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Centrelink robo-debt 'abject failure' and arguably unlawful, Victoria Legal Aid says

11 April 2017
Christopher Knaus

Victoria Legal Aid has described Centrelink’s robo-debt system as an “abject failure” which is an arguably unlawful response to the government’s self-inflicted budget problems.

The scathing assessment came as the system is again put under the microscope, this time by the external auditing firm PwC Australia, which has been engaged by the Department of Human Services. 

The Senate inquiry into the automated debt recovery system continued on Tuesday in Melbourne, hearing evidence from Victoria Legal Aid and the state’s community legal centres.

Legal Aid’s managing director, Bevan Warner, said the system should serve as a lesson of what not to do in public administration. 

“In our view the initiative is an abject failure, it’s hurting people,” Warner said. “It is arguably unlawful, and even if it is lawful, it shouldn’t be. The minor improvements that have been announced do not go far enough.”

Warner said the legality of the system was questionable because the creation of the debts did not involve a critical evaluation by a Centrelinkofficer.

The system is expected to begin to target 783,000 people for possible debts in 2016-17, compared with 20,000 in the years earlier. 

“This is an unjustified and staggering 3,900% increase,” Warner said. “The initiative was a blunt solution to a self-inflicted problem.”

Warner called on the government to release the terms of reference of the PwC audit, and involve community-sector stakeholders in the process to rebuild confidence in Centrelink’s debt recovery process.


The inquiry also heard from the Melbourne-based Consumer Action Law and Western Community Legal centres. They argued that Centrelink should be bound by the same stringent guidelines that govern private external debt collectors.

Those guidelines – produced by the Australian Competition and Consumer Commission and the Australian Securities and Investment Commission – prevent undue harassment, intimidation or unscrupulous practices, and requires private debt collectors to have evidence that a debt exists before they attempt to recover money.

The guidelines now apply to the third-party debt collectors engaged by Centrelink but not Centrelink itself.

Consumer Action Law Centre’s chief executive, Gerard Brodie, called on Centrelink to voluntarily ask the ACCC/Asic to hold it to the guidelines.

Brodie said that would force the agency to provide evidence to back up its allegation that a debt existswhen it is disputed by the welfare recipient.