Senate debates

Tuesday, 25 February 2020


Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Bill 2020; Second Reading

1:23 pm

Photo of Patrick DodsonPatrick Dodson (WA, Australian Labor Party, Shadow Assistant Minister for Reconciliation) Share this | | Hansard source

I rise to speak on the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Bill 2020. While Labor supports this bill, we are seriously concerned about the government's ability to implement these changes properly. The bill will change the way income is reported to Centrelink. Its aim is to improve the accuracy of income reporting. It will remove the requirement for people to estimate their total pay based on the number of hours worked, which, of course, is more susceptible to error. Income will be reported based on when a person is paid, not when income is earned. In most instances people will receive their pay slip before reporting their income. This shift to reporting income when it is paid will more closely align the receipt of the employment income with the timing of the Centrelink payments. It will make it easier for people to manage their budgets.

The bill will also enable Centrelink to use the Single Touch Payroll information from the Australian Taxation Office to prefill income for Centrelink reporting. It will not be automated reporting, however. The individual will still be required to check and certify income that is prefilled using the Single Touch Payroll system. Improving the accuracy of income reporting will reduce instances of overpayments and underpayments. That's the hope and the wish. For many, the new reporting system will be more straightforward than existing payment and reporting arrangements. The prefilling of Single Touch Payroll data will, hopefully, make income reporting more convenient.

I note, however, that ACOSS and other stakeholders support these changes in the bill if they are properly implemented. If properly implemented, they could make interacting with Centrelink much easier for people on social security. But the government has to get it right. Labor are very concerned that the government simply won't get the implementation of these changes right, and we've got good reason to hold these concerns. This is a government that holds in contempt Australians who are doing it tough. No-one will forget the government's legacy of robodebt. This government has run down Centrelink services to the point where pensioners are waiting months to get the pension or are having to spend hours on the phone waiting to speak to someone.

We do not want to see more people having to wait for these payments or having those payments cut off. We certainly do not want to see any more people issued with false or inflated debts, because the government was unable to implement these changes properly. If people have questions, they should not be left waiting on the phone for hours. It is absolutely critical that the government has the right system and resources in place to make this scheme work. The government's track record on managing our social security safety net has been horrendous. The government must not let these new reporting arrangements go the way of robodebt.

This is a government that pursued thousands of innocent Australians with false or inflated debts for three long anxious and fearful years. For three long years the government stubbornly tried to defend the shambolic, cruel and illegal robodebt system. This is a government that has sought to make claiming or applying for income support so difficult, so painful and so frightening that vulnerable Australians just give up. This is a government that has axed, and outsourced to labour hire, thousands of Centrelink jobs. Over that time pension processing times skyrocketed and call waiting times to Centrelink for pensioners also skyrocketed. Older Australians who have done the right thing by this country, who have worked all their lives and contributed by paying taxes on their earnings, have been forced by this cruel government to wait months for their pension. Every pensioner will tell you their own personal nightmare about Centrelink. They have been forced to wait hours and hours on the phone just to speak to someone at Centrelink. Australians should not be made to jump one bureaucratic hurdle after another just to get access to Centrelink. Australians should be able to access income support or the pension as and when they need to.

It is no wonder the community are so anxious about the government's ability to implement these new reporting arrangements. The Senate inquiry into this bill certainly reflected the anxieties and concerns from the community. A number of submissions and witnesses raised significant concerns about this government's ability to implement the changes in the bill smoothly and efficiently. The National Social Security Rights Network, for instance, said:

We're particularly concerned about the transition periods, where we understand that people will actually need to do some manual calculations to make sure that the period that the data relates to is correct. That particular period is, I think, going to be fraught, and there are going to need to be additional resources from Services Australia to support people through that period.

The Australian Unemployed Workers Union said:

While we support the idea of making income support reporting simpler, the recent experience with robodebt offers salient warnings about the harms that arise when the algorithms that inform income imputations do not reflect the reality of variable income many underemployed workers experience. The robodebt experience shows how the design and digitisation initiatives too often occurs in a vacuum, with insufficient testing of the concepts on human subjects and with a disregard for the suffering that arises when these initiatives fail to work as intended.

