CAMPBELL, Ms Kathryn CSC, Secretary, Department of Human Services

DeBURGH, Mr Russell, Branch Manager, Pensions and Integrity, Department of Social Services

GOLIGHTLY, Ms Malisa, Deputy Secretary, Integrity and Information, Department of Human Services

HALBERT, Ms Cath, Group Manager, Payments Policy, Department of Social Services

HUDSON, Mr Adrian, General Manager, People Services, Department of Human Services

HUTSON, Mr Jonathan, Deputy Secretary, Enabling Services, Department of Human Services

JACKSON, Mr Barry, Deputy Secretary, Service Delivery Operations, Department of Human Services

JONGEN, Mr Hank, Departmental Spokesperson, Department of Human Services

LARKIN, Mr Andrew, General Manager, Adelaide Delivery Centre, Department of Human Services

McCANN, Ms Alison, Acting General Manager, Customer Compliance, Department of Human Services

McHARDIE, Mr Charles, Chief Technology Officer, Department of Human Services

McMAHON, Mr Jim, Acting General Manager, Customer Payment Services, Department of Human Services

McNAMARA, Mr Jason, General Manager, Integrity Process Modernisation, Department of Human Services

MUSOLINO, Ms Annette, Chief Counsel, Department of Human Services

SEAR, Ms Cathy, Acting General Manager, Community Engagement, Department of Human Services

STOREN, Mr Craig, General Manager, Strategic Information and Redesign, Department of Human Services

THIVEOS, Mr George, General Manager, Families, Department of Human Services

WILSON, Ms Serena, Deputy Secretary, Social Security, Department of Social Services

WITHNELL, Mr Mark, General Manager, Business Integrity, Department of Human Services

CHAIR: Welcome. I am presuming information on parliamentary privilege and the protection of witnesses and evidence has been provided to you—and you all very familiar with that. I remind witnesses that the Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy, and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies, or factual questions about when and how policies were adopted. I invite you to make an opening statement, if you would like to.

Ms Campbell : Given we made quite a fulsome opening statement last week and there were many common members of the committee, I was not sure that there was any need for me to go back over that.

CHAIR: That is fine. Before we go into questions, I want to clarify the letter that you sent us yesterday—about the matters of privacy and the referral by Ms Burney—what is the scope of the matters that you consider covered by your letter?

Ms Campbell : This is quite a complex issue for us, because we have not seen the referral that Ms Burney has made. We have only seen the front page of the referral. We do not understand the full extent of the referral to date. We are quite concerned about personal information of any nature being provided. We were hoping to be able to answer questions in general terms, because we do not know what the full extent of Ms Burney's referral to the AFP is.

CHAIR: We may test that a little bit later. It is not where we want to go first up. As I understand what you have just said, matters that are general in nature, around the issues around provision of personal information in general—

Ms Campbell : I will ask our legal counsel to provide advice on that, but I think there are issues there.

Ms Musolino : What we know from the front page of the referral is that what is in scope of the referral is the department's exercise of its powers under 202 and the general disclosure of information, which was canvassed quite broadly at estimates last week. In that context, it would be difficult for us to answer those questions without potentially prejudicing the police evaluation and any future investigation, and that is our concern.

CHAIR: I would have thought that your general interpretation of that provision would not—I am not a legal expert by any stretch of the imagination, but maybe we will need to test later on why you think that would be prejudicial to any of the current investigations.

Ms Musolino : Yes.

CHAIR: Last week, we asked for a great deal of information to, hopefully, be available today. I am wondering whether you have that information.

Ms Campbell : We have a table that deals with debts by month and notifications, so if we table that, and then maybe work through that to see whether that satisfies the—

CHAIR: It would be much appreciated if you could table that. Perhaps you could take us through this.

Ms Campbell : It would be useful for me to talk you through that. If we look at the number of assessments, that is when a recipient or former recipient was first selected for an assessment; that would have been because we had identified a difference between the information that we held on our records and information that the tax office held on their records. That is the initial letter that was sent. So the number of assessments that were initiated is different to assessments completed because an assessment might be initiated in one month and then completed in another month. You will see that by the time we get to December there are 9,954 completed but 8,993 commenced, because they are commenced in that month but the second row is those that were completed without debt. That is what we call 'the initiating letter'.

CHAIR: Those were the numbers that were completed without debt. So can I take it from that that for November, where there are 94,754 initiated, you cannot necessarily subtract the nearly 12,000 from that?

Ms Campbell : That is correct, because they may have been instigated in a previous month, but they were completed in that month.

CHAIR: When you go down to the number of debts—

Ms Campbell : That is the next table, which talks about the debts rather than the assessments that were initiated.

CHAIR: I am sure that there will be lots of questions about this during the afternoon. Is that all the information that you have to table?

Ms Campbell : Yes, I think so. You did ask us some other questions on notice, and we are continuing to work on those, from the previous hearings and hopefully we might have some information, but if you have other questions we can try and get that for you.

CHAIR: Thank you.

Senator WATT: Thank you to everyone for coming along today. I think it would probably be most helpful if we just recap some of the evidence that we received this morning and ask you for your response. You have probably either been listening or had people listening on your behalf to keep you informed. One of the really concerning things that has come out of the evidence that we have received this morning is that every single witness that appeared said that they had either warned the department before this system was rolled out about concerns they had around implementation and that the kind of things that we have seen happen would happen; or they in fact offered to help the department to manage these problems but everyone of them either was not responded to or was told that things were in hand. ACOSS told us that they had warned the department before the system was rolled out that there would be problems. The CPSU told us that they had requested a briefing from you personally, Ms Campbell, on around, I think, 18 or 19 January, and that was not offered to them and they still have not had that.

Ms Campbell : Do you want me to do one at a time?

Senator WATT: Yes, just to wrap it up, the ATO told us that not only were they not consulted about this issue of averaging out annual income to come up with a fortnightly rate, but they attended meetings in December and February where they offered to help and were told, 'It is all okay.'

Ms Campbell : Can we start with ACOSS?

Senator WATT: Sure.

Ms Campbell : I had heard some of that evidence this morning, but not all, and I had understood that ACOSS were talking about the general principle of compliance. Someone might be able to correct me, but I do not recall them actually saying that in detail measure. They had been concerned about compliance in general and seeking repayment from recipients. That was my understanding of their general concerns when the measures were announced. So that was a more general concern.

Senator WATT: On the ACOSS issue, you are saying, to your knowledge, that ACOSS never raised a concern about this new system.

Ms Campbell : If I am able to continue. Then in around early January ACOSS did meet and did write to the minister, and the minister met with ACOSS and went through some of those issues. The minister then wrote back to ACOSS. We were working through some of those issues at the time, and we noticed that, immediately after that meeting, ACOSS went out to the media and disclosed the full contents of the meeting with the minister. So then I did not meet with ACOSS, because we thought that that would be counterproductive in that current media hype that was going on, that everything I said to ACOSS would have been published the very next hour. So I did not meet with ACOSS on that occasion.

With the CPSU, we went back and had a look after this morning's evidence about whether they requested to meet with me. The evidence I have says in the letter: 'I would appreciate an opportunity to meet with the appropriate operational manager.' So I think it might be a little bit misleading to say that they requested a meeting with me. They wrote to me, and the CPSU do write to me on a regular basis.

Senator WATT: They have a lot of things to complain about, according to them.

Ms Campbell : Indeed, according to them. Those pieces of correspondence are generally dealt with in our industrial relations area because they are generally of an industrial relations nature.

Senator WATT: If not you, has anyone senior in your organisation met with the CPSU in response to that request?

Ms Campbell : I will take that on notice and work out whether they did on that request. We meet with the CPSU frequently. These issues are raised. In fact, this issue was raised when the CPSU were about to undertake industrial action. We actually went into the Fair Work Commission and discussed the industrial action that they were going to undertake. There was some debate about whether it was related to the enterprise agreement or it was related to this matter. We are continuing to work with the Fair Work Commission on that matter and are not able to talk about the details of that. I do think it is fair to say that we have engaged with the CPSU on that matter.

The third thing is the ATO. I might see if there is someone else who has some detail about our dealings with the ATO on this issue.

Ms Golightly : We did have a teleconference that I was involved with with the ATO recently. I cannot remember exactly the date, but it was recently. The conversation covered the fact that we are using the file that they give us in exactly the same way that we have done for many, many years, and that nothing has changed in that regard and, on that basis, they were comfortable. We then talked about sharing going forward any best practices that both our agencies might have had experience in in terms of recovery of debts. We agreed to do that, and we will continue to do that.

Senator WATT: More generally, Ms Campbell, did any stakeholder, whether it be unions or NGOs who assist social security recipients, raise concerns prior to the implementation of this system that it might lead to the kinds of problems we have seen happen, where people have been sent inaccurate debt notices and that there would be the pretty obvious problems of cleaning up whether people owe money or not?

Ms Campbell : Can we talk about the term 'inaccurate debt notices', because—

Senator WATT: You are surely not going to pretend that they are accurate.

Ms Campbell : I am going to talk about initiating letters and debt notices. I have seen a lot of talk in the media and by commentators about that initial letter being a debt notice. The initial letter is a request to clarify when there are two different datasets. Often I hear it talked about as a debt notice, and I want to be very clear that that is not our interpretation, that that is a request to do it.

Senator WATT: I will let you keep going, but just to be clear I think at last week's estimates you said that at least 20 per cent of these initiating letters—are they?—

Ms Campbell : Initiating letters.

Senator WATT: that turn out to be inaccurate.

Ms Campbell : No. The initiating letters are provided and in 20 per cent of cases the individual involved is able to provide information that clarifies that difference, which then results in no debt. So I do not think the term 'inaccurate' is appropriate. There is an initiating letter. There is clarification by the recipient or the former recipient, and that results in no debt being raised, and that is as it is designed to do.

Senator WATT: I spend way too much of my life arguing with Senator Brandis about words, and I am going to be doing it again this evening, but you cannot deny that those initiating letters in saying to someone, 'We think there is an error here,' and it turns out to be wrong are inaccurate.

Ms Campbell : No, I do not accept that.

Senator WATT: Senator Brandis is obviously getting across government. You piloted this system in July-August last year?

Ms Campbell : We did.

Senator WATT: What did that pilot tell you as to the risk of these kinds of failures that we have seen?

Ms Golightly : The pilot was actually very positive. There was about 1,000 people involved and basically it tested the system very well. There were a couple of ideas that came out of the pilot that have been progressively implemented over, I think, around the September-October-November period, but they were on the margins. They were improvements to a couple of the screens and improvements to drop-down boxes, that sort of thing. So the pilot was actually very encouraging.

Senator WATT: An evaluation of that pilot was no doubt prepared?

Ms Golightly : The results were identified as things that we needed to improve and those improvements have been made. I can get a list of those for you.

Senator WATT: If you could, and if there was a formal evaluation undertaken of that pilot, whether it was internal and external, could we ask for a copy of that?

Ms Golightly : I will take that on notice.

Senator WATT: Do you accept that there is a problem here?

Ms Campbell : We spoke last week—

Senator WATT: Yes.

Ms Campbell : about some of the refinements we have made to address some of the issues. I think in my opening statement last week I talked about our concern over the 6,600 people whose address we did not have correct. That is why we have put refinements in place, including things such as: registered mail; changes to the portal to make it easier to use, particularly around using bank statements rather than people's pay slips that they may find harder to get access to; simpler language; different use of colours on the portal to make it easier to read; an extension from 21 to 28 days to provide the information; and, importantly, when a debt has been identified—which is a pretty long way down the track—that people, if they wish to reassess or review, can put that debt repayment on pause until that review had been completed.

Senator WATT: So each of these refinements, and there has probably been others, that you made addressed problems that did not emerge in the pilot?

Ms Campbell : That is correct.

Senator WATT: So the pilot did not establish, for instance, that the records that you had of where people lived were out-of-date and that is why over 6,000 people first heard about a debt was when they had a debt collector contacting them?

Ms Campbell : In the 1,000-sample that we used, we did not identify that as a large issue. One of the things that is worth noting with some of those individuals is that they had myGov accounts. When a letter is sent to their myGov account, they receive either an email or a text message. I think we have heard lots of evidence, both at hearings and in the media, that people, particularly ex-recipients, ignored those notifications. We find that current recipients did as well, so there was a tendency to not follow-up. When we first started with those initiating letters, sometimes people did not see them because they had ignored the text or the email they had received.

Senator PRATT: But if the information they had provided was correct, it would be a natural response to say, 'I know that there will have been a mistake so I don't need to follow this up.'

Ms Campbell : No, I do not accept that.

Senator PRATT: If you do not accept that—

Ms Campbell : No, I do not accept that. When a claimant makes a claim and they become a recipient, it is very clear that there is a requirement to provide information to the department and so I do actually expect for a recipient to respond to correspondence.

Senator PRATT: Even years after they have been in receipt of benefits?

Ms Campbell : Yes.

Senator PRATT: And the information they provided was correct at the time and remains correct?

Ms Campbell : We do not know that because—

Senator PRATT: You do know that because it is in your own records.

Ms Campbell : No, I do not think we do know that because what we were asking them to do was to clarify information. They have provided us with one set of information, the tax office has another set of information, and so those letters are about saying we have these two different sets of information and we want to clarify those two sets.

Senator PRATT: And if you did your homework in terms of comparing the two sets of information, in many instances you would find that there was no conflict and the recipient who is receiving this notice knows that.

Ms Campbell : We have found that in a number of cases there is a difference—

Senator PRATT: Yes.

Ms Campbell : and that is what we have worked through.

Senator PRATT: But not all.

Ms Campbell : Not all. We have talked about the percentage of people who are able to clarify that information, whether that be the date they worked or the employers they had for different periods. We have been able to clarify that. Then the matter is closed.

Senator WATT: One of the other concerning things we heard this morning was about the practices of the external debt collectors that Centrelink have engaged. I realised it is not a new practice to have external debt collectors, but, again, there have been many media reports and we heard more evidence this morning of really vulnerable Australians who receive social security payments being harassed by debt collectors, threatened with jail, threatened with legal action and pressured to cough up money that they may or may not actually owe. What actions have the department taken to ensure that debt collectors are behaving appropriately?

Ms Campbell : Can I just clarify that debt collectors are not used on current recipients. If someone is a current recipient of a payment, we do not refer their debts to debt collectors. We deal with the recipient. We generally have better contact information for them and they are generally in contact with us regularly because they are receiving payment at that time. I ask Ms Golightly and her staff to talk through what we do and the arrangements in place with the external debt collectors.

