OUR ACCOUNTABILITY CHAPTER THREE

BUILDING STRONG LINKS TO REDUCE STUDENT DEBT—VICTORIA

A series of presentations have been developed to help students understand some of the complexities of Youth Allowance. The presentation is an interactive exercise in ‘brainstorming’ students’ questions and concerns about Youth Allowance.

To avoid unnecessary student debts, Centrelink is also investigating another strategy in partnership with secondary and tertiary institutions and with the state/territory education authorities. This involves reporting directly to Centrelink when students complete or abandon their studies.

DPMOs will continue to build strong links with secondary schools, TAFEs and universities by providing outreach and on-campus assistance to educate students about Youth Allowance requirements.

Debt base analysis

The analysis will contribute to a forecasting model to predict impacts on the debt base of proposed changes to legislation, policy and business processes.

Based on the detailed analysis, Centrelink has started to develop program specific debt prevention strategies. The first group of strategies targets are Age Pension, Disability Support Pension, Sickness Allowance and Indigenous customers.

The analysis found that the current debts KPIs are not appropriate measures of performance. For example, the debt raising KPI only looks at activities completed and does not account for outstanding, undetermined activities. In addition, performance against the recovery KPI has been trending down since 2000 even though recoveries have actually increased over that period.

New debt raising and recovery KPIs that focus on management of debt raising processes have been developed and will replace the current KPIs from July 2004.

Debt prevention projects

In summary, the project protocols and arrangements set a consistent methodology of debt prevention project management, including clear validation and recommendation processes for debt management at the local, area and national levels.

The database will contain plans, reports and recommendations arising from debt prevention projects undertaken by the DPMO network. It will also list other project-related work such as the analysis of debt situations across customer groups, pilots or trial prevention work. All DPMO network members will have access to the database, which will help to provide important information and intelligence needed for effective planning and to conduct future debt prevention initiatives.

The project arrangements and protocols are designed to ensure that any recommendations fl owing from the project outcomes will be based on statistically valid results, thus providing Centrelink with strong assurances that any recommendations adopted will provide the anticipated results.

Debt Raising

In 2003–04 Centrelink exceeded its target of raising new debts within 56 days, with a result of 91 per cent against the target of 80 per cent. Table 4 summarises debts raised during 2003–04.

Debt recovery

Centrelink offers customers a range of payment options to repay their debts. Customers can pay their debts at any Australia Post outlet, by telephone, mail, over the Internet, or by direct debit. Cash, cheque, money order, and credit and debit card payments are all accepted. When a customer is unable to pay a debt in full, Centrelink attempts to negotiate a repayment arrangement that will recover the debt as quickly as possible without placing the customer in financial hardship.

In 2003–04 Centrelink undertook a major review of its debt recovery arrangements.

The review found some variation in performance across the network and unnecessarily complex procedures and processes for handling some debts. The review made a number of recommendations for improvement, including consolidating debt recovery into a small number of specialised sites and streamlined processes for handling some debts. These recommendations will be implemented in 2004–05.

Links with educational institutions

During 2003–04, the Business Transformation project established ‘proof of concept’ trials. To commence in June 2004, these will link Centrelink to educational institutions to evaluate automatic transfer of student data from universities and TAFEs.

Proposed outcomes from the trials are:

• 
  significantly reduced student debt levels
  
• 
  A new claim process initiated by a third party, placing the organisation in a better position to target its resources at student peak processing periods.
  

The proposed trial stages are:

• 
  Stage 1 June 2004—academic Proof of Concept trial with Curtin University and University of Queensland, enabling Centrelink to receive information when an academic change occurs
  
• 
  Stage 2 September 2004—enhancements to stage one, academic Proof of Concept trial with the TAFE sector
  
• 
  Stage 3 December 2004—Proof of Concept trial on third party-triggered new claims for students
  
• 
  Stage 4 January 2005—trial evaluations
  
• 
  Stage 5 March 2005—enhancements to the electronic transfer of new claim data trial functionality.
  

