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Policy Critique – Centrelink’s Online Compliance Intervention System

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 2561 words Published: 4th Nov 2020

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In July 2016 the Department of Human Services (DHS) introduced a new Online Compliance Intervention system (OCI) for raising and recovering debts (Glenn 2017). This OCI system, also referred to as “Robo-Debt” has gained a lot of attention in the media and received backlash from Centrelink customers since its implementation.     

DHS introduced the OCI system to help Centrelink recover over payments (debts). This is done by matching the customers reported earnings with historical employer-reported income data from the Australian Taxation Office (ATO) (Glenn 2017). The OCI system has become a social issue, negatively affecting roughly 500,000 Australians (Legal Aid 2019). An article written by Paul Farrell and Alex McDonald of ABC News voices the perspective of an Australian tribunal member who describes the Department of Human Services debt recovery program as “extortion” (Farrell 2017). Terry Carney, a former member of the Administrative Appeals Tribunal's social security division believes the problem is how Centrelink is determining and collecting debts (Farrell 2017). Terry states “The Department of Human Services conduct is abysmal. It's the conduct that you would expect from a third-world country. At no stage does Centrelink ever seek to defend the unlawful basis on which it's raising its debts” (Farrell 2017). A second article published by ABC News speaks into the impact robo-debt is having on vulnerable Australians and how a class action lawsuit is being filed against the Federal Government. The article argues that Centrelink’s’ OCI exists in a “bubble” and customers are being forced to comply without their complex lives being added to the equation (ABC News 2019). This article also emphasis the lack of human contact and common mistakes associated with the computers algorithm. Both articles highlight the complicity of the robo-debt debate and the hardship it has thrust upon its customers.        

In 2017 the Commonwealth Ombudsman submitted a report written by Richard Glenn. This report discovered eight key issues/problems associated with the OCI. These include: 

  • The accuracy of debts raised by the OCI, in particular those calculated using “averaged” ATO income data (Glenn 2017).
  • The application of the ten per cent recovery fee, which refers to The Social Security Act 1991 stating that a ten per cent recovery fee is applied when an individual refuses or fails to provide information resulting in a debt, and does not have a reasonable excuse for doing so (Glenn 2017).
  • The transparency and usability of the OCI system - in particular, whether the decision making process was clear to customers (Glenn 2017).
  • Problems customers faced gathering evidence and effectively presenting their case in the OCI system (Glenn 2017).
  • The adequacy of DHS’ assistance and communication to customers, including those who are vulnerable (Glenn 2017).
  • The adequacy of staff training and communication to support customers using the system (Glenn 2017).
  • DHS’ approach to complaints (Glenn 2017).
  • The adequacy of DHS’ project planning and governance mechanisms (Glenn 2017).

Many of the problems displayed in the 2017 Commonwealth Ombudsman report link with external contextual factors. Overall DHS’s OCI system has become an issue because of its lack of insight and desire for economic growth at all costs.   

The OCI system policy is influenced by many contextual factors. Contextual factors are things about a person or their environment that can positively or negatively affect functioning in daily life. These factors can be divided into personal (internal) factors and environmental (external) factors. Personal factors include age, personality, beliefs, education and gender. Environmental factors are things around the person such as physical and social environments (Connolly 2015). National Legal Aid submitted a report in September 2019 encouraging DHS to rethink their OCI system. This report displays repetitive themes and illustrates systemic flaws with the current ICO system, including:

  1. The hardship and distress inflicted upon people and families because of robo-debt (National Legal Aid 2019). 
  2. The inaccuracy of robo-debt, including the large number of debts which upon recalculation are less and therefor the troubling possibility that people are paying money to Centrelink that they do not owe (National Legal Aid 2019).
  3. The unfairness of robo-debt’s “reverse onus” which thrusts the responsibility upon the customer to prove their innocence rather than Centrelink prove the amount owed (National Legal Aid 2019).
  4. The lack of clear information provided by Centrelink in response to how a person’s debt is calculated, leaving customers uncertain and confused about their alleged overpayments (National Legal Aid 2019).
  5. The challenges presented when communicating with Centrelink (National Legal Aid 2019).
  6. Customers becoming frustrated and hopeless due to wait times over the phone.
  7. Centrelink staff Inadequately explaining the basis for a customers alleged debt and the pressures accompanying Centrelink’s debt collection strategies.
  8. The stress associated with intimidating contact from private debt collectors contracted by Centrelink to enforce alleged debts, including during periods when customers are seeking review (National Legal Aid 2019).
  9. The damage to public trust and confidence in the integrity of the social security system, as customers fear being pursued for further debts in the future (National Legal Aid 2019).

The following 10 alternatives advocate for a more just and accurate system that benefits both the government and the millions of people who continue to receive Centrelink payments during their lifetime.

