Defence pay and Centrelink abuse

There is an interesting labour market case of national interest at present relating the the overpayment of Special Air Service (SAS) troops who have been serving in Afghanistan and who have faced debt recovery action for such overpayments of allowances of up to $50,000. The case has led to calls for the Federal Defence Minister to be sacked for daring to ask our soldiers to pay back the cash. Another labour market group has for years been subject to so-called “debt-recovery” actions from the Federal government and the sums are nothing like $50,000. Yet the press has been largely silent on the plight of this latter group even though I would argue they are among our most disadvantaged citizens. The juxtaposition highlights the inconsistency of the public debate and the selective treatment of individuals by our Federal government who should be treating us equally according to our rights as Australian citizens.

First, the defence case. It seems that the military arm of the defence forces does not like taking commands from the civilian arm, the latter being the voice of the elected government and hence accountable to all of us via the ballot box. But that is a side-issue. The relevant pay story appears to start with deliberations by the pay-setting authority for the Defence Forces, the so-called Defence Force Remuneration Tribunal in 2007 and 2008 which were designed to simplify the payment of special allowances – like being away in Afghanistan. The plan was to integrate these allowances into the SAS personnel salaries.

It seems that the personnel records were inconsistent with respect to the soldiers’ qualification which meant that in some cases, the individuals were being paid higher than their competencies allowed. That is, they were being overpaid. The computer systems of the Defence Forces are also apparently high dated (so much for the efficiencies we were told would be gained by all the outsourcing of IT) which exacerbated the timely discovery of the overpayments.

The political solution is that soldiers will be allowed to gain the skill levels for which they were being overpaid and if they do so all will be well. Both the Minister and the Defence force chiefs are now saying that the debt recovery action will cease and that no soldier will be worse off. Sounds reasonable until you understand the basis of the dispute.

The political sideshow that has followed is not something that I care to comment on here suffice to say – pretty pathetic.

But what about those who are relentlessly pursued by debt recovery agents acting on behalf of Centrelink? These citizens are the poorest and most disadvantaged of all Australians and have over many years been subject to personal humiliation, damaging withdrawal of income support; and lengthy and complex legal prosecutions. Recently, we have read stories of poor families being ordered to pay back long-standing debts which in some cases amount to sums as small as $20. The current government has renewed the efforts to collect these sums even though Centrelink had deemed them to be “non-collectable” under the previous regime. Thousands of harassing legal letters have been sent by private collection agencies to struggling families.

The previous federal government had made an art form of vilifying welfare recipients and the public became aware of the Centrelink debt issue largely via Centrelink’s own campaign Support the System that Supports You. There were a continual volley of press releases from then Federal government demonising the “welfare cheats” among us and inviting us to “dob in our next door neighbour” if we suspected them of fraud. We started to learn that these cheats were being sorted out via court and subsequent prison sentences. We were being conditioned to dislike the cheats by relentless Government commentary.

Why did people incur debts? Well like the Defence Force IT systems, Centrelink systems are also notoriously unreliable and their systems are very complex. Large debts were built up over long periods without any feedback being received by the person from Centrelink.

Further, the interactions of several highly complex systems – income support, family tax benefits, wlefare-to-work, marriage etc made it very difficult to work out one’s entitlements accurately. Additionally, income support recipients who had a casual attachment to the labour market were asked to estimate in advance how much money they might earn over the coming year in the irregular jobs they might pick up. This is especially in the context of the vagaries of casual work. Their benefits were then assessed on that forward estimate. A debt was then incurred if their actual income exceeded this. Among those most affected by these errors were people who struggled with spoken and written English; those who were innumerate, and those who suffered mental disabilities.

It is also clear that Centrelink often made errors which resulted in overpayments. There is no evidence of any internal punishments being meted out for Centrelink staff who caused a welfare recipient to be relentlessly pursued by debt collection agencies only to find out that the error had been made by the organisation itself.

Further, when confronted with a complex legal demands and court appearances, the disadvantaged workers were not fully made aware of their rights nor offered legal services to help them.

You might want to read Caught in the Safety Net by Camilla Hughes which came out in April 2008. It documents the harsh punitive practices of Centrelink and the way in which these debts were incurred and pursued.

So, you might be thinking – what is the connection between the Centrelink issue and the current Defence Force pay issue? Surely, the soldiers are engaged in a noble struggle on our behalf whereas the income support system has to be continually vigilant against welfare fraud.

On the first point, I will demur. But on the second, I agree, we don’t want people cheating the public income support system. So what does the data tell us?

Centrelink doesn’t publish the data very often but for the financial year 2006-07, of the 4.3 million entitlement reviews conducted only 3083 cases of actual welfare fraud were discovered. That is, 0.0007 per cent. Most of the repayments reported then were the products of honest mistakes made by the person or by Centrelink oficials or its crummy IT system.

So shouldn’t the soldiers be responsible for knowing their legal entitlements, no matter how complex, and being aware of the correspondence between the allowance and skill level required? One cannot say that an allowance of $50,000 is a small amount. Centtrelink expects the unemployed to have almost legal qualifications to navigate through the complexity and uncertainty of the entitlements they are provided.

Why do we expect income support recipients to be fully aware of the complexity of the relevant regulations and legislation pertaining to them yet we seem to be treating other workers (such as the soldiers) differently?

Why is a mistake by Centrelink different to a mistake by the Defence Forces? Why should the soldiers be allowed to keep their wrongly paid allowances when the welfare recipients are not – given that both payment discrepancies have arisen largely from systemic mistakes in each case?

And, why should the soldiers be allowed, after the fact, to upgrade their skills to be commensurate with the allowance they were wrongly paid without penalty?

Once again, our system of government is harsh towards the most disadvantaged citizens and clearly very liberal when it comes to groups of workers who they see as doing some noble. For me, without demeaning the efforts by the Defence Forces (that is another issue), the unemployed carry the burdens for all of us which arise from the flux and uncertainty of the capitalist system and the exceedingly misguided economic policies that our governments choose to overlay this system with.

The deliberate failure of government policy to generate enough jobs suggests to me that we should start a debt recovery process against politicians wages and those of the upper echelons of the policy departments in the bureaucracy (Treasury, DEEWR etc) for every percent above full employment they allow the unemployment to rise. To pay back the overpaid salaries!

Another thought I sometimes offer people when I give presentations goes like this: With currently about 1.2 million workers either unemployed (~550,000) or underemployed (~680,000) and rising quickly, imagine if the government conducted a yearly ballot to determine which of the working age population would bear this burden. So lawyers, company directors, accountants, bankers, academics, politicians, heads of government departments, Centrelink officials, and the rest of us would be in the ballot along with everyone else. Each year a different group would have to assume the burden of whatever level of labour underutilisation current government policy allowed to persist.

How long would it before before labour underutilisation was brought down to very low levels (full employment) by direct public sector job creation to render the ballot irrelevant? Not very long is the answer. The political will would quickly bow to the educated, the influential, the rich in a way that the unemployed can never hope to influence.