A Centrelink glitch that the Government knew about for more than three years led to more than 3400 incorrectly applied financial penalties.
A freedom of information request has revealed that a programming error caused more than 3,400 financial penalties to be incorrectly applied to around 1,300 Centrelink payment recipients.
According to the released documents, the Australian Government knew about the Centrelink glitch for more than three years but chose not to pause the faulty component of the ‘mutual obligations’ system to protect the profits of private companies. Since the issue was first identified, ten of the people affected have died. The government has not provided any information about whether their deaths were related to being hit with financial penalties and payment cancellations.
How does the employment services system work?
Once upon a time, the employment services system was a government run program known as the Commonwealth Employment Service (CES). The CES was originally designed to identify labour shortages in the economy and find work for unemployed people. It wasn’t until 1994 that the first versions of ‘mutual obligations’ were implemented, which forced people to undertake often pointless and demeaning tasks in order to continue to receive an unemployment payment.
This heralded the shift from what was once a system that helped to find work for people who needed it, to the system we have today. One in which unemployed people are blamed for their own circumstances and constantly threatened with the loss of their payment.
In 1998, the Commonwealth Employment Service was largely privatised, leading to the growth of private ‘employment service providers’, organisations which are contracted by the Australian Government to ‘manage’ income support payment recipients and to ensure that they meet their ‘mutual obligations’ by doing things like very low paid ‘work for the dole’.
A recent inquiry into the state of the privatised system described using ‘mutual obligations’ to ‘engage’ people with the employment services system as using a “nuclear bomb to kill a mosquito”.
What was the error?
In 2018, the previous Australian Government introduced a number of changes to the employment services system. One of these changes was the implementation of the ‘Targeted Compliance Framework’.
This system has made the already overbearing mutual obligations even harsher by adding a complicated set of automated processes that penalises income support recipients who fail to meet mutual obligations requirements. The framework identifies recipients who have repeatedly missed mutual obligations and automatically places them in a ‘penalty zone’ where they face loss of fortnightly payments or the cancellation of their payment altogether.
While this system is already bad enough, the glitch caused the penalisation and cancellation of payments for people in the ‘penalty zone’ even if they were not eligible for these penalties. This means that people who were already doing it tough were cut off from payments they would have relied on to pay for rent, energy bills or medication.
What was done about it?
The glitch was first identified in April 2020 by Services Australia – the department that manages the employment services system. However, the documents released under freedom of information show that the first attempted fix was not implemented until October 2023, more than three years later. This fix also created a second problem that affected another 73 people by reducing or cutting off their payments.
While the problem could have been mitigated by pausing or ending mutual obligations including the targeted compliance framework, the department recommended against this option for fear that it would “have significant implications on providers (both in terms of payments (viability) and interactions with the performance framework)”. In other words, the department was worried that the private companies contracted to oversee mutual obligations would lose money and be unable to track their performance metrics if the system was paused.
If only such consideration was given to the people who were unfairly hit with payment cancellations.
The Minister who currently oversees the department has since asked the Commonwealth Ombudsman to investigate the implementation of the targeted compliance framework, but not to review the overall quality of the framework itself or the system of mutual obligations in general.
So, despite a government inquiry, a Treasury White Paper and numerous unions and non-government organisations all finding that the current system is cruel and ineffective, neither major party is willing to get rid of it.
