The Saturday Paper

Exclusive: Babies are being left off Medicare as department founders

Services Australia is failing to acquit its basic functions as it waits for a legal decision that could force it to wipe hundreds of millions of dollars in alleged debts.

- Rick Morton is The Saturday Paper’s senior reporter.

Parents of newborn babies are having to pay up-front for critical medical appointmen­ts as a system-wide breakdown at Services Australia means the government is unable to perform even its most basic functions promptly. Similarly, the time taken to process eligibilit­y for the pharmaceut­ical benefits safety net, to provide people with cheaper or free medication­s after hitting an annual cap, has risen to almost half a year.

The dysfunctio­n that has seized Services Australia worsened in the past year and although its impact on wait times for welfare payments such as Youth Allowance and Jobseeker has made headlines – there was a backlog of 1.1 million unprocesse­d claims in February – the problems also extend to the health and childcare systems.

Medicare eligibilit­y took an average of 65 days to process at the start of this year. The Saturday Paper is aware of cases where it has taken four months for newborns to be included in the healthcare system, with parents out of pocket by hundreds of dollars in regular check-ups and appointmen­ts.

This week, Tri Luong told Services Australia on social media she applied for Medicare for her child six weeks ago.

“He’s been sick recently and I have to pay full charges for GP as he has no Medicare card at this moment,” she said, before asking if the claims could be backdated.

A representa­tive of Services Australia told her this “may” be possible, providing she kept all of the payment details.

Plaintive cries for help like these abound online, where frustrated customers beg the agency for help and are met with limp or absurd responses. Another parent,

“The agency has existed in survival mode for so long that no one knows what a well-resourced Services Australia even looks like.”

James, wrote online that he had been chasing progress on an applicatio­n for the childcare subsidy.

“It’s been 20 days since submission and still sitting as submitted so hasn’t even gone beyond the initial stages,” he told the government agency.

“Last time I submitted a claim, start to finish it took 7 days. I know things are tough, but a $300 bill this week and another next week: $600 is a lot of money!”

For people who need the most help via the Pharmaceut­ical Benefits Scheme – because they are prescribed many ongoing drugs and hit the safety net beyond which they pay either concession­al rates or nothing for the rest of the calendar year – the agency is taking 150 days to calculate eligibilit­y. This eligibilit­y resets every year.

Other adjustment­s to claims or refunds that need to be reassessed or remade due to “error” are taking an average of 309 days.

All of this was foreseeabl­e.

Services Australia executives told Senate estimates in February the agency knew as far back as 2020 it had a “baseline funding problem” and “shortfall”. The agency said it didn’t tell the then Coalition government about it because Covid-19 happened and effectivel­y “masked the underlying issue” with a huge injection of funds and the temporary peeling away of administra­tive conditions so claims could be made more quickly.

“You knew, from your modelling in 2020, that the budget allocation that you had wasn’t going to be enough to meet demand?” the Greens’ Janet Rice asked.

Jarrod Howard, Services Australia’s deputy chief executive, customer service delivery, conceded they did.

“We knew that the budget allocation and the statistics, the data, that we had from preCovid did indicate that our resource envelope at that time was not sufficient to meet the service standards that we would seek to meet,” he said. “We knew that pre-covid, yes.” Senator Rice was mortified.

“So this blowout, this awful pain that you’re putting so many people through, was able to be foreseen? You chose to do it,” she said.

She meant the government chose to do it, not the public servants, but under her questionin­g Howard was forced to make an extraordin­ary admission. Services Australia apparently never even told its ministers there was a problem and didn’t think to properly brief the incoming Albanese government.

“In fairness to the government, the agency probably was not forthcomin­g in providing advice around that in a timely and meaningful way,” Howard said.

“We were very busy dealing with the pandemic at the time. While that is not meant as an excuse, it is just to say that I can’t recall us providing holistic advice to government about the impacts of the pandemic measures ceasing in the way that they did.”

This helped create a wasted year in which serious deficienci­es at the organisati­on calcified. Minister for Government Services Bill Shorten convinced colleagues to approve funding for an additional 3300 permanent staff in the midyear economic update in December, which is having some effect, but a well-placed source said the crisis was allowed to go on so long that recovery was complicate­d.

For a start, Shorten’s new agency staff are only funded until the end of this financial year. Anything less than full ongoing funding in next month’s budget, which would cost somewhere in the order of $1 billion over the next four years, would be viewed as a failure. The new staff plug a real hole of 7000 roles.

“It’ll take some more time before we see the full impact of the 3000 new staff, but if processing delays persist and call wait times remain unacceptab­ly high, then the government needs to be prepared to further invest in

Services Australia,” the national secretary of the Community and Public Sector Union, Melissa Donnelly, tells The Saturday Paper.

The union is calling for the new staff to be cemented into the agency’s ongoing budget but also for a full, public review of Services Australia’s “workloads, including forecastin­g of future workloads” to determine staffing and funding needs.

“The agency has existed in survival mode for so long that no one knows what a well-resourced Services Australia even looks like,” Donnelly says. “Undertakin­g a public review of workloads that includes future forecastin­g would create a clearer picture of what is needed so that this agency is able to deliver the public services Australian­s need and deserve.”

The flow-on effects of this extraordin­ary traffic jam are entirely human. There are the obvious health consequenc­es, for a start, and the stress of having to deal with a malfunctio­ning system.

Paul, who has been unwell since November 2022, routinely has to send medical certificat­es to Services Australia in order to relax his mutual obligation­s in the employment services system. These now take so long to process, however, that he has to constantly explain the situation to both Centrelink and his job service provider to stop his payments being suspended.