The Australian Council of Social Service said:

We'd like to see the system tested on a large number of people in different circumstances and who live in different areas of Australia, with different access to online forms of communication, access to Services Australia et cetera … We need to see that comprehensive testing of the new scheme before it commences so that we can guard against any issues or problems that may exist in the scheme or that haven't been detected.

Importantly, we want to see testing with social security law experts and not just people who could be affected down the road. That's because they can often identify issues that people who would be using the scheme may not be aware of, simply because they have a decent understanding of social security law. If we compare it what happened with robodebt, there was no consultation there with experts at all.

And Anglicare, in their body of information, said:

There is a lot going on at Centrelink at the moment, and it would be really good to see demonstrated consolidation of the current lessons to assist in the future changes. These changes must be seen as an investment into a better system for Australians. They will not work for the people using Centrelink if they're viewed as a cost-cutting exercise. An investment outlook will involve careful design and testing, but it will, ultimately, deliver better outcomes for everyone.

Labor has supported the recommendations from the committee for further targeted consultations and user testing to be undertaken prior to the commencement of the simplification income reporting system to ensure that the measures and associated information and supports are capable of meeting the needs of all income support recipients.

Labor has also supported the recommendation that government commit to initiating a review of the implementation of the simplified income reporting measures within 12 months of commencement of the legislation and that a report of review be tabled in the parliament.

In addition, Labor has also recommended that the government take all reasonable steps during the period of transition to the new income reporting system to detect, to confirm and to correct overreporting of income. This is essential to ensure that payments are corrected and reflects the moral duty of care to use the available information in the system to make sure that social security recipients receive accurate payments.

We also recommend that the one-year review of the implementation of the changes proposed in the bill be conducted independently and that consultations with experts and social security recipients is part of the review process. Accordingly—to keep this slippery government honest—we're on the side that will be proposing three amendments to this bill. Firstly, we want to prevent the repeat of the unfair robodebt system. Secondly, we want to ensure that the government concludes a review of the changes in the bill. And thirdly, we want to improve the implementation of the bill through clearer rules about how irregular income will be averaged forward.

In conclusion, this government holds pensioners and those who find themselves in need of income support fundamentally in contempt. They have sought to make it so difficult and so painful for pensioners and other vulnerable Australians to access Centrelink that they have just given up; people have just walked away—it's too hard. That's what these schemes are designed to do. The government have unleashed the cruel robodebt system on thousands of innocent Australians, inducing fear and anxiety among the most-vulnerable Australians. They cut the pension and sought to cut it further—in every budget. And now they plan to cut the Newstart allowance by doubling the waiting period. Given this record, Labor is very concerned, and many in the community have already stated this, that the government runs a high risk of stuffing up the process of implementing these changes. The appeal is to pay attention to the implementation and ensure that it works for those in need and those who are reliant upon the system. But the Morrison government obviously can't be trusted to get Centrelink reporting right.

1:37 pm

Photo of Rachel SiewertRachel Siewert (WA, Australian Greens) Share this | | Hansard source

I too rise to make a contribution to the debate on the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Bill 2020. This bill changes the way employment income is reported and assessed for the purposes of determining income support payments—and of course it can't be taken in isolation from the fact that we are still going through the current robodebt debacle. So, in principle, something that actually has the potential to improve this situation should be looked at favourably, but it also needs to be looked at to ensure that it doesn't result in any further debacles involving vulnerable Australians who are trying to access our income support system.

The bill introduces new employment income attribution rules, and from 1 July this year income support recipients will report the gross income that has been paid to them by their employer. This represents a significant departure from the current model, where income support recipients have to estimate the amount of income they have earned—and anybody who has had to do that knows what a nightmare it can be. These measures will affect 1.2 million income support recipients who report earnings. This includes recipients of Newstart allowance—which, as we know, tends to be the jobseeker payment—single and partnered parenting payment, Abstudy, Austudy, youth allowance, single benefit, age pension, carer payment and the disability support pension.

From September this year, income support recipients will progressively have their Single Touch Payroll data prefilled when they report employment income to Services Australia. A person's employer and gross pay details will be prefilled through the Single Touch Payroll data. Income support recipients will then need to review, confirm or edit—and that's really important, and I'll come back to it—the prefilled information. By July 2021, all employers will be required to undertake Single Touch Payroll reporting except for those with one to four employees. In other words, Single Touch Payroll and the prefilling of forms for people will be rolled out over 12 months—another really important point that may confuse people.

