Transcript: Radio National, Interview with Fran Kelly

9 March 2017

The Hon Alan Tudge MP

Minister for Human Services
Topics: 
Centrelink debt and compliance
E&OE

FRAN KELLY:  

Well Alan Tudge is the Minister for Human Services. Minister, welcome to Breakfast.

ALAN TUDGE:

Good morning Fran.

FRAN KELLY:  

You heard Cassandra Goldie there, saying extensive distress and fear, a climate of fear is what ACOSS says the department’s aggressive pursuit of debts has created in the community.

ALAN TUDGE:

Well I completely reject that Fran.

These statements are being made by people like the unions and ACOSS who, frankly, have a philosophical objection to doing widespread compliance checks.

We think this is a critical part of our overall system to ensure that there is integrity in welfare payments.

And our checks are uncovering some very stark examples, Fran, of where people have self-declared a very small amount of money to Centrelink, but where the Australian Taxation Office says that person actually earned tens of thousands of dollars.

Now in those situations, they’re getting overpaid and we’re trying to recoup that money for the taxpayer.

FRAN KELLY:  

Yeah but Minister, they may have a philosophical objection, but they’re also in daily contact - the unions and groups that ACOSS represents, with the people who have been hurt, who have been harmed or frightened by getting these letters.

And you can’t deny there are many of those. We’ve all read and heard about them through the media for the last two or three months.

ALAN TUDGE:

That is the case Fran. There have been many cases which have been presented to the media.

In two thirds of those cases, Fran, the person actually does owe money to the Government. In a third of the cases they have nothing to do with our new online compliance system.

There has been a lot of misinformation out there, as you know.

Now our system effectively, uses the same methodology that has been used since 1990. Where essentially what we do is we check what the person has self-reported—in terms of their income to Centrelink—and we check that with what the Australian Taxation Office has on their file as what income they earned.

Where there is a discrepancy, the person gets an opportunity to explain why there is a discrepancy. If they can’t then a debt notice may be issued.

FRAN KELLY:  

Well that’s the point. The change is—no one’s saying that data-matching hasn’t been going on—but the change is what happens after the computer detects a discrepancy.

In the past a Centrelink officer will do a basic investigation before sending out a letter. But now the computer prints out and spits out the letter on its own.

And thousands of people have either not got their letters and that’s ended with them having the debt collectors sending a letter or knocking on their doors.

You’ve got to admit that’s pretty frightening.

ALAN TUDGE:

There was an issue with some people not getting the original letter.

FRAN KELLY:

A lot of people.

ALAN TUDGE:

I’ve admitted to that and we’ve fixed that system. And that was because people hadn’t updated their address on the Centrelink files.

We’re now sending the letters by registered mail, so we’re assured that the person has picked up that letter. But the essential methodology, Fran, is the same.

The letter is only sent when there is a discrepancy identified between the income information that they provided to Centrelink, with that which is held at the Australian Taxation Office and…

FRAN KELLY:  

Yes, but Minister it’s a sledgehammer—it’s a sledgehammer to crack a nut isn’t it? I mean before the system was automated, only 20,000 interventions were made a year, now the system’s sending 20,000 letters out a week.

And clearly it’s sending out letters where the information is wrong.

ALAN TUDGE:

No that’s not right Fran, and this has been dealt with time and time again.

No letter goes out unless there is a discrepancy in the information. Then the person gets an opportunity to update their details. In about 20% of occasions, the person can update their details and provide a valid explanation for why there is a discrepancy.

Sometimes it’s because the employer reported, for example, that an individual worked from June to August, when in fact they worked from June to December.

But on other occasions they can’t explain the discrepancy and that they may have underreported what their income was.

Now there’s one individual that we uncovered—and this was from the Labor years - where a person self-reported $5000 of income to Centrelink. On that basis they get their Newstart payments. The Australian Taxation Office found that they’d earned over $100,000.

FRAN KELLY:  

Sure. There’s always going to be cheats though.

ALAN TUDGE:

But these are dozens and dozens and dozens, in fact hundreds and thousands of cases like this Fran.

Many of these cases we are finding from the Labor years, when Tanya Plibersek and Chris Bowen were Human Services Ministers.

They did not pick up these people, and we are doing the hard work now and picking up these discrepancies, asking people why there is one.

And in very stark cases like the one that I’ve just provided, sending a debt and saying I’m sorry, but you have to pay that money back to the taxpayer.

