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Wednesday, 12 February 1986
Page: 217

Senator GRIMES (Minister for Community Services) —by leave-I wish to advise the Senate of new moves by the Government to significantly reduce social security overpayments and to further improve the administration of pensions, benefits and allowances. These moves are part of the Government's fundamental commitment to ensuring that social security payments go to those who need them, in accordance with their need and legal entitlement. Over the past three years this Government has taken a number of steps to reform the Australian social security system, and to ensure that it is more truly and more accurately needs-based. These steps include moves to reduce overpayments-actions such as the transfer of some two million payments from cheques to direct deposit, and the introduction of much stricter proof of identity procedures. These and other moves are starting to prove very effective-the net level of overpayments detected by the Department of Social Security last financial year fell below $20m.

It is important to get this figure in perspective. The Department of Social Security runs one of the largest financial institutions in Australia. In the last financial year, the Department paid out $14.175 billion on social security payments. It generated 100,340,000 separate payments. Its regional offices considered 14,500,000 counter contacts, answered 7.3 million phone calls and handled 27.2 million pieces of correspondence. So given the scale of activities, the fall in net annual overpayments is pleasing. The Government, however, is determined to achieve better results.

The level of social security overpayments also needs to be set against the massive scale of tax evasion and avoidance which this Government has had to confront. At 30 June 1983 the Department of Social Security was owed $76m in accumulated overpayments. At the same time, there was $2.9 billion outstanding in tax. It is interesting to note that those most vocal about social security overpayments tend to be those most silent about this savage erosion of the public purse. This Government has met the challenge of tax evasion. It is also prepared to deal with the problem of social security overpayments.

By harnessing many recent technological advances, implementing a range of administrative reforms, removing legal ambiguities in the Social Security Act and committing additional resources to this task, we intend to greatly reduce the level of social security overpayments over the next three years. While an increased emphasis on overpayments can be expected to generate some short term increase in notified overpayments, the savings to the Australian public as a result of the campaign could be expected to be in the order of $90m by 1988. The Government's strategy is based on one fundamental precept-that there is no one, simplistic solution to the problem of social security overpayments.

Overpayments occur in an extremely complex system for many different reasons, and it is essential to recognise that fact at the outset if there is to be any worthwhile and intelligent debate on this issue. Unfortunately, too many conservatives in this country think and argue that overpayments can be eliminated simply by threatening and bullying people into submission-by abusing the needy as dole bludgers and welfare cheats, by threatening to cut people of whom they disapprove-such as single mothers-out of the system entirely, and by proposing vicious and vindictive measures such as anonymous telephone dob-in campaigns. Years of experience show that these sorts of tactics simply do not work. During the punitive Fraser-Howard years, levels of overpayments mushroomed, more than doubling in relation to the level of expenditure.

In contrast, this Government starts from the premise that the vast majority of people on social security need and are entitled to be treated with sensitivity and compassion. We recognise that if overpayments are to be tackled effectively, then there must be a comprehensive strategy in place which integrates a wide range of measures, covering all aspects to do with the prevention, detection, calculation and recovery of those overpayments. As a result, the Government has decided to implement a three-phase campaign which involves, first, reviewing and collecting as much existing debt as possible; second, preventing future overpayments; and third, improving the means of identifying and investigating fraud and overpayments.

This strategy has six principal points. The first point will be a major publicity campaign to increase community awareness of the Government's commitment to combating fraud and overpayments and of the obligations of people on social security under the Act. It is important we make it clear that reducing poverty is too important a goal for us to tolerate fraud in the social security system. The second point will be to ensure that all clients are better informed of their exact entitlements, thereby eliminating the many overpayments which occur as a result of misunderstanding and confusion.

Letters to all clients setting out in clear and simple English exactly how their level of payment has been arrived at, will be issued for the first time in May this year, and at regular six-monthly intervals thereafter. The letters will also clearly inform clients of their obligations under the Social Security Act to notify the department immediately of any changes in circumstances which affect payment. The Government is confident that simply by telling people more clearly about the rules of the system and their obligations under these rules, the level of overpayments-and also appeals-will drop significantly. At the same time, of course, those who are deliberately cheating the system will also be put on notice that they are running an ever-increasing risk of detection.

