Through tatter'd clothes small
vices do appear;
Robes and furr'd gowns hide
all. Plate sin with gold,
And the strong lance of
justice hurtless breaks;
Arm it in rags, a pigmy's
straw does pierce it.
King Lear, Act four, Scene
six.
In September the Guardian reported (link
here) that some 300,000 Centrelink payment recipients had their payments unlawfully
cancelled because of a glitch in the IT system that runs the mutual obligations
scheme embedded within the social security system. The Guardian article stated:
The analysis from Economic
Justice Australia shows about 310,000 people had their Centrelink payments
unlawfully cancelled between 2020 and 2024 because they were not given enough
time to reconnect to a job provider after missing a compulsory activity as part
of their mutual obligations.
Jobseekers are required to
meet mutual obligation requirements – such as attending meetings with an
employment provider and applying for jobs – to continue to receive their
payments. After jobseekers receive five demerits in the mutual obligation
system, they enter what is called the “penalty zone”, where they risk having
their payment completely cancelled.
The Guardian article linked to a previous report where the Commonwealth
Ombudsman had found 964 persons had their payments illegally cancelled. The Employment
and Workplace Relations Department (DEWR) later found additional unlawful cancellations
and the mutual obligation system was placed on hold.
A second Report from the Commonwealth Ombudsman has just
been issued titled Fairness in the Targeted Compliance Framework: when
decisions are made beyond your control (link
here) which follows up on the Ombudsman’s previous report. The Mandarin
provides a short summary of the report too (link
here). Both these reports deal with mainstream income support and do not
apply to remote regions where the Community Development Program (CDP) administered
by NIAA and DEWR operates (link
here and link
here). Importantly however, the same IT systems that underpin mainstream program
administration are utilised for CDP.
I don’t propose to attempt to unpick the administrative
detail that underpins the delivery of income support but instead point to two
important elements revealed by the Ombudsman’s valuable analysis.
First, Indigenous citizens are
over-represented in the unlawful cancellations. Bear in mind, these are
citizens residing in urban and regional Australia, not remote communities. The Reports
states (page 11; footnote removed):
Of the 985 unlawful
cancellation decisions affecting 964 job seekers between 8 April 2022 and 4
July 2024 (affected job seekers), First Nations People were disproportionately
represented:
·
16%: Average number of First Nations People who
accessed Workforce Australia Services between 1 October 2022 – 30 June 2024
·
46%: First Nations People who were identified to
have had their payment unlawfully cancelled between 1 April 2022 – 4 July 2024
Further, 24% of affected job
seekers had one or more of the following vulnerability indicators attributed to
them: • psychiatric problem or mental illness • illness or injury requiring
frequent treatment • significant lack of literacy and language skills • drug or
alcohol dependency which impedes compliance • recent traumatic relationship
breakdown • homelessness (beyond the control of the job seeker) • cognitive or
neurological impairment and • significant caring responsibilities.
I have quoted the related vulnerability indicators as Indigenous
citizens are undoubtedly over-represented in many of these categories. They point
to the deep systemic issues in play that point to the importance of considering
issues beyond Indigenous status in seeking the causes of the underlying drivers
of disadvantage.
Bearing in mind the finding by Economic Justice Australia that
the total numbers of unlawful cancellations was over 300,000 between 2002 and
2024, the number of Indigenous citizens adversely affected is likely
considerable, perhaps in excess of 45,000 over the relevant period.
Second, the Ombudsman’s most recent
report makes a finding related to the apparent underinvestment in compliance
oversight of the providers by DEWR (see pages 44-47). I have extracted four paragraphs
from the report which I suggest are worth considering (emphasis added):
As discussed in Finding 5,
DEWR and Services Australia are overturning provider decisions at a high rate.
When incorrect decisions are being made by providers at such high percentages,
we cannot be assured that DEWR’s prevention and education strategies are
sufficient or should not be complemented with a more rigorous approach to
deterrence and sanctions. Given the program has been active for more than 3
years, we would have expected more compliance activities against providers.
Our concerns of the lack of
transparency for provider performance were heightened when we observed that there
appeared to be nominal compliance actions taken against providers. A lack
of provider performance transparency combined with nominal compliance actions
against providers, in an environment where a high rate of provider decisions
are overturned, could point to an oversight design where providers are not
being held accountable for poor performance.
In comparison, job
seekers are very frequently subject to potentially catastrophic penalties for
perceived failures to comply with mutual obligation requirements. In
2023-24, providers issued 1,373,295 income support suspensions to 734,220 job
seekers; of these, 6,895 job seekers were subject to financial penalties.
Providers are paid
significant amounts by the Australian government to deliver services to job
seekers. In 2024-25 DEWR spent approximately $1.256B on
Workforce Australia, 74% of DEWR’s spending on employment services.
Conclusion
My own takeout from the release of this report is threefold:
First, the implementation of
outsourced program delivery arrangements requires high quality and independent
regulatory oversight if the public interest is going to be served. What is almost
always absent in our whole of government thinking about the delivery of basic
services is the quality of regulatory oversight. I do not doubt that there are
downsides to excessive regulation in some policy spaces, but to the extent that
the incessant and longstanding campaign against regulation is broad bush and
not nuanced, it should be seen for what it often is: ideological special
pleading.
Second, there is a case for our core
accountability institutions to shift more attention to focussing on the issue of
whether governments are under-investing in regulatory oversight across the board
(rather than in focussing on whether particular programs or (worse still)
program clients are involved in fraud, inefficiency or maladministration. My
sense is that at least in areas where the recipients of government services are
comparatively voiceless, that this regulatory underinvestment is endemic and
indeed a key element in driving or exacerbating systemic (and seemingly intractable)
disadvantage as appears to be the case in the income support /social security
system.
Third, in terms of Indigenous
policy, the mainstream policy realm matters. While the extent of disadvantage
and need is arguably more intense in remote regions, the issues facing
non-remote indigenous citizens are quantitatively and qualitatively significant
and structurally embedded. The National Agreement on Closing the Gap includes
as one of four Priority Reforms a reform focussed on the transformation of
mainstream institutions (link here).
However, the underpinning detail is all about the processes used by agencies to
deliver mainstream programs and says nothing about the importance of high-quality
mainstream regulation in ensuring Indigenous citizens access mainstream
programs equitably. This may appear to be a very fine distinction, but I would
argue that it is a crucial distinction that deserves more thought by the Joint
Council on Closing the Gap.
10 December 2025
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