"Serious Failure": Ombudsman To Investigate Robo-debt Scandal

"The robo-debt program is deeply flawed and must be shut down and replaced," MP Andrew Wilkie said.

The Commonwealth Ombudsman has agreed to reinvestigate Centrelink's controversial "robo-debt" data-matching program, after claims from a whistleblower that serious flaws remain in the system.

Centrelink has been under fire for more than 18 months now, after welfare clients began receiving demands to repay massive debts after allegedly being overpaid by the agency. Many of the debts were raised after what critics call a flawed data-matching process which sees documents held by different government departments -- including Centrelink, the tax office and medical services -- compared for discrepancies.

Federal MP for Denison, Andrew Wilkie, wrote to the ombudsman last month asking for further investigation into the robo-debt program. The government officer has agreed to the request, and Wilkie has asked the government to shut down the robo-debt data-matching program entirely.

A common mistake made by the program was to compare tax returns to documents lodged to Centrelink, and if the same job was recorded under two slightly different names -- for instance, as cited by Wilkie, "McDonalds" as opposed to "McDonalds Family Restaurants" -- then that income would often be counted twice by the system, and therefore vastly inflate the income earned by a welfare recipient each year. This would raise a debt notice for the Centrelink client, who would be asked to repay some or all of their welfare payments.

The system also averaged payments over larger periods rather than assessing income weekly, which raised repayment debts for people -- such as seasonal workers or students -- who earned large amounts of money some weeks and small amounts in other weeks.

Many debts have been repaid by people who disputed the calculations, and many clients have had their debts cancelled or payments returned after reviews found Centrelink wrongly issued the notices. A report last year found that, between July 2016 and March 2017, 7500 debts were reduced to zero and 12,500 were reduced on review.

Part of the letter Wilkie sent to the ombudsman

The ombudsman released a report into the "automated debt-raising and recovery system" in April 2017, acknowledging errors in the system and recommending changes to increase the accuracy.

Wilkie told the ombudsman in a letter that a whistleblower claimed serious errors remained in the system.

Andrew Wilkie has called for an end to the robo-debt program (AAP Image/Lukas Coch)

"One of the key issues raised by the whistleblower is that people who provide payslips instead of bank statements may incur a higher debt because payslips provide a person's gross income whereas bank statements provide net income," Wilkie wrote.

"Moreover, I have also been told that another key issue with the system is duplicate or triplicate debts that occur because one employer has been recorded under several different names... if these two different names are entered into the computer system then the income is duplicated and there is no mechanism for cross-checking other than manually, which I am told is only undertaken on an irregular basis."

In a response letter dated June 12, the ombudsman replied that "I have decided to investigate your complaint" and asked for further information.

"The system is a serious failure of administration and proper process, and the Federal Government has so far been blind to criticism," Wilkie said in a statement.

"The fact is that the robo-debt system should have been shut down a long time ago. But instead the Government has continued to let it loose on everyday Australians, saddling them with nonsensical and often incorrect debts sometimes in the tens of thousands of dollars."

“The fact that the Ombudsman has now seen fit to investigate the matter again is proof that the robo-debt program is deeply flawed and must be shut down and replaced with one that is timely, accurate and fair."