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Wednesday, 11 September 1985
Page: 452

Senator PETER BAUME —My question is directed to the Minister representing the Minister for Social Security. Is the Minister aware of that part of the Auditor-General's report which identifies overpayments and fraud in social security payments as the two main causes of waste in the Department's expenditure? Is he aware of the very high amounts of money which the Auditor-General said are lost due to fraud and overpayment? Further, is he aware that Special Prosecutor Redlich, in his 1983-84 report, also highlighted those same problems and sought action by the Government? Will the Minister advise the Senate of the main types of fraud and overpayment that the Department has come across? What is his view of the extent of this fraud and the amount of funds that remain uncovered? What is the extra cost burden to be borne by Australian taxpayers as a result of these activities? Finally, what action has the Department taken to deal effectively with the problems of fraud and overservicing raised by Mr Redlich and by the Auditor-General, especially in light of the mini-Budget statement on 21 May to the effect that the Government had in mind a particular monetary goal in relation to recoveries in this area?

Senator GRIMES —The matters raised by Senator Peter Baume are annual ones which are raised whenever an Auditor-General's report is issued. The Department of Social Security always gets a mention, and it always gets a mention in regard to the matters he raised. I will take up a couple of the points he has made and then give some detail about the specific matters raised by the Auditor-General. He talked about Special Prosecutor Redlich's report, and that arose from Mr Costigan's inquiry into social security matters. As a result of that report and the extraordinary claims of fraud and criminal activity amongst illegal social security recipients, the Department of Social Security, I believe with the approval of the previous Minister for Social Security, gave assistance to Mr Costigan and the Commonwealth police. The fraud and overservicing detection section of the Department assisted in order to cut down the amounts of money which were allegedly being ripped off the public purse. After a while it became quite obvious that the claims of Mr Redlich and Mr Costigan were grossly overstated. There was no evidence in regard to what they had put forward. The officers of the Department reverted to their normal activities and have done them since then.

The second point is that every time the Auditor-General brings down a report, naturally, as is his duty, he reports on overservicing in the Department of Social Security. I believe we should put those things into perspective. During the year 1984-85 the Department detected some $60m in overpayments. That represents about 0.42 per cent of the total outlays-which are considerable-of the Department. During the same time the Department recovered $40.6m from people who were overpaid. The amount of $123.8m which the Auditor-General mentioned represents the total accumulated debts owing to the Department over many years. The Department will continue to seek the recovery of the amounts owing to it. This year it has recovered $40m.

The Auditor-General also commented on some procedural breakdowns in the Department but most of his comments-unfortunately this happens each year-have been misinterpreted. The most glaring example of such misinterpretation was by the Opposition spokesman on public administration which was reported in this morning's Australian. He alleged that the Department of Social Security overpaid $350m and that this had been caused by the failure to apply identification procedures.

Senator Chaney —I think you are reading one of my old answers. It is plagiarism at its worst.

Senator GRIMES —As Senator Chaney says, this sounds like one of the answers he used to give and he is dead right. What happened was that the Auditor-General who used a small sample of the Department's 200 regional offices, was unable to be satisfied that the Department's identification procedure was strictly satisfactory. He did not conclude anywhere that this had resulted in the Department's overpaying 10 per cent of its clients. This cannot be extrapolated from the report and the Auditor-General did not state in his report that there were overpayments of $350m.

The Department deals with 2 1/2 million clients each year. This year it will spend $15 billion on pensions and benefits. It is inevitable that there will be some overpayments but to put the matter in perspective even the highest estimates of overpayments amount to less than one-half of one per cent of the outlays. This is too high; everbody says it is too high. The main cause of this-this is what Senator Baume asked about-is difficulty with the identification procedures. The Department has introduced more rigorous identification procedures. I remember, and Senator Chaney will remember, that as soon as one does that the Department is criticised for being overzealous in this area. I say advisedly that maybe some universal identification procedure will assist in this matter.

The Department has always believed-successive Ministers for Social Security have always believed-that the situation can be improved but I do not believe that the situation is helped by reports such as the one in this morning's Australian by the shadow Minister for public administration. There is no evidence from or any claim by the Auditor-General that overpayments to the extent of $350m have occurred. I suggest that the spokesman reads the report again, take a little more time and using the skills he had as a public servant, he will find the truth.