Annual Report 2001–02

Management and accountability PDF (376kb)

Right payments to the right people

This section looks at the things FaCS achieves in terms of ensuring that the right payments go to the right people.

Simplification

A Simpler Way is the report of a taskforce of specialist FaCS and Centrelink staff set up to simplify administrative arrangements for clients when they access income support payments. The taskforce made 20 recommendations for cutting red tape and enabling better ways of doing business through:

reducing duplication and the number of processes clients are required to go through
making access to payments and services easier
better understanding clients’ characteristics and needs
adopting a simplification framework for designing services and programs across the social security system.

FaCS, Centrelink and the Department of Employment and Workplace Relations are working to implement the recommendations. Those already introduced make for simpler claim and administrative processes for clients—for example, proof of identification arrangements, streamlined transfers of eligible clients on income support payment to the Age Pension, and simpler forms. Work is continuing on profiling (see Profiling section below), the Centrelink Customer Account, and enabling clients to obtain ‘advances’ over the phone.

Profiling

Profiling—used for identifying clients who need a greater level of service and preventing incorrect payment at the same time—will be phased in from July 2002 to save an estimated additional $117 million a year from an increase in cancellations, rate variations and overpayments.

Profiling will replace some current reviews, including duration-based program reviews, with contacts based on client characteristics for Newstart Allowance, Youth Allowance, Mature Age Allowance, Widow Allowance, Partner Allowance, Parenting Payment, Age Pension, Wife Pension (Age) and Widow B Pension.

Business assurance

FaCS developed a business assurance framework jointly with Centrelink for implementation from 2002–03. With an initial focus on the risks of incorrect income support payments, the framework is based on agreed definitions of payment correctness and accuracy, and incorporates a process of external validation.

Control of program fraud and incorrect payment

On FaCS’s behalf, Centrelink makes sure that controls are in place to minimise the risk of fraud and incorrectness in payments. The agencies’ Business Partnership Agreement details these controls and provides a framework for maximising correct payment.

This framework consists of three key strategies:

prevention, through systems and procedures to minimise the risk of incorrect payment
detection, through processes to detect incorrect payments as soon as possible and to correct them promptly
deterrence: promoting voluntary compliance through creating a public recognition of the risks and penalties involved in attempting to fraudulently receive payments, including likelihood of detection, recovery of debts and possible prosecution.

Under these key strategies FaCS requires Centrelink to:

develop, implement, and support systems and procedures to prevent, identify, investigate and deter incorrect payments and fraud
undertake activities in debt prevention; reviews; debt identification, raising and recovery; and prosecution
monitor, analyse and report on performance.

Control strategies aim to prevent incorrect payments rather than detect them later. The controls are risk-based and Centrelink gives due consideration, in consultation with FaCS, to cost efficiency and good client service.

Debts are identified and raised in an accurate and timely manner to specified standards, and affected clients are notified of adverse determinations resulting from reviews affecting a rate of payment, raising a debt, recovering a debt or instituting prosecution proceedings.

Reviews apply natural justice, so in adverse determinations the client can comment on the reasons for action taken.

FaCS also requires Centrelink to provide an assurance of correct payment by:

adhering to agreed procedures and processes to maximise correct payments, and providing ongoing assessment of control framework effectiveness, particularly proof-of-identity procedures to minimise identity fraud
undertaking, in consultation with FaCS, 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 continually monitors performance to measure the success of the control framework and service provider performance. At a departmental level, the impact of compliance activities on outlays indicates performance.

Maximising correctness of payments

Debt prevention

Through its business partnership with Centrelink, FaCS emphasises preventive measures for all dealings with clients by ensuring a framework of procedures, controls and systems, including:

undertaking identification checks
issuing appropriate claim forms to clients and alerting clients to their obligations and existing detection mechanisms
verifying critical facts clients supply
selectively applying risk-based admission procedures to ensure resources go to those cases where perceived risk of incorrect payment is greatest
requiring clients to provide their Tax File Numbers as a condition for receipt of payment.

In addition, FaCS requires benefits be paid directly into client accounts to reduce the occurrence of fraudulent negotiation of cheques and false claims for duplicate cheques.

Dealing decisively with detected cases of incorrect payment encourages voluntary compliance. This helps the public recognise the risks and penalties involved in attempting to fraudulently claim payments. Centrelink must:

promptly identify and investigate (or refer to the Australian Federal Police) possible offences
refer appropriate cases to the Director of Public Prosecutions for possible prosecution.

Procedural requirements make clients aware of their obligations and prosecution outcomes are publicised.

Detection

Review activity

FaCS funds Centrelink to undertake particular review activities to target identified risks. All review activity is conducted in accordance with the Privacy Act 1988.

Data matching

Data 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 changes.

