocacy groups. It has also undertaken 17 user research activities, piloted the refund process, engaged with the Ombudsman's office on draft refund letters and met with representatives of the Civil Society Advisory Group, with further updates on the agency's progress in refunding customers.

Services Australia has made a number of changes to its systems to improve the user experience, including introducing registered mail to guarantee delivery of letters before reviews start, and dedicated phone support and assistance from compliance officers to help recipients understand what will happen and what is required during a review. In his April 2019 report the Commonwealth Ombudsman commented positively on this enhanced customer experience, including improved letters and income compliance correspondence. Now simplified income reporting combined with the Single Touch Payroll System means information can be accessed more easily, which will reduce errors.

The court case to which Senator Polley refers in this matter, the income compliance program class action, or Prygodicz v Commonwealth, was the result of using income averaging to determine debts. We now know and acknowledge that this was not a valid method to determine debts. In June this year, the Prime Minister apologised to the people who had been impacted by that method of determining debts to be collected. The Department of Social Services and Services Australia also apologised for the harm and hurt caused by the program and committed to applying lessons learnt from it in the future.

Importantly, as soon as this government became aware that this method of debt calculation was invalid, the practice was immediately stopped. Those Australians who received debt notices resulting from income averaging were paid back that money. As at 30 November, $707.7 million had been refunded to 406,889 people. This accounts for around 95 per cent of people affected and 95 per cent of refunds by value. Around 23,100 people are still to be refunded and/or have their debts zeroed if they hadn't made any payments. Under the settlement, the Commonwealth will make a payment of $112 million in the nature of interest to be distributed to eligible group members.

It should be noted, however, that using this method to determine debt is not something this current government has developed. It was actually something that the Labor Party came up with and supported. Indeed, then Minister for Human Services Tanya Plibersek said on 29 June 2011:

… if people fail to come to an arrangement to settle their debts, the Government has a responsibility to taxpayers to recover that money.

This statement was backed up by Bill Shorten, who said on the same day:

The automation of this process will free up resources and result in more people being referred to the tax garnishee process, retrieving more outstanding debt on behalf of taxpayers.

Senator Polley has called for a royal commission to investigate the income compliance program. A court case on this matter has already been finalised and the settlement agreed. While a royal commission provides a high level of investigation and inquiry—which is, at times, warranted and vital to ensure complex issues are investigated thoroughly—it is not a court and does not exercise judicial power. In the words of former Chief Justice of the High Court Justice Gibbs, a royal commission is a 'mere inquiry' which cannot lead to judgement. Further, Justice Gibbs said, royal commissions 'act in a purely inquisitorial capacity'.

The coronavirus pandemic has resulted in a temporary pause on debt collection activity, to help ease the pressure on household budgets. However, existing income compliance debts will continue to be subject to recovery, ensuring the integrity of Australia's welfare system.

The Prime Minister, the Department of Social Services and Services Australia have already apologised for the impact of the debt recovery practice during this income compliance program; the debt amounts have been repaid to those impacted; the court case has been settled and additional compensation agreed. A further inquiry in the form of a royal commission is unnecessary and unwarranted. (Time expired)