Ms Golightly : The external debt collectors are required to meet all of the guidelines, policies and requirements that are set out by the ACCC. That is part of their contract. We regularly monitor that contract, including, for example, listening with double headsets to phone calls that they make to people. We work with them on the scrips that they use when they are talking to people. We work with them on the text that is in letters that might be sent out to recipients. We also have very good guidelines in the contracts about reasonable hours of contact and reasonable amounts of contact within a certain period. I have no evidence of the claims that were being made this morning or of what you have just outlined.

Senator WATT: So you are confident that your debt collectors are behaving appropriately in their dealings with people?

Ms Golightly : Yes.

Senator WATT: And you rely on things like listening in on calls and stuff like that to make sure that is happening?

Ms Golightly : Yes. As I said, we have quite a regular monitoring regime put in place under the contract, and we utilise that monitoring.

Senator WATT: Are these debt collectors bound by a range of consumer laws around the practices of debt collectors?

Ms Golightly : Yes.

Senator WATT: And they are bound by those laws even when they are operating for a public sector agency?

Ms Golightly : We make that a requirement under the contract.

CHAIR: Even where you are not bound by Australian Consumer Laws?

Ms Golightly : That is correct.

Senator WATT: We are talking about consumer laws and various other privacy and guidelines as well—they are bound by all of that?

Ms Golightly : That is right.

Senator WATT: And, if someone had a concerned that a debt collector was not conforming with those laws or guidelines, who would be responsible or what avenues are there for people to make complaints?

Ms Golightly : Certainly they can ring the department. We have got a dedicated line to deal with any debt inquiries, including any issues that people may be wanting to raise about the debt collectors.

Senator WATT: Again, you have systems in place to ensure that these laws are being complied with?

Ms Golightly : Yes.

Senator WATT: I have seen a least one report of a Centrelink recipient who committed suicide allegedly after their experiences relating to this system, and we have again heard evidence of significant distress to people as a result of having to contest these debts. There was someone who had to catch a bus for an hour and a quarter three times before they got their own complaint resolved. What do you say to people who are experiencing this kind of distress as a result of this mismanagement?

Ms Campbell : With the press story about the suicide—and this is a very sad event, and we do not want to make it harder for families—this was a former recipient, it was not a current recipient. That is why the debt collectors had been used on that occasion. There are always different dimensions to stories that appear in the media, as I am sure you are aware, and we have a different take on what was reported, I think it is fair to say.

Senator WATT: Leaving that particular case aside, this is not the only situation where some significant distress has been caused to people because of the really quite gross failures of this system. What do you have to say to these people?

Ms Campbell : We provided the initiating letter, and the initiating letter asked people to clarify. There was a 1800 number that people were able to access to deal with and work through those issues. We often find that people are distressed when dealing with the social welfare system. Every morning I have a look at my email and there is a number of emails about people who are distressed in different circumstances—it may be their personal circumstances; it may be the interaction of our system with other systems; it may sometimes be a misunderstanding of eligibility under the criteria. We work with those individuals to try and resolve those issues.

I think we talked about last week's service recovery to try and sort through those issues, but this is a complex payment system, and often people do not understand the obligations that go with the payments—that they are required to update various pieces of information. We do our very best to make it as streamlined and user-friendly as possible, but I do acknowledge that there will be people who are distressed. I think that in the lead-up to Christmas and into January people became even more distressed because of the significant media attention around these issues. I think that half of the stories that appeared in the media were not part of this system—they were general debt matters but, because of some of the stories in the media, there was a belief that all debts were wrong. Therefore people started saying: 'I want this debt waived. I don't think I should have to pay this back.' We will continue to work with each and every one of those individuals on those matters.

Senator WATT: Could it be that the other reason people were distressed in the lead-up to Christmas was that that is a time of significant financial hardship for many families?

Ms Campbell : If you look at the table, I think you will note that there was a significantly lower number of debt assessments initiated in December, because we are aware that that is a difficult period.

Senator WATT: But in November there were 94,000, which is nearly double that for the previous month, and they obviously take some time to resolve.

Ms Campbell : It is a difficult management system around when you can and cannot send out letters. If we do not send them out in November, December and January then we have to send out letters in February, March and April, and then people say, 'It's Easter.' It is very difficult to find a good time of year to send a letter to someone asking them to clarify their details.

Senator WATT: Especially if it is wrong.

Ms Campbell : We did not, Senator.

CHAIR: Sorry, but the number of debts raised in December was 39,174.

Ms Campbell : It was, but there was an assessment process. If you go to the top table when the assessments were initiated, we stopped initiating assessments in December. The debts raised may have been on track for some time.

CHAIR: So you started them earlier, but it was foreseeable that you would end up just before Christmas with a large number of them. If you had trialled it, which you said you had, you also would have been able to see from September through to October that it was taking much longer to process, so it would have been likely that you could work out that these notices would end up in people's letterboxes in December.

Ms Campbell : It is very difficult to run a system like ours and not send out debt notices in December or, then, in January. We do our very best to balance that and take into consideration people's personal circumstances, but we do have to enact the law.

Senator WATT: The Labor Party, and possibly other parties, as well as a number of stakeholders in this sector who have called on the government to halt this system until these problems can be fixed. To date the minister has refused to do that. Have you provided any advice to the minister that that should be considered?

Ms Campbell : No.

Senator WATT: Is it the view of the department and the advice of the department that this system should proceed?

Ms Campbell : The view of the department is that there are a number of refinements that need to be made—those refinements are being made—and that the system should continue.

Senator WATT: But there cannot be any guarantees to people. I think we talked about 20 per cent, at least, of the initiating letters that were sent to people being wrong.

Ms Campbell : No. I did not agree to that at all. That is a proposition that keeps being put. My earlier evidence was: in 20 per cent of cases where we ask a recipient or former recipient to clarify information, they are able to clarify the information, which ends the matter. That does not mean the initial letter was wrong, because the initial letter asked for clarification.

Senator WATT: But you are wrong to ask people to clarify, because there was not anything wrong.

Senator PRATT: And you held the information to start with.

Ms Campbell : We did not always hold the information to start with. What we held was a set of information that was provided to Centrelink. There was another set of information that was provided to the ATO. When there is a difference between the two sets of information, we ask the recipient or the former recipient to clarify. On 20 per cent of occasions, they were able to clarify something in it. It may have been dates. It may be that the information held by the tax office said that they had worked an entire year when in fact they had only worked two months. When we had that clarification, we were able to identify that was the end of the matter, and nothing further went on. I do not consider that that makes the initial letter wrong.

Senator PRATT: If someone had only worked two months, in many of these instances you would have had that information on record that the recipient only worked those two months, and you have not double-checked that information before sending the letter.

Ms Campbell : Sometimes we have that information. In that specific example, we may or may not have had that information on the record.

Senator PRATT: But you sent a letter nevertheless, even when it was on the record.

Ms Golightly : We have two bits of information, one which is saying that somebody may have declared income for a certain period, and another bit of information which is saying that they declared to a different organisation income either for the same period or a different level of income—there is some sort of difference. It has always been the case, in any compliance work, that we have to look at those differences, and for many years the first thing we have always done is give the recipient the opportunity to explain that difference. That is how this is working.

CHAIR: This is the critical bit: the ATO were really, really clear this morning that all they give you is the annual income. We asked this. They do not give you when they worked. That is what they told us.

Ms Golightly : What we get from the ATO is the file from them about what employers have reported to the ATO about the tax that has been paid. Sometimes it will have quite specific dates of employment on it. Other times it might be for the whole year or for a larger period. Where there are dates, we look at those dates and we compare them to what the recipient has told us.

CHAIR: What percentage of them have dates?

Ms Golightly : There are always dates in the ATO file.

Ms Campbell : Sometimes the dates say 1 July to 30 June; sometimes they are more refined.

CHAIR: So that is when they have earned, but not necessarily if they have been in and out of employment.

Ms Campbell : It depends on the information the employer provides the tax office—that is the first thing that is worth saying. Then it could be the tax the employer has provided, the different intervals, or it could be that they have said 1 July to 30 June. That is what we continue to try to match with the data that we have on the Centrelink files.

CHAIR: But, if they have just supplied it for the whole of the financial year, what is your response?

Ms Campbell : Then we ask the recipient to clarify, and one of the first things the portal asks them to do is to identify the dates they worked.

CHAIR: But won't they have provided that to you anyway in the first place, because you are the one that is paying the Centrelink payments?

Ms Campbell : They will have provided us with information. This entire system is about clarifying two sources of information. There is the information provided to Centrelink and the information provided to tax. It is only when the two are different that we ask them to clarify. We do not make the assumption that one or the other is correct; we just know that they are different, and we are asking the recipient to clarify the difference.

CHAIR: How far back do you go; 2010?

Ms Golightly : In some cases.

Ms Campbell : That is one of the things we have worked on. We have refined the portal to allow a recipient or former recipient to use bank records, which are available for seven years—

Senator PRATT: At a cost.

Ms Campbell : to allow them to put in net pay rather than the gross pay, and work through that issue.

Senator WATT: Regardless of what approaches have been made previously, clearly there are a number of stakeholders—ACOSS, unions, other groups that represent Centrelink recipients—who desperately want to meet with government to try to work through these problems. I have seen a press release put out this morning by ACOSS seeking an urgent meeting as well as a halt to this. Are you willing to sit down and meet with these stakeholders to talk this through?

Ms Campbell : I will take that on notice and talk to the minister about that.

Senator WATT: You cannot tell us whether you personally as the secretary of the department are prepared to meet with stakeholders?

Ms Campbell : Sometimes when we are looking at service recovery matters—and we want to work with stakeholders, and that is fine—and it gets to a heightened level of media attention and things like that, I think it is always wise to talk to my minister. That is how it generally works.

Senator WATT: But you are the secretary of the department. You are administratively responsible for this system being rolled out. Don't you think it is a good idea to actually talk to some of these stakeholders who desperately want to talk to you?

Ms Campbell : We do talk to customers and recipients. We talk to them about their experience. We work through how that works.

Senator WATT: How can 80-year-old Mrs Jones from Ipswich possibly—would you meet with her? That is what stakeholders are for. They come together to represent the interests of people who are being affected. They have the experience and the skills to sit down and talk with government, and you are not even prepared to say whether you are going to meet with them.

Ms Campbell : My experience is, sometimes, they operate in a heightened political environment as well—

Senator WATT: Maybe they are upset about what is happening.

Ms Campbell : and that, maybe, sometimes when it gets very partisan, it very important to talk to my minister as well. The minister has met with ACOSS. That is very clear because the information was in the media shortly afterwards.

Senator WATT: I very much look forward to seeing the answer to that question on notice about whether you are allowed to meet with stakeholders. That will be a good one.

Ms Campbell : I think you are misconstruing what I said, again.

Senator WATT: You said you would take it on notice. I understand, and I may not express this exactly right, that at one point people who were disputing debts could continue to be pursued for those debts while that dispute was being assessed.

Ms Campbell : Can I clarify that?

Senator WATT: Yes.

Ms Campbell : It has been a practice for many years in the department that when someone was asking for a review of a debt to enter into a repayment plan for those people who are continuing to be on payment. There has been a refinement which is that the repayment plan can be paused while that review is underway.

Senator WATT: There has always been that capacity to do that?

Ms Campbell : The pausing or—

Senator WATT: Yes, the pausing.

Ms Campbell : We have recently clarified that in legal terms and we now understand that it is very clear that we can pause those.

Senator WATT: So someone who is alleged to have been overpaid can request a pause on any recovery action?

Ms Campbell : While an internal review is underway.

Senator WATT: Okay.

Ms Campbell : You would understand why we can't pause indefinitely because that would be an incentive for people to continue to review issues.

Senator WATT: Is the ability to request a pause—and I cannot remember what date it was that the department said that this would happen—a retrospective thing as well?

Ms Golightly : I think it was on or around 15 February. Certainly it would have applied to any reviews that were already underway or any new reviews. I would also note that people can request a review of a debt at any time; there is no time limit.

Senator WATT: Ms Campbell, on your explanation, about 20 per cent of the initiating letters requesting clarification turned out to concern debts that did not exist.

Ms Campbell : I would more accurately say that from 20 per cent of the letters, the recipient or former recipient was able to clarify and explain the difference.

Senator WATT: And prove to you that there is no debt? What we heard from ACOSS was that, in addition to that 20 per cent, we do not know how many people have entered into debt repayment agreements to repay debts which actually do not really exist. They maybe have given into the process, have agreed to repay a debt without contesting it. Do you have any way of establishing that? Are you going back over these debt repayment agreements to manually look at whether people have signed up to debts that they are actually not required to repay?

Ms Golightly : I think there are two points to note there. The process we have just outlined applies to all debts, regardless of how they occur. There are some millions, I think about 2.4 million, debts raised each year. It has been the practice and procedure for many years, as the secretary mentioned, that the debt continues to be recovered even though a review may have been underway. Recently we have clarified that and provided the opportunity where we offer somebody, if they have requested a review, if they would like us to pause the debt, to now do that. That is across the board and it is a practice that has been long established.

Senator WATT: I think I am asking a slightly different question. When a debt is raised, they can contest it, a review is undertaken and a pause is requested in any debt repayment until that review occurs. But I am not actually talking about that. What I am talking about is people who have actually signed up to a debt repayment agreement, have not requested a pause because they have accepted—rightly or wrongly—that they owed a debt.

Senator PRATT: That assumes you are correct.

Senator WATT: They assume you are correct. Is the department doing anything to ensure that debt repayment agreements have not been entered into wrongly when a debt does not actually exist?

Ms Golightly : We have quality checking all the way through the process. We can look at, as part of that quality checking, whether our own processes for any debt is meeting that quality standard. But on any inquiry about a debt where somebody might be concerned, we make the offer to the person that we could reassess the debt and we could pause their recovery.

Senator WATT: I am worried about the people who have asked for a review but I am very worried about, given the kind of people were talking about here, people who may have accepted that you were right when in fact you were not and they have agreed to repay a debt. What I have heard from you is that you have the capacity to undertake a review of those kinds of things. But my question is: are you doing that?

