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.
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.
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.”