Media release: Repay debts or face interest charges
The Hon Michael Keenan MP
Thousands of former welfare recipients who owe a staggering $905 million in unpaid debts to the Commonwealth will be hit with interest charges unless they agree to sign up to a repayment plan.
The Department of Human Services has begun contacting about 170,000 people to notify them of the potential charge, urging them to take action to avoid falling deeper into debt.
All those being contacted no longer receive a benefit, but previously received payments they were not entitled to and have made no effort—in some cases for over a decade—to repay what they owe.
Some cases involve serious criminality including one person who deliberately defrauded $800,000 from the Commonwealth and is still refusing to enter into a repayment plan.
Australia has a generous social safety net that helps people who need it. But if someone receives a benefit they are not entitled to, the Government has a responsibility to recover these amounts to ensure the system remains viable.
Those with a debt are being notified that they have 28 days to enter into a repayment plan in order to avoid being hit with the interest charge.
As none are currently receiving welfare, the Government believes most are now working and have the means to start paying back what they owe.
The amount they will have to pay each week will depend on their personal circumstances and special arrangements can be made for those facing genuine hardship.
But I urge everyone who is contacted by my department to act now to avoid having to pay more in the long run.
For those who refuse to take action, interest charges are only the beginning. My department will also look at other measures such as garnishing wages and tax refunds, or referring matters to external collection agents.
Anyone currently receiving welfare benefits who has a debt to the department is exempt from the interest charge, as are those who have debts that are now under review.
Likewise, the tens of thousands of former welfare recipients who are doing the right thing by repaying what they owe will not have to pay interest.
Charging interest on government debts is not new. The interest rate will be comparable to other government and non-government entities; currently 8.77 per cent.