Government knew Centrelink data-matching was terrible but still scrapped human checking

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Evidence has arisen that the federal government went ahead with the removal of manual checking despite already knowing that the Centrelink data-matching system had at least a 15% error rate.

The response to a 2015 question in parliament [pdf] shows Centrelink’s data-matching with Australian Taxation Office records picked up 1,080,000 “discrepancies” for the period between July 2011 and June 2014.

The department of human services analysis showed 15% of the discrepancies turned out not to be debts. This error rate was reported well before the government removed human checking of the data-matching system’s output in the middle of last year, to ramp up recovery of illegitimate welfare costs.

The data-matching system now sends out a notification letter without human intervention when a discrepancy is found. More than 170,000 notices have been sent, but many customers have disputed the debts. If a letter recipient does not pay, a 10% recovery fee is added and the chasing up is passed onto a debt collector – even if the customer is in the midst of querying or disputing the amount.

Labor human services spokesperson Linda Burney told the Guardian that the debacle is “an incredible failure of administration” and questioned whether the 85% accuracy rate was even lower after manual checking.

“People deserve to see the full business case and methodology the government have used to inflict so much distress on the community,” she said, condemning the coalition government for going ahead with scrapping the manual check even though it knew “thousands of honest people” would suffer.

“Minister Tudge says the system ‘is working’. Not for those calling my office day in and day out. How many people are paying false debt while they are waiting for review?”

On Tuesday, the Community & Public Sector Union also stated the error rate was disturbingly high without manual checks, claiming that “almost every case” that Centrelink staff have reviewed has resulted in the customer owing nothing or “just a fraction” of the original debt.

“In at least one case, an initial debt for $9,000 ended up being $90. That’s not a minor discrepancy but a clear sign of a failed system,” CPSU assistant national secretary Michael Tull said at the time.

Yesterday human services minister Alan Tudge held firm on the data-matching programme, saying the “system is working” and that he sees no reason why the practice should cease.

“Last six months alone, we have recovered over $300 million to the taxpayer through that process,” he said. “The welfare system constitutes a third of the budget so we want to make sure people get the welfare payments they’re entitled to, and no more and no less.”

The prime minister’s former digital transformation boss Paul Shetler last week criticised the government’s “blind faith” in data — and the Centrelink saga is proving that manual checks must be reinstated.

“The way they did it, obviously it’s dangerous, because their algorithms are flawed in the first place,” he said.

In the 2011 to 2014 period, the 85% of the discrepancies found by the data system that turned out to be genuine debts represented an average balance of $1,440. The more than one million discrepancies detected came from 866,000 Centrelink customers.

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