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The Robo-Debt That Doesn’t Exist

13 January 2017
Justin Warren
Eigen Magic

After looking at where the headline $4 billion figure came from previously, we now turn our attention to another big number that’s getting bandied about the place: $1.7 billion in over-payments that the Government wants to claw back.

This number comes from the 2015-16 Federal Budget. The Hockey/Cormann budget. The “lifters and leaners”, let’s go smoke cigars within view of the cameras budget. You know the one.

Anyhoo, on page 116 of Budget Paper No. 2 [PDF] we find this statement:

"The Government will achieve savings of $1.7 billion over five years by enhancing the Department of Human Services (DHS) fraud prevention and debt recovery capability,
and improving assessment processes. From 1 July 2015 DHS will implement an integrated package of compliance and process improvement initiatives including improved automation and targeted
strategies for fraud prevention in areas of high risk. The savings from this measure will be redirected by the Government to repair the Budget and fund policy priorities."

[...]

Note how there’s nothing in the answer to Question 15 about the other 15% of the mismatches? If they’re a mismatch with the ATO, that means the amounts are not the same, so the debt can’t be zero. Since 85% are overpayments, that means this 15% must be underpayments. But what’s their average value? That’s money DHS should be paying people, so the value of the debt should be discounted by this amount.

At least, that’s what DHS should be doing, if Ministers Tudge and Porter, and the DHS actually meant the “no less” part of the line they’ve been spouting for weeks.

Let’s pretend DHS were planning to pay people who got underpaid. How big a problem is it, really? Well, 15% of the discrepancies is 162,000. The discrepancy to customer ratio is about 1:0.8, so if we assume the 15% has roughly the same mapping of discrepancy:customer that’s 129,900 people the Government owes money.

Now, the average underpayment could be very different from the average overpayment, so we’re getting even further out into inaccurate figures now, but let’s assume the average per debt is the same: $1,400. That would mean DHS owes people over $233 million. If DHS actually paid people the money it owes them, the savings from this robo-debt fiasco would be reduced down to under $1 billion. A far cry from the $1.7 billion in the headlines, eh?

Of course, it isn’t being included, because DHS has no intention of paying anyone that money.

So much for the integrity of the system.