Annual Report 2016-17

Compliance and business integrity

The department is committed to ensuring that only people eligible receive welfare and other payments, and that they get the correct amount.

The department continued to protect the integrity of the welfare system, taking a proactive approach to identifying payment accuracy risks, applying compliance measures, and educating people about their obligations.

The department worked hard to clearly explain the obligations of people receiving payments. It also actively investigated alleged serious non-compliance and fraudulent activity across all social welfare, health and child support programs.

If a person is not eligible for a payment they have received, they need to repay the money to the Australian Government. This can happen if someone did not give the department their correct or up-to-date information, for example, that they worked and how much they earned. People are also obliged to tell the department when their circumstances change, for example, changes to their relationship status, living arrangements, care arrangements, assets or income, as their payment may be affected.

Most people want to provide correct and up-to-date information, but sometimes people make mistakes. A small number of people will do the wrong thing. When there is serious and deliberate fraud, offenders may face prosecution.

The department’s compliance actions focus on ensuring people receive the correct payments, confirming their identity, helping them meet their obligations to prevent overpayments, defining potential overpayments, asking them to confirm and clarify discrepancies in information and ensuring fair and appropriate debt recovery processes.

Payment accuracy and correctness

The department conducts activities to ensure it pays the right person, the right amount, through the right program, at the right time.

Through random sample surveys the department estimates the percentage of people receiving payments that were free of administrative and processing errors. This measure is known as payment correctness. With a target of 95 per cent in 2016-17 the department achieved payment correctness of 98.3 per cent.

Through their annual report, DSS provides a measure known as payment accuracy that factors in error by both the person receiving payments as well as by the department.

The department works to ensure appropriate checks exist to minimise the likelihood of errors.

Identity management and support

Confirming and maintaining the correct identity of people who receive payments is fundamental to the integrity of the welfare system. The department does this by continuing to strengthen processes for the management of identity and making it easier for people to enrol in services in a way that suits them. The department is working in close cooperation with the DTA.

In 2016-17 the department confirmed the identity of over 775,000 recipients in line with the Attorney-General’s Department’s best practice National Identity Proofing Guidelines. In 2016-17 the department successfully matched over 1.8 million identity documents from recipients using the Attorney-General’s Department’s Document Verification Service.

In 2016-17 the department continued working with IDCARE, a national identity and cyber support service that provides assistance to people whose identity information has been stolen, lost or put at risk in any way.

Helping people meet their obligations

The department undertakes a range of preventative activities and increasingly uses new strategies to educate and assist people to receive their correct entitlements and meet their obligations and responsibilities. The department also works with people to resolve issues when they have not complied with requirements because of genuine mistakes.

The department continues to work with people to identify life events such as commencing new employment, to ensure continued payment accuracy. This may include calling, writing or sending an SMS.

In 2016-17 more than 254,000 people who received payments were contacted using these approaches which prevented $59 million in overpayments. This contact from the department means people most at risk receive more support to ensure their payments are correct.

As an example, during 2016-17 the department focussed on addressing the highest risk for student payments which is student failure to update their study load details. The department prompts students to update their study details online at key points in time, such as the Higher Education Contribution Scheme (HECS) cut‑off date.

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 it 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 the rate of social security payments otherwise payable dollar for dollar—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 them make informed decisions about their financial position.

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

Potential overpayments

Data matching is used to detect potential overpayments by identifying where information held by the department may be different to information held by external sources. For over ten years, the department’s data-matching processes have been governed by the Privacy Act 1988 and carried out in accordance with the Guidelines on Data-Matching in Australian Government Administration issued by the Office of the Australian Information Commissioner.

Data from internal and external sources is used in data-matching to identify people at risk of potential overpayments. In 2016-17 external sources included:

  • Australian Securities and Investments Commission
  • ATO
  • Commonwealth Superannuation Corporation
  • DET
  • Department of Employment
  • Department of Health
  • DIBP
  • 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.

Online compliance

Data-matching, sending letters and assessing and calculating differences in income and payments has been at the core of the department’s welfare compliance activities since the 1990s. In 2016-17 the department introduced an online compliance portal consistent with community expectations that people should be able to review, update and confirm their information at a time convenient for them, quickly and simply.

The introduction of this online portal did not change how data-matching was undertaken or the way income was assessed and differences calculated. However, the initial rollout gave rise to public controversy.

The department welcomed the constructive and practical enhancements suggested by the Ombudsman in their investigation which have been implemented. The department also welcomed the findings of the Ombudsman that the online compliance system was designed appropriately, accurately calculates debts and has undergone a range of enhancements that ensure its long-term sustainability. This provided the reassurance that debts raised were consistent with the previous manual debt investigation process.

As part of ongoing continuous improvement and by listening to feedback, a number of enhancements were made to the digital solution in February 2017, which included:

  • creating a simpler way to login
  • making it easier to upload information
  • giving people more chances to review their information
  • improved screen design.

Debt management

The department assists people with repaying debts by providing flexible ways to make payments. People with debts have several options available to make repayments, including cheque, money order, direct debit, BPAY, phone or internet banking, or Australia Post’s Post Billpay service. The most common method of repayment for those receiving payments is through withholdings from their payment.