FRAN KELLY:  

Yeah and in many cases it is wrong and I would say it is a sledgehammer approach.

I mean we know, for instance, that there has been mistakes made by the data-matching averaging out annual income over 26 weeks, rather than looking at the income earned every fortnight.

We’ve heard all of that from people who’ve received these automated letters.

ALAN TUDGE:

And again, that’s the same methodology that has been used since 1990 when the Hawke Government introduced the Data-Matching Act in 1990, we’ve used that methodology since.

We are doing more compliance checks because we want to be more thorough. In the process we are uncovering egregious examples, and we are recouping money for the taxpayer.

FRAN KELLY:  

And how is that going?

ALAN TUDGE:

There are many people going to work today, Fran, who will work their tail off, and about 80% of the income tax that they’re paying, goes straight to the welfare system.

Now they want us to ensure that there is integrity in that welfare system …

FRAN KELLY:  

And I think everyone wants to ensure that Minister, but no one is saying there are not people cheating the system, that clearly there are.

I think a lot of people would doubt there’s the hundreds of thousands that appear to be cheating the system that are showing up from this process.

More like many, many thousands of people who are confused by the laws, find it difficult to get the assistance they need to clear it up and are now being branded as cheats and having debt collectors on them and that threatens their credit ratings.

I mean, it seems pretty heavy-handed and there are—a lot of mistakes have slipped through the cracks for you to just say the system is working as it’s meant to.

It’s pretty offensive, I think, to people.

ALAN TUDGE:

No, no, Fran, I’ve said that the initial letter always identifies the discrepancy and it gives the opportunity to the welfare recipient or the ex-welfare recipient to explain why there’s a discrepancy.

We have made a bunch of improvements to the system in the last couple of months. I’ve mentioned one before about sending registered mail now …

FRAN KELLY:  

Absolutely, yeah.

ALAN TUDGE:

We’ve made the user interface much more friendly so it’s easier for people to be able to update their information. We’ve got a dedicated 1800 number where you get straight through. Wait time is less than five seconds.

We’re making a bunch of these small refinements and we’ll continue to do so. But to suggest that there aren’t thousands of people who received over-payments is frankly wrong, Fran.

We’ve got four and a half million people who are on welfare payments, inevitably there are some people there who do the wrong thing deliberately and there’s many others who inadvertently don’t properly update their income information.

FRAN KELLY:  

You’re listening to RN Breakfast. Our guest is the Minister for Human Services, Alan Tudge.

And Minister, last week it emerged that your department and your very office actually gave some of the confidential details, personal details anyway, of a welfare recipient to a journalist because that welfare recipient had had a letter published or a blog complaining about the debt recovery process she experienced.

I think a lot of people listening would be very worried about this.

Why is it ever alright for a Minister’s office or a public service to give somebody’s personal welfare details to a journalist, without their permission, without alerting them?

ALAN TUDGE:

Yeah, first of all we take the issue of privacy very, very seriously and the Privacy Act has strict rules in relation to this.

Second, it wasn’t a letter to the editor or a blog as you suggest Fran, it was a 1200 word very prominent piece in the Fairfax press where a person—where a person had alleged that Centrelink had terrorised her, where she had been barred from receiving payments, and when that occurs it undermines the entire system overall and we have the power under the Act to correct the record, when there is such an example like that.

FRAN KELLY:  

Correcting the record is one thing but giving a journalist someone’s personal files?

ALAN TUDGE:

Well, the journalist didn’t get the personal files. Let’s just be accurate about this and I’ve issued a statement on this.

This was information which under the Act we’re allowed to release very selective information to correct the record.

The Chief Legal Officer formally cleared that information to be released in relation to this one individual only, having published a prominent 1200 word piece in the Fairfax press.

FRAN KELLY:  

And just finally Minister, there’s a lot of pain around this for some of the recipients, but also I think political pain.

Has it been worth it? So far you’ve just received $24 million from all of this haven’t you? I thought the target was $300 million.

ALAN TUDGE:

We’ve identified $300 million of debt in the last six months from the new Online Compliance System. Of that about $24 million has come through the door in cash and the rest of course will come through the door in cash in the years ahead.

The number is small, $24 million, because we have very generous repayment plans—sometimes as little as $5 per week for people who are still on Centrelink payments presently.

FRAN KELLY:  

Minister, thank you very much for joining us.

ALAN TUDGE:

Thanks Fran.

FRAN KELLY:  

Alan Tudge is the Minister for Human Services.