CROWE, Ms Charmaine, Senior Policy and Advocacy Officer, Australian Council of Social Service

GOLDIE, Dr Cassandra, Chief Executive Officer, Australian Council of Social Service

HELYAR, Ms Susan, Director, Australian Capital Territory Council of Social Service

WALLACE, Mr Craig, Advocacy Manager, Australian Capital Territory Council of Social Service

Committee met at 09:07.

Evidence from Dr Goldie was taken via teleconference—

CHAIR ( Senator Siewert ): I declare open this public hearing and welcome everyone here today. We acknowledge the traditional owners of the land on which we meet and pay our respects to elders past, present and emerging. This is the first public hearing for the committee's inquiry into the design, scope, cost-benefit analysis, contracts awarded and implementation associated with the Better Management of the Social Welfare System initiative. The committee will also be holding a number of hearings around the country in coming weeks, and these details will be made available on the website very soon. I thank everyone who has made a submission to the inquiry to date.

This is a public hearing, and a Hansard transcript of the proceedings is being made. The audio of this public hearing is also being broadcast via the internet. Before the committee starts taking evidence, I remind all present here today that, in giving evidence to the committee, witnesses are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to the committee, and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to the committee.

The committee prefers all evidence to be given in public, but, under Senate resolutions, witnesses have the right to request to be heard in a private session. It is important that if witnesses want to give evidence in private session that they give the committee some notice, because it takes a bit to organise. If you are a witness today and intend to give in camera evidence, could you please let our secretariat know. Also, could you please double check that your mobiles are either silent or turned off. Do not forget, this committee applies penalties if phones go off. Chocolate is usually the preferred penalty.

The media have requested permission to film and take photographs of proceedings, and the committee has agreed to this. I remind the media that this permission can be revoked at any time and the media must follow the direction of secretariat staff. If a witness objects to being filmed, the committee will consider this request. The media are also reminded that they are not able to take images of senators' or witnesses' documents or of the audience. Media activity may not occur during suspensions or after the adjournment of proceedings. Copies of resolution 3 concerning the broadcasting of committee proceedings are available from the secretariat—and I will just double-check with our current witnesses that they are okay to be filmed.

Mr Wallace : Yes.

CHAIR: I would now like to welcome representatives from the Australian Council of Social Service and the Australian Capital Territory Council of Social Service, although I am aware that you also represent different organisations. Sorry about the difficulties with security and getting in here. I know all of you are pretty experienced with these committee inquiries, but I am just double-checking that you have been given information on parliamentary privilege and the protection of witnesses and evidence.

Mr Wallace : Yes.

Ms Crowe : Yes.

CHAIR: I would like to invite you to make a short opening statement, and then we will ask you some questions.

Dr Goldie : Thank you, I will make an opening statement, and then I will pass over to my colleague Charmaine Crowe. First of all, Senators, I want to very sincerely thank, through you, the parliament for the establishment of this very important inquiry and to thank the senators for ensuring that this public hearing takes place. I know that the committee is very keen to ensure that hearings are to be held around the country.

We know this Online Compliance Intervention program has affected, in one way or another, at least 200,000 people around the country. We know that towards the end of last year 20,000 letters were sent out by the department every single week. This is since November 2016. Using the government's own figures, we know at least 20 per cent of these so-called discrepancy notices, generated automatically, are in fact incorrect. What we do not know is how many more have been sent in error. We do not know how many have been sent that have alleged debts that do not in fact exist. We do not believe we know how many debts have been pursued that were higher than what was actually owed. We certainly do not know how many people have entered into agreements to repay debts that they did not owe, or certainly a level of debt that they did not owe. And we do not know in how many cases people have entered into debt repayment arrangements that they simply cannot afford.

The impact of this 'robo-debt' system, as it has been come to be known, has been to cause extensive distress and suffering right across the community, with thousands of people affected. The full scale of this, as I said, hit just seven weeks out from the end of the year, from Christmas. We know that in the community this is overwhelmingly a time when financial pressure is very real for households, and most particularly for people who have interaction with the social security system—many of whom are on low incomes or in otherwise vulnerable circumstances.

It should also not go unnoticed that when this kind of program is unleashed on the scale that it was just weeks before the end of the year, it was at a time when legal services and other services were typically understaffed. In many cases, this created an extremely difficult situation in terms of being able to respond as rapidly as we would have liked to. We know that thousands of people have been worried sick about receiving these kind of notices. We also know that, because of the communications from the responsible minister in the lead-up to this program being unleashed, there has been a perception created that if you do not comply you may go to jail. This has been completely unacceptable in terms of the tone associated with this exercise. We believe that the first time over 6,500 people heard about an allegation of having a Centrelink debt was from a debt collector because the department had sent letters to old addresses. We have heard many stories about the behaviour of debt collectors, which has been completely inappropriate. It is certainly important for the Senate inquiry to get the bottom of this.

