Malcolm Turnbull and his ministers are playing with political fire in their hunt for $4 billion in savings from the welfare system by sending off letters to thousands of Australians with a clear warning that debt collectors will be called in to recover old payments.
The blowback from voters is already dangerous and is certain to get worse when the vast program grows across time. The vitriolic complaints about the exercise during the past few weeks have been based on the first batch of 169,000 letters from Centrelink that assume welfare recipients need to repay some of their benefits. It is a taste of things to come.
Porter and his colleague overseeing the program, Human Services Minister Alan Tudge, are walking on to a political minefield. They will have to tread warily all the way to the next election, never knowing when a faulty Centrelink calculation will blow up in their faces.
Yet they cannot go back. For all the fury at the debt recovery effort, the calls for a halt will fall on deaf ears when the government is borrowing money just to pay its recurrent expenses, and the commonwealth net debt is already $317.2bn and heading to $363.8bn.
The government cannot afford to stop looking for savings but has a fearsome challenge in trying to fix the fault rate with its mass mail-out. Porter argued this week that only 20 per cent of letters led to results where the Centrelink discrepancy was “explained fairly simply” when the recipient went online to update the records. That is far too high.
This suggests that 33,800 out of the 169,000 did not owe money but were sent a letter anyway. That amounts to 225 people in every electorate on average across the country, more than enough to make life difficult for a federal politician. If the ratio stays the same across the full program we will see about 340,000 people receiving letters claiming a debt based on false data.
Victoria Legal Aid executive director for civil justice Dan Nicholson says Centrelink’s own figures show 37.5 per cent of its initial claims are modified when recipients seek a review. This could become a nightmare of reviews and appeals that clog the government agency. Libertarians and conservatives should be on the same page as Nicholson on a key principle: never assume the government is right.
Even so, the wall of noise on social media includes complaints at the idea of writing to a welfare recipient to check that information is accurate. There is a clear risk with the scale of the new program, which has been ramped up from 20,000 letters a year to just as many in a single week, but Porter is on solid ground when arguing that people have an obligation to update information when asked.