Ms Golightly : We are doing two things. We are making it plain that there is no time limit on a request for a review. People can ask for that any time and we will do that. I think in some cases where we have been able to establish that there has been no contact, we are going back and are relooking at those cases to make sure that everything is okay.

Senator WATT: I think that would be a very good idea given the number of errors.

CHAIR: Ms Golightly, thank you for the information but it did not actually answer the specific question. If you have not got the information, perhaps you could take it on notice. I have had a number of people personally tell me their accounts, experiences. A number of them have said, 'We started paying because we were just so worried about it.' In the media—in fact, it was, if I understand the background briefing, in a story on the weekend—we had somebody there list their experiences where they had started to pay while they were still challenging their debt. So, the question is then, specifically, how many people have started repaying, who have subsequently asked for a reassessment or started repaying after they asked for a reassessment because they were worried about the debt?

Ms Golightly : I can see whether we can get those numbers for you, but I would stress, again, that this is not a unique practice. For example, in FTB, if somebody incurs a debt there, because they may have not lodged a tax return, for example, or any of our other programs, where somebody has not done something that is required by the eligibility for that payment, then the debt is raised and they can ask for it to be reassessed—

CHAIR: I understand—

Ms Campbell : Senator, I think your question is quite specific about numbers, and I do not think we have those numbers at the table. The other thing I would be trying to work out is how we are going to get those numbers, because it may mean manual engagement. We have talked about the fact that our systems do not specify that, but I think we will need to take that one on notice.

CHAIR: And I understand what you are saying, Ms Golightly. I understand that this has been an ongoing process. But this is a very different process that has now been automated. I understand that in the past you have been doing this, but these numbers are vastly different to the numbers you have been sending out letters to before.

Ms Campbell : With respect to family tax benefit, we had that automated for some time, and—

CHAIR: I am asking about this process.

Ms Campbell : I thought you suggested that this is quite different to anything we have done before.

CHAIR: I understand what you have just said about FTB. But the numbers of people who are now being subject to this automated process where you are talking about other payments, FTB, since this process started for those other payments? I am being very specific.

Ms Campbell : We will take your questions on notice and get back to you on those exact numbers when we are able to get that done.

CHAIR: And I just want to outline for senators that what I intend to do is go to our other senators who have not asked any questions yet about general issues, and then I would like to start going through, for example, issue by issue—debt collection, data et cetera.

Senator DUNIAM: Unfortunately I missed the contribution from ACOSS this morning, but I will read the Hansard with interest later on. I did get the opportunity to ask questions of the CPSU, who provided a commentary on the fact that they think the whole thing is broken and it should be suspended so that, in Ms Flood's words, 'real fixes can be put in place'. I asked Ms Flood what those fixes were. She was unable to tell me. I just wonder whether either ACOSS or the CPSU have been in touch with the department, Centrelink directly or the minister's office with details, suggestions or practical solutions on ways to improve a system they claim is broken.

Ms Campbell : I think the commentary we have read in the papers has been about manual—that it should be more staff, that staff should do every case and automation should not be used. That is the general thrust of the contributions from those two entities.

Senator DUNIAM: Yes, and I tried to probe a bit further on that in terms of the specific numbers that specifically the CPSU thought might be required in terms of additional staff, and they were not able to give me a figure at all. So, I suppose I am just wondering—and you may need to take it on notice—whether there has been any suggestion provided to the agency or the minister's office with specific solutions. A lot of grievances have been aired, but we are all in this to make sure things work properly for Australia. I just wondered whether anything has been provided in the way of solutions.

Ms Campbell : It is more of a general nature—more staff, more manual. They have been the suggestions to date.

Senator DUNIAM: But no numbers, no dollar figures, nothing like that?

Ms Campbell : No.

Senator DUNIAM: I have a number of specific questions that we will deal with later on, but I have no further questions for now.

Senator KAKOSCHKE-MOORE: I am just wondering whether maybe that specific information that you are talking about could have been provided in the meetings that these stakeholders were seeking. I am not sure whether that is perhaps the forum they were looking to explore some specific remedies through, but that is something we can put to the stakeholders. Moving on to some other questions, the table that you provided us with earlier: is it okay if I ask questions about that now, just to clarify a couple of the items?

CHAIR: Yes, clarify those, and then we will come back to a general discussion on data—on figures and things.

Senator KAKOSCHKE-MOORE: Okay. I just want to clarify the top-line assessments initiated between July 2016 and December 2016. I just added up each of those columns, so it was 217,403 assessments, and then for the assessments completed without debt, there were 36,345, and I understand that would arise if the discrepancy in the datasets that you had had been clarified by the Centrelink recipient and it was decided that there was no debt because that clarification had been fixed.

Ms Campbell : That is correct.

Senator KAKOSCHKE-MOORE: So, number of debts raised between July 2016 and December 2016—133,282. Of those, 2,875 were reduced to zero. Would that happen where perhaps the initiating letter was sent out, no information was provided in response, a debt was raised but that information was subsequently provided that clarified the debt?

Ms Campbell : Yes.

Senator KAKOSCHKE-MOORE: And then with debts waived and/or written off, there were 5,563, and I see that in the footnotes your provide some examples of where a debt may be waived, which can include administrative errors, special or unusual circumstances or the debt not being cost-effective to pursue. On notice, would you be able to provide a breakdown of when debts were waived in each of those circumstances?

Ms Campbell : We will take that on notice.

Senator KAKOSCHKE-MOORE: And also where the debt was written off permanently, and examples have been given, because the recipient is deceased or has been declared bankrupt, just to get an idea of those.

Ms Campbell : Yes.

CHAIR: The clarification on the table: it says that it may be waived due to not being cost-effective, and it says under $50. I thought it was higher than that.

Ms Campbell : Under the Social Security Act—and someone will correct me—we will just check to see whether it is in the law or it has been practice that less than $50 is not economical to recover. There is a difference in the family tax act where, because it is constantly adjusting because it is on an annual basis, we do not write off debts under that act.

CHAIR: Under FTB you do not write off anything?

Ms Campbell : No, because it is a constant readjustment, because it is on an annual basis, and the law does not allow us to. That is my understanding, but we will get a lawyer.

CHAIR: I thought the minister on background briefing made a comment about a much higher threshold?

Ms Campbell : I think there is sometimes a little bit of confusion about which cases will identify for going through this process. When we are looking at the filter to determine which ones will be selected, if we think the debt is going to be smaller or a certain amount, it is probably not worth going through this process. But—

CHAIR: What is the threshold for that?

Ms Campbell : Ms Wilson has just clarified that in the act it is up to $200 and in the policy it is $50 that we write them off.

CHAIR: Up to $200?

Ms Campbell : Yes. We can write them off up to $200. But in the policy—and the policy has been in place for many years—has been $50 as well. And I am just looking for a transcript of what was said on background briefing, because it was a very long piece, and I am not sure which part of it is in—

CHAIR: It was towards the end.

Ms Campbell : The difference between how much the recipient has advised us of and how much the recipient has advised the tax office of—that is one of the points we look at in the filter before selecting people for review. So, if there is not a big difference between those two earnings, we think that may have just been rounding or it may be that by the time we go through the process it will not be economical to pursue that debt. I am just looking for someone who knows what the transcript of the minister said, because I do not recall exactly. It might be that that was what he was talking about, which was the difference between the two issues.

Ms Campbell : Minister Tudge said in the background briefing that the initial data-matching only identifies where there is a discrepancy of more than $1,000 to begin with. Then, we will go through the process.

CHAIR: Is that $1,000?

Ms Campbell : That is when the two different earnings are that much, but that will not necessarily be the debt, because that is actually the that earnings the recipient or former recipient has declared. The debt, even if there was $1,000 difference in their earnings, would be much lower because of the way the taper rates work on the payments.

Senator DODSON: How many calls to Centrelink are there from remote communities that are from mobile phones?

Ms Campbell : I am not sure we have that information with us at the moment, but we are happy to take it on notice.

Senator DODSON: What is the waiting time that could be incurred from a client using a mobile phone?

Ms Campbell : We will need to take that on notice. We also know that many recipients in remote communities often access the agent or a Centrelink office in those remote communities, and the agent usually has a landline phone. That comes through to our system and we seek to avoid recipients using mobile phones on those occasions, so those phones are very popular.

Senator DODSON: A comparison of both systems would be useful.

Ms Campbell : Yes.

Senator DODSON: You mentioned earlier that refinements were made to the system as you became aware of glitches or difficulties in the system. Who is engaged to deal with the refinements to the system?

Ms Campbell : Who is engaged to deal with the requirements of the system?—that is done internally within the Department of Human Services.

Senator DODSON: Do you contract that out?

Ms Campbell : Sometimes we have contractors providing support. I understand this system was developed within the department. When we made the refinements, we worked within the department and we did extensive review of what we call the sticking points with user experience. We used people from outside the department to come in and trial and test the changes, and we analysed where they found challenges with it. I call them sticking points, but I think there is a more technical term for what those challenges were.

Senator DODSON: In that process, were there opportunities to consult with ACOSS and other stakeholders?

Ms Campbell : There are always opportunities to consult with stakeholders. As part of our user experience testing, it will be important for us to think about how we do this. I note the questions from the committee, and we will take that on notice about how we might better do that in the future.

CHAIR: Can we talk about data now. I would like us to clarify some of the data that is available. I am after a stack of information on numbers. Thank you for the information you have provided. Can we get updates for January and February?

Ms Campbell : We will take that on notice. I do not have it with me at the table.

CHAIR: That would be good, and obviously then the full table—not just the numbers initiated and completed without debt. Could you also take on notice the number of people who have sought a reassessment?

Ms Campbell : I thought we had already taken that on notice, but we can.

CHAIR: How many are still going through the reassessment process? How many have had their reassessment process completed? How many have had their debt reduced through the reassessment process? You have already done where they have gone to zero. How many have had their debts increased?

Ms Campbell : We do have that on the table. If you go down to the second table where we have got the number of debts, debts reduced to zero, debts reduced to non-zero, debt amount increased.

CHAIR: Okay. Can we have that then for those other months?

Ms Golightly : Yes.

CHAIR: How many have now gone to review? That is through the initial reassessment process?

Ms Campbell : I think that is from continued reassessment that we have been undertaking.

Ms Golightly : Correct.

Ms Campbell : So if someone asks us to and provides more information—and it is an iterative process where people do provide more information—then we might send them the outcome and they go, 'Oh, maybe that's not right,' and they provide us with more information, and then we reassess and we send them another outcome. So it is an iterative process.

Ms Golightly : It also includes any formal internal reviews as well.

CHAIR: Can you separate out the two? So can you tell us the difference between reassessment and a formal internal assessment?

Ms Golightly : I will take that on notice. It might be one of those where we might have to do a bit of sampling because of the process that the secretary just outlined in the reassessment space. It is a bit of an iterative process. But we should be able to identify the formal reviews.

CHAIR: I am sorry; I must be a bit slow. I do not understand the difference between standard reassessment if someone requests it—or is one where somebody requests it and the formal one is where you initiate it?

Ms Campbell : Can I try to explain it. My understanding is: reassessment is when people provide us information and say, 'I don't think that that is correct and here's another piece of information'—so that is reassessment; or they say, 'I think you've got it wrong, and this is why I think you've got it wrong,' and so we reassess. When we finally say, 'Have you got any more information?' and they say, 'No,' and we say, 'Right; this is the assessment,' and they say, 'Okay; I want it reviewed,' then it goes off to a review officer.

CHAIR: Okay. That is what I meant.

Ms Campbell : Authorised review officers.

CHAIR: I was calling assuming that the reassessment was where somebody had asked formally for that reassessment once they got their debt notice.

Ms Campbell : Well, they do. They only go off to the authorised review officer, which we call the review, after they have basically given us all the full information they have got. If they are still not happy then it goes to the authorised review officer.

CHAIR: So what I want is that formal—

Ms Campbell : The formal authorised review officer?

CHAIR: the formal authorised review where someone has got their actual debt that they owe and they are going, 'That's not right,' even though they have gone through the iterative process. How many through that process? How many have had their debt increased, decreased, or—

Ms Golightly : Simply from the formal reviews?

CHAIR: Yes.

Ms Campbell : We will have to take that on notice. I do not think we have got that.

CHAIR: Thank you. And I am presuming that once they have gone through that formal process and they are still not happy, that is when they appeal and go through the appeals process?

Ms Campbell : That is right.

CHAIR: You do not have any detail on the number of those that have gone to appeal?

Ms Campbell : To appeal? No.

CHAIR: I presume we have to go to the AAT for that?

Ms Campbell : I think we would probably have something, but we do not have it with us.

CHAIR: Okay. If you could take that on notice and I will also follow-up with the AAT.

Senator DUNIAM: Did you ask that question on a period of time?

CHAIR: I want it from the beginning of July through to as current to year-to-date as possible.

Ms Campbell : We will take that on notice.

Senator DUNIAM: On that, can I expand that question on notice back a bit further—maybe another six months or thereabouts?

Ms Campbell : We can take that on notice.

Senator DUNIAM: Just to get a comparison.

Ms Campbell : The concept of reassessment, then review, then appeal—so the reassessment space goes on quite frequently. We talk to people, they provide us with more information when we are trying to work through these issues. I am not sure we always capture the number, because it is a fluid process, but we will see what we can get for you.

Senator DUNIAM: Thanks.

CHAIR: I want to clarify: is the automated assessment process still ongoing?

Ms Campbell : The online compliance initiative where we ask recipients or former recipients to clarify their information is ongoing. There have been refinements to it. Most notably, to ensure the letter actually gets to the recipient or former recipient, it is now sent by registered mail. In that letter there is a code that allows them to log onto the system, the refined portal, to clarify their information. At any time when they are logged onto that portal, the 1800 number is there and they are able to ring and clarify or get assistance with completing the process.

CHAIR: Does anybody else have questions around the actual numbers?

Senator PRATT: The numbers of what?

Senator DUNIAM: Any numbers.

CHAIR: Or do you want any extra numbers on the number of letters that have gone out or what they mean?

Senator PRATT: I have some budget questions regarding the recovery of debt, which relates really to the numbers.

CHAIR: Okay, let us go on to that then.

Senator PRATT: What is the budgeted figure for the 2016-17 financial year recovery of debt?

Ms Campbell : I will just ask someone to come to the table with those exact details. Senator, these were part of larger measures. Are you just looking for the amount on employment income that was budgeted for 2016-17. Is that what you are looking for?

