As a followup I wrote this blog – Australia – where victims become criminals<\/a>.<\/p>\n Today, I want to write about the latest scandal to beset the government’s privatised and outsourced welfare services system – the Centrelink debt disaster, which just leaves the mind in a boggled state – given its lunacy and … cruelty.<\/p>\n The Australian government effectively engages in the torture of its own citizens and cannot even do it competently! That is how bad things have become here.<\/p>\n The Australian government agency – Centrelink<\/a> – is part of the Commonwealth Department of Human Services and “delivers a range of government payments and services for retirees, the unemployed, families, carers, parents, people with disabilities, Indigenous Australians, and people from diverse cultural and linguistic backgrounds …”<\/p>\n It was created in 1997 as a result of the Commonwealth Services Delivery Agency Act 1997.<\/p>\n The provision of federal social security in Australia dates back to 1908 (7 years after Federation came into force) when the federal government introduced an old-age pension (although three colonial (pre-federation) states had already introduced such a pension).<\/p>\n Over time, the net of social security expanded as did the complexity of the system.<\/p>\n When the Australian government privatised employment and labour market services and scrapped the Commonwealth Employment Service in the late 1990s, it created a new industry – Unemployment Management – which is almost totally unproductive and absorbs massive financial resources.<\/p>\n This together with a range of other ‘case’ management type function (disability etc) were entrusted to a proliferation of private contractors, many of which are outright scammers and most totally ineffective, given that there has never been a time since when there have been enough jobs to match the demand for them by unemployed workers.<\/p>\n The stated purpose of these outsourced service delivery organisations is to support the unemployed and other disadvantaged groups to gain skills and employment, but what the overall job constraint (shortage) means, is that, at best, they just shuffle the jobless queue.<\/p>\n The evidence is that they shuffle in such way that they maximise the advantages to their own organisation rather than to the avantage of their so-called “customers” or “clients” aka the welfare recipient. There is also evidence of outright fraud, which typically gets swept under the carpet by the Government to avoid it revealing what an outright disaster its system is.<\/p>\n The following graph shows the overall Unemployment-Vacancies (UV) ratio in Australia for the period May 1979 to September 2016 – which includes the entire period that these privatised job services have been operating.<\/p>\n You can see the impacts of the two major recessions in this period (1982 and 1991). The UV ratio is now of 4.04 – that is, around 4 unemployed persons per unfilled job – and it has dropped a little after hovering around 5 for some time.<\/p>\n After the GFC hit and the federal government introduced its large fiscal stimulus, the UV ratio fell to 3.09 (February-quarter 2011).<\/p>\n But it then rose back to a new peak of 5.2 (August 2014) after the Australian government went into austerity mode in its obsessive (failed) pursuit of a fiscal surplus. While that pursuit was in vain it undermined aggregate spending and the labour market has weakened considerably ever since.<\/p>\n Both sides of the hump that peak in the August-2009 quarter tell you are story about the effectiveness of fiscal interventions.<\/p>\n Before the stimulus package was introduced, the Australian labour market was heading into crisis as the UV rose and the economy headed into recession.<\/p>\n After the 2009 peak, the fiscal stimulus started to support the economic recovery and the UV ratio fell.<\/p>\n After that point, with no structural changes obvious, it is hard to argue that the rising ratio was the result of anything other than a declining aggregate spending culminating in the negative real GDP growth result in the most recent quarter.<\/p>\n The Australian labour market has been constrained by a lack of job creation the entire time we have been enduring this cruel, privatised system of job services delivery.<\/p>\n The current UV ratio is low relative to the peak of May 1992 when the ratio was 29, but it remains the case that there are many more people unemployed competing for scarce jobs than there were before the crisis started to impact.<\/p>\n But the UV ratio actually understates the degree of slack in the labour market.<\/p>\n Underemployment is now much higher than in 1982 (when it was largely non-existent) and 1991 (when it started to rise to current levels) and so the unemployed now have to compete for jobs with new entrants, other unemployed and the 1.1 million underemployed (8.8 per cent of the labour force).<\/p>\n Further, labour force participation is well below the most recent peak, which means that there are more than 120,000 extra workers who might reasonably be considered hidden unemployed and would take a job immediately if there was one available.