People who owe money to welfare agencies will have debts snatched from their tax returns while Centrelink and the Tax Office will get unprecedented instant electronic snooping powers over welfare recipients’ financial affairs under the Coalition’s latest policy to stamp out social security rorts.
Estimated to boost the Budget bottom line by $1.1 billion, final pre-election costings released by Treasurer Scott Morrison on Tuesday reveal the promised welfare crackdown will include adoption of “real time monitoring and real-time data analysis of online transactions to immediately address potential non-compliance concerns.”
The core of the Coalition’s plan is the claw back of a $3.5 billion standing debt “due to fraud, non-compliance or misreporting in the welfare system” by applying tactics similar to those used by the Child Support Agency (CSA) to force deadbeat parents to pay up.
“A new and important recovery initiative which is to be part of the Coalition’s overall strategy is to expand tax garnishing to recover unpaid welfare debt,” the policy says.
“Existing processes already ensure that debts are recovered from former welfare recipients who are not in a repayment arrangement by garnishing their tax return and now this process will be expanded to current welfare recipients with debts owing regardless of whether or not they are in a repayment arrangement.”
Put more simply, that means welfare agencies chasing debts will simply take the money directly from debtors’ tax returns rather than trying to make repayment arrangements with individuals.
Employers spared collection
However the new policy has pulled up short of directly docking the wages of welfare debtors, an enforcement tactic Child Support authorities often use to intercept cash flowing from employers before it hits debtors’ bank accounts.
While hitting wages would clearly be a highly effective option, it is understood many large employers are strongly against the move because of the administrative burden and withholding obligations it would foist on them.
The latest crackdown policy is a significant policy departure from the decades-old system of chasing down government debts and overpayments by trying to negotiate gradual payment plans with welfare debtors and then heading to the courts.
Social policy advocates have also long been critical of Australia’s convoluted system of welfare payments because of the heavy burden of complex manual administration and self-reporting incumbent on benefit recipients and the potential for unintended mistakes and potential for fraud.
The government now estimates that around $870 million is owed to it from former welfare recipients, a debt it already chases down using tax return garnishing.
The policy does not say what agency would get priority if debts are owed to both welfare agencies and the Tax Office.
Electronic fraud profiling and data mining intensifies
Aside from the unashamed cash snatch, a massive profiling, data matching and cross checking push is being proposed by the Coalition, all enabled by automated processes that can now trawl through financial and welfare records held by agencies.
The measures include a “historical analysis of social services data to apply risk management techniques to better manage and prevent non-compliance by welfare recipients” and a bid to “identify and manage welfare recipients most at risk of non-compliance.”
Claimants attracting attention will also be helped through “faster and more targeted intervention to prompt welfare recipients to address potential non-compliance behaviour, which will minimise the risk of payments being reduced or cancelled.”
Despite a pledge to “require more frequent and more stringent self-reporting” the Coalition argues that the new measures “will make it simpler and less time consuming for welfare recipients to meet their obligations.”
“This will improve the efficacy of the social welfare system, making it better for recipients, less burdensome, less susceptible to fraud and inadvertent overpayments, and more sustainable,” the policy says.
Shrinking pool of funds?
One area of substantial ambiguity in the Coalition’s welfare debt policy is the financial impact of a potential move by the ATO to do away with tax returns for people with simple tax affairs.
In August 2015 ATO Chief Information Officer Janet King publicly floated the possibility of her agency creating a “personalised tax rate” that took account of real-time financial information from customers, including welfare information, and made adjustments on the fly.
If implemented, the system could potentially negate the need for tax returns because straightforward PAYG customers would always be up to date.
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