Hundreds of thousands of "robo-debt" cases stand to be reviewed by the Morrison government after Government Services Minister Stuart Robert announced Centrelink would no longer rely solely on averaged income data to raise debts.
Mr Robert announced "refinements" to the controversial debt-recovery program on Tuesday, saying other "proof points" such as bank statements or pay slips would now be used when reconciling welfare recipients' fortnightly income declared to Centrelink and annual income reported to the Tax Office.
Minister for Government Services Stuart Robert announced "refinements" of its debt-recovery program on Tuesday.Credit:Alex Ellinghausen
Welfare groups have been calling for the process of "income averaging" to be abolished, arguing it is unfair and inaccurate.
With the government facing a potential class action challenging the legality of its income compliance program, Mr Robert said Centrelink would also "reach out" to the "small cohort" of Australians who had received debt notices based solely on income averaging to "seek further points of proof".
During a Sydney press conference, Mr Robert did not elaborate on how many people were in the "small cohort" or the potential budget impact.
But a Services Australia (which includes Centrelink) submission to a recent Senate inquiry suggests it could conservatively involve more than 220,000 cases.
According to the government, it has identified 734,000 cases of overpayment since July 2015. The submission notes that during income-compliance decisions, about 30 per cent of people do not engage with Centrelink's requests for further information and another 30 per cent start the process but do not finish it. Services Australia said in the absence of any further information provided by a customer, "we have used income averaging to determine the overpayment".
A departmental statement on Tuesday said income averaging "only applies to a very limited proportion of debts".
Labor's spokesman for government services Bill Shorten described Tuesday's announcement as a "complete backflip" and an "admission of chaos".
The Australian Council of Social Service, which has been calling for the scheme to be abolished, said "the devil will be in the detail".
Judith Ireland is a political reporter for the Sydney Morning Herald and The Age, based at Parliament House
Sally Whyte is a reporter for The Canberra Times covering the public service.
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