Centrelink outsources debt collection amid $1.2 billion robodebt scandal

Centrelink’s debts have been outsourced to agencies who will compete with each other to chase and collect the debts. (Photo by Matt King/Getty Images)

Experts fear the lessons of the disastrous robodebt program have already been forgotten, as documents reveal that Centrelink outsources debt collection to three different agencies.

Tender documents show that these agencies will be tasked with collecting debts from Australians – and will compete for it.

Debt collection has been linked to performance, meaning agencies that collect more will earn more work from Centrelink, while those that collect less will be penalized.

“Failure to meet performance targets may result in penalties in the form of a reduction in the volume of future debt referred,” says Services Australia tender documents revealed by ABC.

“If the [contracted debt collection agency] is unable to achieve … improvement in the next quarter, its Debt Referral Volume will be adjusted downward by 5% of its existing Debt Referral Volume.

“This five percent will be directed to the top performers [agency] of the previous two quarters.

Although Centrelink does most of its own debt collection, 6% of it ($105 million out of $1.75 billion) was outsourced to outside agencies.

Unions and academics have been taken aback by the government’s approach to outsourcing debt collection, pointing to the failed robodebt system, which has seen computer algorithms flag debts with welfare recipients who were often false, now has the Commonwealth in the midst of a $1.2 billion settlement. .

Victims of Robodebt were told they owed thousands, even tens of thousands of dollars in some cases, and critics said the policy contributed to self-harm and suicide.

In February 2019, Cheat J Hack revealed more than 2,000 had died after receiving a robotic debt notice.

In mid-November this year a class action lawsuit was settled between the Commonwealth and 400,000 Australians who saw them compensated $112 million for inaccurate robotic debts.

And in late May, the government revealed it was reimbursing $721 million to Australians who had been charged with robodebts.

Elise Klein, a lecturer in public policy at the Australian National University, has done extensive research on the robodebt system and is concerned about the link between debt collection and performance.

“There’s almost an encouragement that you see there around performing and chasing people,” she said. ABC.

“When there are performance metrics, people take shortcuts and that can encourage unscrupulous behavior…because they’re trying to maintain a level of performance.”

According to the tender documents, there do not appear to be any penalties for debt collection agencies that break the law.

The head of the Department of Human Services, Kathryn Campbell, told a Senate inquiry in late July that she “do[es] not accepting that people have died because of robotic debt”.

In a statement, Services Australia chief executive Hank Jongen said the agency was legally bound to collect social debts.

‘The use of external debt collectors is not new and has been part of Services Australia’s process of recovering taxpayers’ money since the mid-1990s,’ he said. ABC.

“The current tendering process simply ensures that we will continue to have a panel of (external debt collectors) in place to provide these services when the current panel arrangement comes to an end.”

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