Centrelink is threatening dozens of Australians with bad credit ratings and legal action if they refuse to sign up to payment plans to repay thousands of dollars in questionable debt.

The government agency has been under fire in recent days amid claims hundreds of Australians have been issued sizable debt notices they dispute.

More than 60 people contacted nine.com.au today claiming they were being hounded by Centrelink. Many shared horror stories of being "pressured" and left "scared" after receiving letters and SMSs demanding money.

Amounts of “debt” sought by Centrelink ranged from $800 to upwards of $25,000 – a combined total of more than $200,000 among those who contacted nine.com.au.

Many who queried the repayment demands were told by Centrelink they would have to sign up to a payment plan even if their claim was under review, in the hope of a refund at a later time.

One individual who said he contacted Centrelink to ask for a review of his claim alleges he was threatened with a "black mark against his name" if he didn't pay up.

"I was advised by the Centrelink debt recovery team that if I don't set up a payment scheme it will go to debt collectors … and I won't be able to get a home loan because of it," he said.

"This has forced me to set up a debt recovery payment to Centrelink as that is the last thing I need. I have been told that they are so inundated that it could be up to a month or more until someone qualified is able to look at my case through the review process."

A single mum, who was sent a debt letter for more than $2000 in mid-December and told she has to pay the amount in full by mid-January, has signed up for the payment plan as she feels she has no other choice.

A former TAFE student who is challenging his claim said debt collecting company The Probe Group pressed him on whether he would pay. Probe gave him two weeks before they would send his case back to Centrelink.

He claims he was told if this was to happen, Centrelink "may take me to court for the debt, or garnish my wages until it is paid off".

“I agreed to nothing until the debt was proven. So I have two weeks to respond before they send it back to Centrelink who may take me to court for the debt.”

A mother of a young son, who was slugged with owing $5400 from Youth Allowance he claimed back in 2014, claims she was told she could appeal if she provided the evidence of her son's previous work group certificates by January 7.

In response to direct questions on the allegations levelled against Centrelink, representatives of the government agency provided nine.com.au with a written statement.

It said Centrelink was "confident in the online compliance system, and associated checking process that we go through with recipients".

"The online compliance intervention system doesn’t automate debt recovery – it is a system which automates part of the standard compliance review process. While the new online compliance system automates part of this process, it does not change how income is assessed or how debts are calculated - it is an easy way to confirm details and resolve any outstanding matters.

"When data differences are detected, the system generates a letter (this is not a debt letter) advising people of the difference and asking them to either confirm or update their details online using myGov. These are not debt letters and at this stage of the process no debt has been raised."

The statement continued by saying 72 percent of people who received an online compliance letter since September 2016 have completely resolved the matter.

"Only 2.2 per cent of customers were requested to supply supporting documentation, which means 97.8 per cent of customers did not need to supply supporting documentation," the statement said.

"The department is determined to ensure that people get what they are entitled to, nothing more, nothing less."

The government has continued to deny any problem with its automated compliance system, which relies on data-matching income reported to Centrelink with tax office records.

It confirmed it developed the data matching software in-house, rather than buying it from a private vendor.

The software has been used for data-matching operations for several years, raising questions about what the government knew of its potential flaws before using it for such high-volume debt recovery.

“As with all new software, rigorous testing has been carried out by the department to ensure the system is working as intended,” department general manager Hank Jongen, effectively head of communications, said.

The department said individuals were given ample opportunity to contest the discrepancies, and that 80% of those who received a letter had paid the money back.

Shetler said a 20% error rate would be unacceptable in any other industry.

“All I can say is, if they were a commercial company, you would go out of business, with a 20% failure rate, a known 20% failure rate, you would go out of business, any other kind of matching service would,” he said.

“Come on. Could you imagine the stock exchange doing that? Could you imagine Amazon, Apple or a bank doing that? An insurance company doing that?

“It’s just unfathomable, and yet government thinks it can do that.

“This is the real problem. Government needs to be less arrogant. You’ve got senior public servants there who are drawing private sector salaries, but they’re not holding themselves to the same standard.”

Shetler identified a series of problems that could be immediately addressed. He said it should start with building capability and upskilling across all areas of the public service.

A “radical” upgrade of IT skills was needed, he said, starting from the top levels of the public service. That would include ensuring only technically proficient executives were placed in senior IT leadership roles. Public servants should be increasingly placed in front of real users, so they can see the impacts of their decisions and systems on the ground.

Shetler said the current Centrelink situation had exposed a gap between government policy and service delivery. That divergence must be addressed, he said.

“Policy is not just something you dream up on a piece of paper,” he said. “It’s actually also the results that you see on the streets.”

it's ludicrous that the govt. doesn't temporarily put a stop to these letters and iron out the bugs in the system. It's letting it's ego get in the way of common sense. They're gonna lose a lot of votes with this crap.

John Smith wrote on Jan 6^th, 2017 at 8:32am:



What about Jobs & Growth?

Instead of kicking people without a job in the face -
find them a job.

Turnbull is hopeless.

John Smith wrote on Jan 6^th, 2017 at 8:41am:



Turnbull hasn't got a clue what to do.