Australian Government to waive 1.2 million social security debts

Minister for Social Services Tanya Plibersek and Minister for Government Services Katy Gallagher have announced that the threshold for waiving small, accidental debts will rise to $250. The government says this is the first increase to the threshold in more than 30 years.

This affects 1.2 million debts that will either be waived or no longer need to be raised for the current financial year.

The government says the administrative cost of recovering small, accidental debts is higher than the value of the actual debt. It wants Services Australia to focus significant matters and the overall integrity of the system.

The ministers guaranteed the strengthening of safeguards so the waiver cannot be manipulated and will not be available for significant non-compliance or fraud.

The government will also make available resolution payments of up to $600, for those affected by the historical debt calculation method known as ‘income apportionment’.

New legislation will be introduced to provide “legal clarity” about the method, which ended in 2020, “to avoid the need to recalculate potentially millions of debts at a significant cost to Australia’s social security system,” according to the government.

Economic Justice Australia and the Australian Council of Social Service will each be given $400,000 in funding to help people navigate the Resolution Scheme.

National Legal Aid says the measures will create a fairer social security system for disadvantaged Australians. Executive Director Katherine McKernan says recent history has demonstrated the need for fundamental reforms to improve the quality and transparency of government decision making, “This response is an important first step in addressing the issues raised by Robodebt, the Royal Commission and the Ombudsman’s Report on this issue.”

McKernan adds it also demonstrates the importance of legal aid funding. “As part of this initiative, investment in legal assistance is essential to ensure people have correct and appropriate legal advice to understand their rights and options when it comes to welfare debt.”

Plibersek says the $300 million package will prevent time and resources being wasted chasing accidental debt and recognise the invalid nature of income apportionment. “Our social security system is designed to be there for Australians when they fall on hard times, which is why it’s important debt recovery processes must be fair and transparent,” she says.

“When the system provides good outcomes for both recipients and taxpayers, all Australians win.”