We believe the actions of the government have culminated in creating a serious climate of fear around this program. We note that as chair of this inquiry, Senator, you have made the protections associated with people giving evidence before you very clear. We have today, again, expressed our serious concern that by releasing public details to the media that are associated with a person commenting about Centrelink matters, it has had a major chilling effect and created a real climate of concern for people that if they speak up their private information may be provided to the media.

When this program was first announced in the context of budget savings, ACOSS warned the government that in setting a large target—we believe it is about $4 billion of overall revenue to be pursued—and pursuing it in an aggressive way, it would lead to deep distress and human damage. Our warnings were not heeded. We have always said that if there is an overpayment received by a person involved with Centrelink, then any kind of debt collection process associated with that must be done in a fair, humane and just way, taking into account the individual circumstances of people affected by it.

The extraordinary result of this auto data-matching system is that the government has used its extensive and extraordinary powers to completely shift the onus of proof from Centrelink on to the individual when investigating whether or not a debt exists. It has created a dragnet approach and we believe that its core features have overwhelmingly operated as an abuse of government power. We know that there are thousands of people who have been forced to try and track down evidence of their fortnightly income, in many cases going back over six years. This has created impossible circumstances for many people with the spectre of them being pursued for a debt that they do not believe they owe if they do not comply. We believe stories of depression, anxiety, fear and frustration will be heard by senators.

It has also completely ignored the understandable implications for people who do need assistance to deal with this kind of pursuit of alleged debts on services, particularly community legal centres. I do not think the committee should ignore the fact that this particular budget saving measure, which we clearly believe is the bigger context for this, should ignore that this is in addition to serious cuts that are being made through the federal budget processes to community services generally and to community legal services in particular.

As soon as the program was unleashed, as quickly as we could, we urged the minister to halt this system, to shut it down and to bring together people from across the community with deep expertise to look at the way in which we could ensure that technology and data matching could be used in a way that was beneficial to people interacting with social security. We believe that, if designed well, this can be achieved, but this has clearly not been done in the way that this system has been designed. The system has completely stripped out any human participation in terms of the careful assessment of whether a debt is owed and the appropriate level of engagement with an individual before any kind of debt process is pursued.

We do not believe the minor changes that the minister announced early in January have addressed the fundamental flaws in this program, so again today we will be submitting to you that the system needs to be shut down. The government needs to conduct an investigation to ensure that, where people have entered into arrangements to repay debts that they did not owe, appropriate and immediate action is taken to reverse that. There needs to be an investigation into the impacts on people at the human level to ensure that appropriate compensation is provided or action is taken to ensure that people's wellbeing is at the heart of this inquiry.

Finally, we believe that it is vital that the government and the committee get to the bottom of how this happened. Who was responsible, what were the processes that led to this extraordinarily damaging outcome, and how do we ensure that, as we look to secure the benefits of technology, this never happens again? Thank you.

CHAIR: Thank you.

Ms Crowe : I will just add some points. I want to quickly detail some of the concerns that we have with the program. The biggest one is the generation of incorrect debts thanks to the crude data-matching process that is undertaken by the automated system. In some cases, income is doubled where there is a different employer name held by Centrelink to that held by the ATO. In other cases, the system averages out annual income over 26 fortnights rather than looking at the income earned for each fortnight the person was in receipt of a Centrelink payment. I should add that the system is designed to do this. Where someone does not enter that fortnightly income through the online portal, it will automatically average that income over the 26 fortnights and subsequently result in a debt that may be incorrect or, indeed, higher than what is actually owed. Previously, Centrelink would investigate data matches between Centrelink and the ATO to be (a) certain that a debt existed and (b) sure about the level of that overpayment if it did indeed exist. Now the responsibility lies with the person targeted, and we believe that is fundamentally unfair.

The government has also changed departmental guidelines around the collection of a 10 per cent recovery fee where there is a debt. They now no longer need information about the circumstances that led to a debt to apply that fee. Normally this fee would only apply if the person knowingly or recklessly provided false information or withheld information. Now the fee applies wherever a reasonable excuse is not offered via the online portal, for instance, including where contact is not made. This is in contrast to the original intent of the 10 per cent recovery fee, which was to penalise recipients who did the wrong thing as opposed to penalising those who made an inadvertent mistake.

Furthermore, failure to adequately communicate with people has led to thousands of people not receiving discrepancy and debt notices where the alleged debt ends up with a debt collector. While Centrelink could not track down these people to provide them with the information about a discrepancy or, indeed, an alleged debt, debt collectors have seemingly had no trouble doing so.

There may be a stay on debts when they are subject to review if the person actually requests a stay on that debt recovery. However, many people have had their debts recovered whilst under review, which has added to the stress, frustration and financial hardship experienced by people affected by the program. I should add that Centrelink has always had the power to recover debts that have been under review. I would also like to add that community legal centres that help people with social security matters have had increased caseloads thanks to this program, with some reporting a threefold increase in demand. Our concern is that people affected by the program are not able to get the legal assistance that they need. We are also concerned about people who may have a social security issue outside of this program and who may not be able to receive timely advice about their matter because of the demand that this program is generating.

