Tens of thousands of seniors are likely to be hit with new queries over their pension payments as the Federal Government looks to slash $980 million from its budget through the expansion of the controversial robo-debt system.
From July, the Department of Human Services will begin trawling through six years worth of data given to the Australian Taxation Office by banks and other sources, looking to match information used in tax assessments with declarations made to Centrelink.
DHS executives told a Senate committee in Canberra yesterday the crackdown would look for income from rental property, dividends and other assets and investments in an effort to find and claw back overpayments.
Though it will look at all welfare payments, aged-pension recipients are most likely to be affected as the crackdown will also match the value of property and other assets provided to the tax office with that declared to Centrelink.
The aged pension is reduced based on the value of assessable assets, other than the family home.
“The Federal Government’s automated debt recovery campaign has been criticised for failing to reconcile data between agencies.”
For most of the past six years, it has cut the pension $3900 a year for every $100,000 of extra assets.
If someone had a $500,000 second home they had not declared to Centrelink, they could owe Centrelink upwards of $100,000 for six years of over-payment.
The Federal Government launched its welfare crackdown last year, in an effort to slash billions from its welfare bill by recovering alleged overpayments from recipients. It automated recovery of overpayments through matching ATO tax data with Centrelink records in an effort to catch out people claiming welfare while still working.
But the campaign has attracted criticism for failing to adequately reconcile data from the two agencies, and for sending welfare recipients into a bureaucratic maze as they try to defend claims they owe money from as long as six years ago.
DHS was sending out more than 20,000 letters a week last year, with at least 20 per cent of recipients later found to owe nothing.
That slowed to 10,000 a week this year after it had to begin using registered mail, the committee was told, after thousands of the letters were sent to the wrong addresses.
DHS officials told the committee the expansion would not initially use the automated recovery system but the size of the expected savings over the next three years indicates it will be introduced at some point.