Once the trials and evaluations are completed, the Business Transformation project will involve looking at the development of a national strategy for the implementation of full functionality.

WORKING WITH TAFE TO DEFINE ‘FULL-TIME’ STUDENTS—QUEENSLAND

To help minimise and prevent student debt, Area Brisbane has signed a Memorandum of Understanding with Queensland TAFE, which includes an agreed definition of a ‘full-time’ student.

The TAFE enrolment project grew out of concerns from both TAFE and Centrelink about the very large numbers of TAFE students with a debt who were not deemed as full-time students by Centrelink.

Because of methods such as competency-based learning, some students would appear to be less than full-time in an ‘enrolment’ check, but would in fact be studying at the correct workload for payment eligibility.

The student policy team in Area Brisbane and Queensland TAFE developed a proposal to look at the students’ entire workload to determine their student status. This aligned with an agreement with TAFE Queensland on what can be considered a full-time workload, which will greatly reduce the significant debt problem that many students face.

Given the success of the Queensland project, educational institutions in other states are considering similar approaches.

Indigenous debt prevention

The Indigenous Services Team continues to work with other stakeholders in developing specific Indigenous debt prevention strategies. These strategies include:

• 
  increased awareness among Indigenous customers about their responsibilities, particularly the notification requirements for changes in personal circumstances
  
• 
  improved information products for customers and training tools for staff, to assist with reducing debt for Indigenous customers
  
• 
  Development of an ABSTUDY debt prevention and management strategy.
  

ABSTUDY debt management strategy

Centrelink is developing a debt management strategy to address the issues involved with ABSTUDY payments. During the year, debt analysis found substantial ABSTUDY customer debt arose from incorrect payments to educational institutions, or from ABSTUDY customers failing to commence studies, notify Centrelink about changes to course details or to inform Centrelink if they have stopped studying.

The debt strategy has four major elements, based on education, communication, accessibility and culture. By focusing on these, it is expected potential and current ABSTUDY customers, and their communities, will have a clearer understanding of payment entitlement criteria and be aware of customer obligations for receiving the payment.

Work undertaken during the year included updating ABSTUDY debt raising and management material in e-Reference, enhanced debt scripts and updating ABSTUDY debt training material.

Assurance of Support—Contributory Parents Migration Scheme

The Assurance of Support (AoS) scheme enables new migrants to come to Australia who might not otherwise be eligible to migrate. This is achieved by an Australian resident providing an assurance and signing an agreement to provide support to the new migrant. The assurer is liable to repay any debts that may arise if the new migrant receives certain social security payments, which are recoverable. Until 30 June 2003, the assurance was required for a period of two years.

Changes to the AoS scheme on 1 July 2003 introduced the Contributory Parent Migrant Scheme to assist Australian residents to bring their parents to Australia. This allows an extra 4000 parents to migrate each year. Under the scheme, the period for which the assurer agrees to provide support and repay any debts incurred if government payments are made is 10 years. Centrelink introduced system and procedural controls to ensure the successful introduction of this change.

The Government introduced changes to the AoS scheme in the May 2004 Budget. These changes move responsibility for the assessment of potential assurers from the Department of Immigration and Multicultural and Indigenous Affairs (DIMIA) portfolio to FaCS. Centrelink will undertake this responsibility on behalf of FaCS. The agencies have worked closely to ensure a smooth transition effective from 1 July 2004.

Residential Care Assessment

In 2003–04, Centrelink continued processing income assessments for aged care residents for the Department of Health and Ageing. These are to help determine residential care fees. Improved performance resulted from training completed in 2002–03 and sustained technical support.

Compliance measures

Review activity

Centrelink’s review activities are specifically aimed at the prevention, detection and deterrence of incorrect payments and fraud, to ensure customers are receiving their correct entitlements. The mechanisms Centrelink uses to detect incorrect payments and fraud include:

• 
  identity checks
  
• 
  data-matching with information held by Centrelink or obtained from other agencies/ organisations
  
• 
  tip-offs provided by the public
  
• 
  inter-agency compliance activities
  
• 
  data analysis
  
• 
  staff observation
  
• 
  Selecting customers for review based on their circumstances, duration of payments, or a specific event.
  

