Centrelink debts as low as $20 were referred to external debt collectors under the government's controversial automated debt recovery program, a Senate inquiry has been told.
Officials from the Department of Human Services told a Senate inquiry last Thursday that the department had referred more than 1,000 Centrelink debts under $50 to external debt collection agencies for recovery.
Human Services deputy secretary Malisa Golightly was asked by Nick Xenophon Team senator Skye Kakoschke-Moore about the smallest debt that Centrelink would refer to an external debt collection agency:
Human Services deputy secretary Malisa Golightly: But for, in terms of going to debt collectors, there may well have been a larger debt, but if there’s a remaining balance, some of it might have been paid off and then the person just stopped paying, um and lost contact, then they can be referred, and sometimes the balance is quite small on those.
Senator Skye Kakoschke-Moore: When you say small, how small is small?
MG: I have to check, but I think it could be as small as $20.
SKM: Really?
MG: But we... it’s part of a larger debt is the issue.
SKM: But, you would put somebody through the stress of being contacted by an external debt collector for $20?
MG: Well, this is something that we’re having a look at, and um a definite, you know, going forward.
The department said it considers each debt worth $50 or less on a case by case basis, in order to determine if it is economical to refer it to an external debt collector.
This Australian Tax Office only refer debts from $500 to $50,000 to external collectors.
Kakoschke-Moore told BuzzFeed News that referring debts as low as $20 to external collectors is “appalling”.
“Even the department recognises how ridiculous this is given they have admitted the practice of referring $20 debts is under review,” she said.
“Has the department even considered the enormous stress that can come from dealing with a debt collector? And why are they willing to put someone through that for the sake of $20?
The department plans to audit the external debt collecting process in addition to the regular performance reviews conducted monthly.
The Senate committee has previously heard evidence that since the automated debt recovery program started in July last year, external debt collectors have behaved in an aggressive and intimidating manner towards some Centrelink clients.
Debt collectors are paid a commission based on the amount they recover, however the department won't reveal the rate of commission as it is "commercial in confidence".
The Australian Council of Social Services (ACOSS) told the committee in March that private debt collectors had threatened to seize clients' assets or take them to court if they refused to repay their debt immediately. More than 6,600 people had received a knock on the door from a debt collector without first receiving a debt letter from Centrelink.
ACOSS said the number of people who had been intimidated into repaying debts they did not owe was unknown thanks to the creation of a "climate of fear".