Centrelink’s new automated system to claw back overpayments has come under fire amid growing concerns that people are being incorrectly accused of owing thousands of dollars.
Welfare recipients have described receiving automated debt letters over the Christmas and New Year period, prompting condemnation from the crossbench and the opposition.
Labor said it wants a pause on the system, which sends out an online letter after using tax office records to determine whether a person has incorrectly reported their income to Centrelink.
“Many former and current Centrelink customers are being sent threatening letters demanding payment of debts – which they do not in fact owe,” Labor’s acting spokeswoman for human services Louise Pratt said.
The automated debt recovery is part of the federal government’s welfare crackdown announced earlier this month and included in the mid-year budget update.
The government said the new initiative was allowing it to retrieve $4.5 million in excess Centrelink payments every day.
But the system has come under fire since the announcement, with independent MP Andrew Wilkie calling for an investigation.
Before the new system was introduced, Centrelink staff would check records manually and then contact claimants via phone or letter.
One welfare recipient told The New Daily on Wednesday she was required to clarify her earnings to Centrelink after receiving an online letter in the lead-up to Christmas.
The letter, seen by The New Daily, said that the woman would owe a debt, which could include a “10 per cent recovery fee”, if she did not provide proof she had correctly reported her earnings in 2014.
“When I got this letter I was very worried,” said the woman, who asked not to be named.
“The information they sent was incorrect and [they] basically got me to do their work to prove I didn’t owe a cent.”
A spokesman for the Department of Human Services said in a statement the department was “confident in the online compliance system”.
“Over 70 per cent of people who received an online compliance letter since September this year have completely resolved the matter,” he said.
RMIT University academic Dr Kay Cook said the automated system placed an unfair onus on welfare recipients, of which many were already vulnerable.
“It’s setting up a David versus Goliath situation where people need to take on the federal government to remedy the situation,” Dr Cook told The New Daily.
“For people in the benefits system, who are the most vulnerable, the balance of power in that and the responsibility for correct payments is completely wrong.
“It could push people over the edge.”
Valerie Farfalla of the Australian Unemployed Workers Union urged people to seek advice from welfare groups or legal aid centres.
“Some of them have been paying debts that they may not even owe,” she told The New Daily.
“The people who have called us have been crying. They’re saying, ‘We don’t know what they’re talking about.'”
Human Services minister Alan Tudge has previously said the crackdown was aimed at ensure “people get what they are entitled to”.
“And to crack down hard when people deliberately defraud the system,” he said.
The government hoped the new automated system would add an extra $4 billion to the budget bottom line.