During 2003–04, Centrelink completed 4.1 million reviews of eligibility and entitlement on behalf of FaCS and the Department of Education, Science and Training. As a result, there were 709 923 reductions in payments (including payment cancellations). Savings to future outlays totalled $104.6 million a fortnight. Additionally, 382 326 debts were raised for recovery action to the value of $460.0 million as a result of this review activity (See Table 6.)

TABLE 6: CENTRELINK’S REVIEW ACTIVITY FOR FACS AND DEST

Agency	Reviews Completed	Reductions in payment		Fortnightly Savings	Debts
	No.	No.	%	$	No.	$
FaCS	4 108 593	708 164	17.2	104 159 698	378 247	452 817 756
DEST	12 603	1 759	14.0	402 891	4 079	7 140 509
Total	4 121 196	709 923	17.2	104 562 589	382 326	459 958 265

Source: Integrated Review System

Prosecution referral activity

During 2003–04, Centrelink referred 4471 matters to the Commonwealth Director of Public Prosecutions (DPP) for consideration of prosecution action. Of these, 4462 matters related to FaCS payments and nine matters related to DEST payments.

During the same period, the DPP prosecuted 3043 cases for fraud against FaCS payments with a conviction rate of 98 per cent, and for DEST payments 12 cases were prosecuted for fraud with a conviction rate of 92 per cent (see Table 7).

TABLE 7: CENTRELINK’S PROSECUTION ACTIVITY

Agency	Prosecuted	Dismissed	Convicted	Debt amount involved in convictions
FaCS	3 043	66	2 977	$36 622 195
DEST	12	1	11	$191 702
Total	3 055	67	2 988	$36 813 897

Data-matching

Data-matching is a major mechanism Centrelink uses to detect incorrect payment and fraud. In 2003–04, data-matching with information obtained from other Australian, state and territory government agencies, as well as non-government organisations, represented 14 per cent of all reviews conducted.

Further progress continued to be made with supplying electronic data to Centrelink. Electronic data has been provided to Centrelink by a private sector education provider and negotiations are under way to bring more private providers online. Education Queensland now provides a regular central data file that significantly enhances the quality of data-matching of information received from them.

State departments of corrective services are increasing the frequency of data provision, with New South Wales the latest to move to a weekly arrangement. Negotiations are also under way for additional data to identify jail escapees and others who are not eligible for payments from Centrelink.

Federal Budget data-matching initiatives

The 2003–04 Federal Budget provided funding for two data-matching initiatives that build on Centrelink’s existing compliance regime.

The initiatives focus on enhanced data-matching processes and expanded data matching activities. Both initiatives reflect the success of the 2002–03 pilots involving four consolidated sites that processed additional reviews, tested new data sources, and improved data-matching processes (see ‘Increasing and centralising data-matching work—Area Hunter’ on page 58).

In 2003–04, these projects led to savings and debts of $72.3 million, 24.3 per cent above the combined savings estimate of $58.2 million.

Data-matching for Community Development Employment Projects

An electronic data exchange process was implemented with the Torres Strait Regional Authority (TSRA) in June 2004 and will be implemented with Department of Employment and Workplace Relations (DEWR) in July 2004. (From 1 July 2004, DEWR is responsible for administering all CDEPs that were previously administered by Aboriginal and Torres Strait Islander Services.)

As of 1 July 2004, all CDEP processing in Centrelink will be undertaken in three consolidated CDEP Customer Service Support Centres.

Proposed initiatives to address current issues surrounding CDEP debts include:

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  developing a CDEP debt management strategy
  
• 
  identifying and introducing ‘better practice’ for payment correctness and recovery
  
• 
  working with external stakeholders to reduce CDEP debt occurrence
  
• 
  undertaking a risk analysis that focuses on identifying risks affecting payment correctness
  
• 
  monthly reporting of CDEP debts
  
• 
  Improving CDEP debt recording to enable easier identification of CDEP debts.
  

