A case study in easily how Centrelink can rip off welfare recipients

This blog is the Appendix to the previous blog titled “The Flip Side of Fraud”. It provides a real life case study of how easy it is for Centrelink staff to rip off welfare recipients and explains why Centrelink annual reports contain no reports of the White Collar Crime.

Tom: A case study in easily how Centrelink can rip off welfare recipients.

The following text from an email that recently received is genuine. However, to protect the privacy of the sender, I changed the name and concealed the amount that Centrelink claims that it is owed.


Thanks for your blog on the inside working of Centrelink. I just received a letter that I was overpaid close to $XXXX in 2008. No other letter was with it explaining how this happened, so i have asked for more information before I start to make slooowwww repayment to the system (if any, if I can avoid it)!

One of your points grabbed my attention:

"Did you know that federal law prevents Centrelink from reclaiming overpayments if it is their mistake and they don’t pick up the error in 6 weeks. Standard Operating Procedure for Centrelink is to ignore this law and demand money back on mistakes that they may have made years ago."

Do you have the part of the federal law which states this (or any idea of how I’d get my hands onto it??).


What has happened to Tom has the hallmark characteristic of a classic Centrelink rip-off that has been going on for years.

What makes Tom’s situation look like a classic Centrelink scam is the fact that no specific details of the "error" are provided. Even if Tom had accidentally provided inaccurate information, Centrelink has an obligation to check for client errors at the time of lodgement. Any errors that this basic check should have picked up but were overlooked, are Centrelink errors, i.e. it is their mistake and so they wear the cost of the error, not clients, like Tom, who has neither the expert knowledge of the information required by Centrelink nor a knowledge of the consequences of such errors. In vetting the information with a client, Centrelink staff are the experts and it is their responsibility to pick up errors when clients lodge new applications and supply requested supporting documentation.

Consider the following points:

  1. 400 offices with 40,000 staff spread across Australia;
  2. 2.5% ‘churning” of staff, i.e. about 1,000 new staff per year who require training;
  3. Constant changes in eligibility rules which means more staff training;
  4. Over 6 MILLION clients with Over 9 MILLION Payments per fortnight, i.e. about 235 MILLION payments per year.
  5. High workloads for customer service staff create high levels of stress and fatigue.
  6. Long, boring waiting times for interviews in Centrelink waiting rooms that lack even basic toilet facilities or child care facilities. A full bladder or irritable children place enormous, urgent pressure on clients to get the interview finished as quickly as possible.

Can you see any scope for human error in that lot of statistics?

There is enormous scope for error and that is why the 6 week rule exists, i.e. because Centrelink’s hard working staff, under unrelenting pressure, do make mistakes.

Fraud flourishes in environments where there is a high degree of potential for administrative errors and mistakes. High work loads, high stress and mountains of paper work that must be processed all help to create a fertile environment for both genuine mistakes and deliberate misuse of the system. Unscrupulous welfare recipients can, and do, attempt to rort the system whilst some Centrelink staff can misuse their lawful authority to “punish” welfare recipients for being “dole bludgers”.

A genuine mistake during initial processing may result in a minor over-payment of $10 per week, i.e. $20 per fortnight. Although Centrelink checks client eligibility at the rate of one million checks per annum, a full rotation may take six years. By then, the “minor” over-payment has blown out to over $3,000. To the average earner on $78,000 per annum, that is inconvenient. However, for a welfare recipient on $10,000 per annum, that is a huge impost.

Deliberately imposing such a financial burden on a welfare recipient presents an ideal opportunity to ‘punish’ dole bludgers. When senator Vanstone was the FaCS Minister, she made very public statements about “cracking down on rorters”. Brash and inappropriate ideological statements made at the top of system have a flow-down effect in a system. “Who will rid me of this turbulent priest?” asks King Henry IV and four Knights promptly murder Arch Bishop Thomas Beckett in the cathedral. Strident statements or leading questions by ‘the boss’ can be perceived by subordinate staff as a tacit order. When politics are added into the mix, e.g. Senator Vanstone’s “crackdown” statements, partisan political ideology can influence subordinate staff to conduct their own private ‘crackdown’ by misusing the system to punish dole bludgers.

The problem is compounded by those staff members who ‘punish’ welfare recipients simply because they can do so. It is a well recognized fact that power, even minor or petty power, can be a very corrupting influence, In a huge, complex organization like Centrelink, an organization that has a huge influence and impact upon the lives of exceptionally vulnerable people, petty tyrants can flourish. Withholding information can, and did, have a devastating effect upon people. Breached clients not being immediately advised of their appeal rights is one such example. In Tom’s case, depriving him of specific details about the alleged debt and/or not notifying him of the six week rule is a textbook case of how a welfare recipient can be ‘punished’ for being a welfare recipient.

Readers who may think that this is an extreme view, or even total rubbish, should keep in mind the role that partisan politics played in Godwin Grech’s actions. If a senior, high ranking Public Servant could act in such a partisan manner, is it unrealistic to accept that lower ranked Public servants with similar partisan views might engage in other inappropriate and far less forms of conduct.

