Australian government hires private debt collectors to track down welfare recipients

Less than a month after the federal government agreed to a $ 1.2 billion settlement on the illegal “robodebt” program, it launched a new tender from private collection agents to track down beneficiaries. social assistance for allegedly receiving overpayments.

The new contracts will include several provisions indicating that the ministry intends to take a more aggressive approach to debt collection.

The welfare queue outside a Centrelink office in Sydney last March (Photo: WSWS)

The files will initially be divided equally between a panel of three companies. Their performance will be expected to be assessed against a “balanced scorecard” comprising “debt collection performance, customer satisfaction levels, adherence to agreed service levels and contractual arrangements; and quality operational results.

In fact, the tender documents make it clear that financial performance – the percentage of debts collected – will be the primary determinant of the number of cases referred to each company after the first quarterly review.

The documents state: “Financial performance is essential to achieve a level of performance that will ensure a high level of performance. [company’s] share of reference volumes is maintained or increased.

While other government agencies, such as the Australian Tax Office, pay a fixed fee to private collection agents, Services Australia (formerly the Department of Human Services) will pay a commission rate, creating a strong incentive for businesses to intimidating customers into paying their alleged debts in full, rather than contesting debts or negotiating partial payments.

Previously, external collectors had 180 days to collect debts. Under the new tender, they will only have 56 days, forcing them to pursue repayments more aggressively. The shortened time frame will also put deemed debtors under increased pressure to comply rather than attempting to make their case.

In an effort to quell public criticism of the program, companies will be required to notify the department “within an hour” of a client that they will contact the media or MPs.

While Services Australia has hired external debt collectors in the past, over 90% of debts have been handled by the agency itself. On the other hand, 43% of debts contracted under the illegal “robodebt” program between July 2016 and March 2017 were entrusted to private entrepreneurs.

Under the punitive requirements of Centrelink, the social arm of Services Australia, people receiving payments must report their income every two weeks. The already pitiful payments start to be reduced if workers earn more than $ 300 per fortnight from other sources.

The “robodebt” program was introduced in mid-2016 as part of an aggressive move to recover “overpayments” from welfare recipients who allegedly under-reported their income to Centrelink. The automated process compared the Centrelink records with the Australian Tax Office “averaged income” data.

Before its shutdown in November 2019, around 900,000 “robodebt” notices were issued. Those who received the notices were threatened with penalties and jail time if they did not pay the fraudulent debts.

In many cases, the alleged overpayments had occurred years earlier, making it virtually impossible for workers to refute the agency’s claims.

To compound the problem, it was extremely difficult to contact Centrelink to dispute the reviews. In 2017-2018, approximately 50 million calls to the agency were received with a busy signal. The officially reported average wait time of just under 16 minutes is a vast underestimate, as the clock is reset every time a call is transferred, and “abandoned calls” – in which the caller hangs up in frustration without speaking to an operator – are not counted.

This is the direct result of decades of civil service job cuts under successive Labor and Liberal-National governments, as well as the privatization and outsourcing of many aspects of Centrelink’s operations.

Labor has publicly criticized ‘robodebt’ for the purpose of exploiting public opposition to the regime for political gain, but in fact the practice of issuing debt notices on the basis of ‘income averaging And “data matching” was instituted under the Gillard regime. Labor government in 2011.

Although the current Liberal-National government was forced to admit in November last year that the entire “robodebt” regime was illegal, by August 2020 only 80% of the debts issued had been repaid. Even after the class action victory last month, some of those targeted by the program will have to wait until at least February 2021 to be compensated.

While Australia has so far avoided the horrific COVID-19 infection and death rates seen internationally, the country has not escaped the economic fallout from the global pandemic.

Between December 2019 and May 2020, the number of Australians receiving unemployment and other income benefits through Centrelink doubled from around 820,000 to 1,640,000. The official unemployment rate (significantly underestimated ) increase from 6.9 percent in September to 7 percent in October, and remains at a level that has not been consistently observed for more than two decades.

Those numbers are almost certainly expected to increase in April next year with the shutdown of JobKeeper, which currently subsidizes the wages of around 1.5 million workers.

Despite the current economic crisis and the continuing risk of contracting COVID-19, strict income and asset testing, as well as “mutual obligation” requirements for welfare recipients to come for interviews hiring and / or unpaid work, have been reintroduced.

Between September 28 and November 30, 250,112 payments were suspended by Centrelink for failure to meet “mutual obligation” requirements.

Centrelink’s debts were “suspended” in April, but have now resumed, and the agency will begin demanding payment in February.

The terms of the new external debt collection contracts illustrate efforts by Australia’s ruling elite and political representatives to claw back part of the social benefits paid to the country’s most vulnerable residents.

Although the new developments are an escalation, there is nothing new about the approach. For decades Labor and Liberal-National governments have forced the unemployed, the disabled and the elderly to endure dehumanizing treatment and relentless bureaucracy in exchange for pitiful welfare payments as low as $ 40 a day.

The continued assault on social assistance recipients, along with cuts to education, health, public transport and all forms of social spending, are part of a wider campaign to cut taxes on people. rich and forcing workers into low-paid and insecure jobs.

Naomi C. Amerson