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The issue

The government is using a computer algorithm to identify overpayments, or ‘debt’, by matching fortnightly Centrelink reporting periods to annual income from the Australian Taxation Office and looking for discrepancies. 
They're going back at least 7 years, and anyone who has earned any income in the same financial year that they also received any payment from Centrelink is at risk of getting a 'debt'.


             ~ But how can they match fortnightly reported earning to an annual amount?
The answer is simple, but stupid: they take your total financial year earnings and divide that by 26.

             ~ But what if I was only working part of the year, or not working regular hours, or...
Well, exactly. It’s leaving people with often massive debts, and no reliable advice from Centrelink about how get an appeal.


Additionally, the system isn't comparing employer ABN's, but business names.
Can you see that "Fred's Breads", "Freds Breads", "FRED'S BREADS", and "Bready Fred trading as Fred's Breads" are probably all the same employer? The algorithm can't, so it will conclude that you've been hiding employers and income from Centrelink, and have been overpaid, and will initiate recovery proceedings accordingly.


That's a lot of false debts.


When the program launched, letters (over 230,000 in the first few months, with more on to follow) were often sent to old addresses, so the first some people head about their debt was when a loan application was rejected, or when they found out they'd been barred from travelling, or when a debt collector came knocking. A significant number of debts arrived just before Christmas.

In part as a result of this campaign, at the beginning of the year tens of thousands of debts were quietly recalled from debt collectors. Letters are now sent by registered post to confirm that they have been received. Bank statements are accepted as evidence of income amounts and dates.


But Centrelink will not allow you to speak to their in-office staff regarding your debt, and insist that you lodge your appeal online (the website's reportedly frequently offline) or by contacting a 'subject mater specialist' over the telephone (people report it is very hard to get through). That's if you know how to ask for the right kind of appeal, and too many people don't know.
They want to see your payslips from the period of alledged overpayment, but had previously advised people to keep their payslips for only six months. Sourcing old payslips from small businesses or businesses that have folded can be difficult or impossible, and using bank statements requires you to convert your net pay back to gross earnings. If you provide them for information outside the period they have requested, this can trigger further automated 'compliance' checks and manufacture more debt.


The government has always devoted resources to identify past overpayments. But what has changed is that the current government has removed the human oversight and let loose a poorly designed computer algorithm, effectively outsourcing the verification to the recipient — resulting in more 'debts' being created per week than were created by previous governements each year
They have also removed the six year limitation for chasing debts.
Retrospective 'compliance checks' are also being undertaken on recipients of Family Tax Benefits.