This is a significant change to our social security system. Our social safety net looks after some of the most vulnerable members of our community. It is critical that we get these changes right and avoid the mistakes of the robodebt debacle. We have a responsibility in this place to ensure this bill does not cause unintended harm. The measure to simplify income reporting has broad in-principle support from the social services sector, but they have concerns which were expressed in the short inquiry that we had into this bill, and the Greens share these concerns. As I said, we support, in principle, the objectives of this bill, but we want to resolve a number of issues identified through the committee inquiry process, and I'm circulating a suite of amendments to address the issues I'm about to articulate.

This measure was part of the 2019-20 budget. Despite having had eight months to work on this legislation, there has been an incredibly limited consultation phase and a short time frame provided for stakeholders to consider the bill. I am concerned that the time frames for this bill are being driven by the associated savings, which the government claims to be about $2.1 billion over four years, instead of a genuine need to make reporting easier for income support recipients. That concern is specifically about the time line driving this.

There are some technical elements of this bill that are unclear and need to be clarified. I will be circulating an amendment to insert a definition of 'employment period' into the bill. As it currently reads, it is unclear whether 'employment period' refers to the number of days in a person's pay cycle period or the period during which a person worked. This could lead to a person misreporting their employment period and being penalised for using the wrong period. The amendment seeks to clarify this by explaining that 'employment period' means the period of time over which the employment income was earned. This issue was raised in the submissions to the Senate inquiry, and Victoria Legal Aid had strong concerns about the period of payment and how it would be used to assess income. They say:

it is not clear what is meant by the "particular period to which the employment income relates". It could be the pay cycle period … or the period during which the person worked.

This means that people could be confused about how they report their employment period when reporting to Centrelink. This amendment seeks to clarify what is meant by 'employment period' so that people can report their income correctly—and we know what happens if people mistakenly report their income. It's a clarification that won't change any provision in the bill, and it won't change the way income is calculated or assessed.

There is another clause in the legislation that provides the secretary with discretion to attribute employment income that does not have a corresponding time frame—for example, a Christmas bonus. They can appoint that over a certain period. There are currently no guidelines or limitations on how the secretary should exercise their discretion, which we find concerning. The way income is assessed has consequences for how people manage their budgets and for eligibility, of course, for income support payments. Whether the secretary attributes a bonus for two or 52 weeks has real-life implications for income support recipients. This is why I am circulating another amendment that will require the secretary to consider the nature of the person's work or employment, any hardship that may be caused and whether the work was undertaken when the person was receiving income support.

The success of this bill largely rests on the quality of its implementation and rollout. Given the complicated nature of these changes, that, I think, is self-evident. This includes the phases of user testing, communication and supports provided to income support recipients. Let's start with user testing. During the bill inquiry, we heard evidence that a small-scale focus group of 10 people has been conducted in Brisbane. Services Australia has also been working on co-designing a letter about the changes to 600,000 customers of Services Australia. However, ACOSS, Anglicare and other stakeholders highlighted the need for more urgent, widespread and comprehensive user testing. We know that people receiving income support payments often had complex employment situations and experience additional vulnerabilities. I'm not convinced that there has been, or will be, a process that has captured all of these requirements by the user-testing process undertaken by Services Australia. I urge the minister and the department to ensure that the government urgently undertakes comprehensive user testing on a large and diverse range of cohorts. User testing must capture people of different ages, abilities, literacy levels and geographical locations; people with different access to technology; First Nations peoples; and people from culturally and linguistically diverse backgrounds. It is also recommended that the government undertake user testing with social security law experts, who would to be able to identify issues with the new reporting rules.

On the other hand, the effectiveness of this bill hinges on how the new reporting rules are communicated to income support recipients. A key concern I have is that people will be nervous about editing their prefilled Single Touch Payroll data. It is possible that people will also assume that their prefilled data is correct and that they don't need to check it. This could lead to debts being raised against people who think they are doing the right thing. It is essential that income support recipients are provided with advice about their rights and responsibilities if they make changes to their prefilled Single Touch Payroll data, and we had a discussion about that—and about the need to be able to access information fairly well instantly when they're looking at their forms—during the Senate hearing into the bill.

