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UNLAWFUL: $11.5 million in fines taken from 1 million Aussie bank accounts

·4-min read
Australian police infringement notice, Australian cash. Inset: Revenue NSW logo.
Revenue NSW's process of removing money from people's bank accounts was deemed unlawful. (Sources: Getty, Revenue NSW)

Revenue NSW used automated technology to unlawfully remove money from the bank accounts of people who hadn’t paid fines, with accounts “completely emptied” in some instances.

NSW ombudsman Paul Miller sounded the alarm about the technology in a report tabled to Parliament on Monday, urging government agencies to exercise caution and transparency in how they deployed these technologies.

“My office began to receive a spate of complaints from people - many of them financially vulnerable individuals - who had discovered their bank accounts had been stripped of funds, and sometimes completely emptied,” Miller said.

“Those people were not complaining to us about the use of automation. They didn’t even know about it.”

In the report, Miller noted that some of the people affected were Centrelink recipients, and others had been left unable to afford groceries.

Revenue NSW changes systems but more to be done

Miller said Revenue NSW had taken a “number of steps” to address the ombudsman’s concerns about the practise.

“However, what it did not do – despite our suggestion that it should – is seek expert legal advice on whether the use of the automation process was lawful and in accordance with its powers under the Fines Act,” he said.

“Ultimately, we decided to seek that advice ourselves.”

Legal advice sought by the ombudsman confirmed the office’s suspicion that the practice was unlawful and, in 2019, Revenue NSW changed its processes so decisions to remove money from bank accounts could not be fully automated.

Instead, a Revenue NSW staff member is required to formally authorise the garnishee order after the technology identifies potential actions.

A garnishee order is the forceful removal of money from a bank account or wages.

Revenue NSW had earlier adopted a “minimum protected balance”, which meant it must leave at least $523.10 in a person’s bank account, and installed a new hardship policy.

However, Miller noted these changes did not completely address the ombudsman’s legal concerns.

In particular, under the Fines Act, the power to make a garnishee order lies with the Commissioner of Fines Administration, delegate or authorised person.

The legal advice found that between 2016 and 2019, Revenue NSW’s machine technology was unlawful because no authorised person was involved in the initial process of deciding to issue a garnishee order.

And while the decision to include a Revenue NSW person in the garnishee order process was helpful, legal counsel still had concerns about whether the person authorising the removal was exercising their power correctly.

Average penalty removed around $500

In total, Revenue NSW recovered $11.5 million from garnishee orders in 2019—2020 a significant increased on the 2012-2013 figure of $10 million. The average recovery amount in 2019-2020 was $500.

Over the 2019-20 financial year, Revenue NSW issued more than 1 million bank garnishee orders and 8,991 employer garnishee orders.

It also sent nearly 20,000 fines for external debt-collection referral and issued nearly 13,000 property-seizure orders.

This reflects a significant increase in the number of garnishee orders issued. In the 2010-2011 financial year, Revenue NSW issued just 6,905 orders and by 2018-2019, it was issuing more than 1.6 million garnishee orders. 

"Reasons for this include that Garnishee Orders issued to the big four banks tend to be a successful means of recovering fine debt," the ombudsman said in the report. 

"Garnishee Orders to those banks are, through straight-through processing, very cheap to administer and they allow for an iterative approach to be taken to identify an account held by the relevant fine defaulter if their account details are not already known."

The ombudsman was also unaware of how many other NSW government agencies were using similar technology.

“We are concerned that other agencies may also be designing and implementing machine technologies without appreciating all the risks, without transparency, and without getting appropriate legal advice’,” Miller said.

The ombudsman called on government agencies to ensure they included legal experts when building machine-technology solutions, and acted in ways that were transparent.

“Greater visibility is not a panacea to all of the potential issues that can arise when government adopts machine technology. But it is an essential starting point.”

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