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Wednesday, 6 July 2011
Page: 4133

Senator SIEWERT (Western AustraliaAustralian Greens Whip) (11:44): I seek leave to make a speech in this second reading debate. This bill was called on at very short notice. I was in a meeting and literally bolted across the parliament.

Leave granted.

Senator SIEWERT: I thank the chamber for that. The Social Security and Other Legislation Amendment (Miscellaneous Measures) Bill 2011 makes what we believe is an important amendment to the Social Security Act. It is an important process but it is also important, I think, because it raises some important issues that I would like to articulate. This particular amendment, as you know, creates an obligation in the legislation for income support recipients to notify Centrelink in the event of a change of circumstances which might affect their payment. The point here is that it is obvious that that is something that is supposed to happen. It should be obvious to recipients but it is not actually in the legislation, so of course we support the principle of putting it into the legislation. Previously, the obli­gation to notify was contained in notices sent by Centrelink to recipients and it seems fairly obvious that you would need to because you have to meet certain require­ments to obtain social security support.

The bill seeks to repair a fault in the legislation and the way in which social security fraud cases have been prosecuted. The Greens do not have any difficulty with the issue of putting a requirement in the legislation that social security recipients are in fact required to notify Centrelink of changes in their circumstances. This is basically formulating a requirement that exists presently; however, the bill also seeks to retrospectively apply that requirement so as to ensure the convictions of around 15,000 people who are potentially at risk due to some recent court decision.

It is the retrospective element of the bill which causes me and the Greens some concern. The social security system, we believe, is an absolutely vital part of our society and defines us as a country. We take care of those who are most in need. This system will not work if people are intentionally taking advantage of the system for their own personal gain. As I said, we do not have any problem in principle

We want genuine fraud to have appropriate repercussions and we appreciate the potential administrative consequences of having to go back and look at 15,000 cases if this bill is not passed, but in principle we have a problem with the retrospectivity of this type of law-making. It is the principle of natural justice, not to mention international law, and I quote from Article 15.1 of the International Covenant on Civil and Political Rights:

No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence, under national or international law, at the time when it was committed.

An amendment which deals with these sorts of issues, which we believe this amendment does, potentially breaches our international obligations and we have got some serious concerns about this particular aspect of the bill. It is a very serious decision by this parliament that we believe could potentially infringe on somebody's civil liberties by retrospectively confirming criminal convictions which are now in doubt through decisions of our courts.

I note with concern the Scrutiny of Bills Committee has strong reservations about the use of retrospectivity to impose or confirm criminal guilt and the justification used by the government. As the Scrutiny of Bills Committee report notes: the legal defect the bill seeks to fix squarely relates to the question of whether criminal liability was established. Furthermore, the report notes that the justification provided in the explanatory memorandum 'does not address the broader significance of the use of retrospective criminal law for the Australian legal system'. It goes on to say:

Although it is likely true that many persons were aware that as a matter of social or moral norms or principles they should have informed the Department of their changed circumstances…

It talks about the fact that—and I acknowledge it—it is in the High Court at the moment and there is no legal obligation to do so at the moment. It quite eloquently outlines the concerns about the retrospect­ivity of this particular piece of legislation.

Also the report talks in general about imposing retrospective laws, and people will be aware that the Scrutiny of Bills Committee often highlights those particular issues and expresses concerns. It says:

This principle may not necessarily be absolute, but there is arguably significant benefit in upholding this principle in terms of maintaining other policy objectives.

I too share the concerns of the committee and question whether the policy outcome justifies the breach of this important principle.

Another problem I have with this bill is that it shores up the government's prose­cution framework without the government acting on the greater injustices that exist in relation to the investigation and prosecution of social security fraud. We have got, as I said, some very strong concerns about the retrospectivity in itself as a principle, as does the Scrutiny of Bills Committee, but there are some other very significant issues that apply, we believe, to the Social Security Act and some of the ways that Centrelink and others have been handling the prosecutions through that particular act and how it reflects on the particular decision we are about to make in this place.