<\/p>\n The Australian government has been playing a charade with us since it created this monstrosity. It pretends they have created a ‘market’ where customers go an buy things.<\/p>\n In the mainstream economics textbook, that these bastard politicians pretend to live by, the consumer is sovereign and determines the allocation of resources to final products such that everyone maximises their utility (satisfaction)<\/p>\n So they stopped calling the unemployed – jobless – and instead decided they were ‘customers’ or ‘clients’ who were ‘buying’ services from the outsourced suppliers (although the government was paying the bill!). A total sham.<\/p>\n Meanwhile, the government began doing everything it could to discourage access and make it harder for people to claim and\/or stay on benefits.<\/p>\n I wrote about these issues in this blog – Job Services Australia – ineffective and rife with corruption – scrap it!<\/a><\/p>\n There is an interesting article by John Hewson, the former leader of the Australian Federal Liberal party (which along with the National Party form the conservative side of politics here) in today’s press (January 5, 2016) – Beware the ‘new conservatives’ motivated by ambition and ego<\/a>.<\/p>\n He can hardly be described as a progressive force in politics and is a conservative economist (former academic). But even he is reviled by the way the conservative political forces in Australia are operating these days.<\/p>\n In his commentary on the trends within the conservative side of Australian politics (with overtones for other nations) he eschews the move to “new conservatism” which promotes “anti-immigration, anti-Islam, anti-Muslim, anti-climate elements … as fundamental elements”.<\/p>\n He says:<\/p>\n \n… conservative attitudes to economic management vary. Some argue the urgency of budget repair, but simply imagine this can be achieved by attacking dole bludgers, welfare fraud, and foreign aid, while promising tax cuts and protecting areas such as defence and their particular “pork”.\n<\/p><\/blockquote>\n He also talks about the National Party (the minor coalition partner representing the rural lobby) as being “less than pure than conservatives on key economic issues” given they demand protection from global competition and “various subsidies and support for farmers and miners”.<\/p>\n Tellingly, he writes:<\/p>\n \nSimilarly, on welfare – the Nats are hard on the disadvantaged, unless they are farmers facing drought, flood and fire.\n<\/p><\/blockquote>\n Of course, when a farmer loses all income because of drought and is rendered effectively ‘jobless’, the same treatment is not meted out to them.<\/p>\n I documented this hypocrisy in this blog – The indecent inconsistency of the neo-liberals<\/a>.<\/p>\n As the neo-liberal infestation spread and became core culture within the federal government (all sides of politics unfortunately) and its bureaucracy, new legislation was passed (for example, the Welfare to Work changes in July 2006) which shoehorned single parents with school-age children and people on disabilities back into the unemployment benefits system (effectively).<\/p>\n We had absurd statements from federal politicians that 15-year old girls were deliberately getting pregnant to avoid work and live on the pension – despite the pension being below the poverty line.<\/p>\n These changes reduced entitlements (maximum rates), made the means test tighter and increased the ‘work test’ obligations, despite it being obvious that there haven’t been enough jobs.<\/p>\n While during the full employment era from 1945 to around the mid-1970s, the federal bureaucracy largely functioned as a professional organisation to provide first-class services to citizens as their rights of citizenship, it has morphed over the last 30 years into a neo-liberal contract management agency overseeing outsourced service delivery.<\/p>\n I have had close contacts in the various Federal departments over the years and it is not an exaggeration to suggest that the more social democratic spirits have been purged (in Employment, Human Services, etc) in favour of a sociopathic tendency where beans are more important than people.<\/p>\n As the former Liberal Party leader wrote today:<\/p>\n \n… how much of this “new conservatism” is simply motivated by ambition and ego, as the main proponents believe in (and start to wallow in) their own media.\n<\/p><\/blockquote>\n The same can be said about the new public service managers who design policies that are, in my view, violations of acceptable human rights.<\/p>\n Last year, the Australian National Audit Office<\/a> released the results of its investigation into the “effectiveness and efficiency of the Department of Human Services’ management of Smart Centres’ Centrelink telephone services”.<\/p>\n This is one dimension of the interface between Centrelink and the disadvantage income support recipients it manages and dispenses to.<\/p>\n The report – Management of Smart Centres’ Centrelink Telephone Services<\/a> (published May 19, 2015) is scathing.<\/p>\n Remember in I, Daniel Blake how the employment agency officer simply told Daniel that all the relevant forms and information “was just on the Internet” without any sensitivity to whether Daniel knew anything about the Internet, which a lot of older welfare recipients do not.