Justin Reads The #notmydebt Centrelink Senate Inquiry Report: Part 4

This series was originally posted to Storify and has been reproduced here after Storify was shut down. Unfortunately a lot of the inline images I originally tweeted have been lost, but you can still get the gist of which paragraphs of the report I’m talking about.

In this episode of Too Long; Justin Read, Justin reads chapter 5 of the #notmydebt Senate inquiry report.

Debt Recovery

The sordid business of how Centrelink extracts cash from vulnerable people.

Chapter 5 time! #tljr

This chapter is about debt recovery, and this starting quote sums it up nicely. #tljr

Where did it go wrong? I have had no answers, and I have to pay the debt. They give you a certain amount of time. They say, ‘Either you have to pay it in full or we can take five per cent of your earnings or you can offer us more.’ They were very friendly about it. They said, ‘Every three months the repayments for that debt will go up from five per cent of your earnings to 15 per cent’—and that’s it: they just take it.

OCI is about shaking down poor people for money. #tljr

DHS don’t dare shake down rich people, because they have scary lawyers. #tljr

DHS wrote it into the contract with Probe Group. #tljr

Of the two external debt collection agencies contracted by the department, Probe Group advised the inquiry that ‘recovery performance’ was one of the KPIs in its contract with the department.

If you’re currently receiving payments from DHS and they decide they want money from you, they just take it. #tljr

If you’re no longer getting payments, they’ll refer you to a debt collector if you “do not engage” with them. #tljr

first is that they have to be a former recipient. We have to not be aware that there is a vulnerability there…They also have to not be engaging with us. Our first point of call is to send them a letter asking them to repay the debt or enter into an arrangement. If they do not engage with us at all, eventually we would refer them to an external collection agency for the purposes of collecting the debt.

We’ve spoken earlier about the relentless mocking of people who talk like that, right? Right. #tljr

Some excellent shade here from the report writer about DHS’ constantly changing story about referrals to debt collectors. #tljr

5.8 The committee notes that the department’s estimate about the proportion of purported debts referred to external debt collection agencies has varied during the committee’s inquiry. On 8 March 2017 the department informed the committee that:

Generally, as part of our broader debt program, about 10 per cent of debts are referred to collection agencies.

5.9 But on 18 May 2017 the department said:

…the department refers around 20 per cent of its debt to external debt collectors.

5.10 The department later provided evidence to the inquiry that of purported debts raised between July 2016 to February 2017, 42 per cent were referred to  external debt collection agencies.

My opinion is that DHS lies a lot. It’s a pattern.

They use a bunch of weasel words to obfuscate and avoid overtly lying, but they lie.

DHS lied. Sure, maybe they’re just incompetent. I reckon they lied. Let’s just cut the bullshit, ok? #tljr

DHS lied to a Senate committee. That is a thing that happened. #tljr

See? They know which debt collector they refer you to for which debt. They know how many there are. #tljr

DHS deliberately exploits people’s ignorance.

Oh gee, I wonder why this is? #tljr

5.16 As noted in Chapter 4, private parties generally need to provide evidence to demonstrate that a debt exists or obtain judgment from a court before a debt is recoverable. In respect of current payment recipients, the department does not need to do either.

DHS doesn’t have to follow the same laws and you and I. #tljr

40% of people with an OCI debt are currently receiving payments from DHS. #tljr

DHS will just straight up start taking your money if it’s easy for them to do.

They take 15% of your benefit to repay the debt by default. That’s a lot for someone on Newstart. #tljr

Why 15%? Why not 5% or 10%? It’s pretty arbitrary. #tljr

This case study is horrifying. Read all of it. #tljr

Case study 5.1—UnitingCare Queensland
This is a client that has come to our service, and shows the vulnerability of a client who does owe a Centrelink debt. This client presented to our service. She is 68 years old. She is on the Centrelink age pension. She lives alone. She has no social or family support. She has no assets, no financial support and no savings. She lives in a remote town, approximately an hour away from Bundaberg—so it is pretty isolated. This client presented to our service. She was very distressed and was having suicide ideation. She had been notified by Centrelink that she was to pay 100 per cent of an $11 000 debt that was generated when she was employed by Queensland Health as a nurse. As this client had no financials means to pay this, being on the age pension and with minimum computer skills, the financial counsellor advocated for this client.