Senator PRATT: What I am trying to ascertain is how much debt has been collected versus what you budgeted for within this measure.

Ms Campbell : So the target for this measure versus actual fiscal identified?

Senator PRATT: That is correct.

Ms Campbell : Okay, can we get the fiscal numbers?

Ms Golightly : The amount of debt raised under this sort of program for the first six months of this financial year has been in the order of $300 million.

Senator PRATT: So that was the budgeted figure for the first six months?

Ms Golightly : No, that is what has actually been raised.

Senator PRATT: What was the budgeted figure before you implemented the program?

Mr McNamara : In terms of the employment income measure, for 2016-17 we were looking at about $1.2 billion. If we look at the measure in total, it actually has a number of elements though.

Senator PRATT: I understand that, but if you have got $300 million raised, then you must have the line item that goes back as to what you budgeted against that $300 million?

Mr McNamara : Yes. If you look at the 2015-16 budget, we budgeted for $576 million in that year.

Ms Campbell : I am just trying to clarify: the comparison is the 576 for the anticipated savings?

Mr McNamara : Yes. It depends. If you want it by measure, we can go through by measure as it appeared in the budget papers on MYEFO.

Ms Campbell : I think what the committee is looking—because that is a whole lot of other things that are not related to the online compliance initiative.

Senator PRATT: But if you have raised $300 million through the online compliance measure, then you must have had some sort of estimate of what you estimated it would raise.

Ms Campbell : I am just trying to find that component. We are adding some numbers together. Can we take that on notice? Some officers will have a look at that and see whether we can actually get the number, because I am not too confident of what the number is.

Senator PRATT: If you can get the number during this hearing, that would be great.

Ms Campbell : Yes.

Senator PRATT: You have described $300 million raised. Can you define 'raised' for me: is it where a debt notice has been issued or is it debts that have been repaid?

Ms Campbell : The fiscal number is the debt notice has been raised.

Senator PRATT: Okay, so that is where a debt notice has been issued, but the debt has not yet been repaid?

Ms Campbell : Because repayment plans can go over very long periods—people can pay as little as $5 a week back—that is the difference between the fiscal and the underlying cash number, so when the cash is actually received. I am just checking to see whether we have the underlying cash number. At the moment the underlying cash number is $24 million.

Senator PRATT: So that is $24 million that has come in—

Ms Campbell : But that would be expected when people are on repayment plans, when they are paying it back over some time. That is to ensure that people who are facing hardship or who may not be able to afford it are able to pay that back in small amounts.

Senator PRATT: And you are going to find out for us what the estimate was of how much would be raised, noting that the dates attached to that $300 million were for the first half of this financial year?

Ms Golightly : That is the first half of this financial year.

Senator PRATT: Can you also give me the budgeted figure for the recovery of debt for the whole of this financial year?

Ms Campbell : I thought that was the number you had just asked for.

Senator PRATT: Good; that is fine. And collected year-to-date is $24 million?

Ms Campbell : That is the underlying cash number versus the fiscal number.

Senator PRATT: No, the fiscal number is the raised—

Ms Campbell : That is what is raised, that is what is in the budget papers and that is what measures work off. The actual collected is the underlying cash number, which will have a tail because of the way the recovery payments go into place.

Senator PRATT: I think that answers my budget questions, but we are still on—

CHAIR: We still have some more data questions.

Senator PRATT: Yes. Have we covered the ATO matching?

CHAIR: I think we need to go back there.

Senator KAKOSCHKE-MOORE: Would you be able to provide a breakdown of the number of debts that have been referred to external collection agencies and the number of debts that have been kept in-house?

Ms Campbell : We might be able to do that now, because debts—generally it is former recipients who are referred, and when we are unable to contact people as well.

Ms Golightly : From memory it is around 10 per cent, but I will get the actual figure for you. Of the reviews completed to the end of January, there were about 50,600—sorry, that is incorrect.

Ms Campbell : Can we take that one on notice and get back to you?

Senator KAKOSCHKE-MOORE: Yes.

Ms Campbell : Generally, as part of our broader debt program, about 10 per cent of debts are referred to collection agencies. In this case, we have taken some actions—we talked about the 6,600 who had not engaged with us. Those debts have been recalled from those collection agencies, and we are now using different means to try to contact these people; we are using different data sources, like the electoral roll and the like, to see whether we can find these people. We can even use the databases these data collection agencies have to see whether we can find where people are and see whether we can contact them.

Senator KAKOSCHKE-MOORE: Okay.

CHAIR: Will the numbers that you provide exclude that 6,600?

Ms Campbell : I think we would just be explicit about the 6,600. If someone has not engaged with us, we are now looking to see whether they did not receive our emails or our letters or did not respond to our letters, and to see whether we can engage with them as well.

CHAIR: Now I am confused. The 6,600 have been recalled?

Ms Campbell : I think more than 6,600 have been recalled, but there were 6,600 where we knew that they had not engaged with us beforehand. They have been recalled, and we are recalling some others to see whether we can make sure they had the opportunity to update their data.

CHAIR: Can you be explicit in the table about what has been recalled?

Ms Campbell : We will.

CHAIR: The other thing we should know is how many of those 6,600 started paying the debt anyway.

Ms Campbell : I do not think we have that information, but we will—

CHAIR: Could you include that in the table?

Ms Campbell : We will see what we can do with that information.

CHAIR: Thank you.

Senator KAKOSCHKE-MOORE: To provide a bit of context to the use of external agencies in relation to OCI, perhaps you could go back six months or 12 months and provide us with data about the number of debts referred to external agencies before the program started.

Ms Campbell : We can provide that for the entire debt profile. We have about 2.4 million debts every year, so about 10 per cent—but we will get you the exact numbers on that.

Senator KAKOSCHKE-MOORE: Thank you.

Senator DODSON: I am not sure whether this is an appropriate question, but what has been the saving from the adoption of this system, and what savings have been made by the removal of the 5,000 employees?

Ms Campbell : The question on savings to date is a question we have taken on notice for Senator Pratt, so we will continue to do that. As for the savings from the staff cuts that have been spoken about in the media, I can take you through that. I will just try to find the numbers. It is actually longer than five years that the 5,000 number relates to.

Senator DUNIAM: About how long?

Ms Campbell : The reductions in staff commenced probably in 2010-11—at the start of 2011. The then Centrelink had been staffed to deal with the expected increases in unemployment coming out of the global financial crisis. Fortunately, that did not occur, and the unemployment rate did not rise to the expected rate that was forecast. Centrelink, back then and now, is staffed on numbers of recipients under each claim type. The then Centrelink had been funded for the expectation of Newstart recipient numbers increasing. That did not occur; therefore, the money did not stay with the entity and then moved to the Department of Human Services. Therefore, there was a reduction in moneys available, and there was quite a significant staff reduction in 2011 due to the fact that that money was no longer available to then Centrelink and later the Department of Human Services to pay for the increase in staff numbers. I am just trying to find the numbers, but recollection is that about 2,000 staff came from that.

Senator DUNIAM: In 2011?

Ms Campbell : After that there was the service delivery reform initiative that was announced in the 2011-12 budget, which was when we brought the then Department of Human Services, the Child Support Agency, Medicare and Centrelink into one department. Service delivery reform was about not only bringing it all together in one department but also putting more services online and to allow for greater service for citizens of Australia. That was about $200 million a year—that is now and continues on from that.

I will go through how much the amounts were in order to take you through that. So that was service delivery reform—net savings of $219.5 million from 2015-16 ongoing under service delivery reform. Then there was a 2011-12 measure in MYEFO which was reducing the cost of government administration, which was a one-off efficiency dividend. It was an application of a 2½ per cent efficiency dividend, and that resulted in a saving of $457.9 million over five years, 2012-13 to 2016-17. And just while I am saying that, I will see if someone could find me the numbers of staff differences per year. Then in the 2012-13 MYEFO, there was a target saving of public service efficiencies, which was a further $86.3 million over five years. Then we were required to provide additional savings of $20.1 million over four years, to be achieved through better procurement. In the 2013-14 budget, in order to find a savings offset for the ISIS business case—that was a replacement of our IT system—there was a further $8 million per annum over two years. In the 2013-14 budget, in order to pay for the child support system replacement, there was a saving required of $101 million over five years. In the 2013-14 budget, there were targeted savings of public service efficiencies of $23.3 million over four years. In the 2013-2014 budget, there was a further measure on DHS efficiencies, which was $62 million over five years.

The economic statement of August 2013 required an increase to the efficiency dividend rate to 2.25 per cent, which resulted in savings of $379.7 million over four years, plus $20.6 million, so about $400 million over four years. In the economic statement, again, there was another efficiency dividend of about $40 million over four years. In the 2014-15 budget, the temporary increase to the efficiency dividend was an increase of 0.25 per cent, which was about $84.6 million over four years. The Department of Human Services efficiency in 2015-16 was $55.1 million over four years, and then, in the 2016-17 budget, the department was to deliver an additional $20 million in savings per annum from 2016-17 and another increase to the efficiency dividend.

So overall, the staffing number—the reduction from 2010-11 to 2011-12—was 2,381 staff. And that is average staffing levels, so—

Senator DUNIAM: That number again, sorry.

Ms Campbell : It was 2,381, from 2010-11 to 2011-12. From 2011-12 to 2012-13, it was a reduction of 797 staff. From 2012-13 to the 2013-14 financial year, it was a reduction of 1,706 staff. From 2013-14 to 2014-15, it was a reduction of 378 staff and from 2014-15 to 2015-16, it was an increase of 486 staff.

CHAIR: Are those all full time—that average?

Ms Campbell : That is average, so that is the full-time equivalent. So it could mean more part-timers. It is not headcount. It is actually average staffing levels, so a full-time equivalent, basically, across a full year. So the claims that the 5,000 have been made recently are not correct.

CHAIR: I think this morning the CPSU acknowledged that it was from across governments. That is my understanding of what they said this morning.

Ms Campbell : In fact, for this measure, there was actually 700 staff allocated for these compliance measures.

Senator KAKOSCHKE-MOORE: New staff?

Ms Campbell : It is hard to say 'new staff' with the work that we do in Human Services, because some measures start—so most measures have staff at the front to do the computer system and set it up, and then it goes down because we go into steady state, for want of a better term. We often have those bumps—

Senator DUNIAM: So it is a reallocation.

Ms Campbell : So it reallocates; they might have been doing a family tax initiative—or something—one year. Well, then, the next year that same amount, or an amount of staff would go off and to compliance measures. So it depends on the government of the day and what their new measures are.

Senator KAKOSCHKE-MOORE: So those 700 could have been reallocated from a different work group to focus on this—

Ms Campbell : They could have been but—

Senator KAKOSCHKE-MOORE: or they could be brand-new.

Ms Campbell : And there has been an increase in staff from 2014-15 to 2015-16, of about 486—or about 500—staff, and a lot of that was to do with the new compliance measures. During that period also, the CRS, the Commonwealth Rehabilitation Service, had been part of the department, and those activities were ceased, so that meant 1,200 staff were then available for reallocation. The money was taken away but the net increase means that those actual people could go and do different things.

Senator KAKOSCHKE-MOORE: Were any labour hire companies used to fill the positions in the department for the OCI issue that we are talking about?

Ms Campbell : I know we had non-ongoing employees, which are not labour hire, but I can take that on notice.

CHAIR: How many were casual?

Ms Campbell : When you say 'casual', do you mean irregular and intermittent employees?

CHAIR: Yes.

Ms Campbell : We will take that on notice as well.

CHAIR: Thank you. What do you call them?

Ms Campbell : Irregular and intermittent employees, as by the act.

CHAIR: It is afternoon tea time. We would like Mr Jongen to answer some questions after afternoon tea, because there is a section of questions that we want to get to due to availability of senators.

Ms Campbell : That is fine. Answering those questions may involve Mr Jongen or it might be something that I am able to answer as well.

CHAIR: I understand that.

Proceedings suspended from 14:46 to 15:02

CHAIR: We will get started once again.

Senator PRATT: Chair, did you have some particular themes that we were looking at?

CHAIR: We will go to the information publicly available and any privacy issues we want to traverse.

Senator PRATT: I need to follow up with respect to some of the issues that were raised in estimates last week. It is my understanding that the minister's office sent two sets of internal briefings notes marked 'for official use only' to The Guardian and to the journalist Mr Malone, and that these briefings contained Andie Fox's personal information, including her relationship and tax histories. Are you able to confirm that that was the case?

Ms Campbell : We sent a letter last night to the committee. Given this matter has been referred to the Federal Police, and because the evaluation by the Federal Police is underway, our advice is that it would not be appropriate for us to continue to discuss this matter.

CHAIR: You can still take the questions on notice.

Ms Campbell : We can take the questions on notice, but we cannot provide answers at this time.

Senator PRATT: That is fine. Can I ask you to table the email from the minister's office to Mr Malone and to The Guardian?

Ms Campbell : We will take that question on notice.

Senator WATT: I must admit that I am not really across the detail of the complaint that has been made to the AFP, but does that concern the matters we discussed at last week's hearing?

Ms Campbell : We do not know. We have seen only the front page of the complaint; we have not seen the full complaint. That was what was put in the public domain by the complainant; we do not have the full complaint.

Senator WATT: I think after the hearing last week it emerged that the minister or his office had provided some further confidential information to a different journalist, this time from The Guardian.

Ms Campbell : We wrote to the committee last night indicating—

Senator WATT: I heard you and am aware of that letter.

Ms Campbell : So the answer is the same: we will take that on notice. We will take on notice any question you have around this matter.

Senator PRATT: Could you take on notice to advise the committee of exactly what information has been provided to journalists?

Ms Campbell : We will take that question on notice.

Senator WATT: I can help you out here. I am advised that the complaint that has been made to the Federal Police does not relate to the two 'official use only' briefings that were provided to Paul Malone of The Canberra Times and Christopher Knaus of The Guardian.

Ms Campbell : I have no evidence that tells me that, and so, because the only evidence I have is what is in the public domain and there is an AFP evaluation underway into this matter, it would be inappropriate for us to canvass these issues. I am happy to take your questions on notice.

Senator WATT: I might see whether it is possible to get a copy of that referral.

Ms Campbell : And then I will seek legal advice on that referral.

CHAIR: Even if you cannot deal with it now, that may well expedite the answers to your questions on notice.