<\/p>\n The same applies in Australia. Many income support recipients who have to deal with Centrelink rely on telephone contact. The Audit Office considered:<\/p>\n \nTelephone services … are an integral part of the Australian Government’s delivery arrangements for welfare services and income support provided through the Centrelink program … <\/p>\n In 2013-14, the department handled 43.1 million telephone calls for Centrelink services-an average of around 800 000 calls per week-at a cost of some $338 million.\n<\/p><\/blockquote>\n So it is no small matter if the telephone service doesn’t operate properly.<\/p>\n The results of the Audit show that the system fails badly:<\/p>\n 1. “in 2013-14, just under one third of customers (nearly 14 million calls) who were able to enter the Centrelink telephone network hung up before the reason for their call was resolved. Around 6 million of these calls were estimated to be abandoned in the Interactive Voice Response (IVR) system, often when callers were advised by an IVR message of the estimated wait times to talk to a Service Officer (SO)”.<\/p>\n 2. “more than half of the calls that were abandoned occurred after the customer had invested time waiting to speak to a SO. In 2013-14, 7.8 million calls were in this category and the average time that customers spent waiting before they abandoned the call was 9 minutes and 42 seconds.”<\/p>\n 3. “These abandoned calls represent a lost investment of time and effort by the customer … in 2013-14, the time lost by customers prior to abandoning their calls, after going through the IVR system, cumulatively totalled some 143 person-years.”<\/p>\n 4. “the more detailed results for Centrelink telephone services show an increase in average speed of answer from well under 16 minutes in 2012-13 to over 16 minutes in 2013-14”.<\/p>\n 5. “Centrelink customers also continue to experience high levels of call blocking and call abandonment, which can further impact on the customer experience.” That is, the system just hangs up on them!<\/p>\n 6. The cuts to staffing levels (in the name of “efficiency”) have created this nightmare. Austerity strikes again.<\/p>\n Conclusion: the service delivery standards are dreadful yet the government continually diverts attention from the mess they have created by focusing heavily in the public domain on alleged welfare fraud!<\/p>\n Which brings me to the latest Centrelink scandal – the debt letters before Xmas.<\/p>\n While sociopaths surely designed this system, the austerity push has driven a lot of human activity towards automatic processes which, seemingly, just use simplistic computer scripts that result in ridiculous interactions with the income support recipients.<\/p>\n In the latest disaster, considerable harm has been caused and yet the government and its bureaucracy are claiming nothing is awry.<\/p>\n Backtrack to September 30, 2010 when another Australian National Audit Office performance report (Audit Report No.10) – Centrelink Fraud Investigations<\/a> – was released.<\/p>\n The Audit Office investigated the incidence of fraudulent access to Centrelink payments. It notes that:<\/p>\n \nIn 2008-09, Centrelink delivered social welfare payments totalling $87 billion to 7 million customers, many of whom are the most vulnerable in our society and heavily dependent on Centrelink payments.\n<\/p><\/blockquote>\n Centrelink has a “Fraud Control Plan” which details how it maintains the integrity of the payments schemes it is responsible for.<\/p>\n The detail is not important here.<\/p>\n Essentially, it conducts fraud investigations and provide evidence briefs to the Commonwealth Director of Public Prosecutions (the CDPP), who then decides whether the proceed with prosecution or not.<\/p>\n The data for 2008-09 tells us that:<\/p>\n 1. There were “26,084 fraud investigations … which led to $113.4 million in customer debts”.<\/p>\n 2. “5082 referrals were made to the CDPP for consideration of prosecution action in relation to fraud, resulting in 2973 convictions (about 11 per cent of the total investigations reported by Centrelink).<\/p>\n 11 per cent seems a lot.<\/p>\n But think about it in the scale of the operation. It recovered $113.4 million out of $87 billion in payments – do the calculation – that is 0.13 per cent.<\/p>\n It successfully prosecuted 2973 persons out of 7 million – do the calculation – that is 0.04 per cent of the recipients (and I don’t know whether there was any multiple convictions which would reduce the minuscule percentage even further.<\/p>\n The Australian Council of Social Services reported that (Source<\/a>):<\/p>\n \nLast year just 0.018% of those receiving payments were investigated for fraud, while 996 cases were referred to prosecutors and just 29 cases resulted in indictable charges\n<\/p><\/blockquote>\n In other words, as the hysteria among the conservatives against welfare support was reaching fever pitch, the numbers detected were falling in levels and proportions.<\/p>\n While the Government ministers are continually trying to make out that fraud is a massive problem, the evidence contradicts that spin.