What the financial counsellor had to do in the first instance was connect her with a generalist counsellor because she was suicidal, just to make sure that harm was minimised. She attended those appointments. Then they sat down and investigated the debt. It was her debt; it was a real debt for her. However, as this client was on the age pension, the ability to pay back the $11 000 was a great concern. The other issue that she was having was the online portal. She could not navigate the online portal. She had limited computer skills, so therefore she need to connect with the financial counsellor to understand how to connect with Centrelink.

Centrelink did say that they were going to take a large portion of the client’s fortnightly pension in order to pay off this debt, which caused further distress because she was only just making ends meet. After considerable time, effort, phone calls, letters and advocacy to Centrelink, a debt waiver was put in and it was declined, and all other advocacy by the financial counsellor was unsuccessful. At this stage, the financial counsellor put in a payment plan of $15 per fortnight, which was the absolute maximum this client could afford—and even then it was cutting everything down to a bare minimum. This was deducted from her pension each fortnight. However, every three months the financial counsellor still needs to contact Centrelink to get this arrangement reinstated because, after three months, it automatically falls off and the client is sent another bill asking for the full amount, which causes further trauma to the client.

DHS’ behaviour is probably illegal in Victoria. But proving means taking them to court, and lawyers cost money.

DHS’ recovery actions are probably not even lawful in Victoria. #tljr

Some states have recognised recipients’ reliance upon their payments in law. Under Victorian law, Commonwealth payments cannot be used to satisfy a debt.

Why won’t DHS engage with the Committee? #tljr

The department undertook to provide the committee with details on how many debts had been outsourced to external collection agencies for such small amounts, but at the time of drafting this information had not yet been provided.

Ignore Questions on Notice

This is a pet peeve of mine.

Various agencies are slack when responding to Senate Estimates (or Committee) questions on notice. I spoke to a clerk at Parliament about it a while back, and basically there’s very little consequence to just not responding.

The clerk will politely remind them from time to time, but basically the responses come back whenever the agency feels like it. The date set by the committee for the return of answer you’ll see in the documents isn’t a deadline in any meaningful sense.

Technically the Senate could censure the agency, but that would involve a bunch of tedious process stuff, so it never happens.

There’s effectively no enforcement, which certain agencies exploit. DHS is one such agency.

DHS was super late replying to Questions on Notice on multiple occasions. But they can, because there are no consequences. #tljr

Debt collectors have to abide by various guidelines from ACCC and ASIC. #tljr

But if nobody can verify the debt calculations are correct, how do they know they really have a debt to collect? #tljr

DHS sent 56504 OCI alleged debts to debt collectors. They recalled them all in mid-Feb 2017. #tljr

By the end of February, a total 139,413 debts had been raised. 56,504 is 40.53% of all debts raised.

That’s a) a lot of debts sent to external collectors, and b) a lot to recall all at once.

When asked the reason why the debts were being recalled from external debt collection agencies, the department did not provide specific detail, however responded that is[sic] was ‘part of our service recovery processes.’

“part of our service recovery processes”? Bollocks. You got caught doing the wrong thing. #tljr

DHS can apply a 10% recovery fee if you “refuse or fail to provide information” unless DHS is satisfied you have a “reasonable excuse” #tljr

A recovery fee has been applied to 72.44% of all debts raised (so far). #tljr

DHS May Have Broken The Law

Surprising, I know.

Under social security law, the department is permitted to charge a 10 per cent recovery fee on ‘so much of the debt as arose because the person refused or failed to provide the information’ unless the Secretary is satisfied that the individual had a reasonable excuse.

Applying the recovery fee in this way was probably also against the law. #tljr

The Commonwealth Ombudsman’s Office raised concerns with the department that individuals may have been charged the 10 per cent fee even though they may have had a reasonable excuse.

DHS stopped doing it after getting caught out and yelled at. #tljr

The 10% fee is probably illegal. #tljr

In simple terms: in general, someone would not be entitled to recover more than the debt plus interest until court proceedings were actually issued. It is unlawful, at common law, to charge a penalty because you have not paid on time. A penalty is a payment which has no relationship to the loss that you are suffering as a result of not having the money paid on time.

DHS pays debt collectors on commission. Other departments don’t, like the ATO.#tljr

Let’s be clear: the incentives DHS has put into this system are designed to aggressively get money out of poor people. #tljr

DHS either doesn’t know why it does things, or just lies all the time. #tljr

When asked the reason why the department pays a commission rather than flat-fee to its external debt collection agencies, the department did not provide a specific policy reason except that it ‘has been the long-standing practice.’