Finally, I would like to state that the program does target vulnerable people where there is no vulnerability indicator on their record. That may happen, for instance, where the person did not have a vulnerability at the time they received a Centrelink payment from where the alleged debt arose, but have subsequently acquired one—for instance, they may be subjected to domestic violence or have depression and anxiety. Those people may well be caught up by this program. We also have concerns about how the program deals with people with other disadvantages—for instance, where they speak English as a second language. Thanks. I think we will open up to questions.

CHAIR: Ms Helyar or Mr Wallace—did you have additional comments?

Ms Helyar : There is a couple of things I thought would be worth noting. We are here working with the Australian Council of Social Services, but also representing the ACT Network. The ACT is a city which most people think is wealthy, well employed and well educated but, in fact, we know that there are a number of people who have been caught up in this debt recovery scandal. They are very vulnerable and are operating in an employment market in which the biggest growth in jobs is in part-time and temporary work, and where there is double the number of people looking for work for whom there are jobs available, especially in the lower skilled jobs market.

One of the concerns we have about the regime is that it does not recognise the labour market in which people are trying to work and comply with their Centrelink requirements, which is a market in which people get bits and pieces of work; work irregular hours and often spend periods of time across a financial year out of the workforce. This leads to it being way more complicated and extremely onerous to comply with a Centrelink system that assumes that people either have or do not have a job across a financial year.

CHAIR: Before I throw to Senator Watt, Dr Goldie, I want to go back to the point that you made about the number of people for who the first they knew about this was from debt collectors. Did you say a number? If you said a number at the beginning, I missed it.

Dr Goldie : It was 6,500.

CHAIR: Those were people who the first they knew about it was when a debt collector contacted them?

Dr Goldie : That is right.

Senator WATT: Thanks everyone for coming along today. These are obviously some really serious matters we are dealing with and, given you are our first witnesses, we should recognise that it is International Women's Day. No doubt there are a lot of women in particular who have been affected by this disgraceful abuse of process.

I was going to ask some questions about the debt collection processes, because I think most people who have followed this debacle are familiar with the fact there has been a lot of unfair treatment handed out to people in terms of the notices that they have been receiving, but I do not think that the debt collection aspect has had quite as much attention. I think it was Dr Goldie who mentioned that there are many reports of debt collectors behaving pretty badly with recipients of these notices. Dr Goldie, or the other witnesses: is there anything that you can specifically point to us in terms of reports that you have received?

Ms Crowe : I might jump in there. There have been media reports of external debt collectors, which I think you are referring to, who have threatened alleged debtors that they will claim assets or seize assets. There have been reports of debt collectors demanding immediate payment or unaffordable repayments, and there have been reports of debt collectors threatening to take people to court.

My understanding is that there are service agreements between the department and external debt collecting agencies. I question whether those actions are indeed permitted under those agreements. But, to the best my knowledge, those kinds of actions are not permissible under Consumer Law, and, as I understand it, these agencies need to abide by Consumer Law. That is why we have concerns around those reports.

Senator WATT: I was actually going to ask you about that. I know that there are a number of guidelines and laws that apply to debt collection agencies, whether they are operating in a public sector field or if they are chasing money for banks in the private sector field. From the reports you have heard from your member organisations, is it your view that some of these debt collection agencies are not complying with guidelines and laws?

Ms Crowe : Certainly, if these reports that I have seen are correct, then, yes, it would appear that they are not complying with the Australian Consumer Law. I should add that, whereas Centrelink has special rules itself around debt collection, it does not have to abide by Consumer Law, the external debt agencies to. That is why we would have concerns about these reports.

Dr Goldie : If I could add to that. I think this is an important part of the work of the committee, if I may suggest. It is clear that the Commonwealth has very particular legislative powers that are extraordinary, in contrast to other entities that are required to follow certain laws and regulations associated with debt collection. As some senators will have heard, what we are doing is not new. In terms of the power of the Commonwealth for example to take a position that a debt is owed and then, without any kind of independent traditional assessment of that, and then to be able to pursue a range of powers in order to recover debt, including of course the people who are directly relying upon the department for income support, these are extraordinary powers. We say that in light of that it is therefore particularly incumbent upon the Commonwealth to exercise a high standard of duty of care and to ensure that there is the appropriate level of human involvement in the careful assessment, active assessment, to be well and truly satisfied as a department that a debt is in fact owed, before any of those kinds of powers are exercised. I think it would be perfectly appropriate for the committee to look at the laws and powers that do applied the Commonwealth and the regulations associated with the area and to take a view about whether those are appropriate in a contemporary context, as well as whether or not the auto data matching-process itself has obviously got major flaws in it.

Senator WATT: Is this practice of using external debt collection agencies a relatively new thing for Centrelink or has that been happening for some time?

Ms Crowe : That has been happening for some time. Typically, external agencies would collect around 10 per cent of debts that have been raised. The latest data we have seen suggests that that is the case with this program as well.

CHAIR: The 10 per cent?

