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Issue #1606      August 14, 2013

Centrelink bill-paying system told to lift its game

An independent review of Centrelink’s free bill-paying scheme that assists people manage their finances has been told to lift its game. The review found that Centrelink lacked the financial acumen to run the scheme, and that “this resulted in laissez-faire commercial practices harming Centrelink customers.”

“Centrepay is an extremely valuable and important service, and it’s critical that it be given a new lease of life,” said Maree O’Halloran of the National Welfare Rights Network.

“Of the 13,540 businesses that are approved by Centrelink to offer Centrepay, most are honest and treat people fairly. However, some business operators have been unscrupulous about signing people to the system. The report highlights the need to better protect vulnerable income support recipients and communities.”

The study supported claims by welfare groups that Centrelink failed to adequately promote take-up and awareness of Centrepay, arguing that “if Centrepay was more widely used by vulnerable groups, there may be less impetus for programs such as Compulsory Income Management.”

Centrepay is used by just 9.3 percent of income support recipients, with the average person having three deductions from their Centrepay account. Started in 1998 as a service to assist Indigenous clients manage their finances, Centrepay has experienced phenomenal growth since then, doubling in size since 2007, to 557,690 users in February 2013. The scheme distributes nearly $2 billion of income recipients’ funds each year.

Indigenous people are heavy users of the scheme, accounting for 15 percent of Centrepay participants, and have, on average, higher levels of deductions through the scheme. Utilities and housing accounts for over three quarters of all Centrepay revenue. Improved consumer safeguards are needed, as the report notes that 35 percent of people receiving a Centrelink payment “have some form of language or literacy issue impending them from readily accessing or understanding … financial documentation”.

The Department of Human Services has a duty of care to ensure that participating businesses do not place already vulnerable people at risk of increased financial hardship.

“It is critically important that people on low incomes including people with vulnerabilities who use the scheme and the broader community maintain confidence with the Centrepay system,” said Ms O’Halloran.

“It is certainly the case that a lack of oversight and responsiveness has resulted in some vulnerable people being harmed by a system that is meant to assist. This report is a wake-up call that there can be no more business as usual at Centrepay.

“To be blunt, a laissez-faire approach was highlighted by the independent review with respect to risk assessment, IT issues, monitoring, compliance and complaints. This approach has been harmful to some of the nation’s most vulnerable people.

“Welfare and financial counselling groups have argued that Centrepay lost its way – this report is a road map about how it can get back on track.

“Welfare Rights is pleased that the Minister for Human Services, Senator Jan McLucas, has supported most of the recommendations in the independent review.”   

Next article – Murdoch, Labor and the “free press”

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