Ms Campbell : I would take legal advice, if I were to see the full referral, and discuss it with legal officers who would also talk with the AFP, because it is now the AFP's evaluation.

CHAIR: Yes, but this is a separate committee, and while you are taking these on notice, if you cannot answer them, you will need to let us know under the public interest immunity process.

Ms Campbell : We will.

CHAIR: Are you claiming that?

Ms Campbell : We will take them on notice, and if there is further information available, we will seek legal advice on that, but the legal advice we had from what was in the public domain from the referral was that we should not answer those questions and that we should take them on notice at this time, which is why we wrote to the committee last night.

Senator WATT: Where we have got to is that the department cannot talk about personal cases because they are confidential, but if they end up in the media, you can talk about them until a complaint is made, in which case you cannot talk about them any further.

Ms Campbell : I do not understand your question.

Senator WATT: It is a little bit frustrating that it is okay for ministers and, apparently, departments to put personal confidential information into the media, and then the moment people want to make complaints about it or start asking questions, the walls come down.

Ms Campbell : As we explained in the letter we wrote to the committee, and we might be able to table that—

CHAIR: We have it.

Senator WATT: I have seen the letter.

Ms Campbell : this matter has been referred to the Federal Police for evaluation.

Senator WATT: No, the matter that we are seeking to ask questions about is not the subject of the Federal Police referral.

Ms Campbell : But I do not know that, because all I have is the front page of the letter of the referral, and so I have provided that front page of the referral and sought legal advice on that. You may think we are being overly cautious, but that is all I have and that is what we have sought legal advice on.

CHAIR: Have you sought advice from the AFP about what you can and cannot talk about?

Ms Campbell : We have.

CHAIR: What did they say?

Mr Hudson : As we reported in the letter that was provided to the committee, the AFP has confirmed to the department that it received the referral for evaluation on 2 March 2017. The AFP has stated that whilst the evaluation is ongoing it would not be appropriate to provide any further comment.

CHAIR: That is specifically about that particular issue?

Mr Hudson : That was what they advised us.

Ms Campbell : I accept it is difficult, because we do not know what the full referral is, and that is the advice. We are happy to take them on notice and see what we can provide.

Senator WATT: Can I clarify one thing that came up before the break. This was dealt with partly while I was out of the room, so apologies if we are going over old ground. There has been that differentiation between—if you are looking at the dollars involved here—debts raised as opposed to money actually collected on a cash basis. What I think came out was that about $24 million has actually been retrieved from people.

Ms Campbell : Yes, because of the repayment plans that are put in place. Whenever a debt is raised, we talk with either the recipient or the former recipient about how to pay back the money. It may be that they are facing financial challenges—they may have a number of reasons—and we agree on a repayment plan. That repayment plan can be as small as $5 per week. As you can imagine, if it is a large debt and they are only paying it back at $5 per week, that means that there will be a lag in the payment—so a difference between the fiscal when the debt is raised, and the underlying cash when the moneys are paid back.

Senator WATT: So it basically works out that the amount you have retrieved, being $24 million out of $300 million, is about eight per cent of the debts that you have raised?

Ms Campbell : That is to date, and I think it is the end of December. So, to the end of December, that is the case, and there will always be that lag because of the availability of repayment plans to take into consideration the individual circumstances of recipients and former recipients.

Senator WATT: We also talked before the break about savings, mostly about the savings that have been generated in staff reductions.

Ms Campbell : This is the 5,000 staff issue?

Senator WATT: Yes. That has been dealt with. I was also interested in exploring a little further the savings that are expected to be made out of this program. If I am reading this correctly, when the Strengthening the Integrity of Welfare Payments measures, which all of this stuff falls under, was first announced by the government in the 2015-16 budget, they estimated that they would recoup about $1.7 billion over five years.

Ms Campbell : Yes, and there are a number of elements to that measure, and we clarified before the break that we did not exactly have the breakdown with us of each of the elements, so we would take that on notice and get back to the committee on what the breakdown was for this one element of that measure.

Senator WATT: Looking at the whole package, if you like, some of those figures were changed in MYEFO and things like that, but by the time we get to the 2016-17 midyear MYEFO the government is now predicting that they will achieve $3.7 billion worth of savings over four years through this whole range of measures—

Ms Campbell : A number of measures, of which what we are discussing is one.

Senator WATT: Yes. I know you are going to take it on notice, but do you know whether the savings that are expected to be generated from this particular measure have increased since this program was first announced?

Ms Campbell : The estimates have not been varied, and we have not had long enough to look at the actual performance in order to make that assessment about whether there needs to be a variation to it.

Senator WATT: Again, that is slightly different to what I am asking. It is not so much about whether you are thinking about changing the target. Do you know whether the savings target for this particular measure has changed since it was first announced?

Ms Campbell : I am not trying to be difficult, but the measure has a number of elements in it, so subsequent measures may have had the same element but in different years, so it might be better if we take it on notice, if you are mainly interested in what we are talking about here—the employment matching—and look at which bits have been added to. It generally involves which years are being focused on. There has been the 2015-16 budget, the 2015-16 MYEFO and then MYEFO 2016-17. So we might be best to come back to you on notice with a chart that best describes it.

Senator WATT: Okay. How hard does Treasury or Finance ride you to achieve these savings targets?

Ms Campbell : The Department of Finance agrees costings as part of the costings process, and these costings went through that normal costing agreement process. Then we do estimates updates with our colleagues, and that is where we determine whether we are achieving those targets or not.

Senator WATT: So that is something that is constantly monitored by Finance and Treasury?

Ms Campbell : Constantly monitored.

Senator WATT: It would be Finance, would it not?

Ms Campbell : Generally Finance, yes.

Senator WATT: They are the bad guys—we all know it! The reason I ask is that we had evidence this morning that there is a concern that part of the rush in getting this system up and running, and the fairly harsh treatment that has been meted out to at least some vulnerable people, is really driven by this need to achieve these budget savings. If you do not meet those budget savings, there are consequences. Has the need to meet these budget savings been a factor in getting this implemented?

Ms Campbell : When any measure is implemented, the costings process is gone through either in the budget or in the MYEFO, and estimates are made. The planning then goes into the implementation on what is a government decision. Measures are government decisions announced via MYEFO or budget, and then that is underway. Sometimes measures produce different results to what is expected, and that is an estimates variation. Sometimes they either overspend or overachieve. Sometimes they underspend or underachieve. That is a constant process we have with the Department of Finance about estimates variations, and with the Department of Social Services as well.

Senator WATT: Can you remind us which types of payments this OCI system has been applied to at this stage?

Ms Campbell : It was not identified to be one type of payment; it was about recipients or former recipients and earned income. So it was not a type of payment but any recipient who had either declared to us, or to the tax office, earned income.

Senator WATT: Whether it be someone receiving an age pension, a disability support pension, Newstart—

Ms Campbell : Predominantly Newstart, because those are people more likely to be working, but there would have been a small number of age pensioners if they may have been transitioning between work and retirement or doing some work whilst in retirement.

Senator WATT: Have you provided any advice to government about the potential of expansion of this OCI mechanism to other types of payments or other types of recipients?

Ms Campbell : This measure is applicable to people across a broad range of payments if they have earned income, so it already is applicable to a broad range of payment types.

Senator WATT: You would have seen media reports that this might be expanded to age pensioners, to veterans, to other groups. Is there any consideration being given to whether that might occur in the future with groups within the community or with types of payments that are not currently subject to the OCI?

Ms Campbell : I think there are announced measures where automation would be used to facilitate compliance in those spaces. I think it is fair to say that there are a number of refinements that have gone into this process which would be applicable to other types of income, as is envisaged—

Senator WATT: Such as?

Ms Campbell : Other types of income, like rental income from properties, investments, business income, foreign pensions—all types of income that impact on a recipient's payment rate.

Senator WATT: So what you have done to date is really focus on earned income?

Ms Campbell : Yes.

Senator WATT: So, whether someone is receiving a DSP, an age pension, Newstart—whatever kind of payment it is—the focus has been on comparing that with earmed income?

Ms Campbell : Yes. And importantly with those other types of income—because the earned income comes from the tax office via employers—matching is done, or will be done, from the actual tax return of the recipient. So that comparison would be what the recipient told Human Services and what the recipient told the tax office, not what the recipient's employer had told the tax office. So it would be two pieces of data that had both been provided by the recipient to the government in different forms.

Senator WATT: Going back to the information disclosure, I understand the referral to the Federal Police has been well disseminated in the media. I would have thought that your legal advisers would have seen the terms of that referendum.

Ms Campbell : We understand that we only have the front page—that that was the only thing promulgated in the media, not the subsequent page.

Senator WATT: I might try and get some more information about that.

CHAIR: I want to go back to the issue of the provision of information around the release of public information. Do you take that to mean that, if another occasion arises where someone speaks in the media, you will not be releasing any information on that particular person until this matter is resolved?

Ms Campbell : I would be asking for subsequent legal advice on that matter. Given that it has been referred for evaluation to the Federal Police, we would take subsequent advice on that.

CHAIR: How do you interpret it at the moment?

Ms Campbell : I would take advice.

CHAIR: So you have not sought advice yet?

Ms Campbell : This happened last night. It was last night when we were preparing for this that we realised we could have an issue about the AFP evaluation that was underway. We sought advice on that matter. We are here; we will seek subsequent advice on what to do next while the evaluation is underway.

CHAIR: Does that mean—I want to be really clear about this—you will seek advice now on whether it is appropriate for you or the minister to be releasing any more information on income recipients who have spoken out about their own personal situation?

Ms Campbell : Given the evaluation by the Federal Police is still underway, I will seek advice on whether I would be jeopardising that process by doing anything of that ilk.

CHAIR: Have you provided any further information on anybody that has spoken out in the media about this—on their personal circumstances—since the referral occurred last week?

Ms Campbell : To whom?

CHAIR: To the minister. Sorry, you may not have heard me say that.

Ms Campbell : As we discussed last week with the minister, the reason the minister has provided information on individuals is about service recovery. If someone goes out in the media and makes a claim that there has been maladministration, we have a service recovery team that seeks to contact the individual to find out what their issues are and see whether we can resolve them as quickly as possible. If that is likely to be a question asked by the minister, we then provide that service recovery information to the minister about what happened, what the circumstances were, whether we had made an error, whether there had been a misunderstanding about the obligations. But that is done in a service recovery mechanism.

CHAIR: To protect the confidence and integrity of the system?

Ms Campbell : No, to just—

CHAIR: That is what you said last week. I am only quoting back to you.

Ms Campbell : That was in the context of releasing the information outside. If we talk about why we tell the minister, it is because he is responsible for the administration of this element of the portfolio. He wants to know whether we are doing our job properly. So it is important that we are able to tell him. The email that I had this morning—I send that off to the service recovery team to determine whether or not we have made an error, whether we can fix it quickly. And that is why we do that engagement with citizens—to try and do service recovery. We think that is quality service.

CHAIR: Go back to my question. Have you provided any further personal information on income support recipients, past or present, since last week, whether it is service recovery or to correct the record to the minister?

Ms Campbell : I will have to take that on notice because I do not have the regular with me—but I would expect that we probably have. That is something that we do on a regular basis because of service recovery.

CHAIR: What about the issues of correcting the record?

Ms Campbell : When we provide the information to the minister, it is about service recovery generally. I do not—

CHAIR: Sorry, did we not have this whole conversation last about correcting the record and maintaining confidence and integrity of the system?

Ms Campbell : And we talked about two different things. We talked about the information being provided on a regular basis to the minister for service recovery purposes, so that he understands why there are complaints in the media—noting that half of recent complaints have had nothing to do with OCI—to see whether there are other issues in there. Then there was another discussion and I think that goes to what the AFP evaluation is underway on, and our preference is to take those questions on notice.

CHAIR: Okay. I do not see why you have to take on notice the question I asked: have you provided any further information about the other matter, not system recovery, on a person who has spoken and criticised the department and undermined confidence in the system? Have you provided any further information on anybody to the minister?

Ms Campbell : That could be service recovery.

CHAIR: Or it could be both, and please—

Ms Campbell : Or it could be both.

CHAIR: don't take us around in circles again. Have you specifically done it on either or both?

Ms Campbell : I will take that on notice.

CHAIR: Thank you. There being no further questions on this specific issue, can we move on to the process. Do you have any questions on the process? I know that you are short for time?

Senator WATT: I was interested in just going back over some of the issues to do with the ATO and the information provided. Is that the kind of thing you mean?

CHAIR: Yes.

Senator PRATT: And the targeting of different groups is part of the process.

CHAIR: Yes, that is all part of the process. Do you want to lead off, given your time frame?

Senator WATT: Sure. I am keen to explore the decision making that occurred in deciding to go with this averaging out annual income to arrive at a fortnightly amount. What we heard from the tax office was that they provide people's annual income to you, but really the decisions made about averaging that out to get to a fortnightly rate and then issuing notices and letters on the basis of that rest with DHS?

Ms Campbell : I think that misconstrues the process, so I can take you through the process. I do not think that accurately reflects the process that occurs.

Senator WATT: Could you do that please.

Ms Campbell : A process has been in place data matching for many years. So when the tax office provides us with information and we look at the information that is provided in the Centrelink records, we seek to match them up. If they are very similar, very close, they are not selected for further consideration. As has been the case with our manual process, we then look at the periods in which the income was earnt. So if the tax office says it is less than 12 months, it is a three-month period, we compare that with the information that was provided in our Centrelink process. This concept of averaging and that it happens every time did occur when we were unable to engage with the recipient or the former recipient when they had not engaged with us and that was where the final result was when there had been no engagement. Now we refined the system, particularly around that initial letter, to make sure that we do engage with the recipient.

The averaging, as you have called it, is something that has been around in the manual system as well as in the automated system, but it is about the engagement piece. So it is about making sure that we can clarify with the recipient either the amounts or the period, and then if the recipient comes back and says, 'Yes, I did earn that much, but I earnt it over 10 weeks' then that is a different equation to how we do the comparison with the data that was held on Centrelink.

Senator WATT: Okay. Do you think that going down that path is inevitably going to create issues where you essentially use an annual figure and go through that process to arrive at the fortnightly and other figures that you then rely on to commence your debt recovery?

Ms Campbell : I think it is a problem when the recipient or the former recipient does not engage with us. That is why the refinement has been to ensure as best as possible that we can engage with the recipient. Sometimes we will really struggle to engage with either a recipient or a former recipient because they do not want to be engaged with us, or it may be that for whatever personal reasons they do not want to engage. Our focus at the moment is on ensuring that we engage with the recipient or former recipient as soon as possible so we can clarify these issues.