When another welfare recipient whom I will call Bob, was hit with an over-payments debt, he questioned it but received little information. It was only after I provided Bob with copy of the legislation containing the ‘6 week rule”, that the Centrelink staff member agreed that the huge debt did not have to be paid. This scam is really quite safe for any CSO who engages in this activity. If the welfare recipient demands information and indicates that they will appeal the matter, the issue can be smoothed over as a ‘computer error’ or ‘human error’.

White Collar Crime; To Whom the Benefit?

One of the big problems with ‘White Collar Crime’ is that much of goes unreported because a prosecution of an alleged offender would result in very bad publicity for the organized involved in the crime. The problem for Centrelink is not that it is the victim of the White Collar Crime that I am reporting; it is a major beneficiary. Centrelink’s annual reports highlight “Savings” accrued during the financial year. Every time the 6 week rule is concealed from welfare recipients, Centrelink’s “savings” increase. It is therefore quite clear that there is a financial benefit to Centrelink which looks good in the reports, both from individual Centrelink offices to Centrelink’s head office, and in the annual reports to Federal Parliament. The vested interest in ‘accidentally’ failing to apply the six day rule is a situation ripe for exploitation.

“10 prosecutions a day”.

Centrelink has a vested financial interest, as well as a compelling legal liability interest, in denying that this sort of activity has ever occurred. In late 2005 and early 2006, Centrelink spend millions of dollars advertising the fact that their highly efficient fraud investigators were achieving more than 10 referrals per day of alleged welfare rorters to the Office of Director of Public Prosecutions. However, if Centrelink’s annual reports covering the period 1st July 1998 to 30th June 2009 are to be believed, these highly efficient fraud investigators failed to report even on in-house case of White Collar Crime.

It is quite clear from the discrepancies in Centrelink’s annual reports that only a thorough, independent forensic audit of Centrelink’s database will determine the extent of this unreported criminal activity. The independent review panel has already been asked to conduct a forensic audit to determine the number of Breaching/Compliance Measures triggered deaths that have occurred. Such an audit should also search for evidence that welfare recipients have been conned into making payments that they did not have to make.

My advice to welfare recipients who have received a Centrelink demand for re-payment is simple. Do not agree to pay until all of the details are made available and insist upon a written summary of your appeal rights. If you have not agree to pay, or even if you have, you have the right to have the issue reviewed by an Administrative Appeals Officer. Go that route if all else fails but the best bet is to get a print out of the ‘6 week limit’ legislation, and present it to Centrelink along with a request for proof that it was not Centrelink’s mistake.

Ron Medlicott (Christian welfare justice activist.)

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2 Responses to A case study in easily how Centrelink can rip off welfare recipients

  1. Greg Gilder says:

    where do I find the “six week legisation that you spoke of in the final paragraph? in you closing papragraph?

    • yadnarie48 says:

      Section 1237A is part of the Social Security Act 1991.

      According to Senator Rachel Siewert (The Greens), the full text of the act can be downloaded here: http://www.comlaw.gov.au/Details/C2012C00556/Download

      Section 1237A can be found in volume 3, page 604. This monstrous piece of legislation comes in 5 sections totaling over 800,000 words!

      For the record, the Parliamentary Entitlments rules that (former) prime minister Julia Gillard, and the current prime minister, Tony Abbott and over 140 other federal MPs constantly make “mistakes” with is about 8o pages and 4,000 words.

      DOUBLE STANDARDS – You Bet. If pushed by Centrelink to repay a debt, point out that the Australian Federal Police will only enforce Section 135.2 of the Commonwealth Criminal Code Act (1995) to welfare recipients or other citizens but flatly refuses, because of the (political) “gravity/sensitivity” to investigate politicians who may have violated this law “By acts of commission or acts of omission have obtained a financial advantage that they were not entitled to receive.”

      Check out an old posting from 1st July 2012 which contains documents secretly classified by the Senate in November 2005 – Documents 1 & 3. Document 2 is also a big embarrassment for our current prime minister NEVER reported any post breaching fatalities, probably because the Howard Government’s breaching quotas were a direct violation of Section 135.2, i.e the Howard Government abused its power by deliberately depriving welfare recipients of welfare entitlements through the illegal use of “Performance Indicator Targets.” (Breaching quotas.)
      NOTE: If you use Firefox or Chrome, double click on a document and it will then appear in a seperate window – you can then use the menu to print out the document if you want to show it to Centrelink and ask them for an explanation!!!!

      http://wp.me/p1n8TZ-3v 1-07-12 Senate classified stuff posted on the web.
      http://wp.me/p1n8TZ-3K 2-07-12 Still more senate classified stuff.
      http://wp.me/p1n8TZ-3K 16-07-12 More ‘don’t copy, don’t distribute’ stuff.
      http://wp.me/p1n8TZ-4y 22-07-12 The gag on constitutional rights.

      You may find this early posting sounds familiar as well: http://wp.me/p1n8TZ-5E How Centrelink works the 6 week rule.

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