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Albanese government pauses controversial debt recovery method until appeal resolved Albanese government pauses controversial debt recovery method until appeal resolved
(10 days later)
Legality of income apportionment has been under question for years but social services says it is confident system is lawfulLegality of income apportionment has been under question for years but social services says it is confident system is lawful
The Department of Social Services will pause work on recovering debts using its income calculation method while it awaits the outcome of an appeal against an administrative appeals tribunal (AAT) decision in the federal court.The Department of Social Services will pause work on recovering debts using its income calculation method while it awaits the outcome of an appeal against an administrative appeals tribunal (AAT) decision in the federal court.
The legality of income apportionment – where a recipient’s job income is divided over fortnightly periods in order to calculate support payments – has been under question for years.The legality of income apportionment – where a recipient’s job income is divided over fortnightly periods in order to calculate support payments – has been under question for years.
Guardian Australia revealed in November 2020 thousands of people had been denied refunds under the robodebt program because the agency said their debts had been substantiated by historical payslips or bank statements.Guardian Australia revealed in November 2020 thousands of people had been denied refunds under the robodebt program because the agency said their debts had been substantiated by historical payslips or bank statements.
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A commonwealth ombudsman report last year also found up to 100,000 debts or potential debts were incorrectly calculated between 2003 and 2020 due to an “incorrect” understanding of social security law by the department.A commonwealth ombudsman report last year also found up to 100,000 debts or potential debts were incorrectly calculated between 2003 and 2020 due to an “incorrect” understanding of social security law by the department.
But the method’s validity faced another blow in August 2024 after it was tested in the administrative appeal tribunal. The three tribunal members found recipients of social security benefits could be receiving “less than the amount to which they are entitled” and could be “pursued for debts that are either not owed or are for amounts that exceed what is owed”.But the method’s validity faced another blow in August 2024 after it was tested in the administrative appeal tribunal. The three tribunal members found recipients of social security benefits could be receiving “less than the amount to which they are entitled” and could be “pursued for debts that are either not owed or are for amounts that exceed what is owed”.
The decision is being appealed in the federal court.The decision is being appealed in the federal court.
On Wednesday, the department’s secretary, Ray Griggs, said he remained confident the method was lawful but would redirect work on internal reviews, explanations of decisions and raising of new debts until the appeal is resolved.On Wednesday, the department’s secretary, Ray Griggs, said he remained confident the method was lawful but would redirect work on internal reviews, explanations of decisions and raising of new debts until the appeal is resolved.
“In April 2024, Services Australia restarted a limited number of internal reviews, explanations of decisions and new debt-raising activities, in line with the department’s interpretation of the law,” Griggs said, adding the department needed “to reach a firm legal position and restart debt activity in a timely manner”.“In April 2024, Services Australia restarted a limited number of internal reviews, explanations of decisions and new debt-raising activities, in line with the department’s interpretation of the law,” Griggs said, adding the department needed “to reach a firm legal position and restart debt activity in a timely manner”.
“The department achieved this, in consultation with Services Australia, the ombudsman, and welfare rights stakeholders. I have reconsidered this position in light of the appeal to the full federal court.”“The department achieved this, in consultation with Services Australia, the ombudsman, and welfare rights stakeholders. I have reconsidered this position in light of the appeal to the full federal court.”
The method relies on, in some cases, calculating welfare debts based on payslips that don’t align with the fortnightly income reporting periods. In these situations, the agency creates a “daily” average.The method relies on, in some cases, calculating welfare debts based on payslips that don’t align with the fortnightly income reporting periods. In these situations, the agency creates a “daily” average.
One income support recipient, known as FTXB, who was taken to the tribunal in August, received fortnightly youth allowance payments totalling $2,804.02 between June 2014 and July 2015.One income support recipient, known as FTXB, who was taken to the tribunal in August, received fortnightly youth allowance payments totalling $2,804.02 between June 2014 and July 2015.
FTXB worked at a grocery store as a casual worker but his paydays did not align with his youth allowance payments.FTXB worked at a grocery store as a casual worker but his paydays did not align with his youth allowance payments.
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The complication meant the department could not easily determine what days income was earned, as opposed to when FTXB received the income.The complication meant the department could not easily determine what days income was earned, as opposed to when FTXB received the income.
The AAT ultimately agreed with the respondent’s preferred calculation method, meaning they owed $806.16 instead of $911.98.The AAT ultimately agreed with the respondent’s preferred calculation method, meaning they owed $806.16 instead of $911.98.
The decision could mean thousands of other debts raised using the income apportionment method between 2003 and 2020 could require recalculation.The decision could mean thousands of other debts raised using the income apportionment method between 2003 and 2020 could require recalculation.
The commonwealth ombudsman, Iain Anderson, concluded in his report the practice is “not related” to robodebt, in which recipients’ annual income was averaged across 26 fortnights.The commonwealth ombudsman, Iain Anderson, concluded in his report the practice is “not related” to robodebt, in which recipients’ annual income was averaged across 26 fortnights.
“The robodebt calculation methodology frequently switched the burden of proof away from Centrelink to prove a debt existed, and on to the customer to prove a debt did not exist,” the report said.“The robodebt calculation methodology frequently switched the burden of proof away from Centrelink to prove a debt existed, and on to the customer to prove a debt did not exist,” the report said.
But the report did find that apportionment “likely affected social security payment rates and may have [led] to unfair debts against customers”.But the report did find that apportionment “likely affected social security payment rates and may have [led] to unfair debts against customers”.