Senator WEST —My question is to the Minister for Social Security, Senator Newman. Can the minister confirm that most social security debt arises from administrative error or oversight and not deliberate fraud? Further, can the minister confirm that most social security debts are repaid by mutual agreement between the person and the Commonwealth services delivery agency, known as Centrelink, to repay the money by instalments? Is Centrelink now overriding these agreements and garnisheeing people's tax returns to repay social security debts? Do people have any review or appeal rights when their tax return is intercepted and paid to Centrelink?

Senator NEWMAN —The senator is quite right in saying that fraud against the department is in fairly small proportions in terms of numbers. Unfortunately, however, it means a substantial amount of money in terms of cost to the taxpayer.

Opposition senators interjecting—

Senator NEWMAN —Madam President, I wish that they would allow me to at least explain because clearly this is something that they do not understand despite their 13 years of being in government.

There are many people who are not committing fraud but who are breaking the social security laws to the extent that the taxpayer, their neighbour, is footing the bill for payment of entitles to which these people are not entitled. People are being paid more than they are entitled to or they are being paid an income support measure for which they have no entitlement at all. They have breached the act because they have not disclosed, for example, their earnings or their living situation.

Your claim at the beginning was that most were due to mistakes or oversight by the department. If that is what you said you are wrong; that is something that I am advised is of the order of about four per cent maximum. Mostly we are talking about people who are breaking the law but they are not perhaps engaged in fraud. It is important, whatever happens, that we clean up the act so that the taxpayers are not spending money that they should not be spending on people who are not entitled. I have already told this parliament a few months ago that we are now saving $19 million per week on money that would have been going to people who are not eligible.

The agency has a responsibility to recover social security debts in a timely manner. Since 1987 legislation has been in place under which, where a customer has a social security debt and is due a tax refund, the refund may be garnisheed in order to repay some or all of the debt. In the majority of cases, tax garnishees were issued for debtors who had no withholdings or other recovery arrangements in place. In some cases customers who are having a portion of their current social security entitlement withheld as repayment towards a debt were subject to the garnishee action. Withholdings are generally limited to 14 per cent of fortnightly payments and, particularly for large debts, do not always represent a satisfactory recovery arrangement.

Where a debtor's tax refund is garnisheed the debtor is notified in writing immediately thereafter and advised of review and appeal rights. In most cases, debtors have not disputed the action. However, where the debtor contacts the agency about the garnishee action, each case is assessed on its merits and, in special circumstances, partial refunds of the garnisheed amount have been negotiated.