Compliance and business integrity

Social Security and Welfare Programme Compliance

Payment accuracy, correctness and integrity

Payment accuracy reflects the department’s ability to pay the right person the right amount of money, through the right programme, at the right time, and takes into account customer and administrative error.

Payment accuracy is calculated by the Department of Social Services (DSS) using data derived from random sample surveys. DSS reports on payment accuracy in its annual report available at dss.gov.au

Payment correctness for social security or family assistance payments is also calculated using data derived from random sample surveys. Payment correctness is the percentage in surveys where the customer received a correct payment without administrative error. With a target of 95% in 2015-16, the department achieved payment correctness of 98.4% compared to 98.1% in 2014-15.

Payment integrity ensures that payments made on behalf of government are managed correctly and that appropriate checks exist to minimise the likelihood of errors.

Customer compliance

In 2015-16 the department continued its effective management of identified payment accuracy risks. The department uses a number of interventions to address payment risk and increasingly uses new strategies to educate and assist people to receive their correct entitlements and meet their obligations and responsibilities. We work with people to resolve issues when they have not complied with requirements because of genuine mistakes.

During the year the department’s targeted early intervention strategies included sending letters and SMS messages to remind our customers of their obligations and to prompt self-correction. Whenever possible we made immediate contact, usually by phone, to remind our customers about their reporting obligations and to update their records to avoid overpayments.

In 2015-16 more than 260,000 customers were contacted using these approaches which prevented $63.7 million in overpayments (see Table 45 below). This contact from the department allowed customers most at risk to receive the support they needed to ensure their payments were correct.

Table 45: Social welfare payments compliance activity
  2013-14 2014-15 2015-16 % change
since
2014-15
Interventions 869,082 923,462 987,895 +7.0
Reductions in payments 77,272 52,100 69,921 +34.2
Fortnightly savings
in future outlays
$19.2
million
$18.2
million
$21.7
million
+19.2
Prevented outlays $51.8
million
$61.4
million
$63.7
million
+3.7
Debts raised 101,331 126,134 210,0091 +66.5
Total debt value $283.6
million
$362.1
million
$694.6
million1
+91.8

1. The introduction of the Strengthening the Integrity of Welfare Payments - Employment Income Matching budget measure saw an increased focus on addressing historical overpayments. This compliance activity has resulted in a high incidence of debt and has subsequently contributed to a significant increase in debt savings from the 2014-15 financial year.

The department’s risk-based compliance approach uses data from a variety of sources to identify and manage payment risks. Data from internal and external sources is used in data-matching exercises to identify customers at risk of incorrect payment. In 2015-16 external sources included:

  • the Australian Securities and Investments Commission
  • the Australian Taxation Office (ATO), other than using the Data-matching Program (Assistance and Tax) Act 1990
  • the Commonwealth Superannuation Corporation
  • the Department of Education and Training
  • the Department of Employment
  • the Department of Health
  • the Department of Immigration and Border Protection
  • the Department of Veterans’ Affairs (DVA)
  • Defence Housing Australia
  • public and private education providers
  • state and territory departments of corrective services
  • state and territory registrars of births, deaths and marriages
  • state and territory land titles offices

In accordance with section 6 of the Data-matching Program (Assistance and Tax) Act 1990, the department, the ATO and DVA participated in 2 complete data-matching cycles for the department and 4 complete data-matching cycles for DVA. These activities resulted in 6,585 reviews and returned $65.3 million in net benefits to government.

Table 46: Social welfare reviews and net benefits to government
  2013-14 2014-15 2015-16 % change
since
2014-15
Reviews 27,632 24,178 6,5851 -72.8
Net benefits $132.7 million $134.6 million $65.3 million -51.5

1. There were significant improvements made towards Employment Income Matching (EIM) interventions which uses Pay As You Go payment summary data provided by the ATO. EIM targets the same Earned Income risk as the Data-matching Program. A redesigned process has enabled more EIM reviews to be completed and improved treatment of the risk.

See Appendix E for more information about the department’s Data-matching Program.