Senator PRATT: Isn't the alternative to check your own records, though, because the recipient has already told you the periods in which they earned that income?

Ms Campbell : Senator, what we have identified is there is a difference between our Centrelink records and the tax records, so we do not know—

Senator PRATT: You annualise the tax office's—

Ms Campbell : which is correct, and that is why we seek to clarify with the recipient or the former recipient which is the correct record, or is there other information they can provide.

Senator WATT: Did you have this level of problem when you had the manual system before moving to this automated system?

Ms Campbell : We had a smaller number of recipients and former recipients involved. There were still complaints from those people as well, because they were not keen to be subject to review. In fact, most people subject to review are not happy. In fact, most people who get debts are not happy. That is just a feature of what we do, and so there are always complaints about us asking people to clarify details.

Senator WATT: You have got to admit the volume of complaints has markedly increased since this automated system has been implemented.

Ms Campbell : I suppose it depends on how define 'complaint'. There has been significant media and issues, but I am not sure whether the exact number of complaints that have been formally received has increased.

Senator WATT: To use your terminology—'clarifications'.

CHAIR: Or 'reassessment'.

Ms Campbell : Clarification is part of the system. That is what the system involves.

Senator WATT: This media does not come out of nothing.

Senator DUNIAM: I reckon you had a hand in it!

Senator WATT: I didn't actually, but I read it with interest. What you have said to us on a number of occasions is that what happens is that someone gets a letter that says, 'We've had a look at your data; we think there's something wrong here; can you clarify,' and, depending on what they say, a debt notice does or does not get raised. You have to admit that the number of people who have been able to show that there are inaccuracies in the records that you are using has gone through the roof compared to what happened under the manual system.

Ms Campbell : We could start again with they are not 'inaccuracies'; they are 'differences' in the information that is held.

Senator WATT: I have not got Senator Brandis for another hour. Can we not argue about words until then.

Ms Campbell : I think it is quite important because the words 'inaccurate' and 'wrong' are not correct.

Senator WATT: Are they inaccurate?

Ms Campbell : They are inaccurate, Senator. Now I have lost where I was up to. In many of these cases, we are discovering that people forgot to declare an employer; particularly when they had multiple employers, they forgot to indicate that they were an employer. They thought that they were going to be below the threshold so there was no point in declaring it. They thought they had declared it but then they realised they had not declared it, or they declared it in one year but not the other year. This is a complex system. It is really very difficult to navigate. It is difficult to navigate for the recipient and it is difficult to administer as well because of the nature of, for example, earned income for main payments such as Newstart and the like are evaluated on a fortnightly basis and they are also evaluated on an annual basis for family tax benefit. So sometimes recipients get confused in what they are declaring for family tax benefit purposes and income support purposes. So when we ask them to clarify, that is the opportunity in which to clarify it.

Senator PRATT: The department has claimed that notices were sent based on the behaviour patterns of individuals. I am keen to understand what the rationale is behind which groups were targeted when notices were sent. Could you explain the rationale to us?

Ms Campbell : Can you give us the source of that quote from the department so we might be better able to answer your question?

Senator PRATT: My understanding is that the department has briefed members of parliament.

Ms Campbell : I would have to clarify which member of parliament. I know I have not briefed a member of parliament on this matter.

Senator PRATT: I have a note to me that says, 'In a briefing with the department, the secretary claimed that notices were sent based on the behaviour pattern of individuals.'

Ms Campbell : I briefed advisers, but not a member of parliament, and I think we were talking about behaviour being income. So if they had income and the income was different to what they had declared that is why we sent the notices.

Senator PRATT: It would appear that, nevertheless, there are targeted groups in relation to Newstart and youth allowance. Given that you are only part way through this program, can you take us through who was chosen for the first tranche of these notices.

Ms Campbell : These notices were chosen for people who have earned income, so it is more likely than other payments that people on Newstart, youth allowance other and students are likely to have earned income. It is less likely, but not impossible, that people on age pension and DSP are likely to have earned income because of the nature and eligibility around those payments.

Senator PRATT: So it is a cohort of everyone who has earned income that has been targeted in this first tranche or is it everyone who has earned income, where you use your discretion? How far through the process are you?

Ms Campbell : This element deals with earned income. There are other elements, which we talked about earlier, which deal with non-earned income. We were saying that the non-earned income comparison source would be from the ATO—the actual tax return which was completed by the recipient. So we would be comparing the non-earned income from the recipient in the tax return that they put forward versus what they told us in their Centrelink record.

Senator PRATT: Their non-earned income. So currently you are looking at earned income through the tax office.

Ms Campbell : Through the tax office and the information provided by employers.

Senator PRATT: What sources of data will you be looking to in the next tranche of this?

Ms Campbell : We will look to the tax returns by recipients.

Senator PRATT: Rather than the—what are they called?—the tax notice of how much tax someone has paid at the end of the year.

Ms Campbell : What we are using at the moment is information provided by the employer to the tax office.

Senator PRATT: So it is from the group certificates—either an individual group certificate or a cluster of them—that you have essentially got that information.

Ms Golightly : The employers have a format that they have to report to the tax office. That can be at different intervals. For each employee they report the amount of tax they have remitted. That is the employer's record of how much PAYG, pay-as-you-go, tax. That is earned income as per the employer's records. The next phase will look at the income that an individual has declared to the tax office on their personal individual tax return.

Ms Campbell : So that will be a source provided by the recipient.

Senator PRATT: The tax office will not give you that information. You are going to ask for the details of a tax return? Or are you data-matching the tax returns as the next phase?

Ms Golightly : The tax office has both of those sources of information. They are in different files, and we will get each of the files.

Senator PRATT: Do you expect that there will be different cohorts of people in the next tranche of this? For example, in the first cohort, if you are looking at Newstart and youth allowance people, which is therefore based on information provided by the employer, is the next tranche of this more likely to throw up families in receipt of family tax benefit payments?

Ms Campbell : Can I clarify that there was no payment type focused on by this measure.

Senator PRATT: I understand that.

Ms Campbell : And the same for subsequent measures: it will be about the non-earned income as well. This one is earned income. The other measures we have been talking about are the non-earned income.

Senator PRATT: But comparing employer data versus someone's tax return may be likely to throw up different groups.

Ms Campbell : It may. I do not think we have done enough work on that yet to see what the profile will look like. We understand at the moment, as we have discussed, that earned income is more in those primary working-age payment spaces.

Senator PRATT: While you are not saying that pensioners are more likely to be targeted in the next phase, if pensioners have tax returns they may be more likely to come up in the second tranche of this process.

Ms Campbell : The next phase will look at non-earned income. It will be across the range of payments. We do not have any data yet to say which payments are more likely at this stage.

Senator WATT: Going back to the ATO information, as I understand it, the sequence was that there was a pilot in July or August. When would you say that rollout commenced, November? It was earlier, according to this, wasn't it?

Ms Golightly : September.

Senator WATT: Did the department at any time advise the minister of concerns that this system was not ready and that problems around data matching or other problems would arise?

Ms Campbell : No.

Senator WATT: Did you ever advise the minister or his office of concerns that, specifically, the use of ATO data to arrive at fortnightly figures would lead to inaccuracies?

Ms Campbell : That is not how the system is constructed, because the first step is to give the recipient the opportunity to clarify. I think what we underestimated was how many people would not clarify and would not engage. I think if I was to sum up what the problem has been, it is that when we wrote those initial letters recipients and former recipients did not engage. A small part of that—the 6,600—was because they did not know anything about it, but there was a large proportion of people who did not engage with us through those initial letters.

Senator WATT: Earlier today you told us that you felt that part of the reason for the angst around before Christmas was because of the large amount of media reporting that was occurring. You are saying now that the real problem was that Centrelink clients did not engage.

Ms Campbell : No. I think there were two different questions. You were asking what problems we thought were in the system and could have led to some of these issues, and I was saying that, having done a post-mortem of the implementation and looked at the things, I think we could have done better at getting people to engage. That is why we have moved to registered mail, in order to ensure that people engage.

Senator WATT: You do not think there is anything you could have done before those initiating letters were sent to ensure that the information you are relying on is accurate?

Ms Campbell : Because the construct of the system asks the individual to compare the two sources—that is the construct.

Senator WATT: But the figures you are putting to them are based on calculations that you do.

Ms Campbell : No. They are not based on the 26-week issue—

Senator WATT: I understand that.

Ms Campbell : they look at the amount that is earned in the period that is identified with the tax office versus the amount that has been reported to us in the Centrelink system.

Senator PRATT: When doing one of these reviews manually, would you normally have both the employer's information and their tax return?

Ms Golightly : The data matching is exactly the same as it has been in the manual system.

Senator PRATT: When you data match manually, do you pull in both the tax return and the employer's details at the same time?

Ms Golightly : Yes.

Senator PRATT: But in this case you are not. Is it possible that people will be hit twice by a review?

Ms Golightly : That is not how the process works.

Senator PRATT: Can you explain? Because it appears you are data-matching the employer payment information, but not at this point the tax returns. But when you do it manually, you pull in both?

Ms Golightly : I will just take a step back. There are two different measures. One is looking at earned income, as the secretary explained, and another one is looking at un-earned income.

Senator PRATT: I well understand that. When you do it manually, do you look at both of those sources at once when you review someone?

Ms Golightly : When we look at the earned income manually, we are looking at the same sources—

Senator PRATT: The same sources?

Ms Campbell : The same source.

Ms Golightly : We are looking at the same source of information as we have done for many years.

Senator PRATT: I understand that, but when you review manually, do you review both sources of information at once?

Ms Golightly : Sorry, but I am trying to explain. For looking at earned income, the process has always been and still is that we look at two sources of information. Those are the information the recipient has given us and the information the employer has given to the tax office. That has always been the case and still is the case, and that has not changed with this measure.

Senator PRATT: That is not my question.

Ms Campbell : Maybe I can answer your question. What Ms Golightly has just said is that when we are looking at an earned income review, we look at what they have already told us, plus what came in from the employer to the tax office.

Senator PRATT: Are they always separate reviews? Do you review both earned income and a tax return when doing someone's review manually?

Ms Campbell : It depends on what sort of review we are doing. If we were just doing earned income, and that is what we had identified, we would just look at the earned income source. If we had in the past manually had concerns both about and income and non-earned income, we may do the two together.

Senator PRATT: But it seems entirely possible, and much more likely, that someone might have gone through this process now thinking that they had cleared their debts and that it was all sorted, only to be confronted again with another discrepancy because the department have not done what they would normally do, which would be to look at the individual circumstances and see what the information throws up.

Ms Campbell : If someone went through an earned income review now and there was an adjustment made because of further information, that would be on their record. So then, when we do non-earned income, it would only be if there was a discrepancy in their non-earned income that they would then go into that process again.

Senator PRATT: Why are you not doing both at once? It seems entirely unfair when someone thinks it is all sorted and it may not be.

Ms Campbell : In the past, we have done earned income. It depends on how it came to our attention that there might have been an issue, and it depends what the recipient brings forward when they are completing the information they need to provide.

Senator PRATT: Surely when you are doing these things manually and see a discrepancy in earned income, you might also take the opportunity at that point to look at their tax returns?

Ms Campbell : We might if it was available and if it was a manual engagement, but this is a different system, taking advantage of the ability to match data.

Senator PRATT: And putting consumers through much more inconvenience as result.

Ms Campbell : Not consumers; the recipients.

CHAIR: I want to go back to this issue of comparing the two sets of data and the manual system versus the automatic system. Under the manual system, is there somebody checking whether the period of time is correct?

Ms Campbell : That is what happens in the automatic system as well, if that information is in the tax office file.

CHAIR: If it is in the tax office file?

Ms Campbell : Or if the person provides it. In the Centrelink record, if it says 'July to September' and the tax office records say 'July to September', and it was that amount of money and it matched, they would be excluded from this process. Say it was not in their Centrelink record at all, they were on a payment for the entire year and the tax office came back to say they earnt $15,000 over the whole year—then it would be $15,000 versus zero, so we would probably seek to clarify that situation. If the tax office came back and said, 'It was $15,000 between July and September,' and they were not on a payment between July and September, they would be excluded in that category as well.

CHAIR: That is where the ATO has provided when people were—

Ms Campbell : That is right.

CHAIR: What happens when the ATO does not do that, and you just have the annual income?

Ms Campbell : That is where we ask the recipient to clarify, and that was the same in the manual process.

CHAIR: Thank you. Any questions on process?

Senator DUNIAM: I have some. Ms Campbell, you touched on a number of them, I suspect, through looking at specific areas of process. We have talked a bit about the refinements that have taken place; I am wondering whether you could give us a broad overview of the refinements that have been put in place.

Ms Campbell : The first refinement, and one that we expect to have some significant results, is registered mail—making sure that the recipient gets the initial letter. We have a process in place where we will check to see whether they have actually received the letter and then we can continue to engage with them. The first two letters are now sent via registered mail. The first letter asks people to clarify and gives them a code with which to access the refined portal. The second reminder letter is also sent via registered mail—assuming the first letter goes to that address. If it comes back and says that the person was not at that address, we will then seek other means to contact them. Sometimes we can use mobile phone numbers that may be listed in the record and we can use other sources, such as the electoral roll or something like that. That is the refinement in making sure the letters get there. Even if people were registered for myGov, we are still sending them out registered mail just to make sure they get that.

Senator DUNIAM: What about social media and things like that? Is that a tool that is used?

Ms Campbell : We have 11 million users of myGov, and some people say that their preference is for all correspondence to go to their myGov account. When a new letter is sent to their myGov account, an email or a text message is sent to the recipient to say, 'You've got mail in your myGov box.' What we have seen over Christmas is that a lot of people have not followed through and looked in their mailbox—sometimes because people are not current recipients and sometimes because recipients did not get around to it. We have refined it by ensuring that the registered mail goes out.

