It’s a system designed to help Australians who most need it. Yet it’s created continuous scandals, with parts of it paused because the government can’t say if it’s operating legally.
Hundreds of thousands of Centrelink clients are affected by its frequent problems, being charged or overpaying debts incorrectly calculated as another class action is launched.
To top it off, Guardian Australia revealed another of its errors on Friday: about 44,000 customers had overpaid their debts, some by more than $20,000.
“The system is so defective across so many different areas,” says Christopher Rudge, a welfare expert and lecturer at the University of Sydney’s law school.
“We just have all of the chickens coming home to roost.”
Rudge lists three big-ticket items currently unfolding: income apportionment, illegal cancellations caused by issues with Centrelink’s targeted compliance framework – the system that runs mutual obligations – and a fresh class action.
In July, the federal court found the method the Department of Social Services used from the early 1990s to 2020 to calculate a welfare participant’s payment – known as income apportionment – was invalid. The government is now working on legislation to give about 3 million people affected by the unlawful debt calculation method up to $600 in compensation. Small accidental debts up to $250, of which there are about 1.2m, are also expected to be waived.
“What the income apportionment legislation does is deprive judges of deciding whether or not the government action was lawful or not. And they just vanish away their own, their own unlawful action for the last 29 years,” Rudge says.
A ‘welfare system in crisis’
There is also the issue of an estimated 310,000 Centrelink recipients who had their payments unlawfully cancelled between 2020 and 2024 because they were incorrectly told they had not met their mutual obligations under the scheme.
And then there’s the class action, launched in September, that is seeking compensation for about 20,000 Aboriginal and Torres Strait Islander people who were made to work longer hours under worse conditions than people in the cities as part of a work-for-the-dole scheme.
“The welfare system is in crisis,” Rudge says. “There are so many scandals and so many accusations of unlawfulness and so many legitimate actions from individuals against the government.”
In August, the commonwealth ombudsman announced it was investigating the targeted compliance framework (TCF), and has already found that payments had been cancelled unlawfully.
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Since March, the entire cancellation system has been shut off.
The ombudsman has recommended continuing a pause to further cancellations, until it could review the legality of the entire TCF system.
Another report confirmed that hundreds of thousands of welfare recipients face payment suspension every year, under a system that the government cannot ensure is operating legally, according to Kristin O’Connell, a spokesperson for the Antipoverty Centre.
“The government does not have information in its systems to determine whether suspensions or other decisions were lawful or not,” she says.
Despite the pause on cancellations, payment suspensions continue.
In total, there have been 321,995 suspensions for 205,870 jobseekers between May and July this year.
These suspensions can have serious consequences.
Earlier this year, Kelly, whose full name was withheld, was in hospital recovering from psychosis when her payments were suspended because she could not attend a meeting with her job provider. Her hospital doctors wrote four medical certificates to Centrelink, but all of them were rejected.
One of the issues in the system, according to O’Connell, is the use of private job agencies that have little accountability for their decisions.
“What that means in a person’s life is that their Centrelink payment can be stopped at any time, by someone who is unaccountable,” she says.
Too many cooks
The welfare system is run by three departments, hundreds of private companies and relies on automation.
Kate Allingham is the chief executive of Economic Justice Australia, the peak organisation for community legal centres that specialise in social security law. She says there are too many cooks.
“You have the Department of Social Services that looks after the legislation and the social security guide, then you have Services Australia, who are actually the ones administering Centrelink, and they operate from the operational blueprint,” she says.
Then you have the Department of Employment and Workplace Relations, which runs the network of employment providers, she says.
“You throw in the private providers, and then you also have processes of automation, and no one knows what’s going on at all,” she says.
Allingham says they work “in silos”, which creates “the perfect storm” for chaos.
“We have a social security system that is too complex for the government to lawfully administer, and part of that is that there are just too many players,” she says.
One example of this is that the departments have – or will soon have – several different remediation processes for errors, including compensation for robodebt victims. And they have set up different phone lines for people affected to call, she says.
“The robotdebt compensation payments … will be happening next year,” she says.
“The income apportionment resolution scheme, that legislation is before parliament. We now have the debt overpayment phone line, and we also have the Employment Services remediation, where there have been decisions that result in people’s payment suspension and cancellation,” Allingham says.
“So that’s four different phone lines.”
Allingham says their members regularly hear about the “profound” psychological impact contact from Centrelink can have. That might stem from a text message telling them their payment has unexpectedly been suspended, or a letter in the mail saying they’ve been overpaid and now have to pay it back.
“This type of notification sends people into a panic – suddenly they can’t pay rent or that utility bill they know is coming,” she says.
The social security program director at the Australian Council of Social Service, Charmaine Crowe, says it is “inexcusable” for the government not to follow the law.
“Governments should make clear when they are in the wrong,” Crowe says.
“Some of the correspondence issued regarding mistakes made by Services Australia implies that the individual is at fault and includes no apology.
“It should be the bare minimum that the government admits when it makes a mistake and apologises accordingly.”
Guardian Australia sent questions to each department and its associated minister. In response, a government spokesperson said it was “committed to ensuring Australia’s social security system is functional, compassionate and safe”.
“We understand the importance of ensuring government systems operate effectively, particularly when interacting with vulnerable people,” they said.
The spokesperson said the government had “inherited a system still reeling” from robodebt, which needed to rebuild trust with the population.
“Our government is getting on with the job of rebuilding that trust, including by righting historical wrongs, providing compensation and reforming systems that aren’t fit for purpose,” they said.
The issues are complex, but the suggestions to fix them are numerous.
Advocates are increasingly calling for the abolishment of mutual obligations and the TCF, and to pause suspensions.
“The treatment of people who are worse off and who are locked out of the labour market sets an important standard for society, and at the moment that standard is below the floor,” O’Connell says.
“I think we’re at the point where this has become so extreme and so widespread that the prime minister actually needs to step up and take responsibility for what’s going on, and live up to his rhetoric about no one being left behind.”
