Labor's debt bombshell after court ruling

Yahoo

7 days ago

Debt recovery for overpaid welfare checks is set to resume following a landmark Federal Court ruling, but Labor is reportedly considering a bombshell debt forgiveness measure that would stop the collection.
The Federal Court handed down its decision on Tuesday that the method the government had been using since 2020 to calculate and collect debt was valid.
The Department of Social Services (DSS) had paused debt repatriation for social security employment checks received before 2020 as it awaited the key court judgment, but the department secretary Michael Lye said the court decision affirmed his 'legal position' and assessment activities would resume.
'Now there is certainty to the legal position, assessment activities will recommence in line with the court's decision and my obligations as secretary,' Mr Lye said.
The department could now reassess the debt of up to 160,000 people as far back as 1979, reportedly worth $1.1bn.
But the Australian Financial Review reported that government officials were aware that Social Services Minister Tanya Plibersek was considering options on the overpayments, going as far as to forgive the debts.
Greens questioning in senate estimates earlier this year revealed that Services Australia was chasing billions of dollars in decades-old debt.
Data showed that up to $4.9bn in unpaid debts were being pursued from more than 829,000 customers.
Ms Plibersek did not comment beyond a joint statement released with Katy Gallagher on Tuesday.
'The Albanese Labor government acknowledges the decision of the Full Court of the Federal Court in Matthew Chaplin v Secretary, Department of Social Services,' the statement read.
'Income apportionment is a historical practice which ran from the early 1990s to 2020. It is not used today. It has never been used by the Albanese Labor government.
'Income apportionment was a method used by Centrelink to calculate debts in circumstances where they did not have detailed information about days and hours worked.
'This methodology reduced unreasonable reporting burdens and paperwork on welfare recipients and was a genuine misinterpretation of the law.
'The Chaplin decision has reconfirmed that the process of income apportionment was not lawful. It also confirmed that the process used to calculate debt since 2020 is valid.
'The government will now evaluate its impact and develop a suitable response.'
Greens social services spokeswoman Penny Allman-Payne criticised the government for 'aggressively targeting income support recipients with cruel and ridiculous debt notices based on dubious data matching methods'.
'Income support payments are already below the poverty line, meaning thousands of income support recipients are making tough choices between skipping meals or paying the rent,' she said.
'The last thing they need is the government hounding them to disprove a dodgy debt notice, sometimes from decades ago.
'The Greens will be urging Labor to act to protect welfare recipients and finally put the Robodebt era behind us.'