Let me be clear: we have no intention of being soft on people who intentionally defraud the system. It is imperative, if we are to have a strong social security system that truly acts as a safety net for our most vulnerable Australians, that it is strong, effective and is not undermined. I do not want anybody to be running around this place saying, 'The Greens are soft on fraud, on Centrelink.' We are not, but we are concerned that we are picking up people in that net that in fact are unintentionally committing offences and that we are not going for the really serious fraud cases.

When we speak to people in the sector, we believe there are obviously some very genuine fraud cases and, as I said, we need to go for those people. If you look at some of the ways these cases are being prosecuted and who is getting picked up through this process, we are concerned that there are some people getting picked up in the process that are not necessarily the big fish and that they have committed offences unintention­ally. It would appear that many people who are investigated, prosecuted and ultimately convicted are sometimes confused by the complexity of the system—an issue I have raised in this place before; in fact not two weeks ago we were talking about this issue and I was outlining the 34 pages of complex rules and tiers of payments that come out quarterly from the government. It is confusing for someone who knows the system, let alone someone who does not know the system. The main reason for Centrelink debt is undeclared or under­declared earnings. Many people, for example, underestimate their income to Centrelink because they do not know how to correctly report it or they do not have the understanding or, in some cases, the necessary English language skills to properly read a payslip. This confusion is com­pounded when people work irregularly or are paid irregularly or when their payslips lag behind reporting requirements. Centrelink letters which attempt to outline obligations and requirements can be difficult to under­stand, particularly for people with limited literacy, formal education or English skills. It is very concerning to note that Indigenous income support recipients are particularly susceptible to these problems and are more likely to incur debt than non-Indigenous recipients.

Casual employees, including teachers and nurses, also statistically find themselves more often in debt. That is because of the issue I outlined before about the irregularity of pay and when they are supposed to report it. Sometimes there is a lag in getting paid. If there is a lag in getting paid, you actually have no income. Those are issues that we have heard strong concerns about.

I have heard reports of income support recipients who know they are being overpaid but feel they are in too deep and are afraid to come forward for fear of being prosecuted. Of course they should report it, but they are concerned about the repercussions. We believe this is understandable considering reports that Centrelink staff frequently and inappropriately threaten people with jail—these people are worried they will go to jail. Given that those threats are being used inappropriately, that also has implications. These people are being charged as a matter of procedure, sometimes years after the so-called fraud has occurred and they have in fact already entered into repayment arrange­ments. I fail to see that justice can be served by prosecuting some of these cases. Surely our money is better spent focusing on those who are intentionally committing fraud on the system.

When you look at the statistics, minor offenders and those who end up in debt via error make up a huge proportion of those being investigated and prosecuted. For example, in 2007-08, 1,135 debts were prosecuted involving amounts between $5,000 and $10,000, and 379 people were prosecuted for amounts of less than $5,000. In the same year, only 10 out of a total of 2,624 successful prosecutions were for false claims or false identity matters—in other words, fraud. According to the National Welfare Rights Network, the level of deliberate and intentional fraud in the system is acknowledged to be extremely small: 0.044 per cent.

It is not just the welfare sector that reports this; a study of social security fraud cases completed in 2008 revealed similar patterns. Of the 80 cases examined, the average amount involved was $10,000, and over 85 per cent of people had already repaid some of the debt and there were no cases of identity fraud or elaborate scams. The authors state that these findings 'challenge the stereotype of the organised criminal willingly defrauding the Commonwealth government for large sums of money'. The research concluded that in many cases it was plausible that circumstances pointed to an error rather than criminal intent. What is going on here? We are focusing on prosecuting vulnerable people when there is no evidence of serious fraud and, in many cases, when they are already paying back their debt. The system seems to be set up to catch more vulnerable people rather than the serious exploiters of our welfare system.

The human toll on people who are prosecuted is painfully high. There are regular reports of human distress, careers ruined and even suicidal thoughts. When you look at the human impacts, not to mention the administrative costs, we believe we should re-examine this punitive approach. As I have said—and I will be really clear—we want to crack down on those who are intentionally committing fraud.

