Centrelink debt waivers welcome but insufficient

Today the government announced significant changes to Centrelink debt policies.

The harm done to every person who received a Robodebt and unlawful income apportionment – large or small – must never be repeated. These changes fail to deliver on the government’s promise to implement the Robodebt Royal Commission recommendations. The Antipoverty Centre calls on the government to immediately suspend Centrelink debt collection activity and work with us on more meaningful reforms to ensure no one is harmed by recoupment practices.

Antipoverty Centre spokesperson and JobSeeker recipient Jay Coonan said:

It is a relief to see the government beginning to take some action in response to its unlawful debt recovery, but we know these changes will not protect poor people from the harm done by debt raising and collection practices. They do not go anywhere near implementing the Robodebt Royal Commission recommendations that the government committed to two years ago.

It should not have taken so long and it should not have taken so much work by welfare recipients and advocates for this progress to be made.

The government must work with welfare recipients to make bigger changes that will ensure we are safe, and have stability and control over our lives. This must include the reintroduction of the 6 year time limit on debt recovery, which is glaringly absent from this announcement.

When you are poor, it hits you like a lightning bolt when you find out you have any debt, let alone one that’s long in the past. We are grateful that some pressure will be taken off those who will have their debt removed, but nothing the government has announced can adequately compensate for the distress, wasted time, financial strain and other impacts of being pursued for unfair debts over such a long period.

The culture and purpose of Centrelink’s debt collection must be dismantled and replaced with a model that treats us with humanity. Accounting and administrative errors must not be seen as cause for punishment and punitive “debt” recovery approaches must be abandoned. It must remove unfair and confusing rules that contribute to payment errors. The notion of debt collection must be abandoned in favour of payment accuracy, ensuring people who are underpaid receive what they are owed.

The government should be acting to stop debts before they happen by simplifying the social security system. People are being put in debt, prevented from accessing Centrelink payments they need and forced into unsafe situations due to labyrinthine rules and eligibility requirements. A better system would not allow debt to occur in the first place.

Media contact: email media at antipovertycentre.org or call/message 0413 261 362 via Signal

Implement urgent and medium-term reforms

So-called debts are generally due to errors in the system or unfair, confusing rules. These include partner and parental income tests, complex eligibility for study payments, cuts to Centrelink payments when a small amount is earned from wages and access barriers for people experiencing homelessness and family violence. A lawful “debt” is rarely a fair debt. The government must stop treating accounting and administrative errors that lead to overpayments as cause for punishment and abandon its punitive debt recovery approach.

The government must immediately pause debt-raising and collection activities until safe processes for recovering overpayments are implemented.

In addition, we call on the government to make the following changes:

1. Remove unfair and confusing rules, simplify and improve reporting processes, and adequately staff Centrelink to remove factors that contribute to payment errors.
2. Replace the current debt collection unit with a team that is responsible for ensuring accurate payments were made, including identifying and rectifying underpayments.
3. Limit the period over which Centrelink is able to recover debts to 6 years and apply the same time period for backpaying underpayments (currently 13 weeks).
4. Treat unemployment as a valid reason not to harass people for debts as per examples in the ACCC and ASIC Debt collection guideline for collectors.
5. Where an amount is owed to Centrelink, people should only repay their debt after they have a liveable income and can afford to. If the government is concerned the person may never have a liveable income they should make welfare payments liveable.

Get help if you receive a Centrelink debt notice

If you receive a debt notice immediately contact a welfare rights community legal centre. It’s free and you can find the relevant legal centre in your area on the Economic Justice Australia website.

Although Robodebt has ended, many debt notices issued are inaccurate. Even if you receive an accurate debt, it can be waived in certain circumstances, including: “the physical and emotional state of the person together with their decision-making capacity and financial circumstances…”. You can find more information about debt waivers here.

The ACCC and ASIC debt collection guideline lists unemployment and low income as reasons a debt collector should not continue pursuing a person. You can find the guideline here.