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Wednesday, 25 November 1998
Page: 716

Mr SWAN (12:03 PM) —The Data-matching Program (Assistance and Tax) Amendment Bill 1998 (No. 2) seeks to make the data-matching program a permanent feature of the social security system, and the opposition welcomes this. The approach of the opposition in these areas is one which does give great emphasis to responsibility and to incentive but also to compassion. There is a lot of rhetoric thrown around using those words and it depends on how they are put into practice.

In an earlier debate, we heard discussions about the ethic of incentive and how people who worked hard were entitled to get additional benefits. I think that is true whether you are dealing with self-funded retirees or low income families. People who work hard to make this country great are certainly deserving of support from the government. That could be nowhere more true than it is with elderly Australians. Someone mentioned the concept of intergenerational theft before. There could be no greater intergenerational theft against elderly people than the imposition of double taxation on them through a GST, for example, or the passing of legislation to take away their family home when they require essential nursing home care.

Of course, in this bill we are dealing with another form of theft. We are dealing with theft from the social security system—something which the opposition regards as an extremely serious topic and which must be dealt with as effectively as possible. I am sure that members on both sides of the House will recall that the data-matching program was introduced by Labor, just as was the seniors health card, which was discussed earlier.

The Data-matching Program (Assistance and Tax) Act of 1990 gave effect to measures announced in the 1990-91 budget. Now, of course, the government does not seek to highlight that fact. This Labor initiative introduced a method for detecting inconsistent payments being made to a person by two or more agencies and the detection of possible tax evasion. An independent person listening to members of the government, particularly the minister, could be forgiven for thinking that the government invented measures to catch social security cheats. But it is a matter of record that it was the Labor government which first got tough on social security fraud after the total neglect by the previous coalition government, the government in which the current Prime Minister was the Treasurer and should have been concerned with matters such as that.

Labor's original act defined the method of data matching and placed a limit on the number of data-matching cycles. It gave force to data-matching guidelines that have been used by the Privacy Commissioner. The act permitted the use of tax file numbers to assist with the verification with the tax office of income information provided by social security recipients. It also increased data matching between a number of government departments, including Social Security; Veterans' Affairs; Health, Housing and Community Services; Employment, Education and Training; and the tax office. Labor's initiative placed Australia in the enviable position of being recognised as a world leader in fraud and review work. In fact our approach was copied and adopted by a number of other nations.

Today I want to signal that protecting the tax revenue that pays for social security from fraud and abuse is a very important priority of the opposition. We all need to take responsibility. It is a very important word, responsibility—for ourselves, individually, but we also need to take responsibility for each other. We as a community have to reach out to those who are not able, for whatever reason, to get by on their own. That is Labor's historical and contemporary commitment to the social safety net: to look after those who cannot get by on their own.

The coalition have a different view. They would actually prefer a system where people did not have access to a decent social safety net. Only last week the IMF recommended that Australia cut the level of unemployment benefits and kick people off at a certain period of time. What was the minister Senator Newman's response? It was very interesting. She said that the government would look at these recommendations to see which ones they could adopt. She is yet to reject the policy prescriptions of the IMF, which were presumably originally written by the government anyway.

Labor knows that just knocking people off welfare unfairly does not solve the heart of the problem. The problem in the end can be solved only by creating sustainable jobs and greater opportunity and making sure that people have the skills to get decent jobs.

Mr Cadman —What has this got to do with it?

Mr SWAN —A hell of a lot, because absolutely essential to that commitment is the maintenance of the credibility and sustainability of the safety net. To maintain the credibility and the sustainability of the safety net you have got to stamp out fraud and abuse. It is just not one without the other. You have got to work at both ends of the spectrum. You have got to have both a commitment to opportunity and jobs on the one hand and a commitment to the safety net on the other—and essential to a commitment to the credibility and support for the safety net is stamping out fraud and abuse and error.

The opposition is delighted the government has taken up the important work that we began. We are pleased the government is so enthusiastic about the mechanisms that we created. But the opposition is somewhat bemused by the government's claims of leadership in the area and by attempts to claim that we are unconcerned by social security fraud. We do welcome the opportunity of speaking to the amendment bill. We are pleased to remind the government of some of the facts about social security fraud.

The original act contained a sunset clause which was to come into effect in January 1993. That sunset clause has been extended three times, most recently in 1995 when it was extended to 22 January 1999. The bill before us now seeks to remove the sunset clause altogether.

The data-matching program has proved to be very effective in maintaining the integrity of the social security system. When in government, Labor was running between five and seven data-matching cycles a year for each of the years 1991 through to 1996. Savings in 1993 were $80 million, in 1994 they were $84 million, and in 1995 they were $92 million from that measure alone.

Awareness of data matching and the use of tax file numbers by the public have also increased voluntary compliance with the social security system, so the effective savings resulting from data matching are certainly greater than the figures that I have just quoted. When the Australian National Audit Office reviewed the program in 1993 it found it was `a valuable compliance and control technique'.