Centrelink's communications general manager, Hank Jongen, stated on ABC radio in 2009:

We do not prosecute people who make genuine mistakes. We only refer cases where there's been deliberate … deception or intent to defraud … Every one of those cases either involves deliberate false statements, forgery, identity fraud, or instances where the customer had previously been prosecuted for a similar offence.

Yet both reports from the sector and academic investigations reveal that this is definitely not the case. The difference between what is happening and what people say is happening is great. There seem to be two different stories here. We believe we need to look further into how we can improve this system. Why are we not targeting more intensely those who have committed serious fraud?

We believe that the statistics point not to a high rate of guilt but to serious problems with access to justice for people on low incomes. It is difficult for them to get legal representation and there are great incentives for them to plead guilty. This is particularly important: there is an incentive for people who cannot get legal representation, who are the most vulnerable, who are scared or who cannot navigate the system to plead guilty.

A recent audit by the Australian National Audit Office paints an even grimmer picture. In essence, the report concluded, for numerous reasons, that Centrelink's investi­gative procedures were seriously flawed. Among other things, it held that Centrelink misused its coercive powers, failed to keep records, lacked proper oversight and breached government and departmental policies. According to the audit, 87 per cent of Centrelink's 113 fraud investigations did not comply with the Australian government investigations standards or Centrelink's mandatory policies and procedures. To quote the report:

Overall, most fraud investigations reviewed by the ANAO did not comply with the Australian Government's regulated framework and Centrelink's internal policies and procedures.

The important issues to emerge from the results of the review were: noncompliance with the Australian government investi­gations standards and Centrelink's own policies and processes, increasing the risk of serious and complex fraud cases not being referred for consideration of prosecution and potentially affecting the quality of briefs of evidence referred to the CDPP; incomplete information recorded in Centrelink's fraud investigation case management system and investigation files, affecting Centrelink's ability to provide assurance that the investigative approach was appropriate and to protect the rights of customers through legislated safeguards such as freedom of information; and lack of documented critical decisions and evidence of managerial oversight at key control points in the investigative process, including information-gathering processes, making it difficult to determine whether Centrelink used its coercive powers inappropriately to collect evidence after fraud was suspected. These are quite serious findings. I think this quote sums it up:

Prosecution should not be instituted unless there is admissible, substantial and reliable evidence that a criminal offence has been committed. The ANAO's analysis suggests that material contained in Centrelink's briefs of evidence is not consistently meeting the requirements of the Prosecution Policy of the Commonwealth. This has the potential to severely limit the prospect of defendants, who may be successfully convicted for fraud, being treated in a fair, open and accountable manner. The ANAO notes that almost all of Centrelink fraud defendants plead guilty.

When you add all of these problems up it creates an extremely distressing situation. Vulnerable people are being investigated and prosecuted for fraud, often without basis and often for small amounts already being repaid, with an almost 100 per cent conviction rate—and there are serious questions about the fairness and transparency of the process. It is difficult to imagine how we can solve some of these entrenched, systemic problems, but perhaps we need to be taking a more serious look at this.

These are the reasons that we have concerns about this particular piece of legislation. We have 15,000 cases here that we are being asked to basically approve retrospectively, and I have just highlighted serious concerns with the way some of these cases may have been pursued. People would have pleaded guilty for the reasons that I outlined. The ANAO report clearly points out some serious problems with the way fraud is being investigated by Centrelink. We have been through Senate estimates and have talked about this, and I know that they are trying to improve the situation. But the point is that we are talking about retrospective application of this legislation. We have some very serious concerns about this piece of legislation because of its retrospective nature and because we are not convinced—I am sorry; we are just not convinced—that every single one of those cases would have been dealt with in the most appropriate manner.

This is a serious piece of legislation. I understand why the government has to do it and I understand the principle. Yes, we should be amending this legislation to put this particular amendment in to make it obvious that people have to notify Centrelink of their change in circumstances. We need to state what is obviously a requirement in the legislation. But we have very serious problems with this particular legislation and the ongoing way that Centrelink is pursuing some of these fraud cases.