Transcript: 2GB Sydney, Afternoons with Warren Moore

26 January 2017

The Hon Alan Tudge MP

Minister for Human Services
Online Compliance System


No-one could forget Labor's embarrassing Mediscare campaign last year.

Now, you'd think they'd realise that it backfired, but Labor is back using scare tactics today, this time targeting Centrelink's automated debt recovery system.

So we've been hearing about this now for some time, but the fact it's a scare campaign has been exposed.

And they've been exposed once again, because it turns out two-thirds of those publically claiming to be victims of Centrelink have been found to owe significant debts to the taxpayer.

Talking about that now is the Human Services Minister Alan Tudge, who is on the line.

Thanks for your time, Minister.


G'day Warren, happy Australia Day to you.


Yeah, happy Australia Day to you. Well you must be quite happy that Simon Benson has written this piece in The Australian today.


Well, it's a very significant story that he's written, and what it shows is that Labor has been deliberately putting up cases to the media alleging that people have been so-called victims of the online compliance system, when in many cases, in fact, they do owe significant amounts of money.

Now, we're recovering that money where there has been a clear overpayment, and that's good for the taxpayer and it's also good for the welfare system, because it means it's going to be a more sustainable system in the long run.


So that means, I guess, the automated system is definitely here to stay?


The automated system is here to stay, and what that essentially does is that it checks the self-reported income supplied to Centrelink with the income details which the Australian Taxation Office has on you. If there's a discrepancy between those two, the person is asked to explain why there might be a discrepancy.

In some cases people can validly explain why there's a discrepancy, but in many cases they cannot, and in which case they'll be issued with a debt notice.

It is always tough, as you know Warren, getting a debt notice for anything, but in these cases if you were overpaid you do have to pay it back to the taxpayer because the taxpayers are working very hard these days, and a large proportion of their taxes is going to the welfare system.


So let's just clarify that again, and I know you've explained this dozens of times over recent weeks, but you get the explain notice before you actually get the formal debt recovery notice.

Is this correct?


Yeah, that's correct.

Now, I should admit that there has been a problem in the past where some people didn't because their addresses were not up to date on the Centrelink system.

So they may not have received that first letter.

We've fixed that, because we're going to be sending out registered mail so that we know that people are picking up that information.

But for most people, they get not only one letter, but they get a second letter saying that there's a discrepancy, please go online and explain that discrepancy.

Many people can, but a lot of people cannot, because they didn't properly declare their income.

It has been exposed in Simon Benson's story today that even in many of the cases which Labor put up to the media as being so-called victims of this compliance system, either (a) weren't even part of the online compliance system, or (b) were very clear in terms of not having declared a job, not having declared their full income from a business which they might be running, or for example students claiming full-time Youth Allowance when they're only a part-time student.

In most cases there is a very clear overpayment, and most people do have to pay that money back.


Obviously though, that glitch in the system that you alluded to at the beginning where it wasn't sending out that first letter if the address wasn't correct, that has really set yourself up to be a bit of a target.


Oh, well, legally Centrelink have to send it to the address which they have on their record. Now, some people may have changed address and not updated their records, and that we've uncovered and we have fixed. We will make constant improvements to the system overall, and we want to make it as fair and as reasonable and as accessible as possible for people to be able to update their information if they do get that request for information letter.

But the core principle, Warren, is absolutely paramount, and that is that we will be doing the checks of what people have self-reported to Centrelink with what the Australian Taxation Office has in relation to their file, and where there's a discrepancy, they will be asked to explain.

That's been a principle, by the way, that's been around for many, many years, and successive governments.

Unfortunately, in the cases which we have been discussing in recent times, including today, some of these are from the Labor years.

I think had Labor done the hard work then and the proper audits then, we wouldn't be having this discussion today, and we've been charged with picking up the can on these cases and recovering those funds, and now Labor's criticising us for it.


Well, I mean according to Simon's story, 52 cases are being publicly put forward. 18 of those were under the old Labor system, so that means we've got 34 left, and 60 per cent of those have been found to be overpaid for failing to declare other income or employment. I mean, you can't say the current system's perfect, though.

Are there cases where it will get it wrong?


The system identifies discrepancies between the Centrelink data and the Australian Taxation Office data. Now, where there's discrepancy, you get the chance …


You get the please explain. But acknowledging that some people - and this is why it became a controversy - some people didn't get that letter, which has been …


Yep. Even if you didn't get that letter and you received a debt notice, you can still call up Centrelink and explain that discrepancy, or go online and explain that discrepancy.

Everybody has multiple chances to do that. You can in fact provide updated information, even if you've already paid back some of your debt or all of that debt, and get a reassessment.

So you've got multiple chances along the way to provide the explanation as to why there might be a discrepancy.

But the unfortunate reality though, Warren, is that some people do deliberately defraud the system while others inadvertently don't provide all of their income information to Centrelink, and therefore get overpaid.

The welfare system today constitutes a third of the entire federal budget, and so people are out there working today or tomorrow, and a large proportion of the income tax they pay is going towards the welfare system.

Now, I think most people are quite happy to pay welfare to those who need it. It's an important part of our society.

But I think they do want to ensure that there's integrity in that system and that people are getting the right payments, and not getting overpaid or indeed getting underpaid, and that's what this system is about.


I mean, I would very much doubt, though, you're going to hear the end of this in terms of the politics, because as we saw, you could try and explain rationally the Mediscare or the Medicare issue during the election campaign, but that didn't stop them, did it?


Well, it didn't, and maybe the Labor Party will learn a lesson from this story today, where they've admitted that they put up cases where they didn't know themselves whether or not the person did indeed legitimately owe money back to the Commonwealth Government, and back to the taxpayer.

Rather, they just bowled them up to the media and put them out there.

Clearly, I don't think they've got the best interests of those individuals at heart, either, because they're putting them into the public spotlight, when indeed that person may in fact owe money.

There was one case, for example, which has been in the media, where the person had a business, and they declared that that business only earned $8,500 when in fact it earned $48,000, and they were claiming Centrelink benefits the entire year.

That occurred during the Labor years, and Labor didn't pick that up because they weren't doing as rigorous checks.

We are doing these rigorous checks.

We want to be fair.

We want to be reasonable.

We want to continually improve the system for people, but we've got to do these checks so that the system is sustainable, and so that we're being fair, also, to the taxpayers who are paying for welfare …


Well, if you're talking about $4 billion in overpayments, I know the taxpayer wants the money back. Simple as that.


Well, the system costs about $150 billion a year now.

You've got about four and a half million people each year receiving Centrelink benefits, so inevitably some of those people will either do the wrong thing deliberately or inadvertently do the wrong thing.

We do have to have this auditing system in place.

It is a key principle of successive governments, and we will be continuing with it.

We'll make improvements to the system, but it's a key principle and we're going to stick by it. Labor used to believe in this.

They used to use automation, but now of course they're criticising us for actually recouping money which is genuinely owed back to the taxpayer.


Okay, I'll leave it there, but thanks for your time.

Appreciate it.

Happy Australia Day.


Thanks very much, Warren.


Minister for Human Services Alan Tudge.