Your Ref: A2131759 Our Ref: EC21-000354
Chief Executive Officer Rebecca Skinner
Mr Michael Manthorpe PSM Commonwealth Ombudsman GPO Box 442
CANBERRA ACT 2601
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Dear Mr Mphorpe
Draft report into Services Australia's income compliance program
Thank you for your letter of 11 February 2021 providing the opportunity to respond to your report, Services Australia's Income Compliance Program -A report about Services Australia's implementation of changes to the program in 2019 and 2020 (the Report).
Services Australia's (the agency) response to the Report and recommendations is provided in the context of the Prime Minister's announcement on 29 May 2019, that the former
Department of Human Services (a Department of State within its own portfolio) would transition to Services Australia, an Executive Agency within the Social Services Portfolio, from 1 February 2020. Prior to this transition, the former Department of Human Services had implementation oversight for the Income Compliance Program (ICP), including the revisions to the program announced by the Government on 19 November 2019.
The agency accepts recommendations 1, 4, 5, 6, 7, 8, and 9 in the Report, and notes recommendations 2 and 3, as outlined at Attachment A.
As an agency we strive to continually improve our processes and note the seven comments pertaining to the agency's actions between the Government's announced changes to the program on 19 November 2019 and 29 May 2020.
forward to the ongoing cooperation and collaboration between our agencies.
Yours sincerely
Rebecca Skinner ZkFebruary 2021
2021 OMBUDSMAN OWN MOTION REPORT: SERVICES AUSTRALIA'S INCOME COMPLIANCE PROGRAM -A REPORT ABOUT SERVICES AUSTRALIA'S IMPLEMENTATION OF CHANGES TO THE PROGRAM IN 2019 ANO 2020
SERVICES AUSTRALIA RESPONSE RECOMMENDATIONS
Recommendation 1
As soon as it has completed identifying all individuals who are and are not eligible for a refund, and without duplicating communication that may be required as a result of legal proceedings, Services Australia should communicate directly with individuals who have had debts raised under the IC Program and who have not been assessed as eligible for a refund or removal of their debt. That communication should be in writing and include clear advice about the individuals' review rights.
Services Australia response: Accepted
The agency is writing to many individuals covered by this recommendation as part of the class action settlement process. Details of planned communication for this group are outlined on the agency's website Implementation Plan for Settlement Distribution Scheme - Services Australia and this communication includes details on their rights of dispute under that process. The agency will separately write to customers who are not eligible for a refund and have opted out of the class action, and this communication will include information about those customers' review rights.
The agency has communicated consistently that customers are able to seek further information on their debts, and can request a review of past or current debts, at any time.
Since the Government's announcement on 29 May 2020, individuals have been able to contact the agency on a dedicated 1800 number to query if they are eligible for a refund or check their debt through the Income Compliance refund query tool. This information is also available on the agency's website and includes details about an individual's rights of review.
Recommendation 2
If it is anticipated that Services Australia may re-raise debts that have been refunded, it should, at the earliest opportunity, publish general information on its website to enable individuals to understand that the Australian Government's decision to refund eligible debts does not preclude Services Australia from raising another debt for the same debt period without relying solely on income averaged information.
Services Australia response: Noted
In circumstances where Services Australia decides to revisit and potentially re-raise refunded debts it should, at the earliest opportunity, write to affected individuals and provide
information to enable them to understand the impact of its decision. This information should include:
a) the basis on which any decision to revisit and re-raise debts will be made
b) an assurance that income averaging alone will not be used to re-raise debts, and c) information about individuals' review rights.
Alternatively, if Services Australia does not intend to revisit and potentially re-raise debts which have been the subject of refunds, it should confirm this publicly at the earliest opportunity.
Services Australia response: Noted Recommendation 4
Services Australia should continue to identify options to resolve the issue of individuals' debts having been affirmed by the AAT with income averaging in the final decision, ideally with a view to refunding those debts which would otherwise have been eligible for refund as soon as possible.
Services Australia response: Accepted
Services Australia is working with the Department of Social Services and its legal advisers in relation to this matter.
The agency notes its ability to refund debts affirmed by the AAT based on averaged ATO income data is complex and will ultimately be subject to legal authority.
Recommendation 5
Services Australia should review its guidance to staff, including all relevant policies,
procedures and training materials, to ensure it aligns with Services Australia's stated position that where an individual requests a formal or ARO review, their request is referred directly to an ARO.
Services Australia response: Accepted
The agency's internal review process aims to ensure customers are provided with explanations of decisions and are given opportunities to have reassessments without the requirement to apply for a formal review.
as well as training, will be updated ahead of implementing the new operating model.
Recommendation 6
In circumstances where Services Australia is unable to obtain income information from the individual or third parties for the purposes of an SME review, it should finalise the review based on evidence other than averaged ATO information on hand and provide a decision to the individual.
Services Australia response: Accepted
The agency is seeking to finalise outstanding Subject Matter Expert reviews of ICP debts using evidence other than averaged ATO income data.
Where the available information on a customer's record is insufficient to enable a decision
maker to form a revised or more accurate decision, the agency will engage with customers and/or third parties to seek additional information to undertake a recalculation of the customer's debt.
Recommendation 7
Services Australia should only rely on 'net to gross converted income information' from bank statements in income compliance activity, in the absence of other proof points, with express confirmation from individuals that the grossed up amount accurately represents their fortnightly earnings for the relevant period.
Services Australia response: Accepted
Information from bank statements is just one of the additional proof points that can be used by a decision-maker to determine a debt. The agency can also refer to other relevant
supporting information and documents such as payslips, letters from a person's employer, amended payment summary information from the ATO, other information from the customer, and third-party information.
Recommendation 8
In circumstances where Services Australia continues an individual's income compliance in-flight review, and where the individual had previously been contacted about an income discrepancy, Services Australia should include in its written communication a correction to any information provided in the initial correspondence that is no longer accurate.
At a minimum, the correspondence should note that Services Australia made changes to the IC Program in November 2019, and that it will no longer raise debts relying solely on
estimating the person's income by 'averaging' ATO income information over multiple fortnights.
Services Australia response: Accepted