Yahoo Finance Centrelink outsources debt collection amid $1.2bn robodebt scandal
Experts are fearing that lessons from the disastrous robodebt scheme have already been forgotten as documents reveal Centrelink is outsourcing debt collection to three different agencies.
Tender documents show that these agencies will be tasked with collecting debts from Australians – and compete with one another for it.
Debt collection has been tied to performance, meaning that the agencies that collect more will win more work from Centrelink, while those who collect less will be penalised.
“Failure to meet performance targets may result in penalties in the form of a reduction in the volume of future debts referred,” states Services Australia tender documents revealed by ABC.
“If the [contracted debt collection agency] is unable to achieve ... improvement during the subsequent quarter they will have their debt referral volume adjusted down by five per cent of their existing referral volume.
“This five per cent will be directed to the best performing [agency] from the previous two quarters.”
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While Centrelink performs most of its own debt collection, 6 per cent of it ($105 million of $1.75 billion) has been contracted to external agencies.
Unions and academics have been taken aback by the Government’s approach to outsource debt collection, pointing out that the failed robodebt scheme, which saw computer algorithms flagging debts with welfare recipients that were often false, now has the Commonwealth in the midst of a $1.2 billion settlement.
Robodebt victims were informed they owed thousands, or tens of thousands of dollars in some cases, and critics have said the policy contributed to self-harm and suicide.
In February 2019, Triple J Hack revealed more than 2,000 had died after receiving a robo-debt notice.
In mid-November this year, a class action was settled between the Commonwealth and 400,000 Aussies that saw them compensated $112 million over inaccurate robodebts.
And in late May, the Government revealed it was issuing $721 million in refunds to Australians who had been charged robodebts.
Australian National University public policy senior lecturer Elise Klein has done extensive research on the robodebt scheme and is concerned about the link between debt collection and performance.
“There's an almost encouragement that you're seeing there around performance and going after people,” she told ABC.
“When there are performance measures, people cut corners and that can encourage unscrupulous behaviour … because they're trying to maintain a level of performance.”
According to the tender documents, there doesn’t seem to be penalties for debt collection agencies that break the law.
Department of Social Services head Kathryn Campbell told a Senate inquiry in late July she “do[es] not accept that people have died over robodebt”.
In a statement, Services Australia general manager Hank Jongen said the agency was legally obligated to collect social welfare debts.
“The use of external collection agents is not new, and has been part of Services Australia's process for recovering taxpayer money since the mid-1990s,” he told ABC.
“The current request for tender process simply ensures we will continue to have a panel of (external debt collectors) in place to deliver these services when the current panel arrangement ends.”
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