Transcript: ABC Brisbane Drive, Interview with Emma Griffiths

14 February 2017

The Hon Alan Tudge MP

Minister for Human Services
Topics: 
Online Compliance System
E&OE

EMMA GRIFFITHS:         
The federal MP in charge of Centrelink and the system is the Human Services Minister Alan Tudge. Alan Tudge, how many of these letters have gone out so far?

ALAN TUDGE:   
G'day Emma. I think from memory there's about 200,000 letters that have gone out over the last seven months.

EMMA GRIFFITHS:         
And how much money in debt have you collected?

ALAN TUDGE:   
That figure I don't know off the top of my head. I can try to get that figure for you by the end of the program.

EMMA GRIFFITHS:         
How much money are you hoping will be recovered through this automated and expedited system?

ALAN TUDGE:   
Over the course of 4 years we're hoping to recoup about $4 billion in what have been overpayments. Now, just to put that into context, over those four years the welfare bill will be in excess of $600 billion, so it's still a relatively small proportion.

Why are we doing this is the important question, and that is it's the unfortunate reality that some people do deliberately defraud the system, while others inadvertently not accurately update their records and consequentially receive more than they're entitled to.

And as your listeners would probably know, if you're on a Centrelink payment there's an obligation when you're receiving it that you have to update your income details every fortnight, and most people of course do the right thing, but some people don't, some people don't do it deliberately, and there's others who inadvertently don't do the right thing.

EMMA GRIFFITHS:         
Is it true that in about one in five of the cases these letters are turning out to not be warranted at all?

ALAN TUDGE:   
That is incorrect.

EMMA GRIFFITHS:         
So how many cases is it that they're found not to owe any money?

ALAN TUDGE:   
Well what occurs is the initial letter - and I was listening carefully to the callers who called in there - the very first letter which a person gets simply asks for information, because a discrepancy has been identified between what they self-reported to Centrelink in terms of their income, versus what the Australian Taxation Office will have on their record as to what their income was for that time period.

When there's a discrepancy between those figures, then a letter is generated. We ask them in that letter can you please update these details or validate the information that we have. Now, on 20 per cent of occasions people do jump online, or they call the call centre, they update their income information and that's the end of the matter.

In 80 per cent of the occasions people either don't respond to the letter, or they do update the information but a debt is still owing. So now many people, including the Labor Party, say that that's a 20 per cent error rate. That's not a 20 per cent error rate…

EMMA GRIFFITHS:         
What is the error rate, then?

ALAN TUDGE:   
Well, on 100 per cent of occasions there is a discrepancy which has been identified between what a person self-reported to Centrelink, versus what the Australian Taxation Office has as to what their income was…

EMMA GRIFFITHS:         
But it doesn't necessarily mean they have to pay money back, does it?

ALAN TUDGE:   
No it doesn't, it doesn't, and the letter doesn't say that. The letter says a discrepancy exists, can you please explain why there might be a discrepancy. In some cases there's a perfectly logical explanation for why there's a discrepancy.

For example, sometimes the employer, when that employer reports to the Australian Taxation Office, might've incorrectly reported the dates of employment for when that person worked at an employer.

So it might've said, well, Joe worked from July through to October, when in fact Joe only worked from July through to August. Now, when that is corrected then any discrepancy disappears and that's the end of the matter.

What is occurring though, Emma, is that some people don't respond to that first letter, they don't respond to the second letter - which is a reminder letter to please jump online and update your records.

And it's only when a debt letter is generated, because there's been no response, that people then start to want to get more engaged and ask for a review, which of course is perfectly their right, and in that review process then they provide that information.

And I suppose I'm encouraging people that if you get a letter from Centrelink, open it, read it carefully; if it asks for information, provide that information for us.

EMMA GRIFFITHS:         
Minister, I just want to play for you 1 of the calls that we got from Yvette. She's in Carbrook. Here's what she said.

[Excerpt]

CALLER YVETTE:
I got on Centrelink after I had a casual job, and I just needed some Centrelink to kind of fill in where I wasn't getting enough money from work.

And I was studying at the time, so I was working and studying and trying to support myself and living out of home. Last year, around November, I got a letter saying I owed Centrelink a certain amount of money …

EMMA GRIFFITHS:         
How much?

CALLER YVETTE:               
It was about seven grand, that first letter, and then the next letter I got it was saying it was 15. And that's just, like, an incredible amount for a 22 year old to try and come up with, and they're saying that they're going to send debt collectors and things like that.

That's a really huge stress for me to try and have to deal with, you know, trying to study and work and live my life. They said there was seven days I had to pay this back, and yeah, it was just - yeah. Big shock.

To call Centrelink and deal with the whole situation you have to pretty much put a day of your life aside, because you spend three hours on hold to talk to someone, and then you have to find out all the information you need to get from, like, university and stuff, so then you have to call the university and get that information.

So it's just this huge process that I don't know if I'm ready to go through yet, but I do have to deal with it because they've given me such a short space of time to try and get everything sorted.

[End of excerpt]

EMMA GRIFFITHS:         
Minister, that doesn't sound fair does it - $15,000 to pay back and you've got seven days to do it?