I am going to truncate my statement to enable Senator Baume and Senator Haines to speak. What we have done is, as I have said, introduce these principal points. We are also reviewing the collection of existing debt. We are taking action to ensure that the Department will be much more effective in the future in recovering detailed overpayments. From May, all withholdings will be automatically indexed in line with the six-monthly increases in pensions and most benefits. I suppose the most controversial part and the most public part of the Government's plans has been the suggestion that we have an amnesty. As a result of this, the Government has decided to declare a three-month amnesty for some categories of people who have been paid more than they were entitled to in the past.

The amnesty will take effect from today and run until 31 May. Unfortunately, there has been a great deal of ill-informed and overwrought criticism of the amnesty in recent weeks, most of it based on little more than prejudice and self-interest. Without waiting for the terms of the amnesty to be finalised and announced many people have rushed into print to condemn the amnesty for `thieves and cheats'.

The amnesty, I wish to assure all honourable senators, will in no way apply to people who have been systematically and deliberately defrauding the social security system. All those who have been morally outraged solely as a result of their over-active imaginations in recent weeks can therefore relax. Contrary to popular mythology, not everyone who is overpaid by the Department of Social Security is a hardened thief or calculating criminal. Too often, overpayments occur simply as the result of misunderstandings or confusion. In fact, most overpayments occur as the result of genuine clients failing to advise the department when their circumstances change, rather than people deliberately setting out to rip off the system.

The amnesty is designed to help those people who have, or at least originally had, a genuine right to a social security payment, but who have subsequently been overpaid because their circumstances changed and they did not inform the Department. It does not for instance, cover people who register for unemployment benefit in two or 22 different names. It does not cover people who deliberately misrepresented their circumstances in the first place in order to gain a payment to which they were not entitled. It does not cover cases of internal departmental fraud, nor does it cover incorrect payments deliberately initiated during the amnesty period.

It covers only those people who come forward of their own free will before 31 May-not people who are already being prosecuted, or are under notice of investigation. The statement is the same as that delivered by the Minister for Social Security (Mr Howe) in another place. It consists of six pages. Rather than delay the Senate by reading the whole six pages and therefore preventing Senator Peter Baume or Senator Haines speaking, I seek leave to incorporate the remainder of the speech in Hansard.

Leave granted.

The statement read as follows-

The amnesty has been very carefully designed to ensure that as far as possible, it helps only those who may perhaps be described as ``treadmill'' cases-genuine clients who have failed to notify of a change in circumstances, who are anxious and concerned about detection, but who are too frightened to come forward because they can't afford to repay the debt incurred, and may face prosecution.

The Government recognises that in a social security system as large and complex as this, there are many genuine clients who in the past could have stumbled almost unintentionally into being overpaid.

Even where people have intentionally failed to notify of a change of circumstances, the Government sees little point in forcing people to maintain the deception-continuing to receive payments to which they are not entitled-because they fear the consequences of owning up.

As far as possible, the amnesty is designed only to help those people who made an initial mistake and who would welcome the opportunity to set the record straight-not those people who deliberately set out to get money to which they are not entitled and who have every intention of continuing their theft. These people will instead be subject to increasingly vigorous investigative and detection procedures.

Before outlining the final stage of the three phase strategy, I would like to point out to the Senate that the amnesty is designed primarily to improve the social security system and reduce overpayments-not primarily to help individuals (although of course many people in hardship or needy circumstances will benefit). But some of the advantages of the amnesty to the Department of Social Security, and to all taxpayers, include:

it will free staff and administrative resources to concentrate on detecting deliberate fraud;

it will stop many overpayments immediately that might not otherwise have been detected for some time.

Finally, I wish to outline briefly to the Senate some of the improvements to be implemented in identifying, investigating and recovering overpayments.

These improvements will include the installation of a personal computer-based system in all regional offices so that staff can calculate overpayments much more speedily and efficiently.

Procedures are also being developed to ensure that the maximum rate of withholding is correctly and automatically applied in all new cases where a debt to the department is identified.

The direct credit method of payment will continue to expand, thereby further reducing the incidence of fraudulent cheque negotiations.

Additional staffing resources have been allocated within the department to deal with and eliminate the backlog of fraudulently negotiated cheques presently awaiting investigation.

I am pleased to present this detailed strategy to honourable senators, because I believe that the long-standing problem of social security over- payments can only be overcome by a comprehensive, integrated program which combines the very latest technological advances with an informed appreciation at both Government and departmental level of the complexities involved.

I am confident that the strategy I have outlined meets these demands.

Senator GRIMES —I move:

That the Senate take note of the statement.