<\/p>\n It is also questionable whether the fraud control procedures actually engaged in by Centrelink in their quest for “quantitative performance targets” were even legal.<\/p>\n The Audit Office concluded that:<\/p>\n 1. “most of these fraud investigations did not comply with the Australian Government’s regulated framework for fraud investigations and Centrelink’s internal policies and procedures.”<\/p>\n 2. “these results reflect Centrelink’s non\u2010compliance with the requirements of the AGIS and its internal policies and procedures at key points throughout the investigation process, contributing to: deficiencies in case selection and prioritisation practices; and shortcomings in managerial oversight of investigation planning and the necessary deliberation of critical decisions and investigation outcomes.”<\/p>\n 3. “Centrelink advised that its approach to targeting customers most at risk of committing serious fraud … focused on the savings to be achieved, mostly through the recovery of customer debts and include quantitative targets for fraud investigations and prosecution referrals.”<\/p>\n 4. “It focused fraud investigations on the less complex cases (in order to achieve the targets), at the expense of progressing the more complex, serious fraud investigations.” So the big corporate players who have job services contracts which have defrauded the system by overstating success rates etc get away clean and the schizoid, impoverished person with a homegets pillaried for making a mistake.<\/p>\n 5. The Audit Office talked about how Centrelink was moving towards new “business systems” which used computer intelligence etc (“enhanced with the introduction of an intelligence capability”) to detect and pursue fraud – as if that was a “development”.<\/p>\n Which brings us to the current day.<\/p>\n The Federal Minister for Human Services appeared on National TV on December 5, 2016 issuing threats to our most disadvantaged citizens:<\/p>\n \nWe’ll find you, we’ll track you down and you will have to repay those debts and you may end up in prison.\n<\/p><\/blockquote>\n Centrelink send out thousands of letters to support this repression during 2016 with Australian Federal Police included in the letter head – repeating the threat that if people are caught receiving income support when they do not qualify then they would incur “a criminal record or a prison sentence”.<\/p>\n The sociopath that wrote the text clearly didn’t realise that there was no OR in this – a person who goes to prison has to have a criminal conviction! But I digress.<\/p>\n Things got worse as we reached the end of 2016.<\/p>\n Australia readers will be familiar with the headlines in the last few days documenting the Centrelink Debt disaster.<\/p>\n For example, Peter Martin has a good summary of the issue in yesterday’s Fairfax press (January 4, 2016) – Centrelink’s robo-debacle is a litany of inhuman errors<\/a>.<\/p>\n Essentially, Centrelink facing massive staff shortages due to the ‘efficiency dividend’ push by the Federal Government (started by the Labor Party, no less) and have implemented “automated data-matching” algorithms to match tax file records administered by the Australian Tax Office with its own income payment records.<\/p>\n Anyway who knows anything about these type of matching systems realises they are “crude” and liable to error. In some cases, that propensity to error might not matter much but when it is a government dealing with its most disadvantaged citizens, the costs of even minor errors can be dramatic and include elevated mental health disorders, family breakdown and increased suicide rates.<\/p>\n The downside risk is enormous.<\/p>\n We learned that the detected breaches under this new system are “currently occurring at a rate of about 20,000 cases a week, compared with 20,000 a year previously” (Source<\/a>).<\/p>\n As the holiday season approached, and just before Xmas, Peter Martin writes that:<\/p>\n \n… tens of thousands of Australians received notes embossed with the Centrelink logo telling them the income their employer had reported to the Tax Office was different to the income they had reported to Centrelink. Unless they explained why within 14 to 21 days, they would have an assessment made against them and be hit by a 10 per cent recovery fee.\n<\/p><\/blockquote>\n As Peter Martin notes, some of the claims go back 6 years “way beyond the six months the Centrelink website asks people to keep pay slips” (for any income they might have earned).<\/p>\n In Australia, you are innocent until proven guilty (the British system of justice).<\/p>\n But these letters reversed “the usual onus of proof, they were guilty and sentenced until later proven innocent”.<\/p>\n The debt letters mostly made spurious claims with an internal Centrelink source said that “of the hundreds of cases they had reviewed, only about 20 (at a “generous estimate”) turned out to be genuine debts. <\/p>\n![\"australia_uv_ratio_1979_september_2016\"](\"https:\/\/billmitchell.org\/blog\/wp-content\/uploads\/2016\/11\/Australia_UV_ratio_1979_September_2016.jpg?resize=538%2C325\")
<\/a><\/p>\nWe have been here before<\/h2>\n
The Centrelink Debt Scandal<\/h2>\n