Then, if we go to the portal, we looked at the easiest way for people to provide their information, and that is why we have this connecting code that comes in those registered mail letters that expedites people's way through. They still have to provide proof of identity, generally through a passport or a driver's licence so that they can prove who they are and to get that code. Once onto that portal, we have reviewed the portal and made a number of user experience changes around what sort of words work better for people and what sort of colour and format would make it much easier to read. One of the other things we have done with the portal is to make it possible for recipients to provide net income rather than gross income. The main social welfare payments are calculated on gross payment, which would require people to have access to information from employers. If we use net income, people are able to use bank statements to say what actually went into their bank accounts in different periods, so that is an improvement there. We have also automated the process of asking for an extension in which to provide more information and the like.

We have also looked at some of the letters—letters are the bane of our life—trying to make them clear and easy to read. We have had another go at making sure the letters have a call to action so that people understand what their requirements are. Importantly, there is also issue of pausing repayment plans while the debts are under review. So those are the main refinements.

CHAIR: Is that assessment and review?

Ms Golightly : Under assessment, you do not have a debt.

CHAIR: You do not get the debt.

Senator DUNIAM: So that is prior to the debt, and then review is after the debt has been—

Senator KAKOSCHKE-MOORE: Ms Campbell, you mentioned before that one of the issues the department had was that the department underestimated how many people would not clarify, once they received the initial letter, or would not engage with the system. What percentage of recipients did the department estimate would engage with the system, and how many participants have engaged with the system now?

Ms Campbell : I do not know that we have actually got that number at hand, but we could get that for you on notice. It has been a very useful reminder. We have looked, in the past, at other types of payments—for example, family tax benefit. With family tax benefit, we have 1.5 million recipients, so even this year we will send out approximately 300,000 reminders to people that they have to lodge their tax return, as a consequence of getting family tax benefit. Last year we sent out about 300,000 and, even after we had sent reminders, still 65 per cent of those people received a debt because they had not updated their details, they had not engaged with us. Of those 65,000 people who had a debt, about 21,000 subsequently had the debt reduced to zero—because they had done everything; they just had not told us. This is a pattern that we have. We actually have to suspend a number of payments every year from recipients who we ask for information—we ask them to update their details; we ask them to notify us of earnings—and they do not give it to us. After we have tried on a number of occasions, we actually have to suspend their payments in order for them to engage with us again. So I think it is going to be a key lesson learnt for us about just how many people are not responding to calls for action.

Senator KAKOSCHKE-MOORE: This information might have already been provided—and, if it has, please let me know—but could you give me a breakdown of the initial assessment that went out, state by state? It would just be interesting to know how many people in South Australia—

Ms Campbell : I do not think we have that state by state.

Ms Golightly : We could get that on notice.

Senator KAKOSCHKE-MOORE: Fantastic. Thank you.

CHAIR: When people have been responding to 'Please update your data' or—

Ms Campbell : Clarification.

CHAIR: Clarification—there have been some complaints that—what is the name of the sheet that you sent out to people to—

Ms Campbell : Is this from Background Briefing?

CHAIR: Yes. It is not the first time I have heard that, though.

Ms Golightly : The ADEX?

CHAIR: Yes, that is it—the ADEX.

Ms Campbell : Ms Golightly might be able to explain it.

Ms Golightly : I think the acronym is ADEX.

CHAIR: That is different to the information when you upload it on the actual online process? It is different?

Ms Golightly : I am not sure that it is. The ADEX might be two different things, perhaps. My understanding—and I will check this on notice—is that the ADEX is something we use to help staff explain to customers how the debt was calculated, which is a different issue to somebody entering their net pay from their bank statement, for example, onto the online system. I was not quite sure what the—

CHAIR: What people have been trying to find out is how the debt was calculated. Then they have to provide information to update it, but the complaint seemed to be—certainly from Background Briefing,but I have had complaints previously—that the information people have provided is different, or where the information is needed and requested is different, to what you have sent them in terms of what you have, or in the form that you have it, I should say.

Ms Campbell : I asked some questions about this after listening to Background Briefing on the ADEX. I think we might take that on notice and see what that form is. Sometimes it is confusing with 'gross' and 'net' and fortnights and the like, so I think—

Ms Golightly : That is right, and the comparison between their earnings in the period they might have worked and the Centrelink period that they were paid in. There is information that tries to marry those two.

Ms Campbell : There are also issues about when it was earnt versus when it was paid. That is a feature of the act. Ms Wilson might be able to provide more information about that.

Ms Wilson : The current arrangements require the income to be assessed in the period in which it was earned rather than when it was received. So it depends upon the periodicity of a person's earning and when their wages or salary are received versus their fortnightly payment period and the daily rate calculator for the fortnightly payment period.

CHAIR: When people get their pay slips, is there sometimes an error between what the employer puts down about when they worked and when they received their money?

Ms Campbell : There sometimes can be, and so we have looked to see whether that is likely to be material and we do not suspect it is likely to be material—some of those issues.

CHAIR: It does not impact?

Ms Campbell : It depends on how big the earnings are. If they earn $100,000 in one week, or a large amount, it might skew it, but mostly that is not going to be material because it is going to be small, casual type stuff. That is probably not likely to be creating the debt issues.

CHAIR: I want to return to manual checking and the issue that has been raised—we have been given a copy of, supposedly, a memo—around whether staff, if they saw an error in what was going through the automated system, were to correct it. I am sure you have seen that reported in the media.

Ms Campbell : I have. We encourage staff to get recipients to go online, and one of the main reasons for that is that, once they are online, they can also contact the 1800 number. If you go to a Centrelink office—there are 350 throughout Australia—it is not always likely that the person there will be deeply experienced in these matters. We do not have the capacity to train all our staff up to do every element of business across the Department of Human Services, so we stream into expert type areas. This is an expert type area, so what we wanted was for recipients to engage with the system and then engage with the 1800 number, which has the people who are expert on this, rather than any of our service staff in the offices. I think that may have caused some confusion about correcting things and the like. When they rang the 1800 number, they would work through those issues, and there was never a direction to those staff to ignore information that was available.

CHAIR: The 1800 number staff?

Ms Campbell : That is where we have always done the manual reviews through. We did not do manual reviews in every service office throughout Australia because it is quite complex because of the nature of what we are dealing with.

CHAIR: The comments that were made were that, before the debt notices got sent out, where somebody saw an error they were to just send it out anyway.

Ms Golightly : That is not a correct statement either. There has never been any direction; in fact, the system flags the more complex ones to go to a manual review before the debt is issued, and the whole point of that manual review is to check that the debt is correct. So I am not sure where that came from.

Ms Campbell : We did find some of those comments in the media were about people who did not understand the end-to-end nature of the system—they understood a small part. They may have been making observations while we were testing the system and trialling the system as well, and some of those were then reported as fact.

Senator DUNIAM: Earlier today, we had anecdotal evidence from the CPSU about an increase in levels of reported aggression with client-liaison staff. I wonder whether there is any data you can provide to us around that.

Ms Campbell : I will talk briefly while someone finds Mr Jackson for me, who is responsible for the service delivery operations network. We have not seen any increase in customer aggression during this period. Most of our engagements with recipients are always very respectful and very polite. It is true that recipients do not always appreciate being told what their eligibility is, but we do that in a respectful manner. We do have a small number of incidents—and those incidents occur every day—where people are aggressive and take it out on the staff members. But we have not seen an increase in the last few months on that issue.

Senator DUNIAM: You made a point before about those who receive a piece of correspondence suggesting that something is not right with the status of their claims or their recipient status. Obviously they are not happy, so sometimes they—

Ms Campbell : It is also fair to say that there are often other factors in those individuals' lives which lead to the customer aggression. Often, when we call the police, they are known to the police, and the police are sometimes even looking for those individuals at that time.

Senator DUNIAM: Right, okay.

Ms Campbell : We engage and we have quite good relationships in all the places with the local police force as well. We take customer aggression against our staff very seriously. We ensure that staff are trained to be able to deal with it. They always try to deconflict and try to talk the situation down. There are security guards in a large number of our offices, who are able to engage with the recipient and calm them down. The outcome we are looking for is for the recipient to exit the office on those occasions. But, unfortunately, when that is unlikely, we do call the police to assist on those occasions.

Mr Jackson : Picking up on the secretary's comment, there is actually no evidence to support that we have had an increase in customer aggression. In fact, in the period 1 July to 31 December 2016, we had a total of 3,718 incidents. For the same period in the previous year, from 1 July to 31 December 2015, there were 4,709 incidents, which is a reduction of some 361 on a year-on-year basis. That is bearing in mind that we do get in the order of 7,400 plus or minus incidents reported every year.

Senator DUNIAM: So a calendar year—12 months?

Mr Jackson : A calendar year. There is no evidence to support that there is an increase that is associated with this.

Senator DUNIAM: That clarifies that.

Senator SIEWERT: Can I go back to the online compliance interventions and the memo that went out to customers to confirm or update their employment income details. One of the dot points says:

The OCI operates within the Change of Circumstances (CoC) Interaction framework and will not record a contact on Activity List (AL) screen, Future Activity List (FAL) screen, Document List (DL) screen or History Summary (HS) screen

What does that mean?

Ms Campbell : Senator, would you be able to table what you are looking at so that we know what to respond to?

Senator SIEWERT: Yes. Mine is a bit scribbled on.

Ms Campbell : Does it look like it is something that we sent to recipients or something that we sent to staff?

Senator SIEWERT: No, it is an internal memo.

Ms Campbell : I do not know that I have got that.

Senator SIEWERT: We will give you a clean copy.

Ms Campbell : The staff who deal with these things understand those words—I do not. But the staff who deal with it every day—

CHAIR: It is not just me, then.

Senator DUNIAM: No, it is me, too. Do not worry.

Ms Campbell : I do not think I have it.

CHAIR: It is okay. They are just coping it now. Senator Kakoschke-Moore, do you want to continue with your questions while we wait for the photocopying?

Senator KAKOSCHKE-MOORE: That would be great. They will be on a slightly different topic, but if I can get through them, that would be great. Returning to some evidence that we received from the CPSU this morning, in particular there was an allegation put to us that some Centrelink staff are having their emails monitored by the Department of Human Services. Would you care to make a comment on that?

Ms Campbell : Of course it is a departmental email system, and we do have alerts for inappropriate use of email. For example, we have a mechanism to ensure that large amounts of data or large attachments do not leave the department, because that might mean either an inadvertent or advertent leaking of personal information.

Senator DUNIAM: Of a client's personal information?

Ms Campbell : Client-type information. And that has happened accidentally; we have sometimes found staff want to work on something at home, so they send it home. What we are looking for is to ensure that privacy and security issues are maintained, so there is a cybersecurity-type element to that. Also, we are very focused on ensuring that inappropriate release of information does not occur and, because we hold so much personal information, we want to make sure that that is in place. Sometimes we do look, when information has been released, to see whether it has been released from the department.

Senator KAKOSCHKE-MOORE: So one of the flags is big emails and large attachments. In relation to the release of inappropriate information, how would that be flagged as requiring monitoring?

Ms Campbell : Not as requiring monitoring, but we will do a scan through when we see something. I can remember a case where a local journalist was alerted to the fact that there was going to be a particular customer cohort in the office. One of the customer service officers sent an email off to the local newspaper to alert them, and we could not quite work out why they had all arrived. That is a case where we looked to see who emailed the local media. That is a breach of the code of conduct, because that led to the release of information. We do look at email when we are investigating code of conduct-type issues.

Senator KAKOSCHKE-MOORE: I think that the context of the discussion we had this morning was around staff members who might have received instructions or directions that they were uncomfortable with, and who wanted to speak to their union about those instructions.

Ms Campbell : We were very clear in that, about inappropriate use, and someone—I am not sure who—sent out an email saying, 'If you've got a problem, please talk to your manager first.' We often find that staff do not always understand the broader picture. They sometimes understand a small component that they work in and do not understand how it plays out in the broader scheme, particularly during times of change where one process was used in one place and then a new process is put in place, or particularly when new policy is in place. We often have to work with staff to explain it and, with 35,000 staff, I am not sure we always explain completely to everyone what is actually changing. So we encourage staff, if they have concerns, to ask their manager about those issues.

Senator KAKOSCHKE-MOORE: What form does that encouragement to approach managers take? Is that in guidelines?

Ms Campbell : There was an email sent out to clarify that, rather than leak information, they should talk to their manager in the first instance about any concerns they had about the work they were doing. There was some media suggesting that people were morally challenged or something, and we said, 'Please talk to your manager so you can actually understand what's going on here.' If you had read all the media you would have thought that we were sending out those subsequent letters without any of the previous letters that were asking for people to clarify—that the debt letter was the first step. That was something that we had to work hard on to explain to staff, because they had read the misreporting on some of those issues in the paper. I sent out an email in late January to clarify for staff so they understood what was actually happening.

Senator DUNIAM: Following on from that, you talked about the flags. Emails generated in government departments often have a classification attached to them—

Ms Campbell : They do.

Senator DUNIAM: so does that act as a flag as well?

Ms Campbell : You cannot send out an email that is classified outside of either the department or the broader government where we have reciprocal arrangements with other departments. We can send stuff to Ms Wilson in the Department of Social Services, because our systems are matched to be able to do that. But if you try and send something out with a classification above that, it does bounce back.

Senator DUNIAM: Is that automatically generated, depending on the content, or do you select the—

Ms Campbell : No, you have to select what the classification is. A lot of our information is personal.

Senator DUNIAM: The only other point that was made by the CPSU reps this morning was that—and correct me if I am wrong—there was reference to Facebook being monitored as well. Is that something that—

Ms Campbell : I am not sure we have time to do that for everyone. If a staff member does not turn up for work, our first concern is whether they are okay, and we try to make contact with them. Sometimes managers do use Facebook to try and make contact with them. We have used it on occasions when we have been doing inquiries if they are a customer as well. The most notable example is where we have had people taking income from their work in the department as well as claiming parenting payment single, and not declaring their income. That sometimes fits into our broader compliance framework, so they become a customer then.

Senator DUNIAM: It was raised in the sense that staff were not encouraged, and, in fact, were scared to speak out about the operation of the system. Emails and Facebook were being monitored—

Ms Campbell : I was surprised by the suggestion that people were scared to speak out. Of course the CPSU has all the rights as are applicable under the Fair Work Act and the enterprise agreement. They are frequently in our workplace. We ensure that we adhere to those requirements under the law.

Senator DUNIAM: Thank you very much.

CHAIR: Senator Kakoschke-Moore, you looked like you had some more questions?

Senator KAKOSCHKE-MOORE: I did, thank you; on a separate subject this time, on the process of engaging external collection agencies. You confirmed earlier that only non-current clients that have a debt would have that debt referred to an external collection agency. If you are a current Centrelink recipient, the debt collection would happen in-house, so to speak.