Reviews of Social Welfare payment decisions

Merit reviews

A customer may ask for a review of a decision-an independent process undertaken by an officer not involved with the original decision. The review officer will contact the customer to explain the original decision and may ask for further information. The review officer can affirm, vary or set aside the original decision.

In 2015-16 the department continued to focus on managing outstanding reviews of decisions. An improved business model saw a significant reduction in the number and the age of reviews on hand. This, in turn, led to an overall decrease in the average time taken to finalise customer reviews.

Once this internal process is completed, if still unsatisfied the recipient can apply for a review by the Administrative Appeals Tribunal (AAT) Social Services and Child Support Division (referred to as the ‘AAT First Review’). If the recipient still remains unsatisfied after the AAT First Review, they have a right to request a further review by the AAT General Review Division (referred to as the ‘AAT Second Review’). The AAT First Review process was previously undertaken by the Social Security Appeals Tribunal (SSAT). From 1 July 2015 the SSAT was amalgamated into the AAT which assumed responsibility for both levels of the review process.

Decisions most commonly challenged were:

  • rejection of claim for payment such as Disability Support Pension
  • raising or recovery of debts, including Family Tax Benefit reconciliation debts
  • participation failure
  • start date of payment
  • rate of payment
Table 47: Social welfare payments merit review applications
Applications 2013-14 2014-15 2015-16
Internal reviews 115,618 111,982 105,786
SSAT/AAT First Review1 9,812 12,289 11,198
AAT/AAT Second Review1 customer applications 1,924 1,999 2,178
AAT/AAT Second Review Secretary applications2 45 75 81

1. From 1 July 2015 the SSAT was amalgamated into the AAT which assumed responsibility for both levels of the review process. The 2 levels of review are now referred to as the AAT First Review and the AAT Second Review.

2. This refers to the Secretary of any department where the Minister is responsible, under the Administrative Arrangements Order, for part of the social security laws that allow decisions to be appealed to the AAT.

Table 48: Social welfare payments merit review outcomes
  Unchanged decisions1 Changed decisions
  2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
Internal review officer 65.3%
80,370
66.1%
83,286
62.5%
60,963
34.7%
42,662
33.9%
42,732
37.5%
36,617
SSAT/AAT First Review2 75.1%
7,686
75.3%
7,974
74.6%
8,195
24.9%
2,548
24.7%
2,619
25.4%
2,788
AAT/AAT Second Review2 customer applications 75.2%
1,416
79.7%
1,390
79.2%
1,542
24.8%
468
20.3%
354
20.8%
404
AAT/AAT Second Review Secretary applications3 73.3%
22
50.0%
18
50%
43
26.7%
8
50.0%
18
50%
43

1. Unchanged decisions include reviews that have been withdrawn.

2. From 1 July 2015 the SSAT was amalgamated into the AAT which assumed responsibility for both levels of the review process. The 2 levels of review are now referred to as the AAT First Review and the AAT Second Review.

3. This refers to the Secretary of any department where the Minister is responsible, under the Administrative Arrangements Order, for part of the social security laws that allow decisions to be appealed to the AAT. Secretary applications are managed in accordance with the partner department’s instructions.

Debt management

In 2015-16 the department raised 2,439,431 social welfare debts to the value of $2.8 billion.

Table 49: Debts raised from customers receiving social welfare payments
  2013-14 2014-15 2015-16
Number of debts raised 2,230,894 2,350,131 2,439,431
Amount raised $2.2 billion $2.5 billion $2.8 billion

Debt recovery

People with payment debts have several options available to make repayments, including by cheque, money order, direct debit, BPAY, phone or internet banking, or Australia Post’s Post Billpay service. For a customer still receiving a payment the most common method of repaying a debt is through withholdings from their payment.

When a customer has difficulties repaying a debt, the department organises a repayment agreement that ensures the customer is not put in serious financial hardship.

When a person is no longer receiving payments and has failed to make or maintain a recovery arrangement, the department may use a contracted collection agent to recover a debt, with commission only paid on the recovered amount. The department also has a dedicated team with investigative and intelligence capability to locate former customers who have large debts and the capacity to pay them. If necessary, legal action may be taken to recover the amounts owed.

