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Centrelink inquiry told 'income averaging' creating incorrect welfare debts

6 April 2017
Christopher Knaus

Forcing welfare recipients to disprove their own debts has made the error-prone, previously rare practice of “income averaging” commonplace, welfare advocates say.

The National Social Security Rights Network has used its submission to the “robo-debt” Senate inquiry to provide a forensic and detailed account of the problems with the new system.

The network said that, despite the government’s claims otherwise, the method of debt recovery has undergone “fundamental” changes.

One of the most controversial aspects of the new system is its tendency to average a person’s annual income over 26 fortnightly periods and then assume they were ineligible for benefits at any point during the year. 

The network’s executive officer, Matthew Butt, said that practice was previously rare but is now prevalent. 

He attributed that to a shift in the onus of proving or disproving a debt, away from Centrelink compliance teams and on to the individual welfare recipient.

Previously, where a discrepancy was found between income reported to Centrelink and the Australian Taxation Office, Centrelink staff would investigate.


Butt said that led many people to simply confirm that the ATO’s annual income figure was accurate, without understanding the consequences. Others simply did not respond.

He said that was leading to an increased use of income averaging.

“Averaging was not the norm under the old process,” he said. “You’ll notice that the department keeps saying there’s always been averaging. That’s true... but it was a rarity.


The department said that, if it held information suggesting that a recipient had only worked for less than a year, it would average over that shorter period. 

It has previously stated that “intensive support” was still available for people who need help clarifying their income information. 

A spokeswoman said welfare recipients were not routinely asked to provide payslips. When they could not contact past employers, find payslips, or bank statements, a staff-assisted process was available to help them.

Extensions were also available automatically on two occasions, she said, to give more time for welfare recipients to track down information. 

“If further extensions are needed, people should contact 1800 086 400 and discuss their situation with a compliance officer,” she said.