Up to 100,000 Centrelink Debts May Be Incorrectly Calculated

A report released by the Commonwealth Ombudsman has found that "approximately 100,000 actual and potential debts" issues from 2003 to 2020 may have been incorrectly calculated. The miscalculations came as a result of unlawfully or incorrectly "apportioning" payment recipient's income.

The report, titled Lessons in lawfulness: Own motion investigation into Services Australia’s and the Department of Social Services’ response to the question of the lawfulness of income apportionment before 7 December 2020, and conducted by the Commonwealth Ombudsman, Iain Anderson, found that Services Australia (and its former department, The Department of Human Services) had been issuing Centrelink payments, such as JobSeeker and Youth Allowance, under an "incorrect understanding of relevant legislative provisions," resulting in incorrect "income apportionment" calculations.

The report explained that the law requires Centrelink to determine a 'daily rate' of employment income, an average of the total income earned by the payment recipient within a 'Centrelink fortnight.' This employment income is then used to calculate a payment for a recipient.

However, the report outlined how it was "difficult" for both the recipient and Centrelink to accurately calculate this income as payslips did not always show the exact hours or days worked or because pay periods did not align with the 'Centrelink fortnight.' This resulted in customers being over- or under-paid depending on how calculations were made leading to potential debts.

The report also stated there could be even more Centrelink customers who may have had their payments or debts impacted by these calculations:

"Due to the number of payment types affected, and the length of time these income apportionment issues were occurring, there may be more customers affected than the 100,000 reviews and debt matters already identified.

Which Centrelink & Services Australia Payments were Affected?

The report highlighted that "range of social security payment types were affected by income apportionment – either indirectly or directly," including benefits and allowances, such as Newstart, JobSeeker and Youth Allowance, pensions, including the Age Pension, and the Coronavirus Supplement.

Is this the same as Robodebt?

The report noted in its initial highlights that "income apportionment’ is different to the ‘income averaging’ that was at the heart of Robodebt." The report states that Mr. Anderson was also "satisfied" that, unlike Robodebt, which continued without any changes to legislation which the relevant agencies "knew were required," the incorrect and unlawful use of income apportionment investigated was a result of" an incorrect understanding of relevant legislative provisions."

Sources & Further Reading

https://www.ombudsman.gov.au/__data/assets/pdf_file/0040/299947/Commonwealth-Ombudsman-public-statement-regarding-OMI-Income-Apportionment-Lawfulness.pdf

https://www.theguardian.com/australia-news/2023/aug/02/up-to-100000-welfare-debts-or-potential-debts-miscalculated-over-two-decades-ombudsman-finds

https://www.theguardian.com/australia-news/2020/nov/10/more-welfare-debts-under-scrutiny-after-tribunal-rulings-cast-doubt-on-services-australia-methods

https://www.friendlyjordies.com/post/robodebt