Ms Crowe : Ten per cent. That is just the latest information that we have.

Senator WATT: You also mention—and I think Senator Siewert followed this up, as well—that there are 6½ thousand people, I think it was, who first heard about their debt when they got a knock on the door from a debt collector, literally.

Ms Crowe : Yes, or a text.

CHAIR: Can you tell us what type of contact you have heard about, because I have heard of texts, knocks at the door—

Ms Crowe : Likewise, texts and phone calls. I personally have not heard about people getting a knock on the door. It has mostly been by telephone. The frustrating thing for a lot of people has been that while Centrelink could not alert them to the fact that there was a discrepancy and then an alleged debt, the debt collector could seemingly make contact straight away. It is fundamentally flawed. I should add that the department's own guidelines state that under the manual process of detecting and investigating debt Centrelink does or should contact the alleged debtor if the debt is large or if it is not reasonable to assume that the person is aware of the debt. To the best of my knowledge no-one under this program has been contacted initially by Centrelink to let them know that there is a potential debt that may be quite large, certainly not by telephone.

Senator WATT: What you have described to us is that Centrelink is also applying a 10 per cent debt recovery fee on a debt. So if I receive a debt notice, and let's assume for a moment that it is incorrect, saying that I know Centrelink $5,000, if I do not pay or if my address details with Centrelink are wrong and first idea I hear of it is when I get a debt collector onto me, I can potentially be charged another 10 per cent of that debt—so another $500.

Ms Crowe : That is correct.

Senator WATT: Which is to cover the cost of the debt collection, or for whatever purpose.

Ms Crowe : Yes.

Senator WATT: So I could be up for $5,500. You mentioned I think that debt recovery action is continuing while debts are under review. So I could complain and say, 'This is not correct. I don't owe $5,000. In fact I don't owe anything.' But I'm also being hit with a 10 per cent fee on top of that and, essentially, I can be ordered to repay this when it actually could all be wrong.

Ms Crowe : That is correct, except the minister did make an announcement recently to change the rules around debt recovery, where the debt is under review or reassessment. My understanding now is that the person affected can request for a stay on that debt recovery action while the debt is under review.

CHAIR: They have to request that—it is not automatic?

Ms Crowe : That is my understanding, on the basis of the information published on Centrelink's website. I should add that one of the problems with this program from its rollout through to refinements that have been made is that there has been no formal provision of information around those changes. We are seeing information provided through media outlets. For instance, when the first changes were made in January the first we heard of them was through The Australian newspaper. It seems to me that that has been the case with further refinements made, except in this instance where information has been published on Centrelink's website. I should add that that was some two weeks after the changes were first announced. That is a problem for people, because if they are not aware of the exact details around the changes then they cannot necessarily act on those changes—for instance, request a stay on debts, or whatever the change may be.

Ms Helyar : I think the issue is the compromise of the public's confidence in public administration is huge in this space. People fear retribution when they contest a debt. They are unable to access the information that the government requires of them. And people who are concerned about a debt being raised against them, because they have complicated work arrangements, coming in and out of work and having irregular hours, maybe they are discouraged from seeking work. People have had to take time off work to do with their Centrelink debts. Consumer Law obligations are not imposed on government in the same way they are imposed on private entities. All of these things compromise the public's confidence in systems. Some of our members have wondered is that partly what people are being encouraged to do is to stay out of the Centrelink system. They are being discouraged by this poor public administration from exercising their entitlements in the income support system. Some people will cynically suggest that perhaps that may be the point of the process. I think it is really dangerous for government to implement programs like this in ways that are so flawed, because it has long-term impacts on the public's confidence.

Senator WATT: There are so many aspects to this, aren't there? Dr Goldie, I think in your opening statement you said that the government has admitted that at least 20 per cent of the debt notices that are being sent out to people are incorrect. In fact, the number could be a lot larger. We do not know how many more have been sent in error or for debts that do not exist, and we do not know how many people have entered into debt repayment agreements despite not actually owing a debt. Is there anything more you can tell the committee about those concerns?

Dr Goldie : You will be presented with the direct stories of people who will say that they have entered into arrangements to repay debt that they did not owe, or they certainly were not confident they owed, because, of course, no particulars were provided to them about the exact basis for that figure having been arrived at—because of, for example: 'I was worried about losing my pension;' 'I was worried about losing my income support.' It is really important to understand the power dynamic here. As my colleague Susan highlighted, the Department of Human Services plays such a critical, powerful role in Australian society. We call it a safety net and let's not forget the significance of that. This is a safety net that really matters to people's sense of 'There is somewhere I can go if I get in trouble.' But what the system has done is created a climate where people have been frightened, indeed have a feeling of being bullied, into complying. I think it is significant that in some cases we know of people have been putting their heads in the sand because they are frightened of what might be at the end of it. We need a culture created by the department and minister that is 'You come to the Department of Human Services for help.' That is why I fully support the comments from my colleague Susan Helyar about not only the immediate implications for these individuals but also the longer-term confidence that the public has in the administration of our social security system.

