Annual Report 2002–03 Volume I
Right payments to the right people
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- Control of program fraud and incorrect payment
- Maximising correctness of payments
- Debt raising and recovery
- Prosecutions Eighty-five per cent of cases met the Director of Public Prosecutions’ quality requirements (target: at least 80 per cent). Budget measures Detection
- Research and development
- 2002–03 compliance Budget measures
- Communication campaign
Right payments to the right peoplePortfolio spending on providing programs and services to approximately 6.4 million members of the community accounts for around one-third of the Australian Government’s Budget. FaCS develops policy that aims to target support and intervention to where it is most needed and at the same time protect government outlays and minimise the risk of fraud and incorrect payments. The portfolio has a comprehensive compliance framework that is continually being improved and enhanced by FaCS and Centrelink to detect instances where Centrelink customers have not provided the correct information. SimplificationWork continues on recommendations from A simpler way (August 2001), an interim report to Minister Vanstone by the Rules Simplification Taskforce. Simplifications include: clients can now apply for advance payments over the phone simple amendments to debt repayments under $1000 can be arranged by phone Indigenous clients can apply for Community Development Employment Project (CDEP) and participation supplement on a single form Centrelink staff can now check the value of property assets online with the Australian Valuation Office, resulting in time savings for staff concept trials have begun to assess electronic verification of earnings by employers. A final report on the work of the taskforce will be given to Minister Vanstone early in 2003-04. Customer Account‘Customer Account’ is a web browser application that gathers customer information into easily viewable screens. Centrelink staff will no longer need extensive experience with the Centrelink mainframe, allowing new staff to be trained and become effective more quickly. Processing for new claims will be added to the Customer Account in the first half of the new financial year. FaCS expects that by July 2006 customers will be able to interact with their personal accounts and supply simple updates via the Internet. FaCS keeps a watching brief on Customer Account to monitor budgeted savings and ensure that policy is correctly applied within the technology. ProfilingService profiling is a method of selectively identifying and reviewing clients who need a more focused level of service to help them meet program outcomes, including payment correctness, activity testing and economic and social participation. Service profiling has been implemented for the Age Pension, Wife Pension, Widow B Pension, Newstart Allowance, Mature Age Allowance, Widow Allowance, Parenting Payment and Youth Allowance. Previous program reviews, based largely on the length of time a client has been receiving payment, have been replaced with more intensive contacts for those clients most at risk of not achieving program outcomes. Business AssuranceThe Business Assurance Framework (BAF) builds on a number of existing quality control and quality assurance mechanisms. It is designed to provide a comprehensive picture of the effectiveness of controls, in relation to the maintenance of the integrity of administered outlays for payments and services. The BAF defines accuracy of outlays, correctness and sources of error, while also identifying and analysing operational processes deemed critical to payment correctness. The BAF, in relation to accuracy of outlays and payment correctness, was piloted during 2002–03. Recommendations from the pilot will be progressed as part of full implementation during 2003-04. Further development of the BAF will focus on services to clients provided through Centrelink, such as participation support services and information on rights and responsibilities, and the integrity of information on the effectiveness of those services. Control of program fraud and incorrect paymentOn FaCS’ behalf, Centrelink ensures that controls are in place to minimise the risk of fraud and incorrect payments. The BPA details these controls and provides a framework for maximising correct payments. The framework consists of three key strategies: prevention, through systems and procedures that minimise the risk of incorrect payment and fraud deterrence, through creating public recognition of the risks and penalties involved in fraud and incorrect payment detection and recovery, through processes aimed at detecting incorrect payments and prompt recovery of any debts. Control strategies aim to prevent incorrect payments where it is cost-effective to do so rather than detect them later. While the controls are risk-based, Centrelink gives due consideration, in consultation with FaCS, to efficiency and good client service. Debts are identified and raised in an accurate and timely manner to specified standards. Affected clients are notified in writing of review outcomes that affect payment eligibility and debt. FaCS requires Centrelink to provide assurance of