More than window dressing needed to address Centrelink debt traps
Welfare Rights Media Release 26th July 2004
Changes announced today by the Minister for Youth and Children's Services Larry
Anthony to Centrelink debt recovery, compliance and reviews, were welcome, but
would have only a negligible impact on the levels of debts raised, said Mark
Leahy, Vice President of the National Welfare Rights Network (NWRN).
"Poor policy, a failure to regularly review entitlements, administrative
errors, inadequate debt preventative strategies, along with increased legislative
complexity for staff and Centrelink clients, have all meant that debt numbers
have increased.
"In 2002-03, 2.4 million debts were raised, equal to $1.7 billion in overpayments
owed mainly to Centrelink.
"Centrelink workers generally do a good job under the most difficult conditions.
But in our experience some staff in debt recovery act outside their mandate,
and unduly pressure clients with debts to repay by credit cards, or to take
out an additional mortgage. Debt recovery staff should assess a person's ability
to repay a debt, but this does not always occur.
- "Further areas that the Minister needs to examine include:
- Increasing resources to Centrelink so that they can raise debts when they
are discovered. Failure to do this means that debts can accrue after Centrelink
has received information about the discrepancy;
- Improving letters from Centrelink to clients to make a person's obligations
clear and removing confusion - both of which add significantly to client mistakes
and error;
- Ending the unfair Centrelink practice of garnishing bank accounts of age
pensioners with limited funds that were meant to cover emergencies, such as
funeral costs or foreseen medical costs;
- Addressing misunderstandings about the tax and Social Security system (such
as the difference between gross and net income);
- Addressing the widespread belief that there is an automatic swapping of
information between Centrelink and Australian Taxation Office;
- Changing the Family Tax Benefit system to reduce the massive debts levels
that are a result of structural flaws; and
- Stopping the raising of debts by using technologies, which is uncovering
debts that may go back a decade or more, particularly where Centrelink has
failed to conduct adequate payment reviews.
"We are pleased that the Minister has acknowledged that improvement is
needed in the areas of Centrelink debt recovery, management and compliance.
What's really needed now is a dedicated focus on debt prevention, efforts aimed
at reducing both Centrelink and client errors," concluded Mr Leahy.
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For comment: Mark Leahy (08) 8226 4123 (w) (08) 8354 2493 (h) or
Gerard Thomas (02) 8300 6882 (h) or (02) 9817 9909 (w) or 0425 296 883 (m).
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