Before January 1, Centrelink debts expired if the agency ignored them for six years. Now it can pursue them at any time like the Tax Office, but within the agency there is confusion about the implications.
Just as Australians were ringing in the new year and the public campaign against Centrelink’s massively scaled-up debt recovery program was beginning to pick up steam, a legislative change removed a time limit that meant a certain number of welfare debts used to expire.
Previously, unlike other debts to the government, notably those owed to the Australian Taxation Office, welfare debts would lapse if no action was taken to recover them in six years.
Agencies like Centrelink could fairly easily restart the six-year limit, by taking a basic action like opening the client’s record and doing a basic review, but nonetheless it resulted in some debts expiring because the agency did not have enough resources to pursue them all.
From January 1 it was removed entirely by the Budget Savings (Omnibus) Act,shortly after the government asked Centrelink to identify and recover hundreds of thousands more debts than it ever has before by significantly decreasing the amount of administrative effort spent on each one.
The various pieces of legislation amended by the act now say welfare debt recovery actions can take place “at any time” and according to the act’s explanatory memorandum:
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There’s apparently a view in the agency that now there is nothing stopping the automated compliance program from going back through tax and welfare records “indefinitely” to find new debts to raise.
But an independent expert in social security law said this was not quite right; the six-year limit only ever applied to debts after they were raised. The clock started when the agency became aware of the debt (or when it reasonably should have — for example, if it was notified of an overpayment but failed to actually raise a debt for six years or more).
The legal interpretation was that Centrelink could always chase a debt from any time in the past — provided it could argue there was no reasonable way to have found out more than six years prior — but in practice it always raised more debts than it could recover, so it prioritised the biggest ones and did not go looking for new ones especially hard.
The Mandarin also understands that debts which expired after no action was taken for more than six years before the change on January 1 cannot be resurrected.
The further back Centrelink goes looking for past discrepancies between taxable income and support payments, the less chance there is that the people advised of potential debts will be able to produce payslips or other records to prove they were not overpaid.