ALAN TUDGE:   
Well that doesn't sound quite right…

EMMA GRIFFITHS:         
And debt collectors?

ALAN TUDGE:   
…and there's a few issues which she has raised. The first thing I would say is that the letter which she received, which may have been asking for debt to be repaid, would not have been her first letter, it would've been her third letter.

So the first letter, as I've said, is actually we've identified a discrepancy, can you provide the information to validate. And now, she may have ignored those first couple of letters, in which case the debt letter was generated.

The second point I would say is that in that first letter it gives you 21 days to provide the information. You can automatically ask for a further 14 days, you can automatically ask for a further 14 days above and beyond that, so you do have a reasonable amount of time if you need more time.

A further point that I would say is that, yes, it does take a little bit of time to be able to collect the information that we are asking, but at the same time many of these people have been in receipt of thousands of dollars of taxpayer support - sometimes tens of thousands of dollars.

And so I don't think it's unreasonable to ask such a person to spend, it might be a couple of hours or even a few hours, to gather that information and to verify when a discrepancy exists.

EMMA GRIFFITHS:         
But they've already proved their eligibility to receive the payment.

ALAN TUDGE:   
Well they have declared in the past their eligibility for that payment, and of course your eligibility over time and your payment rate depends on how much income you're earning throughout the year.

If you start to have a part time job and you're earning more income you need to self-declare that income to Centrelink. That's how the system works for nearly every 1 of the income support payments. Now, we take that on honesty.

We take that you've done the right thing, and self-reporting the exact right amount so that we can recalculate what you're entitled to. But of course, some people aren't honest, and there's others who just inadvertently don't properly update their income records…

EMMA GRIFFITHS:         
Minister, what about the seven days that Yvette …

ALAN TUDGE:                   
…hence we have this system, Emma, where in hindsight we just do some checks. We do some checks because we've got now your income from the Australian Taxation Office, and we check what you self-reported, and when there's a discrepancy we ask you to try to explain that discrepancy.

I'll just say one final point, Emma, which that woman raised, and she said she had to wait for hours on the telephone to get through to someone. There is a dedicated 1800 number for people who may have a debt notice, or have been asked to provide information. That 1800 number…

EMMA GRIFFITHS:         
What is that 1800 number, Minister?

ALAN TUDGE:   
It's 1800 086 400. Now, at the moment, for the last six months that's had a call wait time of less than five seconds on that 1800 number.

That's a dedicated 1800 number for people who are anxious about it, who have received these letters, who need to speak to somebody to inquire as to what process they need to go through.

EMMA GRIFFITHS:         
Five seconds until you speak to a human being?

ALAN TUDGE:   
I have been calling it almost every day myself to check on this, and I have never, ever had to wait. Now, I'm not saying that that will be the case forevermore, but it is a very short wait time to be able to get through to somebody for them to give you a bit of reassurance as to what the process is.

EMMA GRIFFITHS:         
And Minister, Yvette there also said she'd been given seven days to pay back $15,000 and she'd been threatened with debt collectors.

ALAN TUDGE:   
Again, that does not sound right. I'd like to look into her case in more detail. If you're under financial duress, if you don't have a lot of money - which it sounds like she may not - then you can enter into a repayment schedule with Centrelink.

That repayment schedule, by the way, can be as little as $5 a week, which some people have entered into. So your personal financial circumstances are taken into account in order to start to repay. Now, if I can get…

EMMA GRIFFITHS:         
Does that $5- is that minimum amount explained to people that's an option? Because we also heard from Susie at Narangba who said she had initially had to repay a debt, and it was coming out of her carer's pension at the rate of $160 a fortnight.

ALAN TUDGE:   
Well it depends on an individual's financial circumstances. Now, in her instance, if this was going to be putting her into financial difficulty then she should be speaking to a Centrelink officer and explaining that, and generally they're very reasonable, to be honest. They try to do the right thing.

EMMA GRIFFITHS:         
Okay, well we'll make sure we send Yvette's details to your office.

ALAN TUDGE:   
If you could get Yvette's details through to me I can personally have a look into that as well, but it does sound like- anyway, I hope that I've clarified a few of the issues along the way.

EMMA GRIFFITHS:         
Minister, we'll certainly make sure you get her details. It's 20 past 5, this is ABC Radio Brisbane.

You're with Emma Griffiths speaking with the federal Human Services Minister Alan Tudge, particularly about this issue where around 200,000 letters have been sent out to government payment recipients notifying them there's been a discrepancy and you may have to pay back a debt, you've been overpaid possibly.

Given all of the stress that his has caused, Minister - and I know that our callers are far from the only people that have been affected by this - are you making any changes to the system?

ALAN TUDGE:   
A couple of points: Firstly, no one likes to receive a notification suggesting that they might owe money, and we understand that, but if there has been an overpayment then we do want to recoup that money and want to be as reasonable as possible.

I've always said all along that we'll constantly make refinements to the system so that we can be reasonable to the Centrelink recipients, but also fair and reasonable for the taxpayer who's paying for it.

