The government is under mounting pressure to halt its punitive welfare compliance system and the technology automating it after the Commonwealth Ombudsman confirmed unlawful support payment cancellations.
Commonwealth Ombudsman Iain Anderson’s report published on Wednesday found more than 1,000 jobseekers’ payments had been incorrectly cancelled when legislative changes were not reflected in processes or the automated computer systems.
The actions of the Department of Employment and Workplace Relations (DEWR) and Services Australia were “contrary to the law”, the Ombudsman found, and may have had a “catastrophic” impact on vulnerable Australians.
The report also reveals for the first time that DEWR failed to develop a safeguard required under legislation for automated technologies.
Under the Coalition-era targeted compliance framework, jobseekers with capacity to work must complete mutual obligations to receive fortnightly sub-poverty line support payments.
Failure to meet mutual obligations like attending appointments and applying for jobs can result in demerit points that push jobseekers into a “penalty zone” that leads to payment suspensions, reductions and cancellations.
The TCF is underpinned by a complex IT system that automates many of these processes across two agencies and a network of private employment service providers.
Despite regular assurance activities, DEWR has overlooked at least three IT defects that incorrectly pushed jobseekers into the TCF’s penalty zone and kept them there longer than should have been allowed.
DEWR has been forced to repay more than $1.2 million to 1,280 people that were incorrectly penalised because of these bugs since 2018.
As revealed by InnovationAus.com, the technology continues to malfunction, despite DEWR saying the known bugs have been rectified.
An external review of the systems by Deloitte commissioned by DEWR to provide assurance about the TCF and underlying technology is with Employment Minister Amanda Rishworth but it is unclear if it will be released.
According to the Ombudsman’s new report, it shows the TCF technology has become “increasingly unstable, with volatility directly impacting compliance function operation and significantly increasing the propensity of the system to deliver unintended results, including flawed determinations and outcomes for job seekers”.
“The [Deloitte] Review found that the computer system’s logic was not aligned to the TCF’s policy and legislative intent, and that current practices risk generating unlawful outcomes.”
On top of the technology bugs and a more fundamental issue is that key social security law changes from 2022 have not been reflected in the TCF. The changes required decision makers to give more regard to an individual’s circumstances before reducing or cancelling payments.
The amendments meant even if a jobseeker did not have a reasonable excuse for a mutual obligation failure, the decision maker still had discretion not to cancel the payments and must consider it.
The Ombudsman found the key change was not operationalised and the discretion was not being exercised. When reasonable excuses were not recorded payments were being automatically cancelled between 2022 and 2024.
DEWR was alerted to the error as early as September 2023 by external legal advisers advising on a separate issue. It took another 10 months for the department to pause cancellations in July 2024 and dozens of incorrect cancellations still occurred after the pause.
DEWR had draft advice about the risk of acting contrary to the law in March 2024 and the Ombudsman said it ought to have acted without delay at that point.
“Instead, against the interests of those affected, DEWR chose to continue the status quo. It appears DEWR chose to pass the risk of the consequences for cancellation decisions to job seekers rather than assuming the risk for itself,” the Ombudsman found.
The Commonwealth Ombudsman said the series of failures was particularly concerning because of the warnings about the TCF since its inception and the inherent risks of automating income support decisions.
“These issues had consistently been raised by advocacy groups and other stakeholders, including the likely disproportionate impact of automated processes on the most vulnerable job seekers,” the report said.
Unfinished automation safeguard
Aware of the risks at the time the legislation passed, the Parliament added a requirement that the DEWR Secretary establish a Digital Protections Framework to ensure protections and assurance in the digital channels.
DEWR did not do this the Ombudsman found, with the department saying it paused work on a Digital Protections Framework in 2023 to avoid it being inconsistent with whole of government reforms to automated decision-making.
The Ombudsman found this an unsatisfactory excuse.
“We do not consider a delay of over 3 years, coupled with an indefinite commitment to future action, is reasonable. It does not satisfy the legislative requirement in the SPROM Act that the Secretary establish the [Digital Protection Framework],” the report said.
DEWR has agreed to determine a Digital Protection Framework in accepting all seven of the Ombudsman’s recommendations.
The Ombudsman is now conducting a second inquiry into the decisions, the role of private employment service providers in the process and the two agencies’ remediation strategies.
DEWR received the assurance review from Deloitte in June but is still conducting an internal legal review.
Both DEWR and Services Australia have agreed to all the Ombudsman’s recommendations in the meantime, including maintain a pause on cancellations and developing the Digital Protection Framework.
But advocates say it is now clearer than ever that the TCF must be dismantled.
“This report confirms serious, systematic and repeated failings in one of the most important functions of government – providing a safety net for people doing it toughest in our society,” Australian Council of Social Service CEO Cassandra Goldie said.
Antipoverty Centre spokesperson and jobseeker recipient Kay Coonan said the Ombudsman’s findings are the “tip of the iceberg”.
“Like Robodebt, the “mutual” obligations system causes immense distress and hardship to hundreds of thousands of the poorest people across the continent,” Mr Coonan said.
“The community expects the government to ensure people who need a Centrelink payment can survive and thrive, not spend billions a year on finding ways to cut our payments while lining the pockets of grifters who run outsourced (un)employment services.”
Employment minister Amanda Rishworth said she is “reassured” that DEWR and Services Australia have accepted all seven of the Ombudsman’s recommendations and she expects them to be implemented in a “timely manner”.
“The report reinforces that when legislative changes are made, it is essential the processes and systems that agencies employ to deliver services reflect the legislation,” Ms Rishworth said in a statement.
“The government understands the importance of ensuring government systems operate effectively, particularly when interacting with vulnerable people.”
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