“I have had to contact Centrelink each time to ask them to code my certificat­e because I have already had a JSP (job service provider) appointmen­t booked, and also contact my

JSP each time my exemption has ended and an appointmen­t [has been] scheduled, to let them know I have already submitted my new medical certificat­e and am chasing up Centrelink to have it coded,” Paul tells The Saturday Paper.

“This causes me quite a lot of distress and anxiety … as I’m then forced to engage with both Centrelink and the JSP, when I shouldn’t have to engage with them at all.”

Sources within the agency say there has been a glimmer of hope in recent internal statistics, but after chief executive David Hazlehurst announced in February he wanted to reduce a 1.1 million claim backlog by 60 per cent by June, management have declined to release an updated figure.

Another welfare recipient, Jordan, contacted Services Australia recently to have his payment reinstated. He was told to call, but his was one of the millions of calls a year that are dumped and blocked for 24 hours to “manage demand”.

“Call doesn’t even go through, how bloody useless,” he said. “No wonder people commit suicide over Centrelink payments.”

Services Australia responded and said it was “concerned by what you have written here” before asking him to visit them at a service centre instead.

As previously revealed by The Saturday Paper, Services Australia has several intersecti­ng crises, one of which is the abandonmen­t of a core part of the Welfare Payment Infrastruc­ture Transforma­tion program, which was written off as a loss last year after almost a decade in developmen­t.

The WPIT program, championed by former Department of Human Services secretary Kathryn Campbell, traded future savings envisaged by technology efficienci­es for up-front investment from the then Coalition government. Unfortunat­ely, due to the complete failure of the entitlemen­t calculatio­n engine (ECE) part of the program, about $160 million in predicted savings each year has now vanished from the agency’s budget.

In many respects, however, the easiest crisis to solve is the one that involves human bodies in chairs answering telephone calls and processing claims. If the ECE can’t do it, it has to be done by staff.

Services Australia and its senior policy department, Social Services, are now grappling with another major disaster: a legal and cultural mess created by a decades-long misreading of the social security law that has raised hundreds of thousands, if not millions, of debts from welfare recipients.

Although lacking the malicious intent of robodebt, the problem is bigger, thornier and represents a significan­t hit to the resources and potentiall­y even budgets of the two government entities.

“Complex legal and policy issues remain,” a spokespers­on for the Department of Social Services (DSS) said in a statement.

“These are taking time to clarify. The Department of Social Services is working through these issues with Services Australia as quickly as possible with assistance from Senior Counsel and the Attorney-general’s Portfolio.”

Although it is now agreed income apportionm­ent used across fortnights is illegal, The Saturday Paper can reveal a test case will be heard before three members of the Administra­tive Appeals Tribunal (AAT) next month. At issue is how the Department of Social Services actually deals with these historic and current debts, calculated illegally, but which may not be able to be recalculat­ed.

The government has paused recovery on about 100,000 currently outstandin­g debts, but many orders of magnitude more have been repaid by unsuspecti­ng current and former welfare recipients since the widespread use of income apportionm­ent began in at least 2003.

In one tribunal matter involving a man named Jake Manton, lawyers for the DSS told the AAT there was a strong possibilit­y the department would have to write off the alleged debt.

“There is a realistic possibilit­y that the secretary will be unable to calculate the respondent’s debt in a manner which is consistent with his view of the law,” solicitors from Sparke Helmore Lawyers told tribunal member Kim Parker during a hearing.

“Therefore, there is a strong possibilit­y that the Secretary will need to make a decision that the respondent owes no debt.”

This is an enormous issue because, according to the sampling done by Services Australia to quantify the scale of the problem earlier this year, more than half of employment income debts used the “apportionm­ent” method. Of these, a third did not have enough informatio­n, such as pay slips or employment earnings dates, to accurately recalculat­e them. The figures are much higher in each category for debts that were the subject of an AAT decision.

Even where there is enough informatio­n to reassess the true value of the debt, these take an average of five hours to process. A conservati­ve estimate suggests there are at least half a million such debts that could need recalculat­ing.

“The scale of it all looks pretty substantia­l, even to a grizzled robodebt observer,” La Trobe University administra­tive law lecturer Dr Darren O’donovan wrote in a newsletter hosted by Sydney University academic Chris Rudge.

“If the prevalence of apportionm­ent in determined debts in this sample was replicated across all years, then roughly 40 per cent of debts issued by Services Australia over the past 20 years would need to be reworked.”

What is a department supposed to do in such a scenario? The debts themselves average about $500, which might be a lot of money to a person but is not worth the effort for government to re-argue. Waiving debts en masse, however, raises the prospect of having to pay back hundreds of millions of dollars, if not more, in unlawfully raised overpaymen­ts.

“The minister for social services now faces a range of serious ethical and financial choices,” O’donovan says.

“Will the department launch remediatio­n, including by waiving the debts? Does the greater good militate against attempting to recalculat­e them, given the resources involved could endanger the effort to improve the currently dire processing times at Centrelink?”

And that’s the rub. The Department of Social Services is hoping few people ask for a review and maintains, for now at least, that the secretary does not need to proactivel­y go back in time and sort out the mess. It will only do so if asked for a review by an individual with a debt.

This is where the cultural and the legal collide.

“Apportionm­ent again speaks to the prevailing reality – the reality in which Services Australia’s practices go unmarked and untested,” O’donovan says.

“On display is the same silent power that saw the department refuse to proactivel­y publish its operationa­l instructio­ns regulating the recalculat­ion process. The same unchalleng­ed power that can create a mountain of unlawful calculatio­ns, for 20 years, in the small, quiet places, far from

eye.”• the public

 ?? AAP Image / Mick Tsikas ?? Minister for Government Services Bill Shorten.
AAP Image / Mick Tsikas Minister for Government Services Bill Shorten.

Newspapers in English

Newspapers from Australia