Transcript: 2GB Sydney, Interview with Chris Smith

5 December 2016

The Hon Alan Tudge MP

Minister for Human Services
Topics: 
Debt recovery and compliance measures
E&OE

CHRIS SMITH:

Human Services Minister, Alan Tudge, says the new system, which is expected to generate 1.7 million compliance notices to welfare recipients over the next three years, is helping to meet the Government's debt recovery targets.

He says, our aim is to ensure that people get what they're entitled to, no more and no less, and to crack down hard when people deliberately defraud the system. Hear hear. Alan Tudge is on the line. Minister, thank you very much for your time.

ALAN TUDGE:
Good morning, Chris.

CHRIS SMITH:
The scope of this is massive, isn't it?

ALAN TUDGE:
It is. Although you have to bear in mind that that welfare debt that we're going after - about $4 billion - is really just a small amount of the overall welfare payments that we make every year.

You said some of those figures; $160 billion this year that we'll be paying in welfare, and we're seeking to recover about $4 billion of what were fraud or overpayments over the last few years.

CHRIS SMITH:
I didn't get, from any coverage of this today, an understanding of what percentage was deliberate fraud, I'd be keen to know that.

ALAN TUDGE:
It's very hard to asses. I think there are people who fall within three categories: there are those who deliberately set out to defraud the system by not recording their proper income levels.

Secondly there is a category of people who maybe are just a little bit wilfully blind. They're not organised enough and maybe they're not thinking too much about …

CHRIS SMITH:
[Interrupts] Sir you're being very kind.

ALAN TUDGE:
And then the third category is those who are maybe just completely inadvertent and thought they were doing the right thing, but maybe missed a payment and therefore at the end of the year there are a couple of hundred bucks which they might owe.

So we don't actually know how it breaks down in those three categories. What we do know, that if people are receiving more, or did receive more than they are entitled to, then we will seek to recover that money.

CHRIS SMITH:
Okay let's talk about the recovery in just a second, but still on the scope of this, I said that 5.2 million Australians are receiving welfare. That is the entirety of the population of Sydney including the outer suburbs. It's just like physically it's hard to visualise, you know?

ALAN TUDGE:
I think that's right, Chris. And of course a great many of those people are pensioners, there are many people who might be receiving Family Tax Benefits or on the Disability Support Pension - 800,000 there, 760,000 people on Newstart - the dole.

The biggest issue is not just the financial one, but it's the dependency it creates in capable people. Chris, if you're on welfare for any length of time and you're a capable person you're not working for that money, then over time your capabilities diminish.

Your mental health can decline and you can have a fair bit of lack of self-worth in yourself. So we've got a real motivation, as much for the physical situation as it is for the individual to get them onto a better pathway. Get them to take any job which is available …

CHRIS SMITH:
[Interrupts] It makes sense for their own benefit, but also for the taxpayer's benefit.

ALAN TUDGE:
Absolutely.

CHRIS SMITH:
But what about the increase. I mentioned some figures here of how quickly this budget on welfare will increase. Why does it increase at such a rapid rate?

ALAN TUDGE:
A significant part of that over the next few years is the NDIS scheme coming on board. And so that's a very significant ramp up. And that's a big factor for the increase there.

CHRIS SMITH:
So all and all, is it unsustainable and unaffordable now?

ALAN TUDGE:
Well it's growing by about six per cent per annum. You cannot continue to grow at that rate when the economy's growing at a far slower rate than that. So otherwise it ends up gobbling up the entire budget.

CHRIS SMITH:
And so the Budget's not spending in areas where it should be spending?

ALAN TUDGE:
Well we're in debt. Frankly, we're in debt at the moment, we're very fortunate that we've got this great social security safety net but it's not on a sustainable trajectory at the moment when it's growing well in excess of what the overall economy is growing.

CHRIS SMITH:
Okay how does a compliance intervention work and these are now dished out at 20,000 per week whereas before you had this automated system you could only dish out 20,000 a year.

