Media Release: Government welcomes Ombudsman’s report on Online Compliance System

10 April 2017

The Hon Alan Tudge MP

Minister for Human Services

The Government welcomes the Ombudsman's Report into the Online Compliance System and has accepted all of his recommendations, most of which are already being implemented.

The Ombudsman found the system calculates debts accurately, is reasonable and appropriate in asking recipients to explain discrepancies in data, and the method of data matching has not changed from the approach used by successive governments. He also found that the so-called "20 percent error rate" is a false accusation.

The Ombudsman states:

"In our view, it is entirely reasonable and appropriate for DHS to ask customers to explain discrepancies following its data matching activities as a means of safeguarding welfare payment integrity."(Page 7)

In reference to the accuracy of the system to calculate debt, he states:

"After examination of the business rules underpinning the system, we are satisfied the debts raised by the OCI are accurate, based on the information which is available to DHS at the time the decision is made."(Page 1)

He notes the data matching method has not changed and produces similar results to the more manual system:

"We are satisfied the data matching process itself is unchanged. The number of instances where no debts were raised following contact with a customer (approximately 20 percent) was consistent with DHS’ previous manual debt investigation process."(Page 1)

"This figure has previously been incorrectly referred to as an ‘error’ rate.  In fact, this figure relates to the number of customers who received a letter asking them to contact DHS about a discrepancy and who, after providing an explanation, do not have a debt.” (Page 7)

The Ombudsman focused much of his commentary and recommendations on the usability of the system (by recipients) and the clarity of the Department’s communications, both of which the government has addressed as he acknowledges:

"the changes [introduced in February] have been positive and have improved the usability and accessibility of the system.” (Page 26)

He recommends the Government make further changes to its usability and communications and we will adopt his recommendations. In most cases, we are already implementing the recommendations and often going further than what is recommended.

Furthermore, the Government is pursuing options to limit or avoid application of the 10 per cent recovery fee impacting upon recipients who inadvertently incur a debt.

Minister for Human Services, Alan Tudge, said “the Ombudsman’s report shows that the online compliance system is reasonable in its data-matching and can accurately calculate debt owing.

“He notes that we have made a lot of improvements already, but offers some very practical suggestions for further improvement which we will implement,” said Minister Tudge.

“The unfortunate reality is that while most welfare recipients do the right thing, some deliberately defraud the system while others inadvertently fail to accurately declare their income and consequently receive an overpayment. 

“Our compliance system is aimed at ensuring there is integrity in the system and the Ombudsman supports this goal, and the reasonableness of asking welfare recipients to explain discrepancies between tax office data and self-reported income data.

“We want to be fair and reasonable to welfare recipients but also fair to the taxpayer who pays for the welfare payments. The Ombudsman’s report will help us to continue to achieve this.”