So we're constantly looking at, for example, our website where people are updating their information and making that as user-friendly as possible. We've just recently made some changes so that you don't have to register for myGov before updating your information.

Now, effectively what that means is you don't have to go into a Centrelink office to verify your identification, you can do that all from your desktop now.

We've made it a bit easier now, too, to update your income information online by using your bank statement records, which in most cases are available online, rather than having to get a payslip.

So we're just making some other refinements like that, just simplifying the system to be as convenient, as easy possible to be able to update that information.

EMMA GRIFFITHS:         
So those refinements, what are you expecting that will do?

ALAN TUDGE:   
The overall aim is to make it as simple and reasonable as possible for the Centrelink recipient to be able to update their information if they get a letter asking them to provide information because a discrepancy has appeared between their Centrelink data and their Tax Office data.

That's what we want to do. We want to give people that opportunity to as simply as possible be able to do that. Of course, if they don't like the outcome for that process, as has always been the case they can seek a review of the decision, or a review of the outcome.

They can seek a further appeal to the Administrative Appeals Tribunal even after that, and at each stage they can provide new and additional information should they choose to do so.

EMMA GRIFFITHS:         
One of the issues that's been raised as well on the show is that people will be having their cases reviewed by Centrelink, but at the same time they'll be having to pay back the debt that they're saying they don't owe. Is that something you're looking at?

ALAN TUDGE:   
It is, Emma. This has been a longstanding practice for successive governments, whereby - and not just for this online compliance system, but for all debt which is owed to the Government - that as soon as a debt notice is issued you have to enter into a repayment schedule.

Now, I've actually just recently made the decision to say that, well, if you ask for a review you won't have to enter into a repayment schedule. It's only after the review is completed and if you still owe debt that you'll have to enter into the repayment schedule.

EMMA GRIFFITHS:         
And Minister, we've had a couple of callers actually ring in with some questions. Phil is in Jimboomba, and he wants to know, is Centrelink sending out any letters to welfare recipients saying they've actually been underpaid? Because surely there are discrepancies going the other way.

ALAN TUDGE:   
There are, and there are occasions actually when people do get money back from Centrelink.

The law is that you get what you are entitled to, and no more and no less, and if anybody believes that they've been underpaid, and they can provide the evidence for that, then they will get reimbursed, or they will get money from Centrelink to ensure that they legally got what they were entitled to.

EMMA GRIFFITHS:         
And David, who is on Bribie Island, is wondering if the debt collection service operates like SPER, where you may have a $10 debt to start with, but it jumps a big amount with extra fees and charges. Is there any interest charged, for instance, on Centrelink debts?

ALAN TUDGE:   
When a debt collector has been engaged there is a fee which is attached to it, and sometimes - actually, I should be clearer: If a person doesn't have a reasonable explanation for why there's a discrepancy appearing between their self-reported Centrelink details and the Australian Taxation Office details, then a fee can be attached to it. Now…

EMMA GRIFFITHS:         
Do you know how much that fee is?

ALAN TUDGE:   
That's about a 10 per cent fee. Now, a reasonable explanation can be that there was personal circumstances going on in your life - you may have been suffering some sort of hardship.

The Centrelink officers will typically be quite generous in the interpretation of what is reasonable. But again, this has been a long-standing practice of successive governments for this arrangement.

EMMA GRIFFITHS:         
Doesn't make it right, does it? Or fair?

ALAN TUDGE:   
Well, if there's no reasonable explanation - this is the origins of it, is my understanding - that if there's no explanation at all, there's no reasonable case for why you didn't properly update your income details every fortnight, then there's some sort of a penalty attached to it.

That's the historical reason for it, is my understanding.

EMMA GRIFFITHS:         
And Minister, I know the system has recently been automated, so computers are looking at ATO income versus declared income and if there's a discrepancy letters are being sent out at a rate of knots. How much money is it saving by doing this automatically? Is that saving money?

ALAN TUDGE:   
It still requires a lot of people in the process, of course. What it actually enables us to do is to be able to conduct more assessments. So in previous years there was only a very small number of people who have had their details checked.

This enables us to check more people so that when a discrepancy arises we can ask people to validate their income. So that's what it enables us to do. So it still costs money to do this work, but of course we can check more people and if there's overpayments we can recoup more money for the taxpayer.

EMMA GRIFFITHS:         
And Minister, 200,000 letters you say have already gone out. How many more notifications do you expect to be sent out?

ALAN TUDGE:   
Well, over the course of the four years there will be ongoing work, and there will be hundreds of thousands of letters which are issued when discrepancies have arisen.

But again, I stress the first letter is a letter which says there is a discrepancy between the income information which you self-reported to the income information which the Australian Taxation Office has. That's what the letter is.

Now, I encourage people again, if they get one of these letters, please read it carefully, call the 1800 number if you've got any questions, and then jump online and update your income information if you believe it's not valid, or if you believe you can correct a discrepancy.

EMMA GRIFFITHS:         
Alright. Minister, thank you very much for your time today.

ALAN TUDGE:   
No worries, Emma. Thanks very much.