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Why Centrelink should adopt a light touch when data matching

10 January 2017
Helen Hodgson
The Conversation

The tax and social security systems can be seen as two sides of the same process – income support payments are a safety net funded through taxation. Both systems depend on an assessment of the financial resources of the “client”, whether a taxpayer or a recipient of a payment.

Data matching between the two systems could seem a logical step to policymakers and data analysts charged with reducing the budget deficit. But there are several important differences between the tax and social security systems. These include the principles and intentions underlying the two systems, and differences in the data captured. 

The most important difference is to recognise the fundamental purpose of each system, by revisiting the principle of vertical equity.

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A properly designed income-matching system can help to identify anomalies, but the information needs to be appropriate and fit for purpose. The current exercise is using information in a way that it was not designed to be applied, without properly adjusting for the technical and policy differences between the tax and social security system.

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