Mr Wallace : Can I answer that directly. We had some contact with community legal services last week here in Canberra, which was to the effect that the bulk of the cases that they have been handling that are intensive have been resolved in the person's favour because the debt is not owed. The other piece of information that they gave to us is that the, kind of, default reaction of many people to receiving a notice like this might be to simply pay that debt without giving it a lot of further investigation, because sometimes they are people in precarious employment with other things going on in their lives and they are not wanting to contact advocates and spent time investigating something like this. So the other compromise to public administration is, in effect, that we might be recovering money from people that they do not owe.

CHAIR: Can I just double-check a point on the 20 per cent figure. Is the 20 per cent figure just in areas in the automated debt process and not all the other areas in which Centrelink may have made errors, which we were discussing during estimates last week. Is that correct?

Ms Crowe : That is correct. The information released is a 20 per cent error rate in terms of the discrepancy notices—that is, the mismatch in data between the ATO and Centrelink.

CHAIR: Thank you. I just wanted to clarify that.

Senator SMITH: Dr Goldie, going back to the 6,500 number. It appears very well-rounded to me. I have not seen or heard of that number before. Could you just be more precise regarding where it has come from? This is the number of people visited by external debt collectors.

Dr Goldie : Ms Crowe, can you respond to that.

Ms Crowe : Yes, I can. That figure, as I understand it, is actually 6,600. In her opening statement Dr Goldie said 'over 6,500'. It was a figure stated by the department last week in estimates, referring to the number of people who did not receive the initial discrepancy and then subsequent alleged debt notices. In those instances, my understanding is that, where there was no contact or response from the person, that debt was then sent to a debt collector.

Senator SMITH: My next question is: how do you think we can better ensure that recipients are providing accurate information to the department, particularly on something as simple as postal addresses or living addresses et cetera? How can that be remedied?

Ms Crowe : My understanding is that the system has changed so that those initial notices are sent by registered post. Where the person has not been contacted, the department seeks other avenues to find their current address. It would appear that, at this stage, the contact issue should have been largely resolved. That does not address the matter of people who have previously been contacted under this program, who have not received that information, and are currently trying to address an alleged debt.

Ms Helyar : I think the issue also—

Senator SMITH: So do you think, as a result of this improvement, the registered mail aspect, that future problems will be substantially avoided?

Ms Crowe : No, I do not. I think problems in terms of communication, getting letters to people, may be addressed by that change. The fundamental flaws within the program—including the very difficult and complex nature of the online portal, which inhibits people's ability to provide accurate information that is very much needed when looking at whether or not someone owes a debt—to the best of my knowledge, have not been addressed. The fundamental flaw of the program, which is that it is generating inaccurate debt assessments, will not be addressed by the changes that have been made.

CHAIR: Senator Smith, Ms Helyar was going to make a contribution earlier.

Ms Helyar : The other issue with the information flow is that people may be on a working age payment and then go off it because they are working. Four years later, Centrelink are chasing up what they think is a debt. People are not expected to maintain contact with Centrelink when they are no longer in receipt of payments. Improving the system for people whilst they are in the system does not help with what happens four or five years later when something is being reviewed.

Senator SMITH: In your view, there is still a problem with the effectiveness of the online portal in terms of allowing recipients to update their information?

Ms Crowe : Yes. The slides that I have seen of the online portal clearly indicate that it is very difficult for someone to navigate the system—particularly around the person being notified that if they do not enter the correct fortnightly income they received whilst receiving a payment then there is a large risk that they will incur a debt. That is the fundamental problem. People are not aware that they need to enter in those details. It is not intuitive in that respect.

It is also expecting people to go back as far as six years to correctly identify income they have earned—for instance, in a casual or part-time job—for each respective fortnight they were in receipt of a payment. That is an arduous and very difficult task, and I am sure that for a lot of people it is impossible to do. Unless they are able to do that, the system is designed to average whatever income the ATO has for the financial year over the 26 fortnights and then generate a debt, which very likely is going to be inaccurate.

Dr Goldie : In terms of how a just, humane and fair debt recovery process could and should be designed, one part of it, of course, is to provide accurate information to a person about what their obligations are at the time they are interacting with social security to seek social security. Up until very recently, the department's communication to people going back many years was, I understand—and this may be a point to check with the department—that you were to keep your income records for six months. Now what we have is, as my colleague said, a dragnet approach of going back over six years.

I think it is important also for the senators to understand just why there would be a very loud backlash across the community. This really highlights what ACOSS and many others highlight in the context of this debate about welfare: this notion that everybody is welfare dependent, that we have a massive welfare blow-out. What this shows—and the data is there and we are happy to provide it again to the senators—is that overwhelmingly most people rely on social security at a point in time as they move from a precarious situation often into some kind of paid employment. As my colleagues have said, many of the people have not had interaction with social security for a long time. So, on the upside, that highlighted for many people that they could feel very empowered to be able to speak up because they did not feel that they would have to come back to social security for help. They were very confident to say: 'This is outrageous. I was on Centrelink for four months five years ago, at a point when I was a student' or something and 'I have never seen anything like this.'