Table 50: Social welfare customer debt recovered
  2013-14 2014-15 2015-16
Total debts recovered $1.27 billion $1.43 billion $1.54 billion
- amount recovered by contracted agents $124.8 million $131.3 million $144.7 million
- percentage of total recovered by contracted agents 9.9% 9.2% 9.4%

Compensation payments

The Social Security Act 1991 encourages people to use private financial resources, such as compensation payments, before accessing the taxpayer-funded social security system. It also ensures that any compensation payments for an injury or illness are considered in the calculation of any social security benefits. Under the Act:

  • people can be compelled to claim for compensation when compensation may be payable
  • the department can recover past payments of social security from arrears payments of periodic compensation payments and lump-sum compensation payments
  • periodic payments, such as weekly workers’ compensation payments, reduce directly dollar for dollar the rate of social security payments otherwise payable. Any excess is treated as income for partners of compensation recipients
  • if a person receives a lump-sum compensation payment, they will not receive social security payments during the preclusion period

So that individuals fully understand the effect of a compensation payment on future income support payments, the department contacts them to ensure they are aware of preclusion periods. This helps people make informed decisions about their financial position.

Individuals and their legal representatives can also access a tool on our website to estimate the impact of a pending compensation claim. Information is also available for compensation recipients, compensation authorities, and legal, insurance, union and community representatives.

Serious non-compliance

Our intelligence capability

In 2015-16 the department conducted a variety of intelligence activities to detect and target potential fraud and non-compliance associated with welfare, child support and health programmes. This included supporting a number of joint taskforce activities, testing new detection programmes, supporting the government’s New Compliance Data Sources and the Strengthening the Integrity of Welfare Payments measures, assessing tip-offs provided by the public, and enhancements to the department’s well-established detection capability. The department also used data analytics to improve and refine the detection of fraud and non-compliance.

The department continued to work closely with a number of other government agencies including the Australian Transaction Reports and Analysis Centre, the (then) Australian Crime Commission, the CDPP and the Australian Federal Police (AFP) to promote law enforcement. See Partnerships in combating crime.

As a result of the machinery of government changes in September 2015, responsibility for health provider compliance with the Medicare Benefits Schedule, Pharmaceutical Benefits Scheme and allied health services moved to the Department of Health. The department retained responsibility for customer compliance activities within the health programmes. We reviewed our fraud control framework to focus more clearly on public and patient compliance when claiming and receiving health programme benefits. The updated framework also includes building further capability to detect potential customer fraud.

Taskforce integrity

As part of the Strengthening the Integrity of Welfare Payments 2015 Budget measure, Taskforce Integrity was officially launched in November 2015. The taskforce’s aim is to change localised cultures of non-compliance and welfare fraud and to positively influence customer behaviour.

Run by the department and supported by the AFP, the taskforce is led by an AFP Assistant Commissioner. The taskforce draws on capability from across the department and the AFP to identify and target geographic areas where data analysis points to a higher risk of non-compliance and suspected welfare fraud.

Since the taskforce was established to 30 June 2016, it has undertaken 12,968 compliance reviews, raised over $19.6 million in debts to the Australian Government, and identified and progressed 135 cases for further investigation.

Public tip-offs

The Australian Government is serious about protecting the integrity of the welfare and health programmes to ensure available funds are directed to those in the community who need help the most. While the overwhelming majority of people are honest, there are a small number of people who try to defraud the welfare and health systems and actively try to avoid detection.

Effective handling of tip-offs is a key element in maintaining community confidence in the integrity of payments. All tip-offs from the public suggesting a person may be receiving a payment or benefit to which they are not entitled are assessed by specialist staff. The department invests substantial effort to ensure they are dealt with appropriately.

Information from the public about people who may have incorrectly or fraudulently claimed or received a payment or benefit is used to review entitlements and, if appropriate, carry out investigations. People can provide information to us by:

  • reporting via the fraud page on our website
  • phoning the Australian Government Fraud Tip-off Line on 131 524
  • writing to us at PO Box 7803, Canberra BC ACT 2610

In 2015-16 we received more than 42,000 tip-offs through the Australian Government Services Fraud Tip-off Line and more than 67,000 tip-offs from other sources.

