Centrelink began recalling all the “robo debts” it had sent to one of its external debt collection agencies in early January, an inquiry has heard, at the same time as federal ministers were publicly refuting suggestions the recovery process was unfair or inaccurate.
Dun and Bradstreet, one of the country’s biggest debt collection firms, appeared before a Senate inquiry into Centrelink’s automated debt recovery system on Wednesday.
The company, along with the Probe Group, has been sent 43% of the debts raised under the controversial system and is being paid on commission by Centrelink to extract money from former recipients.
The chief executive of Dun and Bradstreet, Simon Bligh, denied allegations that his company had harassed or threatened debtors, saying there had only been one upheld complaint for every 100,000 contacts.
He told the inquiry his staff did not chase debts from individuals who were either vulnerable, disputing their debt, or still receiving welfare benefits.
Bligh said that on 3 January, at the height of controversy about the system, the Department of Human Services recalled all of the automated debts it had sent to Dun and Bradstreet.
The same day, the social services minister, Christian Porter, publicly described the system as “about as reasonable a process as you could possibly derive”.
“It really is an incredibly reasonable process, the question is why wasn’t the previous government, Labor, when they were in charge, engaging in this process,” Porter told ABC radio on 3 January.
Bligh said the agency was now only referred debts when an individual had agreed to enter into a repayment plan with the department but was failing to comply.
Later, the Department of Human Services confirmed it was recalling all of the 56,504 debts raised under the automated system from Dun and Bradstreet and Probe.
But the department said the process of recalling debts began in mid-February, which conflicted with Bligh’s evidence of 3 January.
The recall was almost complete.
Labor senator, Murray Watt, asked why the department decided to recall the debts from external agencies. One of the department’s deputy secretaries, Jonathan Hutson, was unable to say why the debts had been recalled.
“Senator, I don’t know that I’ve got an easy answer to that question,” Hutson said.
“I don’t have that information for you, sorry senator, I’ll take that on notice,” he said.
Bligh also confirmed the debt agency never physically visited homes, did not have the power to garnish wages and had no complaints against it for contacting people more frequently than stipulated in the Australian Competition and Consumer Commission and Australian Securities and Investments Commission debt collection guidelines.
“As I’ve said, we have approximately one complaint for every 100,000 contacts, we investigate them, the department investigates them, our staff have specific obligations and training … all communications are in a form agreed with the department,” Bligh said.
Bligh said the agency allowed payments to be made by credit card.
Earlier in the inquiry, Mission Australia’s state director, Noel Mundy, spoke of two robo debt cases that his organisation was aware of.
Mundy said one case involved an individual with obsessive compulsive disorder, who was issued an $81,000 debt. The man was being cared for by his mother, a Mission Australia client.
“When the client approached Centrelink, she was informed the son needed to make payments immediately,” Mundy said. “However, Centrelink staff were unable to inform her of the cause or the origin of the $81,000 debt.”
The man’s mother tracked down past payslips and pay information before complaining to the commonwealth ombudsman. The ombudsman investigated and the debt was subsequently reduced to $7,000.
But the mother obtained further evidence of her son’s work history and produced it to Centrelink, prompting the agency to wipe the debt entirely.
“So from $81,000 to zero,” Mundy said.
He said the complexity of the system meant the burden for proving a debt must be on Centrelink, not the individual recipient.
“The government owes a duty of care to ensure that welfare recipients, both past and present, are treated fairly and with dignity,” Mundy said. “We therefore recommend that all government debt recovery mechanisms at a minimum contain robust checks and balances for proper human oversight.”