International data-matching

Centrelink has continued to develop its cooperative relationship with the Netherlands through the International Data-matching pilot. Under this pilot, Centrelink matches information about customers (and any spouses) who are receiving Dutch pensions with information provided by the Social Verzekings bank. The data-matching is able to identify customers who may have incorrectly declared their pension amount as well as payments made to the accounts of deceased people. During 2003–04, the pilot matching identified over $2.3 million in savings and debts. There are plans to undertake further matching next financial year using updated data.

INCREASING AND CENTRALISING DATA-MATCHING WORK—AREA HUNTER

As part of the 2003–04 Federal Budget, Centrelink’s Detection and Review Team received extra funding to significantly increase current data-matching work. The team’s main role is to undertake periodic reviews of customer entitlements to ensure payment correctness and to detect incorrect payments and fraud.

The new data-matching work was centralised across four national sites, including Area Hunter. Experience has shown that centralising compliance review work can deliver gains such as improved effectiveness, resource efficiencies, and a pooling of specialist skills. Located at Cardiff, the Area Hunter team is responsible for processing Tax File Number Declaration Forms and Pay as You Go reviews.

Operations in Cardiff started on 27 August 2003. Within a short time staff had undertaken significant training and development to bring them up to speed with the new review activities. This training and development investment, combined with the team’s strong commitment to the project, produced major dividends for Centrelink and the Australian Government. In 2003–04 the Hunter data-matching site exceeded its Tax File Number Declaration Form benchmark and made a substantial contribution to protecting the integrity of outlays by detecting incorrect Australian Government payments.

Optical surveillance

Introduced in 1999, optical surveillance continues to provide Centrelink with a useful tool to investigate complex fraud cases that, in the past, may have been concluded less successfully.

During 2003–04, Centrelink referred 3241 cases to surveillance providers. Within the same period, 3372 cases were finalized and resulted in debts or payment reductions in 60.1 per cent of cases referred. Savings to future outlays and debts of $24.4 million were identified.

Cash economy

Centrelink continues to use a range of measures to detect and investigate fraud associated with the cash economy. Activities include traditional desk-based reviews and individual field reviews. They also include joint field operations involving the Australian Federal Police (AFP), the Australian Taxation Office (ATO), and the Department of Immigration and Multicultural and Indigenous Affairs (DIMIA) and other Australian, state and territory agencies.

As members of the Cash Economy Working Group, Centrelink, the ATO and DIMIA work to improve their coordination of cash economy compliance activities.

Centrelink has had investigators out posted to the ATO since 1998. In 2003–04 this concept was extended to include a pilot with DIMIA.

During the year, Centrelink’s cash economy activities identified $33.0 million in savings and debts and 163 field operations were undertaken. In the past year, Centrelink’s cash economy, optical surveillance and identity fraud teams were amalgamated in Sydney and Melbourne. The teams’ co-location has led to more effective use of resources and better intelligence sharing.

‘Operation Hilton’ was one of the joint cash economy operations conducted during 2003–04, with a number of Centrelink customers identified as working for cash and receiving payments from Centrelink at the same time. Investigations revealed that a labour hire company was making ‘cash-in-hand’ payments to these customers. Several agencies were involved in the operation, which resulted in over 100 Centrelink customers having their benefits cancelled and some may face prosecution.

Tip-offs from the public

Centrelink investigates all public ‘tip-offs’ as a way of detecting abuses of the income support system.

From public tip-offs received in 2003–04, 72 473 reviews of customers were completed and 17 570 payments reduced. Review activity of tip-offs identified $156.7 million in savings and debts.

The investigation of tip-off information continues to build community confidence in the integrity of the social security system. The public can phone (Report fraud 13 7230), visit or write to Centrelink with tip-off information. Another way to report tip-off information is through Centrelink’s Report a fraud website at www.centrelink.gov.au. Tip-offs received via the site account for about 7 per cent of tip-offs received.