  1. Cease robo-debt and re-design a fairer system. Robo-debt should be stopped and a new system designed to ensure accuracy and fairness (National Legal Aid 2019).
  2. Eliminate averaging. The process of averaging creates inaccurate debts. Using ATO data to estimate a person’s fortnightly income assumes the person has work steady, consistent hours. In truth, many people who receive Centrelink payments are either employed on a casual basis, caring for their families, unwell, studying or starting a new job, which means their income varies from week to week. Therefore, averaging should be replaced with a better process for calculating and analysing potential overpayments which reflects a customer’s realistic fortnightly earnings (National Legal Aid 2019).
  3. Debt amounts must be and correct and finalised before establishing contact with customers. It is unjust for Centrelink to establish a debt without first being 100% certain that the amount is correct. Centrelink also places the responsibility of challenging the alleged debt on its customers. Previously, Centrelink would cross-check its records and make inquiries for the customer, calling their past employers to confirm fortnightly earnings. Centrelink holds the power and expertise to adequately determine a customer debt and they should do this before telling customers that they owe money (National Legal Aid 2019).
  4. Client centered communication and service provision. Centrelink service centers have a unique and important role to play in their communities. As a service it deals with people who are at greater risk of experiencing poverty, disability, disadvantage and mental health issues. Centrelink’s ability to communicate and engage with it customers should be of expertise (National Legal Aid 2019). The following improvements should be made to the way Centrelink engages with its customers:
  • Centrelink should actively help their customers understand and comply with its income reporting system (National Legal Aid 2019).
  • If Centrelink suspects possible overpayments, customers should be approached respectfully using accessible communication. For example, documents or letters from Centrelink should display how the debt amount was determined/calculated and how customers can access further information. This allows customers to identify errors (if any) and easily understand what is being asked of them (National Legal Aid 2019).
  • Centrelink should readily accommodate all customers who seek assistance with their robo-debt claim (face-to-face/over the phone). Centrelink should aim to resolve them claims quickly and easily, whilst providing customers with access to relevant and accurate information if they chose to review their debt at any stage (National Legal Aid 2019).
  • DHS staff should be highly trained to support customers who are unable to understand or uncomfortable with their MyGov/Centrelink online system (National Legal Aid 2019).

5. Embrace a client-centered design and use of technology. DHS should engage with service users and stakeholders, such as, community legal centers, community services, legal aid commissions and digital experts, to re-design and implement the best possible model for service delivery. DHS should design a system that benefits customers, identifies and addresses risk and establishes trust. DHS should aim to create a new system that integrates technology and data analysis to ensure accuracy. There must also be appropriate human oversight. User-testing and evaluating the impact of the system will be crucial components of designing and implementing the effective, evidence-informed solutions (National Legal Aid 2019).

6. Accessible and straight-forward rights to review. Customers should be able to access a fair review of their debt if they are unhappy (National Legal Aid 2019). This process should be easily accessible and straight-forward:

  • Customers who chose to review their debt should not be excluded from accessing a legal service to which all people are entitled too, regardless of whether the customer has provided new information in relation to their alleged debt (National Legal Aid 2019).
  • All debts should be put on hold pending the official outcome of a review. Centrelink should not be able to take from a customer’s tax return or withhold their Centrelink payments. Alleged debts should not collect interest until all issues concerning the debt are resolved (National Legal Aid 2019).
  • All communication and correspondence between Centrelink and its customers should include clear and accurate information about the option to “pause” a debt while a review is pending (National Legal Aid 2019).
  • DHS should clearly state that customers have the right to request more time if they are needing to obtain and submit information regarding their debt (National Legal Aid 2019). 

7. Access to advice and assistance. Customers should always be made aware of their rights when interacting with Centrelink. Legal and non-legal services, such as financial counsellors, legal centers and legal aid commissions are adequately resourced and ready to provide people with the information and assistance to understand Centrelink’s policies/procedures (National Legal Aid 2019). Centrelink should refer customers to these services when they require assistance and guidance regarding debts.

8. Stronger precautions before seizing tax returns. The tax garnishing process results in a customer’s tax return being seized by Centrelink (National Legal Aid 2019). The customers tax return should not be taken in situations where:

  • The customer’s alleged debt is still in the review process
  • The customer is unaware that they owe an alleged debt
  • The customer is yet to be notified of the outcome of their debt review

There should be more human oversight appointed to tax return seizure to avoid illegality and injustice. This process should only take place once Centrelink has establish that a customer is aware of their debt (National Legal Aid 2019).

9. Appropriate application of penalty fees. Centrelink continually enforce incorrect penalty fees when:

  • Customers dispute their alleged debt
  • Customers do not answer phone calls
  • Customers do not receive infringement letters

These circumstances do not match up with the requirements listed in the Social Security Act 1991 (National Legal Aid 2019). A penalty fee should only be imposed when Centrelink is certain a customer has knowingly provided false/misleading information. It must not be imposed for external and uncontrollable circumstances (National Legal Aid 2019).

10. Fair and appropriate debt collection techniques. Centrelink outsources much of its debt collection work to private debt collectors. Legal aid commission clients report these businesses constantly calling and sending text messages trying to pursue unproven and potentially incorrect debts (National Legal Aid 2019). These private debt collectors are often harsh and intimidating, inflicting emotional and psychological harm upon Centrelink customers, for debts that have not yet been fully confirmed (National Legal Aid 2019). DHS should review its engagement with external debt collectors and cease hiring them to pursue customers for alleged overpayments.

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In closing, DHS needs to undergo a cultural change and reassess how the department communicates with its customers to reflect a more hospitable environment. In practical terms, Centrelink should not outsource debt collection to agencies in circumstances where the customer has not been successfully contacted. Key performance indicators and contracts should be revisited to ensure customers are treated respectfully. Furthermore, the initial contact between Centrelink and its customers’ when stating an overpayment needs to be clear and precise to avoid alleged debts being referred back to Centrelink with questions.



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