Centrelink debacle: A symptom of the Turnbull Government's war on welfare

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(Image via greenleft.org.au)

There is nothing fair about the Turnbull Government's pension cuts and Centrelink crackdowns, no matter how they spin it, writes John Passant.

THE GOVERNMENT'S ATTACKS on both pensioners and Centrelink recipients have come to the fore of national debate in 2017.

These attacks have only become possible because of the support of the Greens on pension "reform" and the ALP voting for the Government’s Omnibus savings Bill — a Bill which opened the way for the Centrelink "robo-debt" letters to welfare recipients.  

Labor has opposed the robo-debt letters. Linda Burnie has called for the Auditor-General to investigate, given the number of incorrect assessments. Anthony Albanese has called the letters callous and used two constituents, one of whom was receiving chemo at the time of his payments, to highlight the errors in the system.

The Government has spun the pension attacks to give the impression they are about removing rich people from the pension. The rich – in colloquial terms, the 1% – will never receive the pension. They are too busy using massive tax concessions to horde money away for when they can retire on $500,000 a year tax-free superannuation pensions.

The pension "reforms" are an attack on those on moderate incomes in retirement

As reported by Jackson Stiles in The New Daily, according to a study from the University of Melbourne and advisory company Willis Towers Watson:

'When the changed pension assets test was factored in, the percentage of Australian couples that slipped into "uncomfortable" retirement (defined by ASFA as less than $58,128 per annum in 2014 dollars) increased dramatically. 62% of couples were able to retire comfortably under the old rules, but only 51% under the new rules.'

At 35% of pensioners, Australia has the second highest level living below the poverty line of all the OECD countries. These "reforms" won’t change that in any fundamental way. 

A government that lies about "rich" pensioners (and sucks in sections of the left) will also attack Centrelink recipients such as the unemployed, the sick, students and many others. It is part of the strategy of rolling back the welfare state — a process that has been ongoing in the developed world since the 1970s.

Those on unemployment benefits of $264 a week are not rich. They are poor. A single person on the dole is seriously below the poverty line for a single person in 2014 of $426 a week. This graph from an Australia Institute Report in August 2016 highlights the 32% gap.  

Figure 1: Trends in compliance reviews, 1997–08 to 2008–09 Source tai.org.au

Australia’s welfare system is tightly targeted.

As Phillip Soos notes in Macrobusiness:

'While the government and certain sections of the mass media pretend Australia has an out-of-control welfare system, the facts demonstrate Australia has some of the smallest welfare expenditures relative to GDP, easily the most well-targeted and has the highest “target-efficiency” (each dollar in spending reduces income inequality the most) in the OECD.'

The fraud argument the government and Centrelink use is a furphy.

Tim Prenzler, in a report for the Australian Institute of Criminology, uses Centrelink’s own prosecution figures (see table below) and other figures across all welfare payments.

Source: aic.gov.au

Prenzler says:

Table 1 reports on the outcomes of reviews for the three year period 2006–07 to 2008–09. Of note is the fact that typically, only 15.7% of reviews led to cancellations or reductions in payments. Of these, as few as 0.8% were referred to the Commonwealth Director of Public Prosecutions (CDPP); with 0.5% being prosecuted. Prosecutions resulted in a 98.8% conviction rate. Overall, in the three years, 0.04% of customers were convicted of fraud. For the same period, fraud investigations were estimated to have produced $380.6m in gross savings and amounts targeted for recovery. This compares with $1.4b in overpayments identified and debts generated from the review process. Fraud, therefore, accounted for approximately 26.2% of invalid payments. Furthermore, on average, only 15.1% of investigations resulted in a prosecution referral. In 2008–09, Centrelink referrals accounted for 69% of defendants prosecuted by the CDPP (2009: 115–116).

The level of successful prosecutions was, let me repeat, 0.04% of recipients over the three years. (Although that figure might be a typing error and should perhaps be 0.4%.)  

This new automated data matching system is fundamentally flawed — "a weapon of math destruction", as Peter Martin eloquently describes it. For example, averaging out a person’s income over 12 months, which is what the data matching algorithm does, will produce many incorrect assessments, with the onus then on the recipient to prove he or she did not make a false claim.

Even on the Government’s figures, 20% of those receiving the letters do not owe the debt Centrelink claims. The real figure is likely to be much worse.

As Christopher Knaus in The Guardian revealed:

'The source [a Centrelink compliance officer] said of the hundreds of cases they had reviewed, only about 20 (at a “generous estimate”) turned out to be genuine debts.' 

This is not about addressing fraud. It about terrorising poor people, the unemployed, the sick and students, to name a few. Much as it has done with the hyper-terrorism threat, the government is promoting fear for political and ideological purposes. The fearmongering is working. People are becoming suicidal.

In light of the rise of One Nation, the government hopes that attacking "dole bludgers" will bring back some lost supporters to the fold.

Why concentrate on screwing poor people and those just above them in the income stakes but do nothing about the 679 big businesses which paid no income tax on gross revenue of $462 billion in 2014/15? The answer is simple. It is the same reason they do nothing about their own entitlement rorts or superannuation scheme. They are part of the 1% and share the culture of entitlement many capitalists have.

Politicians don't get prosecuted for catching a helicopter from Melbourne to Geelong, or arranging their travel and work to buy a $795,000 Gold Coast unit, among a myriad of other sins. As I have written before, the political system is corrupt.  

This war on welfare is never-ending. It is part of the one-sided class war waged against workers for the last three decades in Australia. Company tax cuts to address falling profit rates depend on stealing money from pensioners, the unemployed, the sick, single parents, students — it will not stop unless we fight back.

We need to oppose any attack on welfare payments. We should argue for a universal living pension for all who reach 65, irrespective of wealth. Asset and income tests are tools for excluding those who need the payments.

We should argue for a living payment for those on other welfare benefits such as unemployment and sickness benefits, and for students.

We could fund these by abolishing the $30 billion of tax concessions going to superannuation ($17 billion of which goes to the top 10% of income earners). Limiting negative gearing to rental income and abolishing the capital gains tax concession – concessions which go overwhelmingly to the top 10% – would raise another $10 billion or so.

A more progressive income tax system could get much more out of the rich during their working lives. Estate duties could get serious money out of the estates of the rich when they die. Both would help fund progressive initiatives.

Inequality and poverty in Australia are growing. There are now 2.9 million people living in poverty, including 731,300 kids. The Government’s attacks on pensioners and Centrelink clients will add to that number.

As Piketty points out, the best way to address inequality is for workers to win fair wages — that is, big real wage increases.

For a just and equitable Australia, we need to act decisively. We need to fight back now.

John Passant is a former Assistant Commissioner of Taxation. Read more by John on his website En Passant or follow him on Twitter @JohnPassant.

Signed copies of John Passant’s first book of poetry, Songs for the Band Unformed (Ginninderra Press 2016) are available for purchase from the IA store HERE.

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