payment correctness by: adhering to agreed procedures and processes that maximise correct payments, and by providing ongoing assessment of control framework effectiveness, particularly proof-of-identity procedures that ensure identity fraud minimisation undertaking comprehensive risk assessments of service and payment delivery for each income support program providing data on the accuracy of decision-making to assure FaCS that the incidence of incorrect payment arising through incorrect decisions is minimal. FaCS monitors Centrelink’s performance to measure the success of the control and prevention strategies. Maximising correctness of paymentsDebt preventionThrough the BPA, FaCS emphasises preventive measures for all clients by ensuring a framework of procedures, controls and systems, including: undertaking identification checks advising clients on correct claim procedures alerting clients of their obligations and the existing detection mechanisms verifying key information supplied by clients applying risk-based admission procedures that target cases with a high risk of incorrectness requiring that clients provide their tax file numbers as a condition for receipt of payment. Centrelink is required to deal decisively with detected cases of incorrect payment. This helps to encourage voluntary compliance and highlights the risks and penalties of attempting to claim payments fraudulently. Such mechanisms include: prompt identification and investigation of possible offences referral of possible fraud cases to the Australian Federal Police referral of appropriate fraud cases to the Director of Public Prosecutions.
DetectionReview activityFaCS funds Centrelink to undertake specific review activities that target identified key risks. Review activity is conducted in accordance with the Privacy Act 1988. Data matchingData matching involves comparing client identity details, including in some cases tax file numbers, with records from other federal and state bodies, to identify declared income or assets anomalies. Data matching activities include: Australian Taxation Office (ATO) individual tax data ATO Tax File Number Declaration Forms ATO rental assets data State and territory registrar-general deaths data Department of Immigration, Multicultural and Indigenous Affairs immigration records I State and territory departments of corrective services data Defence Housing Authority and Commonwealth Superannuation Administration data Australian Securities and Investment Commission data Investment property reviews with the ATO Department of Employment and Workplace Relations Job Placement Matching Youth Allowance and Austudy Payment enrolment checking Department of Veterans’ Affairs pensions data.
Other activitiesOther methods to identify possible incorrect payments include: joint case work between Centrelink and the ATO information from members of the public (tip-offs) risk-based review selections generated from statistical analysis of client characteristics duration reviews that examine client entitlements at specific intervals from payment commencement profiling that targets clients at risk of not achieving program outcomes. Identity fraudSophisticated computer detection methods continue to detect identity-related fraud. In 2002–03, these methods identified 212 cases of identity fraud. This relates to 469 claims for payment as one fraudulent identity may be used for a number of claims. FaCS is also participating in ongoing negotiations aimed at developing a whole-of-government approach to address identity fraud. Debt recoveryFaCS, through Centrelink, recovers debts by withholding a percentage of ongoing payments or recovering overpayments in cash. In certain cases, garnishee action recovers debts from tax refunds and other lump-sum payments. Debt recovery actions seek to ensure that clients are not placed under undue hardship due to withholding ongoing payments or garnishee action. Centrelink has contracted mercantile agents to recover some client debts when the debtor’s whereabouts are unknown or when pursuit of the debts through standard debt recovery processes is not cost effective. CompensationCompensation provisions reflect the principle that income support for people suffering from compensable injuries lies primarily with relevant compensation authorities, rather than with the taxpayer-funded social security system. Compensation provisions provide for: recovery of past payments of social security from arrears payment of period compensation payment and lump-sum compensation payments preclusion periods, where social security payments cannot be paid due to the receipt of lump-sum compensation payments periodic payments, such as weekly workers’ compensation payments, to reduce directly, dollar-for- dollar, the rate of social security payments otherwise payable. Any excess is treated as income for partners of compensation recipients. To ensure the community understands the social security implications of receiving compensation, Centrelink provides a high-level outreach and information service to compensation authorities and to legal, insurance, union and community representatives. In 2002–03, application of the compliance provisions achieved estimated savings to outlays of $413 million.