Increased focus on identity fraud investigations

Funding in the 2003–04 Federal Budget allocated extra resources for Centrelink to establish skilled investigative teams to increase the focus on identity-related fraud. Through better use of internal and external data sources to detect possible cases of identity fraud, the teams are now undertaking more complex investigative work in Centrelink’s service delivery network.

To build Centrelink’s capability to deal with identity fraud, a phased implementation commenced in January 2004 and will continue over several years. The initiative is expected to deliver $89 million in program savings over the next four years.

Australian Federal Police

Centrelink’s relationship with the Australian Federal Police (AFP) remains strong. In June 2004 they renewed their service agreement, first signed in 2001. The agreement provides the framework for cooperation between the agencies.

From compliance activity undertaken by Centrelink suspected cases of fraud are detected, and Centrelink and the AFP then collaboratively investigate these.

During 2003–04 three federal agents were out posted to Centrelink in Sydney, Perth and Melbourne. Additionally, the AFP co-located one agent in Centrelink’s Newcastle Office.

In June 2004, Centrelink and the AFP reached agreement on increasing the number of out posted federal agents to the equivalent of 9.5 in 2004–05.

When gathering evidence, the AFP’s involvement brings search powers and access to intelligence not directly available to Centrelink. As a result, the AFP’s involvement increases the possibility of convictions in cases referred for prosecution before the courts.

Extension of links with the Australian Taxation Office

Centrelink is exploring the use of new data sources with other agencies, particularly the Australian Taxation Office (ATO). This could lead to greater capacity to check for income and assets not disclosed by customers.

Australian Transaction Reports and Analysis Centre

In December 2003, legislative amendments were made to the Financial Transaction Reports Act 1988 to allow Centrelink access to Australian Transaction Reports Analysis Centre (AUSTRAC) data used in administering social security law.

In March 2004, a Memorandum of Understanding was signed between AUSTRAC and Centrelink that will facilitate access to financial transaction report information. This will enable delegated Centrelink employees to access significant cash transaction reports, international currency transfer reports, suspect transaction reports, and international funds transfer instructions.

Access to information held by AUSTRAC will also provide Centrelink with financial intelligence and other information from overseas financial intelligence units and assist in identifying customers involved in more serious fraud, who may currently go undetected.

Medicare and Pharmaceutical Benefits Scheme

Centrelink provides the Health Insurance Commission (HIC) with data so they can validate a customer’s entitlement to the Pharmaceutical Benefit Scheme (PBS) and the Medicare Safety Net. However HIC are unable to match all of the customer information that Centrelink ‘sends’ to them.

To improve the HIC’s matching success rate, in 2003–04 Centrelink was engaged to collect Medicare card numbers from unmatched customers.

As part of this exercise, a Medicare number training and collection process was developed. This involved Australia-wide training for Indigenous Customer Service Officers—who service remote communities—in collecting identified remote customer Medicare card numbers during community visits.

Australian Valuation Office

In 1985, the Australian Government introduced an assets test for social security pensions. The assets test was extended to benefits classed as ‘allowances’ in 1987. Assets test legislation is governed under the provisions of the Social Security Act 1991.

The Australian Valuation Office is the sole contractor of valuation services to Centrelink and plays an important role in assisting Centrelink in administering this legislation.

During 2003–04, a new Memorandum of Understanding for valuation services was negotiated between Centrelink and the Australian Valuation Office, which will operate for three years and includes the option of a two-year extension.

Concessions and related initiatives

In October and November 2003 Centrelink’s Concessions Team conducted successful consultations with state and territory government concession providers throughout Australia.

In response to these consultations, Centrelink introduced an electronic newsletter for concession providers in January 2004. CPNews provides information on developments with concession cards and related services. Through this initiative Centrelink is strengthening its relationship with concession providers and ensuring better service to customers. The response from state government, local government and private providers has been extremely positive.

Under a Department of Health and Ageing administrative reform, Centrelink developed a new computer system (Centrelink Entitlement Manager) to determine eligibility for Australian Government concession cards. The new system has made significant advances for Centrelink in the determination of entitlement and delivery of concession cards.

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