Table 51: Tip-offs
  2013-14 2014-15 2015-16 % change
since
2014-15
Tip-offs through Fraud Tip-off Line 52,942 49,140 42,825 -12.9
Tip offs from other sources 51,134 59,701 67,973 +13.9

Fraud investigations

The department investigates fraud and refers appropriate matters to the CDPP for it to consider prosecution. The department’s fraud control processes are deliberately focused on the most serious cases of fraud, rather than on people making honest mistakes. See Our intelligence capability.

In 2015-16 the department completed 1,507 investigations into fraud compared to 2,346 investigations in 2014-15. These investigations covered a range of risks including:

  • undisclosed income or assets
  • identity fraud
  • undeclared family relationships
  • residency and absence from Australia
  • study requirements

Of the investigations completed in 2015-16:

  • 1,354 related to the department’s Social Security and Welfare programme
  • 25 related to the department’s Child Support programme
  • 128 related to the department’s Health programme

During the year, to support the investigation capability in a digital environment, the department:

  • enhanced its digital forensic capability
  • further developed its real time, risk profiling capabilities to enhance our ability to address online fraud and prevent incorrect payments

Optical surveillance

Optical surveillance involves observations of people, vehicles, places or objects. The department continued to use optical surveillance where other types of investigation techniques were unsuccessful and when there was a reasonable suspicion of fraud, serious cases of child support avoidance or income minimisation.

In 2015-16 the department completed 31 matters where optical surveillance was used compared to 20 in 2014-15.

Partnerships in combating crime

To ensure a strong response to fraud and non-compliance, the department continues to work in cooperation with a number of government agencies and private sector entities. These partnerships included new information-sharing arrangements, focused intelligence activities and investigations, proactive matching on lists of criminals, active involvement in taskforces, and regular data matching.

AUSTRAC

The Australian Transaction Reports and Analysis Centre (AUSTRAC) gives the department access to its records of significant or suspicious financial transactions. Commencing on 1 January 2016 AUSTRAC and the department introduced an automated data match to supplement existing data acquisition and sharing arrangements. This information is used to detect undisclosed income or target unexplained wealth.

Real time access to this intelligence will strengthen the agility of the department and enable us to better tackle serious and systemic attacks on the welfare system.

Australian Crime Commission

The department provided ongoing support to the (then) Australian Crime Commission (ACC) to address the threat of organised crime. It had 2 officers seconded to the ACC for this purpose-1 to the ACC’s Fusion Centre which focuses on financial crime; and another to the Australian Gangs Intelligence Coordination Centre. As part of the ongoing arrangement, the department also received information and intelligence from the ACC on issues that are identified as associated with social and welfare fraud and non-compliance.

Australian Federal Police

The AFP supports the department’s fraud control efforts. During the year 10 seconded federal agents worked with the department, assisting with our investigations and preparing and executing search warrants. These federal agents also provided training and advice to departmental investigators.

The department is also a member of the Fraud and Anti-Corruption Centre (FAC) established by the AFP. The FAC responds to serious and complex fraud against the Australian Government, corruption by Australian Government employees, foreign bribery and complex identity crime involving the manufacture and abuse of credentials. The department provides 1 officer on secondment as part of this response.

Commonwealth Director of Public Prosecutions

The department and the CDPP continued to work together to respond to fraud against social, health and welfare programmes. The department detects and investigates potential fraud and refers matters involving criminal intent to the CDPP which decides whether to prosecute matters.

In 2015-16 the department referred 996 cases to the CDPP compared to 1,470 referrals in 2014-15. These referrals included:

  • 980 cases related to customers receiving social security or family assistance payments compared to 1,366 in 2014-15
  • 9 cases related to customers receiving Child Support services compared to 10 in 2014-15
  • 7 cases related to fraudulently claiming Health programme benefits compared to 94 in 2014-15

Child Support customer compliance

In 2015-16 the department continued to implement its child support compliance programmes. The department uses various activities to collect ongoing and overdue child support including those listed in the following tables.

