Australia Pursues $4.9 Billion in Potentially Unlawful Debt Recovery

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Services Australia is currently pursuing an estimated $4.9 billion in unpaid debts, affecting over 829,000 customers. Recent inquiries revealed that some of these debts, which include cases dating back to as early as 1979, may have been improperly calculated using a controversial method known as income apportionment.

Between 1990 and 2020, this system was employed when determining welfare debts, particularly when payslips did not conform to the reporting periods. This led to numerous cases where customers were overpaid and subsequently issued with debts they did not actually owe. A review by the Commonwealth Ombudsman suggested that around 100,000 debts could be impacted by this flawed calculation method.

Since October 30, Services Australia has mobilized 150 staff to specifically address income-apportionment matters. Although the government has halted further debt recovery related to this issue, a final decision to waive or refund affected debts rests with the government.

Penny Allman-Payne, the Greens social services spokesperson, criticized the agency's aggressive collection efforts, questioning the legality of the debts raised and highlighting the need for systemic reform. Experts and advocates continue to call for a pause on debt recovery activities until a fair resolution is established.

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