ALAN TUDGE:
That's right, so effectively it's the same methodology but we've now got it much more automated. And the methodology is to crosscheck what people sent to Centrelink with the Tax Office records is the basic thing.

So as you probably know, Chris, if you're getting a Centrelink payment, you have to update your records when your income changes to tell us what your income is. Now we will then crosscheck that information with the Tax Office data after the event.

Now we used to have to do that manually, now we've got an automated computer system which can identify who you are, crosscheck it with ATO and work out whether or not you've been overpaid.

CHRIS SMITH:
And it's making a big difference, right?

ALAN TUDGE:
That's making a huge difference. It's a much more efficient process. We've now got about 20,000 compliance initiatives a week and when there used to be about 20,000 a year. So that's what that's about.

Now in the future, the good news is that we're completely rebuilding our IT capabilities, so that it they will seamlessly talk to each other. So, instead of having to update your income data every fortnight or every month, it will automatically take that feed from the Tax Office's data.

CHRIS SMITH:
Ah huh.

ALAN TUDGE:
So then we won't have a lot of this overpayment and we'll also be able to significantly reduce the amount of fraud.

CHRIS SMITH:
And then there'll be no weak excuses for not updating.

ALAN TUDGE:
And then there's no weak excuses and so that's a couple of years away, Chris, to build that system. It will be a $1 billion upgrade.

CHRIS SMITH:
And also when you say a couple of years away, it occurs to me that there's a lag time in all of this. By the time that you get someone's completed tax return, or whatever tax information you can get hold of, it's after the event and so therefore you're scrambling to get money from years ago.

ALAN TUDGE:
That is right and some of the money …

CHRIS SMITH:
[Interrupts] In the meantime they're ripping us off.

ALAN TUDGE:
Well some of the money which we're seeking to recoup goes back to the Labor years, because they didn't put any of these compliance systems in place so people were being overpaid and just got away with it, or they were committing fraud and got away with it.

We are going back and matching that data and if there is an overpayment then we're asking for people to pay that up.

CHRIS SMITH:
So is it just a matter of asking them to pay or do you go and say you'll also cop a penalty?

ALAN TUDGE:
We ask them to pay and if they're still on welfare payments, then we can garnishee some of their welfare payments to pay it back over time. If they're no longer on welfare payments, then we'll be asking them to pay it back now …

CHRIS SMITH:
So how do they pay it back?

ALAN TUDGE: They can pay it back quite simply now, you know, if you've got sufficient funds you can pay it back in just one cheque that you send in to Centrelink.

CHRIS SMITH:
But that would be unlikely, they would probably pay it back in 10 cent pieces for 25 years won't they?

ALAN TUDGE:
Well it depends on the nature of your situation, so you'll enter into a debt collection arrangement with Centrelink.

Now they'll have a look at what your income is, if you're still skint and you could still say, just surviving on Newstart then you might just pay it back five or 10 bucks a week over a period of a couple of years.

If obviously, you've got more capacity then we'll be asking for people to pay it back more rapidly.

CHRIS SMITH:
And you can force them to repay it, right?

ALAN TUDGE:

Particularly if you're on welfare payments, we can garnishee some of that money.

CHRIS SMITH:
Right. Okay. It's a big, big job but it's also a big ocean of money that's owed to the taxpayer.

ALAN TUDGE:
That's exactly right, Chris, so I feel as if we're making progress in what used to be a manual intervention, now we've got it much more automated and then in the future we're going to have it seamless where it'll occur in real time. So we're on the right pathway but we've still got a job to do.

CHRIS SMITH:
Alright you hang on to that portfolio, don't let anyone touch it, don't let anyone go near it. Keep at it, you're doing a great job. Thank you for your time this morning.

ALAN TUDGE:
Thanks very much, Chris.

CHRIS SMITH:
Human Services Minister, Alan Tudge. Massive job but we're getting somewhere.

[ENDS]