Data matching activities include:

Australian Taxation Office (ATO) individual tax data
ATO employment declaration forms
ATO rental assets data
state and territory Registrars General deaths data
Department of Immigration, Multicultural and Indigenous Affairs immigration records
state and territory departments of corrective services data
Defence Housing Authority and Commonwealth Superannuation Administration data
enrolments of Youth Allowance/Austudy Payment clients.

Other activities

Other methods to identify possible incorrect payments include:

joint case work between Centrelink and the ATO
information from members of the public
risk-based review selections generated from statistical analysis of client characteristics
reviews to examine client entitlements at a specific time in their duration on payment.

Identity fraud

Sophisticated computer detection methods continue to detect identity-related fraud. In 2001–02, these methods identified 238 cases of identity fraud. This relates to 599 claims for payment as one fraudulent identity may be used for a number of claims.

Debt recovery

FaCS, through Centrelink, recovers debts by withholding ongoing payments and recovering cash repayments. In certain cases, garnishee action recovers debts from tax refunds and other lump-sum payments.

Clients are not placed in undue hardship from withholding ongoing payments or garnishee action. Data matching detects debtors who have started work.

Two contracted mercantile agents (Laurens and Co, and Dun and Bradstreet) also collect debts when the debtor’s whereabouts are unknown or it is not cost-effective to pursue the debts through standard debt recovery processes.

Compensation

Compensation provisions reflect the principle that income support for people who suffer compensable injuries mainly lies with relevant compensation authorities, rather than with the taxpayer-funded social security system.

Compensation provisions provided for:

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.
recovery of past payments of social security from arrears payments of periodic compensation payments and lump-sum compensation payments.
preclusion periods within which social security payments cannot be paid due to the receipt of lump-sum compensation payments.

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 2001–02, application of the compliance provisions achieved estimated savings to outlays of $418.5 million.

Prosecutions

Where clients may have committed offences against the 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 possible prosecution action.

In 2001–02, 3732 cases of alleged social security fraud were referred to the Director of Public Prosecutions. The courts dealt with 2893 cases resulting in 2856 (98.7 per cent) convictions.

Research and development

During 2001–02, FaCS and Centrelink conducted random sample surveys on 3000 Parenting Payment (single), 500 Carer Payment, 500 Carer Allowance and 3000 Disability Support Pension clients. A survey of 3000 Parenting Payment (partnered) client reviews began in 2001–02 and will be completed in September 2002. The random sample surveys measure the level of payment incorrectness for these payments as well as providing data on the reasons for incorrectness and the effectiveness of the overall control framework for managing payment correctness.

Achievements

Savings to outlays

Review activity achieved $40.55 million in savings to future fortnightly outlays.
Review activity raised debts of $337.43 million.

Review activity

Centrelink reviewed 2 537 759 social security payments. Of these, 1 056 457 were compliance reviews.
Compliance review activity resulted in 103 688 social security payments (9.8 per cent) being cancelled or reduced. Overall, 34.7 per cent of compliance reviews identified an incorrect payment.

Debt prevention

Debt raising and recovery

Centrelink raised 2 272 310 FaCS and Family Assistance Office debts, valued at $1433.48 million.
Recoveries of FaCS and Family Assistance Office debts by cash and withholdings amounted to $729.42 million. These figures include compensation debts.
Total recoveries were equivalent to 81 per cent of the amount of new debt raised over the same period, and 85 per cent were raised within 56 days (targets: 80 per cent). (Family Assistance Office debts have been excluded because of the effect of special recovery procedures introduced for 2001–02.)

Prosecutions

88 per cent of cases met Director of Public Prosecutions’ quality requirements (target: at least 80 per cent).

Budget measures

Prevention

The new proof of identity model was implemented on 1 September 2001.

Detection

New data-matching exercises with the ATO began on 1 July 2001 to improve detection of incorrect payments by looking at undeclared property assets and income. More resources have been allocated to process reviews from ‘tip-offs’ received from the public. The level of administered expense savings and the cost-effectiveness of the reviews determine the success of the measures.

Research and development

To help detect employment and business-derived income not reported to Centrelink, FaCS is conducting feasibility studies to look at the effectiveness of:

data matching with ATO group certificates
data matching with the Australian Business Number (ABN).

The studies will be evaluated in their second year.

Communication campaign

As 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. The campaign targeted people on Newstart Allowance and Youth Allowance and Parenting Payment (single). Products were also developed for people from diverse cultural and linguistic backgrounds and Aboriginal and Torres Strait Islander people.

Preliminary research shows that people who saw, heard or read the Support the System that Supports You advertising products have a better understanding of Centrelink notification obligations than those who have not. Feedback from members of the public has been positive and initial case studies are indicating that the campaign is a success.

A second burst of advertising is scheduled for September 2002.