Media Release by The Hon Larry Anthony MP

Centrelink effectively managing customer debt

Minister for Children and Youth Affairs, Larry Anthony said that the Australian National Audit Office (ANAO) report released today found Centrelink’s debt management practices to be effective.

“Social security debt prevention, identification, raising and recovery are highly complex areas and I am pleased that the ANAO has found that Centelink is effectively managing these issues and that the incidence of debt is low.

“The ANAO found that overpayments primarily occur as a result of customers failing to advise Centrelink of their change in circumstances or providing incorrect information.

“This supports an internal analysis by Centrelink that found less than one per cent of all debts are caused by Centrelink error. In cases where a debt arises solely from Centrelink error and the customer could not have reasonably known they were being overpaid, Centrelink will waive the debt.

“The ANAO found that customer debt to June 2003 was an accumulated figure of
$967 million. To put this into perspective:

  • 29 per cent of the accumulated debt figure relates to overpayments that occurred before Centrelink was created in 1997.
  • 49 per cent of debt is owed by people who are no longer receiving a payment.
  • $967 million is just 0.33 per cent of the $260 billion Centrelink distributed between 1997 and June 2003.
  • At any one time, only 5.8 per cent of Centrelink’s 6.4 million customers have a debt. Over the last 10 years debt has been between one and two per cent of total outlays.
  • Only one per cent of Age Pensioners have a debt. Of those who have a debt, the value of the debt has decreased by 25 per cent over the last 12 months.
  • Individual debts are generally small. Last year, 50 per cent of debts incurred were less than $100, 60 per cent were less than $200 and 80 per cent were less than $500.

“The Government is always looking to improve Centrelink’s performance and accepts all nine of the ANAO’s recommendations. Centrelink has already commenced work on five recommendations including a review over the next 12 months of the administration of debt prevention and accuracy of the debts raised.

“The ANAO report found that recent and future changes will further improve Centrelink’s debt management performance, including the comprehensive restructure of the agency announced last week.

“Under the restructure, the Debt Servicing Team will have 13 areas streamlined into six specialist areas to centralise operations, improve the consistency of decision making and increase efficiency.

“There was funding in the Budget for a substantial education campaign, ‘Keeping the System Fair’, to reinforce the importance of informing Centrelink when circumstances change. A ’13’ hotline number will also be established for customers to contact Centrelink regarding their overpayment.

“I am also pleased that the National Welfare Rights Network will be involved in additional training of debt recovery staff to enhance the perspective of Centrelink staff working in debt services.

“Australia’s social security system relies on voluntary compliance where payments are made based on the information provided by recipients. While this is the case, there will always be a level of debt.

“The Government is unapologetic about out strong record of ensuring compliance and preventing welfare fraud. We have a responsibility to taxpayers to ensure that people receive their correct entitlement – not more and not less,” Mr Anthony said.