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Minister says number of families incurring a social welfare debt as a result of underestimating their incomes has been reduced.

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Tuesday 2 November 2004

Minister says number of families incurring a social welfare debt as a result of underestimating their incomes has been reduced


TONY EASTLEY: The Fe deral Government says it's ironed out a lot of the problems with its social welfare payments system that had burdened many families with a tax debt. It says it's now "drastically reduced" the number of families who've incurred a debt as a result of underestimating their incomes. 


Previous figures show nearly 600,000 families a year were saddled with a debt, but according to the Government the latest information shows the figure is significantly lower. 


Centrelink, the agency that delivers the payments, has just been criticised for encouraging some low-income families to over-estimate their earnings in order to avoid the debt. The problem was, as a consequence, some families missed out on government concessions.  


Alexandra Kirk reports from Canberra. 


ALEXANDRA KIRK: For the past three years the Government's weathered criticism over the way it recovers debts from families who innocently incur overpayments because they're unable to make a perfect guess about how much they'll earn. Many families have had the debt recouped from their tax returns. 


But now it's claiming recent improvements have "drastically reduced" the overpayments and debt problem. 


In previous years up to 30 percent of all families receiving the benefit incurred a debt. The Government says that's now down to just six percent, according to the tax returns just completed by half the families.  


The Family and Community Services Minister Kay Patterson's office says while it can't assume that will be the final debt rate, it's, quote, "relatively confident" it won't be much higher when all tax returns are in. 


Senator Patterson says she's keen to further reduce the overpayments problem. 


KAY PATTERSON: People aren't required to update their incomes, and we do find that some people constantly underestimate their income. We may be able to have legislation which uplifts their estimate to the previous year, and they can change that if they can demonstrate that their income won't be the same as the previous year. 


ALEXANDRA KIRK: So do you think that you can get rid of the overpayments problems? 


KAY PATTERSON: I think I can reduce them significantly and get as close as possible to people in similar circumstances receiving the same assistance from the tax payer. 


ALEXANDRA KIRK: A few weeks ago a sole parent of three, Katrina, told AM she rightly informed Centrelink she'd just received a one-off child support payment from her former partner, only to be told she would not only fail to get a cent of the Government's extra family payments but end up with a big debt.  


KATRINA: I've had to go to my family and ask them to help me out financially, my neighbours have helped out with food for the children, clothing, hand-me-downs for the kids. 


ALEXANDRA KIRK: Did you explain this to Centrelink? 


KATRINA: Yes - "we're sorry, ma'am, we can't do anything about it." 


ALEXANDRA KIRK: Kay Patterson says Katrina isn't alone and it's a problem she now wants to fix. She's considering a more sympathetic approach for sole parents receiving lump sum child support.  


KAY PATTERSON: I think what we need to do is to examine that, to see that when a person gets a lump sum in a year it's taken into account as income for that year. Had it been spread across, and had the person paid each year it wouldn't have had that effect. I want to look at that. 


TONY EASTLEY: Family and Community Services Minister, Kay Patterson.