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The issue

The government is using a computer algorithm to identify overpayments, or ‘debt’, by matching fortnightly Centrelink reporting periods to annual income from the Australian Taxation Office and looking for discrepancies. They aim to recoup $4 billion over the next four years, $300K this year alone, and without that money their budget starts to look a bit shakey.

 

             ~ But how can they match fortnightly reported earning to an annual amount?
The answer is simple, but stupid: they take your total financial year earnings and divide that by 26.

             ~ But what if I was only working part of the year, or not working regular hours, or...
Well, exactly. It’s leaving people with often massive debts. In order to lodge an appeal, you first have to agree to a payment plan, so you find yourself paying a debt that you don’t think you owe.

 

Additionally, the system isn't comparing employer ABN's, but business names.
Can you see that "Fred's Breads", "Freds Breads", "FRED'S BREADS", and "Bready Fred trading as Fred's Breads" are probably all the same employer? The algorithm can't, so it will conclude that you've been hiding employers and income from Centrelink, and have been overpaid, and will initiate recovery proceedings accordingly.

 

That's a lot of false debts.

 

The letters (over 230,000 so far, with more on their way) have often been sent to old addresses, so the first some people hear about it is when a loan application gets rejected, or when they find out they've been barred from travelling, or when a debt collector comes knocking.

 

Centrelink will not allow you to speak to their in-office staff regarding the debt, and insist that you lodge your appeal online (the website's reportedly frequently offline) or via the telephone (people report it is very hard to get through).
They want to see your payslips from the period of alledged overpayment, but had previously advised people to keep their payslips for only six months. Sourcing old payslips from small businesses or businesses that have folded can be difficult or impossible.

 

Everyone agrees that the government has an obligation to identify any overpayments. But what has changed is that the Turnbull government has removed the human oversight and let loose a poorly designed computer algorithm, effectively outsourcing the verification to the recipient. 
They have also removed the six year limitation for chasing debts.

The program is due for expansion to Disability and Aged Pensioners soon.