On the flipside, as my colleague Susan highlights, when it comes to debt collection by the Commonwealth, it is incumbent upon the Commonwealth in terms of what should be done if a debt is indeed owed to do a proper assessment of the individual vulnerabilities and circumstances. As a government and as a community, we should be taking a holistic approach to the best way for the Department of Human Services to help a person. And if one part of it is to pursue a debt and that that may crush that person because of other individual circumstances going on so they end up in a mental health service, then we need to have sophistication to be able to balance the various factors of individual circumstances and to make the right call. That cannot be done through aggressive debt collection.

Senator SMITH: The quantum of debts raised; is that your 20,000 figure as well?

Ms Crowe : No.

Senator SMITH: So the 20,000 are the letters that have been received by recipients; that is not the number of debts raised?

Ms Crowe : 20,000 notices per week were sent out from the start of November 2016. We understand around 200,000 notices have been sent out since the program began.

Senator SMITH: That is it. Thank you.

Senator KAKOSCHKE-MOORE: Thank you for your evidence this morning. Dr Goldie, you have partially answered my first question. You said in your opening statement that a debt collection process should be fair, humane and just. One of the things that you point to that would result in a fairer debt collection process is more accurate information regarding a person's obligations being given to people receiving Centrelink at the time they were receiving it. What other characteristics do you believe a debt recovery system should have in order for it to be considered just, fair and humane?

Dr Goldie : Charmaine, can you take the senators through the architecture that we have been promoting?

Ms Crowe : Yes. Firstly, the biggest issue is that Centrelink needs to be sure that a debt is owed and if it is owed they need to ensure that the amount is accurate. We do not believe it is fair to place that onus on to the person concerned and for them to go into the investigatory work—to contact old employers, to make sure they have the correct details of income earnt through work for each fortnight. We do not think it is fair for them to have to go and seek that information and provide that back to Centrelink, particularly when they have been reporting their income fortnightly, which we have heard many reports of. At the time, people have done the right thing and reported their income fortnightly and then they have still been subjected to a debt notice. I think that is the main thing: there needs to be human involvement where Centrelink is detecting and investigating debts. That cannot be automated. As we have seen, it has not worked.

Senator KAKOSCHKE-MOORE: My second question was in relation to a couple of comments that have been made this morning that Centrelink and other Commonwealth entities are not subject to consumer laws in the same way that external debt collectors are. Can you provide me with some examples of the types of consumer laws that Centrelink and other entities are not subject to?

Ms Crowe : I do not profess to be a consumer law expert by any means, but one of the biggest differences is where someone contests a debt, so where they say, 'No, I don't believe this is right.' If it were a private creditor, that private creditor would have to stop any recovery action and go back and look at the details of the alleged overpayment. As we have seen, Centrelink has not had to do that. Before the minister made his announcement a couple of weeks ago, Centrelink could still recover debts, even where they were under review or appeal, which would not happen in the private space.

Senator KAKOSCHKE-MOORE: So the main consumer law that is at issue here is the fact that debts are not being stayed when doubt has been raised about the debt's legitimacy?

Ms Crowe : Correct. And the other matter here is that a private creditor would have to have solid evidence that a debt actually existed, and we have seen under this program that that has not necessarily been the case.

Senator KAKOSCHKE-MOORE: So the evidence that these debt collectors are relying on is just a statement from Centrelink saying, 'Mrs Smith owes $5,000,' and then that is enough to satisfy the debt collector that, yes, the debt exists, and they just go ahead and start the collection process?

Ms Crowe : I am not sure of the details of the information that Centrelink provides private debt collectors, but speaking about Centrelink's debt collection powers overall and comparing that with a private creditor's powers, as far as I understand it a private creditor would have to have solid information around the debt, including evidence that it actually exists. What we have seen under this program is that where, for instance, someone has not received the notices and therefore has not made contact with Centrelink, a debt is still raised against them, even though the only information as far as we can tell is that there has been a discrepancy between the information provided to Centrelink and that provided to the ATO. So there is no further detail on that front. Yet they could still undertake debt recovery action.

Mr Wallace : We spoke to the consumer legal centre locally and were lucky enough to have a consumer lawyer in the room who told us that the National Credit Code and the National Consumer Credit Protection Act provide protections against credit providers who attempt to unscrupulously target individuals who they assume owe them a debt. Their advice was that the Department of Human Services was not currently covered by those provisions but that they should be.

CHAIR: The issue there is: under what rule is the private debt collector operating when Centrelink is not subject to the law but they are? It seems to me that, as private debt collectors, they are contravening the rules that apply to them. I know that you are saying the situation has changed. It seems to me a very murky area that they are operating in.

Ms Crowe : I think that is a fair question and one that needs to be put to the department. My understanding is that, at any time the person affected is contacted by a private debt collector, they can ask that the matter be referred back to Centrelink, and then the private debt collector has to abide by that. So they may ask for it to be reviewed, or appeal the debt.