Introduced in July 2016, the Money You Owe online service is a new, convenient and efficient way for people no longer receiving a payment to repay their debt or set up a payment arrangement. Where a person has difficulties repaying a debt, the department organises a repayment arrangement that ensures they are not put in serious financial hardship.

A person can request a review of their debt. Should they disagree with the review outcome they have further appeal rights. The department has continued to make improvements to the debt recovery process, such as pausing the debt recovery action while the department reviews the debt.

Debt recovery

When a person is no longer receiving payments and has failed to make or maintain a repayment arrangement, the department may use a contracted External Collection Agent to recover a debt with commission only paid on the recovered amount.

The department also has a dedicated area with investigative and intelligence capability to locate people who have large debts and the capacity to pay them. If necessary, legal action may be taken to recover the amounts owed.

In 2016-17 the department raised 2.38 million social welfare debts to the value of $2.84 billion.

Table: Debts raised from people who receive payments
  2014-15 2015-16 2016-17
Number of debts raised 2,350,131 2,439,431 2,384,911
Amount raised $2.5 billion $2.8 billion $2.8 billion
Table: Social welfare debt recovered
  2014-15 2015-16 2016-17
Total debts recovered $1.43 billion $1.54 billion $1.64 billion
Amount recovered by contracted agents $131.3 million $144.7 million $126.1 million
Percentage of total recovered by contracted agents (%) 9.2 9.4 7.7

Taskforce Integrity

Taskforce Integrity was introduced in November 2015. Taskforce Integrity aims to change any localised cultures of non-compliance and welfare fraud and positively influence people’s behaviour by encouraging self-correction.

Run by the department and supported by the Australian Federal Police (AFP), the taskforce is led by an AFP Assistant Commissioner and draws on capability from across the department and the AFP. The taskforce identifies and targets geographic areas where data analysis and intelligence points to a higher risk of non-compliance and suspected welfare fraud. Since 1 July 2016, the taskforce has completed 13,595 compliance activities and referred 41 cases to the Commonwealth Director of Public Prosecutions (CDPP).

Public tip-offs

Effective handling of public tip-offs about potential fraud is a key element in maintaining community confidence in the integrity of payments. Specialist staff assess all tip-offs from the public suggesting a person may be receiving a payment or benefit to which they are not entitled. The department invests substantial effort to ensure tip-offs are dealt with appropriately. People can provide tip-off information to the department by:

  • reporting via the fraud page on the department’s website humanservices.gov.au
  • phoning the Australian Government Fraud Tip-off Line on 131 524
  • writing to us at PO Box 7803, Canberra BC ACT 2610.

In 2016-17 the department received more than 38,000 tip-offs through the Australian Government Services Fraud Tip-off Line and more than 75,000 tip-offs from other sources.

Table: Tip-offs
  2014-15 2015-16 2016-17
Tip-offs through Fraud Tip-off Line 49,140 42,825 38,838
Tip-offs from other sources 59,701 67,973 75,227

Serious non-compliance and fraud

The department is serious about protecting the integrity of the programs it administers. The overwhelming majority of people who receive payments behave in an honest manner, however, there are a small number of people who try to deliberately defraud Australia’s welfare, child support and health systems. The department actively investigates alleged fraudulent activity to protect the integrity of government programs and to ensure that only those entitled to payments and benefits receive them.

Our intelligence capability

In 2016-17 the department conducted a variety of intelligence activities to detect and target potential fraud and serious non-compliance associated with welfare, child support and health programs. This included supporting a number of joint taskforce activities, testing and implementing new detection programs, assessing tip-offs provided by the public, and enhancements to the department’s well established detection capability. The department also used data analytics and data mining to improve and refine the detection of fraud and serious non compliance.

The department continued to work closely with a number of other government departments and agencies including the Australian Transaction Reports and Analysis Centre (AUSTRAC), the Australian Criminal Intelligence Commission (ACIC), the CDPP and the AFP to promote law enforcement.

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.

In 2016-17 the department assessed matters to determine if further action was appropriate. The department completed 3,813 evaluations and 1,189 investigations into fraud.

These matters covered a range of risks including:

  • undisclosed income or assets
  • identity fraud
  • undeclared family relationships
  • residency and absence from Australia
  • study requirements
  • claiming for services not rendered.

Of the investigations completed in 2016-17:

  • 1,104 related to the department’s Social Security and Welfare program
  • 81 related to the department’s Health program.
  • 4 related to the department’s Child Support program.

To support the investigation capability in a digital environment, the department enhanced its digital forensic capability through new detection technologies and deploying extra staff. It also further developed real time, risk profiling capabilities to enhance its ability to address online and identity fraud and prevent incorrect payments.

Optical surveillance

Optical surveillance involves observations of people, vehicles, places or objects. The department continued to use optical surveillance when 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 2016-17 the department completed 20 matters where optical surveillance was used.