During the bill inquiry, many stakeholders raised the likelihood that many income support recipients will be underpaid during the transition fortnight—there's a transition fortnight that's been identified for when people are being transferred to this new system of reporting. For example, ACOSS are concerned that people will double-count income as opposed to underreport income. Given there is no obligation for government to detect underpayments—and we have that on record from the government on a number of occasions—I am concerned that income support recipients will face additional hardship during this transition fortnight. I hope that the government will not unduly penalise any income support recipients who accidentally misreport their income during the transition period. In fact, I will be seeking, during the Committee of the Whole process, a commitment from the government about how they will look after people during the transition period.

To avoid unintended harm, the government must implement an effective communication strategy to ensure people from all backgrounds understand the changes. This includes tailored communication channels that meet people's needs, and we cannot assume everybody is digitally literate or has a strong understanding of English. Unfortunately, it doesn't seem that Services Australia is getting the message. The transition calculator, frequently asked questions and video messaging will be provided online. What support options are available for those who don't report their income online? Centrelink apps are currently largely available in English, and some people find them hard to deal with. What happens to people who don't have a strong understanding of English or aren't digitally literate? This tailored communication strategy needs to start as soon as possible to ensure income support recipients have enough time to understand the changes.

Another key component of the implementation of this measure is providing appropriate support services through Services Australia. It is absolutely essential that people are able to ask Services Australia questions about the changes in person, online and on the phone. I'm worried that the closures of multiple Centrelink offices—which, I'll add here, my office is getting a large number of complaints about—will mean there won't be sufficient face-to-face support for people to understand the changes. I strongly recommend that the government consider having a dedicated Centrelink phone number, contact channels and face-to-face support for those that are affected by these changes.

As I mentioned earlier, we are concerned that this bill is being rushed through the Senate without proper consideration of the 1.2 million income support recipients who will be impacted. Stakeholders have voiced serious concerns that introducing new reporting rules in July, and then progressively rolling out the pre-filled STP data, will cause confusion for recipients. I don't have enough confidence in Services Australia to effectively communicate these two different changes in this extremely short period of time. I am concerned about whether Services Australia have the staffing, organisational or technical capacity to undertake user testing and get all those other issues addressed before the implementation on 1 July this year. This is why I've also circulated an amendment to delay the start date of this bill until 1 September 2020. So we are supporting it, but we think it needs a bit more time.

During the inquiry we heard about the importance of reviewing the operation of the bill and I addressed that in my additional comments to the inquiry. That's why I've also circulated an amendment for a review. But we don't just want the government to give us commitment; we want it in the legislation to make sure it actually happens.

I want to go specifically to the issue about robodebt, which I've spoken about extensively in this place, and articulate our concerns that this is not repeated. We understand that under this provision, if this works, future debts will be avoided and we think that's important. We think it is important that people are able to report their actual payment rather than having to continue to estimate it. But we are concerned that while we are dealing with this particular piece of legislation there are hundreds of thousands of people who still do not know what is happening with their illegal robodebts. So that's why I'm also circulating, and will move, a second reading amendment at the end of the motion to add:

but the Senate calls on the Government to:

(a) come clean on the robodebt disaster;

(b) provide all legal advice relating to the robodebt program to the Senate; and

(c) use the savings generated from this bill to compensate robodebt victims.

As I said, we are supporting this legislation in principle because we think it's progress for income support recipients, but we have some concerns that if we don't get this right we'll end up in a bigger mess than where we started from, which is a big mess in terms of robodebt. That's why I'll be asking a series of questions in the committee of the whole and moving amendments to improve this legislation.

1:52 pm

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

I rise to speak on the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Bill 2020. As chair of the Senate standing legislation committee on community affairs, I'm pleased to make a contribution to the debate. On 6 February 2020 the House of Representatives introduced the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Bill 2020 to parliament. It was referred to the Senate standing legislation committee on community affairs on 6 February and the committee tabled its report on 20 February 2020.

