Approximately 3 million Australians affected by Centrelink's unlawful debt calculation method will be eligible for compensation of up to £300 (A$600), following the federal government's admission that the process was invalid. Social Services Minister Tanya Plibersek announced the move on Wednesday, alongside a rise in the threshold for small accidental debts to £125 (A$250), which is expected to waive or prevent about 1.2 million debts this financial year.
The decision follows a Federal Court ruling in July that found the method used by the Department of Social Services to calculate welfare payments—known as income apportionment—from the early 1990s to 2020 was invalid. During this period, Centrelink made assumptions about recipients' earnings during reporting periods, placing a question mark over more than £500 million (A$1 billion) in debts dating back to the late 1970s.
People with historic debts affected by income apportionment between 2003 and 2020 will be eligible for resolution payments of up to £300 (A$600). The compensation will be funded through a new £150 million (A$300 million) package, which also covers the cost of raising the small debt threshold. The government acknowledged that chasing small debts often costs more than the debt itself, making the process 'uneconomical'.
Economic Justice Australia (EJA) described the decision as a 'gamechanger', noting it is the first time the threshold for waiving debts has been increased in over 30 years. EJA and the Australian Council of Social Service will each receive £200,000 (A$400,000) to help recipients navigate the compensation process. The government described the announcement as an 'important first step toward social security reform'.
Finance Minister Katy Gallagher said: 'The last thing vulnerable people need is to be hounded over small debts that are not worth the time or the money to recover.' The Greens welcomed the announcement as a 'tremendous win' for advocates, with Senator Penny Allman-Payne noting that the income apportionment scandal, like robodebt, has shown systemic issues in the welfare system. Legislation to implement the package will be introduced in coming weeks.