Whole of government engagement to combat crime

To ensure a strong response to fraud and serious non-compliance, the department continues to work cooperatively with a number of government departments and agencies. These partnerships include new information sharing arrangements, focused intelligence activities and investigations, engagement with overseas agencies, proactive data matching on persons of interest, active involvement in taskforces, and regular data matching.

Australian Transaction Reports and Analysis Centre

AUSTRAC provides the department with access to its records of significant or suspicious financial transactions. AUSTRAC and the department have developed an automated data exchange capability to supplement existing data acquisition and sharing arrangements. This capability provides the department with greater access to AUSTRAC intelligence that is used to detect undisclosed income or target unexplained wealth.

Greater access to AUSTRAC intelligence has assisted in strengthening the department’s ability to address serious and systemic attacks on the welfare system.

Australian Criminal Intelligence Commission

The department provided ongoing support to the ACIC to address the threat of organised crime. The department continues to have two officers seconded to the Commission—one to focus on financial crime, and the other to work in the Australian Gangs Intelligence Coordination Centre. As part of the ongoing arrangement the department also receives information and intelligence from the Commission on issues associated with social and welfare fraud and serious non‑compliance.

Australian Federal Police

The AFP contributes to the department’s fraud control capabilities. During the year nine seconded federal agents worked with the department, assisting with investigations including preparing and executing search warrants. The federal agents also provide training and advice to departmental investigators and coordinate access to specialist forensic services.

The department works collaboratively with the AFP on specific joint operations to investigate and disrupt larger scale organised crime committed against health and welfare programs.

The department is also a member of the Fraud and Anti-Corruption Centre led by the AFP. The centre 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 currently has one officer seconded to the centre.

Commonwealth Director of Public Prosecutions

The department and the CDPP continued to work together to respond to fraud against government programs. Successful prosecution outcomes are a critical component of the department’s fraud control, prevention and deterrence strategies. The CDPP plays a pivotal role in prosecuting alleged fraud matters detected and investigated by the department. During the year both agencies increased their focus on collaboration and innovation, including through mutual training, efficiency and capability development initiatives.

In 2016-17 the department referred 709 cases to the CDPP. These referrals included:

  • 703 cases related to persons receiving social security or family assistance payments
  • four cases related to fraudulently claiming health program benefits
  • two cases related to persons receiving child support services.

The department has continued to experience a shift in the types of fraud and serious non-compliance threats it addresses, particularly those driven by technological changes or involving unexplained wealth. Work continues with the AFP and State police forces on a number of complex, organised frauds and frauds perpetrated in the online environment.

Prosecution is not the department’s only response to fraud and serious non-compliance. Not all cases of suspected fraud are appropriate for prosecution, particularly where there are evidentiary issues. The department has a range of administrative actions it can take that complement prosecution activity and can be used to tackle cases that cannot be prosecuted.

The department does not set targets for prosecution activity. Instead, focus is given to tackling fraud and serious non-compliance threats holistically, quickly and cost effectively.

Child support compliance

In 2016-17 the department continued to refine its child support compliance programs. The department uses various activities to ensure assessments for child support are accurate including requesting the ATO take lodgement enforcement action for mutual customers. Any available tax refund can also be used to reduce outstanding child support.

Collecting child support via employer withholding and income support payments ensures sustainable collection of timely payments.

Where voluntary compliance is not possible the department will pursue collection. This could include the placing of a Departure Prohibition Order or pursuing collection via the Courts.

Table: Child support compliance and enforcement actions
  Number of actions Child support collected/corrected $ million
2014-15 2015-16 2016-17 2014-15 2015-16 2016-17
ATO taxable incomes enforced(a) 109,935 58,588 65,407 n/a n/a n/a
Tax refund intercept payment(b) 105,202 97,679 99,022 121.5 114.6 116.0
Departure prohibition orders(c) 218 911 1,892 6.7 7.9 9.9
Litigation(d) 169 184 208 3.7 6.4 8.1
  1. To ensure assessments for child support are accurate the ATO takes lodgement enforcement action for mutual customers.
  2. Tax refunds intercepts resulting from actions taken to enforce ATO taxable incomes (lodgement enforcement) are included in this figure.
  3. Departure Prohibition Orders preventing overseas travel are issued to persons who have not made satisfactory arrangements to clear substantial debts. Departure Prohibition Orders are an intensive debt treatment that stops a child support debtor from leaving the country. Due to the success of the program, additional resources were directed to this activity to increase the collection rate of outstanding child support.
  4. The department commences litigation action, targeting parents who repeatedly avoid paying their child support when other enforcement options have been unsuccessful and an assets or income stream is identified.
Table: Employer withholding from wages and salaries
  2014-15 2015-16 2016-17
Active paying parents with employer withholding payments set up(a) 64,390 62,702 67,676
  1. The department may initiate this measure for both current liability and child support debt.
Table: Deductions from Centrelink and DVA payments
  2014-15 2015-16(a) 2016-17
Amounts collected from Centrelink and DVA payments(b) $30.5 million $69.4 million $67.8 million
  1. Represents the total amount of deductions from both Centrelink and DVA payments. 2014-15 shows 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 DVA deductions.
  2. These deductions may be made for both current liability and child support debt

Page last updated: 8 November 2017