Ms Campbell : Yes, it does. Of course we are able to talk with the recipient and talk about withholdings from their current payments as the most likely form. We ask them if they would like to pay it upfront, but they generally do not. They then have amounts withheld from their ongoing payments to repay debt. That is generally what happens.

Senator KAKOSCHKE-MOORE: In relation to the external collection agencies that you use, I have got here that there are three: Dun & Bradstreet, Probe Group and Australian Receivables. Is that right?

Ms Golightly : They are the three that were successful in our most recent tender. Probe and Dun & Bradstreet are operating, and we expect the third company to come on soon. We are just doing final contractual arrangements and IT things.

Senator KAKOSCHKE-MOORE: In relation to the payments that you make to these collection agencies, I think it was said earlier—and please correct me if I am wrong—that a commission is paid on each debt that is collected?

Ms Golightly : It is a commission based on the amount collected for each debt, yes.

Senator KAKOSCHKE-MOORE: Do they also get a flat fee?

Ms Golightly : No, it is just commission.

Senator KAKOSCHKE-MOORE: That sounds quite different to the ATO, where they said that they use a flat fee rather than a commission. Is there a reason behind choosing one over the other?

Ms Golightly : I am not sure of the reasoning behind the ATO, but, in our case, that has been the long-standing practice.

Ms Campbell : It does give us an opportunity to review that. We were probably not aware of that before now, and that will give us an opportunity to review those arrangements in the future.

Senator KAKOSCHKE-MOORE: I am generally curious about the pros and cons of each type of payment structure, and why it is that certain agencies opt for one over the other. I understand that in 2013 the ANAO handed down a report into the use of debt collectors by the Department of Human Services, and one of the comments that was made in that report was a recommendation—or perhaps this was more of an observation, but I think a recommendation would be a sensible thing to come out of it—that 'DHS has not conducted formal audits of the ECAs' compliance with requirements in the head agreements for IT, physical and personal security that protect DHS customer information.' That was from paragraph 25 of that particular report. Has DHS conducted any audits of the arrangements that are in place for external collection agencies?

Ms Golightly : Yes, we have. As part of the contract we have a very regular monitoring program in place, including formal quarterly reviews against the framework that is in the contract and against the policies and principles and law that the external collection agencies have to apply. So, we have regular monitoring of their practices and procedures.

CHAIR: How do you do that

Ms Golightly : There are a variety of ways. One, which I mentioned a bit earlier this morning, involves us, for a sample of calls, double-headsetting with them to listen in to how they are handling customers, both customers who may be calling them and customers they are calling.

CHAIR: They are hardly going to be impolite with you listening in. Do they know when you are listening in—double-headsetting?

Ms Golightly : Yes, they do.

CHAIR: How are they going to be impolite if you are listening in?

Ms Golightly : There are also surveys of the people they are dealing with, and we get regular reports on those surveys. We also look at other practices that they have—whether they are using the correct letters, whether they are using the correct scripting. I can provide more information on notice, but it is quite comprehensive.

Senator KAKOSCHKE-MOORE: So, information about how the performance is monitored and also if possible—I am not too sure if I have the correct phrasing here—a service agreement or a head of agreement that you have with each of these collection agencies? It would be good if we could see a copy insofar as it sets out your expectations, as DHS, about their conduct and how they will perform.

Ms Campbell : I think the only issue would be about commercial-in-confidence, but we can get the lawyers to look at that versus—

Ms Golightly : That is right. There may be parts of the contract we can look at.

Senator KAKOSCHKE-MOORE: And when an external collection agency is engaged and a person receives a letter or a phone call from them and that debtor has concerns about the conduct that the external agency has engaged in, how would somebody complain about that? Would they go to DHS? What is the mechanism?

Ms Golightly : Yes, in the first instance they come to us and we look into the issue and try to resolve it.

Senator KAKOSCHKE-MOORE: And then if they are dissatisfied with the decision or the process that the complaint is—

Ms Golightly : The normal review and appeal processes are available to that customer.

Ms Campbell : That is in regard to the actual debt. You are talking about behaviour of the debt collector.

Senator KAKOSCHKE-MOORE: Yes. If you were somebody who was frightened or believed you had been treated unfairly by a debt collector, who should you talk to?

Ms Golightly : To the department in the first instance, but I suppose if we were unable to help resolve the matter, or not to the satisfaction of the recipient, there are other external mechanisms, such as the Ombudsman.

Senator KAKOSCHKE-MOORE: Do you mean the Commonwealth Ombudsman?

Ms Golightly : Yes, because it is part of our administrator—

Ms Campbell : Senator, we might just take on notice whether someone who is dissatisfied also has recourse to the ACCC or something like that.

Senator KAKOSCHKE-MOORE: Yes, because that was an issue that came up today as well.

Ms Campbell : They will be governed by those broader codes of conduct or behaviour by those entities, so we will just get some details and provide those to you on notice.

Senator KAKOSCHKE-MOORE: Thank you—and how it is that a person would become aware that they do have rights to complain if they feel that they have been unfairly treated.

Ms Campbell : And I suspect that it is the same applicability across all consumer arrangements.

CHAIR: I have some further questions on debt collecting. Can you clarify the commission that is paid for the debts?

Ms Campbell : The actual rate is, I think, part of the commercial-in-confidence part of the contract, so I would have to take on notice whether we could provide that for the committee.

CHAIR: Why would that be commercial-in-confidence?

Ms Campbell : Because it is a competition element between different parties that tender for this type of work. It is not that we do not want to provide it.

CHAIR: Yes, but they have already won the tender.

Ms Campbell : But they will be coming back next time and they will be doing broader work throughout Australia. I will ask Ms Musolino to answer.

Ms Musolino : It is commercial-in-confidence. It is not publicly disclosed. It would give competitors an advantage to know the rates.

CHAIR: Can you provide it in confidence?

Ms Musolino : We could take it on notice.

CHAIR: Same with the contract itself, can you provide that in confidence?

Ms Musolino : We can take it on notice.

CHAIR: So that it is camera?

Ms Campbell : We will take it on notice. As long as we can ensure confidentiality, we can work through that.

CHAIR: Well, we deal with in-confidence material a lot in this place. If you can provide it, that would be appreciated, thank you. How long are the contacts for?

Ms Golightly : I will just check that for you.

CHAIR: Thank you.

Ms Golightly : Three years—sorry, of the two contracts that are running at the moment, one started in June 2016, and I am pretty sure the other one started in November 2016.

CHAIR: The third company, whose name I cannot remember off the top of my head—

Ms Golightly : Australian Receivables.

CHAIR: Yes. Are they still in the process or have they—

Ms Golightly : Yes, we are just in the process of certifying the IT system's connection between them and us so that they can start operating.

CHAIR: How do you decide which debt goes to which company?

Ms Golightly : I might take the detailed answer to that on notice. But, for a start, sometimes a particular recipient may have more than one debt, and if a particular company is already handling one debt for that recipient—

Ms Campbell : Of a former recipient. It would only be going to former recipients.

Ms Golightly : sorry—then we would allocate any other debts to that same company, so that they are not being contacted by different companies.

CHAIR: So you do the allocation?

Ms Golightly : Yes, we do.

CHAIR: I heard what you just said in terms of giving the debt to the same company. I understand how it makes sense to be dealing with the one company. You cannot provide the rest of the criteria now, on which you make those decisions?

Ms Golightly : Sorry, I do not have the rest of them to hand. I just know from memory that that is one of the criteria, so I will take that on notice.

CHAIR: Can you take on notice what criteria you use to allocate the debts, please.

Ms Golightly : Yes.

CHAIR: It is fair to say I have still got lots of questions, which I will put on notice, but one specific issue I want to go back to is the memo, and then I have one more question around the averaging of income. I just want to go to this memo to confirm that it is actually a memo that was circulated in the department.

Ms Campbell : I understand that this was a memo that was circulated to frontline staff who were not specialists in this area.

CHAIR: Okay. So this did not go to all staff. It went to people who were in offices. Is that what you are—

Ms Campbell : That is our understanding. It was people who were in offices or maybe on the phone as well—on the general phone lines.

Ms Golightly : Yes, general service delivery officers.

Ms Campbell : General service delivery officers.

CHAIR: You said that is your understanding, but could you clarify that? At the moment, I understand that. What do you need to do on the sixth dot point down? What does that mean for an ordinary person?

Ms Campbell : I suspect that a front-line staff member would know exactly what that means. I do not, but I think it is to do with the IT system and the interaction. It tells you which pages to go to, which part of the system and which screen. It talks about activity list screen, future list screen, document list screen and history summary screen. We have these task cards for everything that we do, and this gives the officer the detail of where they have to go, where they have to update things and where to find it on the system.

CHAIR: This is where I would like to understand it. It says it will not record a contact and activity list. My simple version of reading that means that, if someone is coming to ask me about the OCI process, in fact it does not record it under any of those lists.

Ms Campbell : I think it will on the history summary screen, but we will have to take that on notice.

CHAIR: Can you take that on notice. Obviously, what I am looking at is the fact that people are coming into the offices to ask about OCI. I want to know whether that is actually being recorded and whether you have that data.

Ms Golightly : We will take that on notice and get the specific answer, but I note that the first dot point under the heading 'what you need to do' is that we are telling our general service delivery staff that they should refer customers directly.

CHAIR: I understand that.

Ms Golightly : They will then be recorded in a different part of the system, and the interaction is recorded there.

CHAIR: I understand that. I also understand that I have had a number of constituents—and I am sure my colleagues have to—that have complained about the fact that they went into the office. 'I got referred online, it's really complicated, I can't understand it and, by the way, myGov doesn't work.' So I understand that it might be recorded if I go online, but—

Ms Golightly : This is not about going online. My reading of it—and we will check this—is that this is instructions to our front-line staff if they get a query.

CHAIR: Yes, that is what I understand. I am asking if that information is recorded, and you said—and I apologise if I am misunderstanding what you said—that the first dog point says you go online.

Ms Golightly : Yes, and the next dot point is, if customers are seeking further information, they are referred to the specific dedicated phone number.

CHAIR: Yes, I understand that.

Ms Campbell : That is where the recording goes into the debt system.

CHAIR: Yes, but what I want to know is whether you keep a recording of the number of people who actually front up to a Centrelink office and want to ask a human being face-to-face what is going on.

Ms Campbell : We can take that on notice.

CHAIR: If you could, that would be appreciated. Thank you.

We have had some discussion around needing to clarify some information with the ATO, so there are two issues I want to follow up here. One is that, where that information about when somebody worked is not provided by the employers—

Ms Campbell : The dates?

CHAIR: The dates. It seems to me that that is one of the key issues. Does there continue to be occasions where the income is therefore averaged out?

Ms Campbell : If the information we have got from the tax office is an amount of money from 1 July to 30 June, the current system is that we would do our very best to engage with the recipient, so we do the registered mail and all those types of things.

CHAIR: Before you go any further: that is the point I am getting to. When that letter goes out, have you averaged the income over the 12 months?

Ms Campbell : No.

CHAIR: What happens?

Ms Campbell : We have compared it to what the recipient told us in the Centrelink system. If they told us in the Centrelink system that they had earnt $15,000 and the tax office says that they earnt $30,000 and that the $30,000 was in a limited time period or even over the full year then we would say there was a clarification needed there.

CHAIR: That is one scenario, but just say the information matched—

Ms Campbell : It was 15-15?

CHAIR: but there is no detail on the period of time in which it was earnt. Do you still send out—

Ms Campbell : That would not work, because we would not send it out at all if it matched. So, let's do one where it does not match. I am trying to understand where you are coming from, Senator—where the tax office thinks the income has been over the full year but it has only been over a shorter period and the Centrelink system thinks it was earnt in that shorter period as well. Is that what you are asking?

CHAIR: No. What some people are saying is, 'I've earnt this much money, but it's been averaged over the year to make it look as if I was working during a period that I was on income support when, in fact, I wasn't.'

Ms Campbell : That is one of the reasons we seek clarification from the recipient. One of the first things we ask them is the period in which they earnt that income. If that period is different to what the tax office tells us, that can then result in no further action being taken. That is part of that engagement system. But if we have advice from the tax office that it was the full-year period and there is a clarification needed with what was provided to Centrelink, we will ask them to clarify. That is one of the refinements we continue to look at. We will look at what the data says about those full-year periods if it looks like that is an ongoing issue with the data periods. But to say that we always average out over 26 is not the nature of the system.

CHAIR: I am trying to clarify whether there are times when you do average out.

Ms Campbell : It was the same in the manual system: if we seek to engage and the recipient or former recipient does not come back to us and there is all this succession of doing it and there is still a discrepancy and we have exhausted every opportunity to talk to the recipient, that will be used to do it. But we are working incredibly hard to engage with the recipient to clarify the information up-front.

CHAIR: I have one question, and then I will put the rest on notice. The ATO said this morning that DHS did not talk to them prior to proceeding with the automated system. Can I ask why you didn't talk to them before that?

Ms Campbell : Or maybe the better question might be, did we talk to them?

CHAIR: I beg your pardon—did you talk to them?

Ms Golightly : The data matching part of the system has been automated for many years and is operating the same way that it has been operating for many years.

CHAIR: Before you started this new process?

Ms Golightly : Yes. The new process puts part of the update and confirmation—the opportunity for the recipient to update or confirm the information—online, giving them an online channel to do that. The bit that we do with the ATO has not changed since 1 July or before 1 July. It is the same.

Senator DUNIAM: I got from the ATO that, even if a discussion had taken place, they are constrained by the information they are able to provide. They have a dataset that is the dataset and cannot be broken up in any different way. That would not have had an impact on—

Ms Golightly : That is a true statement. They provide what they have, and, again, that has been the same for a very long time.

Senator DUNIAM: For 20 years or so.

Ms Golightly : None of that has changed. It has always been the case that the first step we take, if there is a difference identified between the two sets of data, is to contact the recipient and seek an explanation for what that difference might be.

Ms Campbell : We are doing that online now, rather than ringing them.

CHAIR: I will put some more questions on notice about that.

Ms Campbell : Thank you.

CHAIR: Thank you very much, and thanks to all the departmental people who have come today; it is very much appreciated. Thank you to Hansard and to the secretariat.

Committee adjourned at 16 : 39