ProsecutionsWhere clients may have committed offences against the Australian Government and where cases fall within referral guidelines, they are investigated (or referred to the Australian Federal Police if appropriate) and referred to the Director of Public Prosecutions for consideration of prosecution action. In 2002–03, 4160 cases of alleged social security fraud were referred to the Director of Public Prosecutions. The courts dealt with 2874 cases, resulting in 2829 (98 per cent) convictions. Random samplesThe random sample surveys measure the level of payment incorrectness, provide data on the reasons for payment incorrectness and provide information on emerging risks and on the effectiveness of the overall control framework. During 2002–03, FaCS commissioned Centrelink to conduct rolling random sample surveys on 8750 clients receiving benefits including the Age Pension (1500), Youth Allowance (1500), Parenting Payment Partnered (750), Parenting Payment Single (750), Disability Support Pension (1125), Newstart Allowance (1125), Special Benefit (500), Sickness Allowance (500) and Austudy Payment (1000). AchievementsSavings to outlaysReview activity achieved $101.92 million in savings to future fortnightly outlays. Review activity raised debts of $413.07 million. Review activityCentrelink reviewed 4 389 906 social security payments. Of these, 819 231 were compliance reviews. Compliance review activity resulted in 110 761 social security payments (13.5 per cent) being cancelled or reduced. Overall, 15.5 per cent of compliance reviews identified an incorrect payment. Debt raising and recoveryCentrelink raised 1 588 371 debts under social security law and family assistance law, valued at $909.3 million Of the above amount $886.8 million was raised for recovery. The balance was waived at determination. Recoveries of debts under social security law and family assistance law by cash and withholdings amounted to $682.77 million. These figures include compensation debts. Total recoveries were equivalent to 77 per cent of the amount of new debt raised over the same period, and 90 per cent were raised within 56 days (target: 80 per cent) These figures exclude Child Care Benefit and Family Tax Benefit reconciliations and tax return non-lodger debts.
ProsecutionsEighty-five per cent of cases met the Director of Public Prosecutions’ quality requirements (target: at least 80 per cent). Budget measuresDetectionData matching reveals incorrect payments by the detection of undeclared property assets and income. Increased resources have also been allocated to reviews resulting from ‘tip-offs’ received from the public. Research and developmentTo help detect employment and business-derived income not reported to Centrelink, FaCS conducted feasibility studies to look at the effectiveness of: data matching with ATO group certificates data matching with the Australian Business Number. Evaluation of the studies resulted in measures to include these activities in the 2003-04 Budget. 2002–03 compliance Budget measuresCompliance measures that have been implemented during the 2002–03 financial year include: improving the processes for updating benefit recipient information; automating the linking of Youth Allowance records with the records of parents and siblings who are also Centrelink clients; and increasing the number of annual reviews of Rent Assistance. A wider criterion for selecting cases for compliance reviews has been piloted and preliminary results support extending the pilot to a permanent arrangement. This was announced in the 2003-04 Budget. Further joint efforts with other government agencies will also help improve detection of incorrect payments and address compliance issues with the cash economy. Communication campaignAs part of the 2000–01 Budget, the Government announced a multimedia communication campaign to encourage Centrelink clients to do the right thing by notifying Centrelink of changes that may affect their payments. Two bursts of publicity (April 2002 and September 2002) targeted people on Newstart Allowance, Youth Allowance and Parenting Payment Single. Market research shows that the voluntary compliance communication campaign had a significant impact on the target audiences in relation to: capturing the attention of the various segments of the target groups sustaining recall even when the campaign was between ‘bursts’ clearly communicating the core message about the need to report changes in circumstances shifting attitudes on people’s responsibility to remind family and friends to notify Centrelink, or to notify Centrelink themselves of changes.
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