It is important for us to have on the record the history of the program as it was an important part of Labor's overall effort to put in place a social security system which was effective at identifying and preventing incorrect payments. In 1990-91 when the data-matching program was put in place, the annual report of the Department of Social Security said:

An effective social security system makes it as difficult as possible for incorrect payments and fraud to occur, has systems in place that minimise the risk of such occurrence, detects it at the earliest possible stage, deals decisively with the cases which are detected, and creates a public recognition of the risk involved in attempting to defraud.

This is a system that Labor put in place and one that the current government are so keen to score political mileage out of, and I am sure they will continue to do that.

It is not the system that Labor inherited in 1983, for example. In 1983 our social security system did not have a systematic method of identifying and collecting incorrect payments. When Labor came to power the only method of monitoring the system which was reported on concerned the negotiation of fraudulent cheques. That is the way that most social security payments were made then, by cheque. In the last full year of the Fraser government there were just under 11,000 reported fraudulent negotiations of cheques, with a value of $1.35 million. I am pleased to say that it did not take Labor long to begin the reform of the system. By 1984, Labor had embarked on a major project to convert most payments to the direct deposit method—payments straight to bank accounts—with the goal of reducing the incidence of fraudulent negotiation of cheques.

It was also Labor that put in place the range of review mechanisms including mobile review teams, the use of employment declaration forms, the extended use of duration reviews, and the data-matching program. By the end of Labor's term in government, in just over one year, 237,176 overpayments were identified thereby saving $42 million a fortnight, or just over $1 billion a year. That was a far cry from the $1.35 million in 1982. All these initiatives should sound very familiar to the government because they are almost identical to the fraud catching and review mechanisms which they have been crowing about in the media.

This government has not been too interested in the historical facts when it comes to the issues. It just believes there is political mileage to be gained out of focusing on a media strategy of claiming to be tough on fraud. But the fact is that, if you look at the government's cutbacks, particularly its staff cutbacks in Centrelink, it is very soft on fraud because it is actually undermining the mechanisms to implement the strategy; it is undermining it systematically.

The government's cost cutting and job cutting agenda is actually undercutting the very effective system that it inherited from the last Labor government. Before it even began its savage 5,000 job cuts, Centrelink's resources were already stretched to the absolute limit.

Mr DEPUTY SPEAKER (Mr Nehl) —I remind the member for Lilley that the sole purpose of this bill is to repeal the sunset clause and I would be grateful if he could try and be a little more relevant to the bill itself.

Mr SWAN —Forgive me, Mr Deputy Speaker, but it is not the sole purpose; it is actually a data-matching bill to eliminate fraud, and what I am talking about are the mechanisms to get rid of fraud. I have spent the last 10 minutes talking about those various mechanisms.

Mr DEPUTY SPEAKER —Having read the explanatory memorandum, the second reading speech and the bill itself, I would still maintain that the purpose of the bill is to repeal the sunset clause.

Mr SWAN —I will endeavour to be as relevant—

Mr DEPUTY SPEAKER —I thank the honourable member for Lilley.

Mr SWAN —You have only to read the Ombudsman's reports about these matters of fraud to know that there is a crisis in the implementation of the mechanisms to solve fraud. Of course, if you slash the number of people in jobs concerned with the detection of fraud—from head office, area offices, or local offices, including all of the review teams that you have out there—then detection of fraud is severely undermined. I have already begun to receive an enormous amount of anecdotal evidence that Centrelink is being forced to redirect resources away from its review area.

Mr DEPUTY SPEAKER —Order! The honourable member for Lilley will resume his seat.

Mr Cadman —On a point of order, Mr Deputy Speaker: we have had a good debate dealing with this bill, which is—

Mr DEPUTY SPEAKER —No, I do not need you to speak to it. What is your point of order?

Mr Cadman —The member is now way off the mark. He is getting involved in staff cuts and a lot of things unrelated to the substance of the bill.

Mr DEPUTY SPEAKER —I thank the member for Mitchell. The honourable member for Lilley will of course do his utmost to remain relevant to the bill.

Mr SWAN —Thank you, Mr Deputy Speaker. I am indeed trying very hard to be as relevant as I possibly can, because we regard the detection of fraud as a very serious issue. It goes to the heart of whether we have responsibility in our social security system. Consequences flow out from there that impact upon a whole range of aspects of social security, including the incentives for people to get into work.

I was making the point, before the point of order, that the mechanisms to detect fraud are extremely important and relevant to the heart of this bill. I was saying that I had received a fair bit of anecdotal evidence, from people at the front line of fighting fraud, that indicates that their efforts are being undermined. I would like to paraphrase from—

Mr Cadman —You are going to make it up.

Mr DEPUTY SPEAKER —The member for Mitchell will remain silent.

Mr SWAN —No. There is no need for anyone to be unaware of this issue. Any member of parliament has people walking into their office every day to talk about these problems. We may disagree about how and why they have come about, but the problems are there and are real. The fact is that customer service centres are coping with dwindling resources.

