Centrelink has been told it should consider waiving 100,000 debts relating to potentially illegal fines issued up to 2020.
The debts were related to a historic unlawful income scheme. This wasn’t the same as the unlawful Robodebt collection scheme.
The suggestion was made by the Commonwealth Ombudsman, which handles complaints about Government agencies.
What is income apportionment?
To know how much Centrelink support a person is entitled to, the Government takes into account their income.
Between 2003 and 2020, Services Australia used a strategy called ‘income apportionment’ to determine how much it would pay Centrelink recipients.
Income apportionment was essentially a method Centrelink used to work out how much income support some recipients were entitled to each fortnight.
Income apportionment fallout
The practice of income apportionment was scrapped in 2020 when federal laws were amended. This practice has since been deemed unlawful because it was found to be prone to inaccuracies that could lead to recipients being overpaid or underpaid.
In a previous report, the Ombudsman said unlawful calculations could have led to an excess of debt notices being sent to welfare recipients who may have been overpaid.
There are around 100,000 unresolved debts that were issued when income apportionment was used.
In 2021, Services Australia paused debt reviews linked to fines from when income apportionment was used.
In February this year, Services Australia and the Department of Social Services (DSS) advised the Commonwealth Ombudsman of the debts, and the Ombudsman began investigating.
The Commonwealth Ombudsman
This week the Ombudsman released its findings and recommendations. It said it would be a significant administrative task to review every case.
For those with outstanding debt remaining, the report said one possible solution could be Centrelink considering a “large-scale waiver of debts”.
The report recommended a ‘remediation strategy’ for those who have already repaid an unlawful debt. This could include financial compensation.
It also recommended a streamlined complaints service for inquiries related to income apportionment.
Services Australia and the DSS have accepted all eight of the formal recommendations made by the Ombudsman.
They have not yet offered a formal response to the suggestion of a large-scale debt waiver.
