Families around the country are being told they owe a Centrelink debt that might not be theirs

Tuesday, 05 November 2019

This piece was first published by Mamamia – check it out here.

For a busy family trying to juggle work, paying the bills and raising children, the last thing you expect is a letter from the government saying you owe them a debt, with no explanation as to why.

That is exactly what is happening to 1 in 6 families who use the child care system, with around 90,000 families and counting accused of owing a child care subsidy debt to the government.

The government’s new child care system was introduced just over a year ago, and Australian families are paying the price for the system’s flaws. It’s an overly complex and onerous system, with rigid and confusing income and activity tests – and to top it off, it’s supported by a malfunctioning IT system.

Before the election the Morrison Government said they would take a “light touch to compliance” when it came to the new child care system. Instead, it has implemented strict end of financial year reconciliation using automatic data matching between Centrelink and the Australian Taxation Office.

You would’ve thought the government might have learnt a lesson about data matching after the “Robodebt” fiasco.

With no information on the debt notice to explain how the debt came about, families are forced to spend hours on the phone with Centrelink to get the details and explanation they need to verify the debt’s legitimacy.

After speaking and fighting with Centrelink, many families are discovering they never actually owed a debt in the first place and were only accused because of a system error. Amazingly, in some situations Centrelink actually owes them money because of underpayment.

I’m concerned there are potentially thousands of families out there who are paying off a debt they don’t owe – either because they simply don’t have the time to spend hours on the phone proving their innocence, or because they understandably assume the government has got it right.

Good governments make the lives of hard working families easier – not cause undue stress by falsely accusing them of owing money. This would be completely unacceptable if it was being done by a bank or private institution.

Debts are also being incurred as a result of the income balancing. To claim the child care subsidy families must provide an estimate of their annual income, and at the end of the financial year this data is matched with ATO records.

For families with young children, providing an estimate of annual income can be near impossible. In this day and age, more parents than ever are engaged in casual or flexible work arrangements, or are returning to work part-way through the year.

Many families have done the right thing and meticulously reported any and all changes to their income throughout the year, yet in the end have still wound up owing a debt.

A child care system that does not work for all families is a failed system. The system should be designed with families at its heart and it must accommodate different family circumstances. It is supposed to support families to access vital early education and care, and make it easier for parents – particularly women – to return to work.

To have close to 100,000 families already owing a debt to the Commonwealth is proof the system is failing.

I wonder whether those in our current government understand the anxiety and stress it causes for families to be accused of owing a debt. Household budgets are getting tighter and tighter, and families don’t have cash lying around to pay off an unexpected debt. Repaying a debt of potentially thousands of dollars can be enough to completely derail a family budget.

I heard from one mother who contemplated quitting her job after receiving her debt notice because of the anxiety and stress that it caused. I worry how many more parents are out there having the same thought. There is no clearer example of a failed child care system, than one that is encouraging parents to give up work.

Understandably many families are now apprehensive to continue claiming the child care subsidy. If a family has reported correctly and done everything by the book, but still receives a debt, how can they be assured they will not receive a debt next year? All confidence they have in the system has been lost.

1 in 6 families owing a debt cannot be brushed aside as a mistake on the part of families. It is proof of a systemic issue in the child care system and families are the ones burdened as a result.

The government has a lot of lessons to learn from this situation. They must urgently make changes to fix their broken system and provide families with peace of mind going forward.

In the meantime, the lesson for families is if you receive a debt notice, be sure to call up Centrelink because there is every chance you don’t actually owe it.

More News

Monday, 04 November 2019
ABC National News – Child care subsidy debt
Monday, 04 November 2019
AM with Sabra Lane – Child care subsidy debt
Thursday, 31 October 2019
Cost of child care continues to soar