The bill seeks to simplify the way income support recipients report their employment income to Services Australia. Under the Social Security Act 1991 income recipients who earn income through employment are required to calculate these earnings based on the number of shifts they, or their partner, have worked within a fortnight and report this estimate. This estimate is then used to determine their rate of payment for that period. In theory, this seems simple enough. However, in most cases a person will not know exactly how much they have earned until they are paid at a later date, which often falls after their income support payment is made. They may also have income from more than one source, further complicating the calculation. As a result, this scenario frequently results in social security recipients either over or under estimating their total income for the time period. This may then result in an overpayment or underpayment occurring. Measures introduced in this bill will make it possible for those receiving income support to report their gross earnings as it appears on their payslip from 1 July 2020.

Around $2.1 billion is expected to be saved over four years as a result of amending this legislation to ensure improved payment accuracy. It also implements the 2019-20 budget measure to change the social security income assessment model.

As noted by Senator Siewert, the measures in the bill will affect recipients who report income on jobseeker payment, parenting payment—single and partnered—Abstudy, Austudy, youth allowance, special benefit, age pension, carer payment, disability support pension and farm household allowance. This bill will amend the Social Security Act 1991 and four other acts to ensure that employment income is assessed once it is actually paid to a social security recipient. This will provide a more accurate picture of the amounts of employment income paid to social security recipients and minimise the number of incorrect social security payments resulting from misreported employment income. As mentioned earlier, subject to the passage of legislation, it is proposed that this change in reporting will take place from 1 July 2020. This will allow recipients to adjust to the new reporting requirements prior to the addition of prefilled information being included later in the year.

At that point, Services Australia will use data collected by the Australian Taxation Office to facilitate this change. Payroll information collected through the Single Touch Payroll system, which is administered by the ATO, will be expanded under the changes outlined in this bill. From September 2020, it will be possible for Services Australia to use the data collected by the Australian Taxation Office via Single Touch Payroll to prefill payroll information for income recipients' fortnightly reports. This process is similar to the way the ATO already prefills tax returns in readiness for us to do our tax at the end of each financial year. Income recipients will be prompted to review and confirm or update the Single Touch Payroll data before it is used to assess their entitlements. The bill amends the Social Security (Administration) Act 1999 to remove any doubt that this may be done.

Once the new Single Touch Payroll is introduced, employers can use it to report income, tax and superannuation information to the ATO each time an employee is paid. There are a small number of employers who are eligible for temporary exemptions or for quarterly reporting until 2021, such as microbusinesses with between one and four employees, but most employers have transitioned, or are in the process of transitioning, to Single Touch Payroll. If a recipient works for an employer who is not covered by Single Touch Payroll, they will continue to report their income using their pay slip.

The ATO started sharing Single Touch Payroll data with Services Australia for employees who are customers of Services Australia from July 2019. This data includes the salary and wages, tax, lump sum payments and allowances in a year-to-date format on or before the employee's payday. From 1 July 2020, the ATO will start collecting an expanded set of income data from employers, with full implementation of this expanded dataset starting from 1 July 2021. The expanded dataset includes the disaggregation of gross income, Child Support Agency deductions and garnishee amounts, and reasons for stopping employment.

The bill also amends the A New Tax System (Family Assistance) (Administration) Act 1999 to remove any doubt that Services Australia can use information from the Single Touch Payroll system to administer the family assistance law. It further amends the Student Assistance Act 1973 to remove any doubt that Services Australia can use this information to administer that act and the Abstudy scheme, and it amends the provisions in the Veterans' Entitlements Act 1986 regarding the work bonus and pension bonus scheme.

During the inquiry, the committee received eight submissions regarding the legislation. Submitters were broadly supportive of the bill, noting it would simplify reporting obligations, help ensure income support recipients received the rate of payment they were entitled to and help reduce the number of social security overpayments. The submissions highlighted the complexity of the current system and noted government statistics regarding the significant rate of corrections of reported income due to mistakes being made in estimating and reporting income. The Australian Council of Social Service stated that it welcomed the bill because it will simplify the reporting of income and remove the guesswork involved in the current system.

Despite the broad support for this bill, there was one common concern posed by the submitters. This was the need to ensure that the new reporting system was robust enough and would work for everyone who needed to use it. Submitters highlighted the need for consultation and user testing with a range of income support recipients and organisations that support them, to identify potential risks and unintended consequences. I might just stop there.

Photo of Scott RyanScott Ryan (President) Share this | | Hansard source

Order, Senator Askew! You will be in continuation. It being 2 pm, we will go to questions.