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.
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