With the Federal Government promising a $1.5 billion budget surplus next year, it's no surprise Centrelink has launched their biggest crackdown yet.
They're out to recoup $2.8 billion that they've overpaid to welfare recipients. And it's a job so big, they've hired an army of private investigators and debt collectors to help out.
“What we're talking about here is taxpayer money, and we are extremely vigilant in ensuring that those debts are repaid,” Hank Jongen, the Department of Human Services general manager said.
Roslyn Bedford has paid back half of the $500 Centrelink overpaid her in family tax benefits two years ago. “I don't have any major debts in any way, have never been in trouble, and now I am being treated like a criminal,” she said.
She's appalled at the harassment of debt collector Dun & Bradstreet, saying they even text her demands for cash.
“This woman said to me, yelling down the phone, ‘you give me your credit card number now and we will wipe this debt or there will be legal action’,” Bedford said.
Private investigators track down, film and report on welfare debtors and the debt collectors hired by the Government department recovered $123 million in the eighteen months to December.
“I wasn't entitled to the money, I didn't want the money,” Kristen Caldwell said.
Caldwell has been trying to pay back $838.40to Centrelink for months, but says they won't let her.
“They suck,” said Caldwell, when asked about Centrelink’s customer service.
“In phone calls I probably spent about four, maybe five hours,” she said.
Caldwell receives a Parenting Payment, and her partner Paul was, until recently, entitled to the Youth Allowance as an apprentice. “He actually ended his job and I contacted Centrelink and said he's no longer an apprentice. They said that was fine, and that they would cancel his Youth Allowance.”
Instead Centrelink just kept on paying it. Currently $156 million is owed to the Department because it paid out Youth Allowances it shouldn't have.
But it gets worse; the Family Tax Benefits have been overpaid to the tune of $1.053 billion.
“I checked internet banking, and there was a lump sum payment that just was not meant to be there,” Caldwell said. First came a cheque for $338, then $426, and the cheques kept rolling in, even as Caldwell called Centrelink each time to remind them to stop sending money.
Now Centrelink is refusing to let her pay back her partners Youth Allowance until she's paid $1000 she admits wrongly claiming several years ago. She expects the debt collectors to call any day.
“Most Centrelink debts occur because people don't tell us about their earnings. They often confuse net earnings with gross earnings, they don't tell us when they get pay rises, and in most instances these are caused through genuine error,” Jongen said.
He stressed the $2.8 billion has accumulated over many years, and comprises only a fraction of the $90 billion paid in welfare benefits to seven million Australians each year.
“Living on a Centrelink payment is not an easy lifestyle, so we have to strike a balance between effective recovery of money in a way that's fair to the individual. I make the point that the overwhelming number of these debts occur because people make genuine errors. The biggest debts in the Centrelink system result because people don't tell us about changes in their circumstance,” Jongen said.
Bedford meanwhile is paying her debt at the rate of $25 per week, even though she insists she did nothing wrong and says Centrelink has failed to explain why they think she was overpaid.
“They still have not sent me any written material,” she said.
With nearly three billion extra taxpayers’ dollars floating out of the welfare system, private investigators and debt collectors are in for a bumper year.
“The longer you get away with it, the more problems you're going to create for yourself, because you will have to repay the money. In situations like that you will be referred for consideration of prosecution action. It's not a question of if you get caught, it's a question of when you get caught,” Jongen concluded.
Welfare Debt
Family Tax Benefit - $1.053 billion
Parenting Payments - $606 million
Newstart - $420 million
Disability Support - $209 million
Other - $509 million
Total: $2.8 billion
Response statements
Statement from Dun & Bradstreet (Debt Recovery)
Dun & Bradstreet has an established relationship with Centrelink in which we seek to recover taxpayer funds owing to the Commonwealth on their behalf.
In the course of these collection activities, Dun & Bradstreet communicates with members of the community referred to us by Centrelink.
These communications adhere strictly to Commonwealth and State privacy laws, including the National Privacy Principles, and the Australian Competition and Consumer Commission ‘Debt Collection Guideline’.
The Guideline outlines appropriate time and frequency of contact, correspondence, record keeping practices, provision of information and documentation, and conduct towards the individual.
Statement from Centrelink
It’s important to remember that DHS delivers more than $90 Billion in payments to more than 7 million people every year and regularly reviews entitlements to ensure people receive the right payment.
We also have one of the most sophisticated electronic data-matching systems in the world which matches records with external providers such as banks, educational institutions and other government agencies, including the Australian Tax Office and the Department of Immigration.
Centrelink also receives more than 2,000 tip offs a week from Australians who suspect someone may be committing welfare fraud.
As a result of tip offs received in 2010-11, Centrelink conducted 26,516 reviews of customer payments, resulting in savings and debts of $64.1 million.
In 2010-11 the Commonwealth Director of Public Prosecutions prosecuted 1,273 cases for fraud with a success rate of more than 99 percent. In 2010-11, DHS carried out 2.1 million entitlement reviews and achieved a payment correctness rate of 96.7 percent.
As a result of this activity, we identified debts totaling $1.6 billion and recovered almost $1.1 billion in debts.
Data matching between DHS and other Government departments in 2010-11 resulted in savings to taxpayers of more than $147 million.
Optical surveillance is just one of the tools DHS uses to support its fraud investigations. The cost of optical surveillance for the year ending 30 June 2011 was around $750,000 and helped to identify debts of around $5.3 million
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