CHAIR: But the individual does not necessarily know that.

Ms Crowe : Correct.

Senator PRATT: I understand that ACOSS warned the government that this program would be disastrous. Are you able to give some indication of how you characterised that warning to the government?

Dr Goldie : Yes. We issued a media statement, including through TV interview, at the time that the government effectively reannounced this measure, shortly before the federal election, when they said this was another welfare integrity measure and that it was designed to ensure that people were paying back money that they should not have received, and they put a very big figure on the budget saving that they intended to secure through it.

We have just had, I think, an important discussion about when you have essentially a debt collection as the core outcome rather than human service and ensuring that those kinds of human factors are taken into account—when the driver is to get money in. We said at the time—we warned the government—that, if we were to see aggressive debt collection approaches taken, we would see this kind of human distress. We said that anything that needed to be done in the area of overpayments needed to be done in a humane way, recognising on the one hand the extraordinary powers that the Commonwealth currently has under its legislative and regulatory framework to claw back money, reduce people's income support, in order to pursue a debt that it alleges they owe and on the other hand that, arguably, unlike corporate citizens—although I must say that I think corporate Australia in many cases has taken on a clear responsibility that it takes into account the human consequences of actions, including debt collection, on individuals—the Commonwealth has a duty of care in this area. We made that very clear.

I want to be very clear: we were not consulted about this measure. We were not included in any of the discussions about its design. And we have since met with the department, which are working on another tranche of technology development, to say to them: 'What is the governance design that you've got over this? Beyond private consultants, who are you working with?' As I said in my opening statement, I think it is really important that the Senate inquiry get to the bottom of the upstream on this. How did we get it so wrong?

Ms Helyar : There were also formal advice and recommendations sent in December around what needs to be done to fix the program.

Senator PRATT: One of those mistakes was that Centrelink previously advised Centrelink users to keep pay slips for just six months, and yet these debts are being raised on the basis of the last six years. As you have highlighted, people are often in casual employment. That does not seem like a particularly just way of raising debts, when in fact those people in all likelihood reported their income correctly at the time.

Ms Crowe : Absolutely, and that is why you have had many reports of people who may have received a text message or an email or something asking them to look at their myGov account who ignored it because they no longer have anything to do with Centrelink, and they thought they had done the right thing. They just thought it was an administrative error. Even when it got to the stage of them engaging with Centrelink, their assumption was, 'Well, something's gone wrong here; sort it out.'

Senator PRATT: So people used the system as it was designed to work and written at the time, in that you are supposed to report the peaks and troughs in your income, and people have done that correctly in most cases, and the system has been changed around them and underneath them?

Ms Crowe : That is right, and certainly the advice—

Dr Goldie : You will be hearing from the CPSU following ACOSS. We have of course heard the reports from the CPSU about the concerns of staff within Human Services. I think again that it is really important that the inquiry gets to the bottom of this, because what we understand may be the case is that departmental officers do have access to the information because people have historically reported their incomes, but the auto data-matching system has generated a particular assumption about income. Instead of those assumptions about income then being cross-checked by departmental officers with the data that Centrelink holds on past income reported, that has been completely cut out, and all the onus is put back out onto the individual to again come back to prove what income they earned in what periods of time.

Senator PRATT: And the government, as I understand it, have not released any of their assumptions in relation to what you would expect would be an automatic assumption of the majority of those debts generated actually being in the main incorrect because the two systems do not match. In fact, the data matching does not actually match what Centrelink recipients have been asked to do in order to meet their compliance requirements.

Dr Goldie : I think that is a very important question for senators to get to the bottom of. For both the algorithms and other assumptions that have been built into the data-matching system that has been built, and also the assumption that underpins the savings that the Commonwealth, the government, has said it will make, how has it come to these assumptions about the extent to which people have been overpaid? This is a very big figure. Were there assumptions about the number of people that would not interact with the system at all? Upon what basis was that done? Were these set up as targets to be pursued?

Senator PRATT: I have a final question. I am interested to know the extent to which you believe this particular program is in fact lawful and whether anyone has looked at section 51 of the Constitution, which says:

(xxxi) the acquisition of property—

must be—

on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws …

Has anyone looked at the extent to which seeking to access people's assets in this kind of way is a just thing to do?

Dr Goldie : We are certainly working very closely with legal services that are doing their very best within the resources available to provide these kinds of legal assistance, both legal assistance to individuals and some of these legal opinions. We are not in a position to table any of that today. If you have not received it already, you are likely to receive submissions particularly from legal organisations that may be addressing some of these questions.

Certainly, in our view, what we should not do is assume that everything that currently has been the historical practice of the department is how things should be. One of the real opportunities—and sometimes you have to look for the silver lining out of a story which is significantly, overwhelmingly, about human distress, deeply unfair and in some cases a very damaging behaviour by government. This is an opportunity for the Senate to get to the bottom of both the robo-debt and also the legislative and regulatory arrangements around it and to make sure that we actually have the right checks and balances in place. We know that governments have been pursuing surpluses and efficiency dividends. We need to get the balance right in terms of the role of government and, with the population size that we have, the need for the right level of human service to be available for people in an area of such high responsibility.

