Reporting in The Age, The Sydney Morning Herald and The Canberra Times (25 March 2019) included misleading information about how we conduct our compliance activities.
People have 28 days to either pay outstanding debt amounts or enter into a repayment plan – not 14 days as inferred by the story. We have a dedicated team ready to help people set up suitable payment plans and refer them to extra support if needed.
We write to people giving 28 days’ notice and follow up with a reminder letter 14 days later if we haven’t heard from them. We make every attempt to engage directly with people to arrange a payment option that suits them.
General interest charges have been applied since April last year to former welfare recipients who owe a debt and have not entered into a payment arrangement. It is not limited to debts identified through online income checks.
These interest charges are not applied to people who are currently receiving a welfare payment, have debts that are currently under review, or people who are actively paying the money they owe.
Online checks identify discrepancies between income reported to Centrelink and the Australian Taxation Office. Letters are sent to customers asking them to explain this discrepancy.
Income averaging is used to calculate earnings for particular periods. Averaging may be used in various circumstances including when someone fails to engage with us. This process is not new or specific to the online compliance system.
Importantly, no debt notice is issued until people have had the opportunity to assist to resolve the discrepancy. Even after a debt has been raised, people can update their details or provide more information to have the debt reassessed. They can also request a formal review.
We have introduced enhancements to the online system to make it easier for people to review and update their income details online. This includes allowing people to use bank statements in addition to payslips to update their information and more options to record income across a variety of payment frequencies.
The Commonwealth Ombudsman reviewed the online compliance system, and confirmed that the system of calculation being used is comprehensive and accurately captures the legislative and policy requirements.
Below is the full response provided to The Age on 22 March 2019:
- The interest charge measure was introduced in April 2018 and only applies to former welfare recipients who owe a debt to the Department of Human Services.
- People have 28 days to either pay the outstanding amount in full or enter into a repayment plan in order to avoid having interest applied to their debt.
- The department takes into account an individual’s financial and personal situation when working out a repayment plan to ensure they do not experience hardship.
- If someone is in personal or financial hardship, we encourage them to call us using the number listed on their letter, so that we can agree to an arrangement that is reasonable and manageable. Interest is not charged in cases where a person has asked to have their debt reassessed.
- It’s important to emphasise that all the debt recovery activities we carry out are consistent with legislation.
- We will also provide the person with an explanation of how the debt was calculated if requested.
- While we can authorise the garnishee of tax returns, wages and bank accounts to recover social welfare debts, we only take this action when other attempts to recover money owed have failed.
- Before taking these steps, we carefully consider the customer’s circumstances, and we confirm that the customer has failed to enter into a payment arrangement to pay back their debt.
- It would be inappropriate to comment on the case with Victoria Legal Aid, as this matter is before the court.
- This is a letter we send to someone who has an outstanding debt, who is no longer receiving welfare payments. This is a reminder letter which is sent after the initial letter, encouraging this person to pay their outstanding debt or enter a payment arrangement.
- While our letters outline the steps that may be taken if a customer fails to repay their debt, interest charges are not applied to people who:
- are currently receiving a welfare payment,
- have debts that are currently under review, or
- people who are actively paying the money they owe
- More information about General Interest Charges can be found here: https://www.mhs.gov.au/media-releases/2018-04-20-repay-debts-or-face-interest-charges