Gov’t blind to Centrelink farce

James Riley
Editorial Director

The federal government continues to back its highly controversial automated Centrelink debt recovery system despite heavy criticism and digital transformation heavyweight Paul Shetler labelling it “appalling”.

The newly automated system cross-checks information provided to the ATO with information provided by welfare recipients to Centrelink, and sends out 20,000 letters per week to individuals who have received payments in the last six years after identifying discrepancies.

The system has been heavily criticised for miscalculating this debt information, with the system cross-checking annual ATO data with fortnightly Centrelink payments, and targeting people who don’t actually owe any money.

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But Human Services General Manager Hank Jongen says the department is “confident” in the online compliance system.

“If there is a difference in the income recorded by the ATO compared to the income reported to Centrelink for a particular time period, the department is obliged to seek clarification of the difference in data,” Mr Jongen told in a statement.

“This is part of ensuring the integrity of the welfare system. If someone receives benefits to which they are not entitled, the department is required by law to recover the money.”

Mr Jongen says that about 20 per cent of Australians receiving these discrepancies notices do not actually owe any money.

This means that of the 169,000 Australians that have received letters so far, 33,800 do not have a Centrelink debt. That’s 4000 incorrect letters sent out each week.

“Since July, 169,000 reviews have been completed. In approximately 80 per cent of cases people have a debt owing to the Commonwealth. The remaining 20 per cent are instances where the customers have resolved the matter by providing updated information to clarify the difference in report income,” he says.

“The Department is committed to ensure that people get what they are entitled to, nothing more, nothing less”

But the process and this rate of failure has been panned by former Digital Transformation Office chief Paul Shetler, who says Centrelink would have already been shut down for fraud if it were a privately-run company.

“If it was operating in any sort of free market [it] would go out of business, and if it didn’t go out of business, it would be shut down by regulators for fraud,” Mr Shetler told ABC Radio.

Despite the government saying it is working “incredibly well”, Mr Shetler has labelled it a clear failure.

“I certainly couldn’t say why the government is saying it’s working well when it’s manifestly not working well,” Mr Shetler said. “I think you just have to look at it and say that it’s not. It’s quite clear that it’s not working well.”

Part of the problem, he says, is that the system has no manual oversight and is cross-checking information from different agencies that doesn’t match.

“The problem with this one was quite simply – you had an algorithm which, quite frankly, wasn’t working properly, that was trying to match really disparate data sets,” Mr Shetler said.

“You’re trying to match fortnightly data with yearly data and you’re trying to extrapolate on the results. And it fails.”

Shadow Minister for Human Services Linda Burney has called on the program to be immediately suspended while the Auditor-General investigates.

“Labor absolutely supports measures which effectively recoup wrongly paid welfare,” Ms Burney told “That includes data matching and some automation, but also just using some common sense.

“We do not support accusing honest people of fraud. At a cost of $200 million the government can do better. No minister, no department secretary and no real answers.

“The issue should have been fixed by now. Mistakes happen but allowing this to continue is just plain bad governance.”

Opposition Leader Bill Shorten has also slammed the system, labelling it a “toxic mix of incompetence and cruelty” and a “farce”.

Social Services Minister Christian Porter was unavailable for comment, leaving it to the department to respond to the Paul Shetler commentary.

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