Mr Cadman —On a point of order, Mr Deputy Speaker: I do not want to interrupt the honourable member—

Mr DEPUTY SPEAKER —Order! You have not got the call yet.

Mr Cadman —My point of order is on relevance. This bill is a narrow bill concerned with the sunset clause and data matching in social security. It is not concerned with the staff cuts. The honourable member has plenty of opportunity to talk about other issues, but he should stick to the subject of the bill.

Mr DEPUTY SPEAKER —I thank the honourable member. I do note that, in the first sentence of the minister's speech, he does refer to the continued efforts of this government to ensure the integrity of Australia's social welfare system. On my reading of that, I would believe that the member for Lilley has a certain limited scope to speak about the integrity of the social welfare system. The honourable member for Lilley has the call.

Mr SWAN —Thank you very much, Mr Deputy Speaker. It is about integrity. If we are going to have a data-matching system to detect fraud, the people at the front line in implementing the data-matching system must be there in order to implement the systems that are being put in place. I am finding—as I am sure other members of parliament from both sides are finding—that there are fewer staff at the front line in the customer service centres. There is growing pressure to ensure payments are made to customers—that is, that the work is turned around—but because of the staff cuts there are fewer people on the other side, actually out there detecting fraud. That is the problem.

Anyone who works in these organisations, and any member of the public and any member of parliament, ought to be extremely concerned about this situation. If fraud escalates as a consequence of staff cuts, that undermines the credibility of the system. It is not just a question of a political debate here between sides over staff cuts in Centrelink; this goes to the heart of service delivery.

If these concerns are not heeded, then we are going to have a growing fraud problem. I appeal to the minister to have a look at this again because at the end of the day it is not the board of Centrelink that is responsible for the integrity of our system; it is the government. It is the minister, Senator Newman, and Mr Truss, the member for Wide Bay, who are directly responsible for this. In the end, it has nothing whatsoever to do with the board of Centrelink. So if Centrelink is less able to conduct reviews, then it is less able to catch social security fraud.

Mr Cadman —Mr Deputy Speaker, I raise a point of order. He might claim relevance. This bill is a very narrowly cast bill which deals primarily with the sunset clause that is going to be removed from data matching. That is the purpose of the bill. It is a very narrow bill, a very small bill. It has got nothing to do with personnel or with capacity; therefore the member's remarks are irrelevant.

Mr DEPUTY SPEAKER —I thank the member. Before I call the honourable member for Lilley, I will again refer to the minister's speech in which he made the point that it is an important control on personal financial assistance schemes, helping to keep them free of abuse and fraud. I think that opens the way for the honourable member for Lilley to talk about fraud. The minister also said that it reminds the community that it is not a case of if fraud will be detected, but when. He also said that it has become an important feature in the review mechanisms that are helping to build the integrity of the system and the confidence of the public that the system is, in fact, secure from fraud.

Mr SWAN —The Minister for Family and Community Services, Senator Newman, loves talking about fraud and welfare cheats. I just want to make it clear again that there is an absolute commitment from this side to weed out whatever fraud or abuse there is in the system. What we do not hear a lot about from the government—and I would like to hear a lot more—is about putting in place opportunities for people to move forward, to move off welfare and into work. Governments have to do both. They have to look at how they maintain the integrity of the social security system, but, just as importantly, they have to provide opportunities for people to move ahead, to get off welfare and into work.

Australia needs a government that will do both of those things: that will protect the integrity of our social security system from fraud and abuse, but will move people off the benefits and back to work so that they are not actually in the system. Look, for example, at those dependent on unemployment benefits, particularly those dependent upon unemployment benefits for 12 months or longer.

Mr DEPUTY SPEAKER —The member for Lilley is now getting away from the—

Mr SWAN —It is something like a quarter of a million people and the number is rising, with more people being caught in the system, and the government seems to be unconcerned about it. Labor has a very positive agenda in this area. We believe you have to provide the incentives; hence our emphasis upon tax credits and so on. Labor wants to do much more than just make sure the system is not open to abuse. We will support any legitimate means of stopping abuse. We want to make sure the system does not trap people into a cycle of poverty and dependence. Labor intends to make sure that the social security system provides the security of knowing that if you lose your job there will be an unemployment benefit to make sure that you do not fall into poverty.

Our system will also offer the opportunity to make sure that, when you do get a job, it will be worth while. So we are pleased to support this bill today. We call on the government to recognise that social security has to do so much more than just prevent fraud and abuse, important as that is. It has to provide the opportunity for those who are looking for work to find those jobs and, when they do, to be able to hold onto those jobs and take home much more than they currently do.

Mr DEPUTY SPEAKER (Mr Nehl) —Before I call the honourable member for Mitchell, I encourage him to remain within the same limits of relevance that he was so keen to apply to the honourable member for Lilley.