Senator PRATT: Thank you.

Ms Crowe : Can I just quickly add that we know that, where people are asking for their debt to be reviewed, a lot of these cases are being reassessed or reconsidered by Centrelink or by an authorised review officer. They are not actually making their way to the Administrative Appeals Tribunal, so the matter is being sorted before it goes that far. That is not necessarily a bad thing, but it does raise questions around whether these cases will be tested on whether or not they accord with the law—like the practices of the program itself. I am just saying that, where they are under a merits review as opposed to a judicial review, that has implications for looking at the legality of the program involved.

Senator DODSON: My question is probably to Dr Goldie. I noticed that on 19 January 2017 you issued a press statement after you had met with the Minister Tudge the day before. There were a number of matters that you called for—that you called upon the minister, I presume, to take note of and to implement. I am interested in whether there has been any response to your call for the convening of a round table of chief stakeholders and experts in social security to decide a fairer and more humane approach to debt recovery. Has there been any response to that?

Dr Goldie : I think we have included that but can certainly hand out to the committee today the full exchange of correspondence between ACOSS and the minister and the department in relation to our concerns. There was correspondence from us to the minister in December, and we have issued a series of releases and we have certainly done a follow-up piece of correspondence to the minister following a meeting that we had with the minister arising from the first piece of correspondence in December.

There was a series of questions that we put to the minister for data, for information, and, as you know, we asked for the convening of this round table. None of that has been responded to. One outcome from the engagement to date was we have, as I say, met with the department about the next round of technology design—the acronym escapes me at this moment; Charmaine, can you help me on that one?

Ms Crowe : It is the Welfare Payments Infrastructure Transformation—WPIT.

Dr Goldie : That is it; thank you. But none of the other requests have been responded to.

Senator DODSON: I take it from that since January 18 there have been no further meetings with the minister?

Dr Goldie : That is correct.

Senator DODSON: The other matter you raised earlier was the arbitrary target of a $4 billion drive to effect savings underpinning this process. Is that the primary aim, do you think, of this? I am trying to get an understanding of the flawed process through the use of technology and an almost blinded approach to recover a debt set at a certain amount, regardless of how that plays out and where we are at at the moment in terms of some sense to prevail, if human beings are being affected in the order of the numbers that you have quoted today.

Dr Goldie : I think it is a very important context and, as you know, the federal government has been taking a very clear position that it wants to return the budget to surplus. It has taken the position that it is not prepared to raise revenue, despite broad consensus that action needs to be on both the revenue and the expenditure side. As you know, since 2014, the government has been pursuing a range of budget measures, which in many cases were to cut income support and other matters which directly affect people on low incomes, and so this analysis that certainly ACOSS has made and many others is that the approach on the budget has been deeply unfair.

As you know, there is a very hot debate that is still happening about the outstanding budget measures that the government cannot get through the parliament, and we have those other measures that will directly affect people on the lowest incomes. All of these are legislative measures; however, the measures that the government has been able to successfully pursue are the administrative ones—so cuts to funding of community services. All of those have been implemented, and of course this current robo-debt is another administrative measure that the government has been able to pursue, because we have not had the checks and balances of parliament over it. There were a range of questions that you raised at the start, and they seem relevant to ascertaining: 'What is the scope of this and how just is it in its application?' Where do you see the answers coming from to the questions you raised with this committee?

Dr Goldie : I will certainly ensure that senators have the copy of the full correspondence that we have had with the minister, where we set out a series of the kinds of questions that I have referred to in our opening statement. Other senators would be well aware that in some cases there has been an answer to a question but the department has said, 'We don't collect that information.' In our view, what gets collected counts. It is important that we know the answers to these kinds of questions, because it is the only way in which we can get an accurate assessment of the impact this is having on the community.

Can I highlight, if I may, what we see as a contrasting approach from government when it comes to other measures that are affecting people who may be considered more powerful in Australian society. We have all seen, for example, that when the government wanted to pursue superannuation reform there was an overwhelming backlash, primarily from people on the highest incomes in Australia, and the government met numerous times with the people with the lived experience of being very wealthy. It bent over backwards in order to achieve what that group perceived as a slightly better outcome. We have not seen that kind of approach at all. In our view, this will be seen as a government that is not prepared to do that; that because people who are affected are not seen as particularly powerful in Australian society there is a lack of care.

CHAIR: Senator Dodson, I am going to draw your questioning to a close.

Senator DODSON: Thank you, Madam Chair.

Dr Goldie : Senator, I will also need to remove myself from the hearing at this point.

CHAIR: We are just about to finish, because we have gone way over time. Your evidence has been extremely helpful and valuable to us. Thank you very much for your time today.

Dr Goldie : Thank you, senators.