Table 52: Child support compliance and enforcement actions
  Number of actions Child support collected/corrected
$ million
  2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
Tax refund intercept payment 111,612 105,202 97,679 130.4 121.5 114.6
Departure prohibition orders 271 218 9111 6.2 6.7 7.9
Litigation 186 169 1,841 4.4 3.7 6.4

1. There has been a significant increase in the number of Departure Prohibition Orders and Litigation cases reported due to a more accurate reporting source being used for these work types.

Table 53: Employer withholding from wages and salaries
  30 June 2014 30 June 2015 30 June 2016
Active paying parents with employer withholding payments set up
(The department may initiate this measure for both current liability and child support debt)
63,982 64,390 62,702
Table 54: Deductions from Centrelink payments and DVA payments
  2013-14 2014-15 2015-161
Amounts collected from Centrelink and DVA payments
(These deductions may be made for both current liability and child support debt)
$28.9 million $30.5 million $69.4 million

1. The current year shows the total amount of deductions from both Centrelink and DVA payments. Previous years show only the amount of additional deductions received as a result of a legislative change to increase the maximum allowable deduction amount from Centrelink payments. The total figures also included the DVA deductions.

Table 55: Prohibition of departure from Australia
  2013-14 2014-15 2015-16
Amounts collected under Departure Prohibition Orders
(Departure Prohibition Orders preventing overseas travel are issued to customers who have not made satisfactory arrangements to clear substantial debts)
$6.2 million $6.7 million $7.9 million
Table 56: Litigation
  2013-14 2014-15 2015-16
Amounts recovered through litigation
(The department commences litigation targeting parents who repeatedly avoid paying their child support when other enforcement options have been unsuccessful and an assets or income stream is identified)
$4.4 million $3.7 million $6.4 million

Reviews of Child Support decisions

In accordance with the Child Support (Registration and Collection) Act 1988, the department is required to finalise all objections to child support decisions within 60 days for domestic customers and 120 days for international customers.

Parents are contacted through the objection review process before any decisions are made. To ensure procedural fairness, both parents are given the opportunity to provide information to ensure decisions are accurate and based on individual circumstances including financial capacity.

The department provides feedback to original decision makers on the outcomes of objections to help improve future decision making.

We continue to review and enhance the objections process to make it more accessible to customers while continuing to uphold the integrity of the Child Support Scheme.

Table 57: Objections received and finalised
  2013-14 2014-15 2015-16
Number of objections received 15,074 16,317 16,698
-percentage relating to care 34.3% 34.7% 35.8%
-percentage relating to change of assessment 18.4% 18.7% 16.8%
-percentage relating to estimates 15.0% 14.2% 13.3%
Percentage finalised in 60 days-domestic 80.4% 83.8% 94.8%
Percentage finalised in 120 days-international 82.8% 86.6% 96.5%

Objections to change of assessment

The objection rate to change of assessment decisions has decreased slightly from 16.9% in 2014-15 to 16.8% in 2015-16. This is a decrease of 168 change of assessment objections from 2014-15 or a 0.9% decrease.

Table 58: Change of assessment applications finalised and objections received
  2013-14 2014-15 2015-16
Change of assessment applications finalised 18,074 18,092 17,232
Change of assessment objections received 2,770 3,056 2,888

Administrative Appeals Tribunal reviews

The Social Security Appeals Tribunal (SSAT) was amalgamated into the Administrative Appeals Tribunal (AAT) from 1 July 2015 (see Merit reviews for details of the amalgamation). Part of the AAT’s role includes responsibility for independently reviewing objections to child support decisions. The AAT First Review received 2,150 applications for review of child support decisions in 2015-16 compared to 2,053 applications made to the SSAT in 2014-15.

Table 59: Child Support AAT review outcomes1
  Unchanged decisions2 Changed decisions
  2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
AAT First review 508 582 555 878 753 806

1. The total number of applications will not match the number of changed/unchanged decisions due to a number of applications either withdrawn, dismissed or still in progress.

2. Unchanged decisions are those made by the AAT affirming the original decision made by the Child Support Registrar. Unchanged decisions do not include withdrawn or dismissed applications.

To improve service delivery and policy outcomes the department continued to analyse child support review decisions to identify any systemic procedural or operational issues.

Page last updated: 18 November 2016

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