'Bad timing': Services Australia readies debt collection as unemployment remains high

The federal agency at the centre of the controversial robodebt scheme and subsequent record-breaking class action has called on debt collection services from three agencies totalling $8.25 million, government contract notices showed.

The contracts issued for services between July 2020 and June 2021 were expected to resume from February next year with debts still being raised for serious non-compliance or fraud during the pandemic.

The agency added external debt collectors only represented around 6 per cent of the total debt raised during the 2019-20 financial year.

Craig Wallace, policy manager at ACT Council of Social Service, said the resumption of debt recovery amid economic gloom and the agency's willingness to bring on external contractors was bad timing.

"This is bad timing to be focusing on resuming receiving debt collection activity," Mr Wallace said.

"I think it sends a poor message about the prioritisation of government efforts given income support recipients are struggling to locate employment opportunities, to put food on the table and to manage with the consequences of the pandemic.

"Many Australians now have been brought into contact with the income support system who've never been in contact with it before and are coming to terms with how onerous and complex some of the compliance requirements are.

"No one needs the extra stress, particularly at Christmas time, of suddenly feeling like they might be hit with debt."

The agency, which paused the majority of its debt collection April, 3 2020 due to COVID-19, still managed to raise $373.7 million in social welfare debts from 506,802 people by the end of October. It's a figure the agency notes is around half the expected amount of debts it would typically deal with.

From early November, Services Australia began notifying recipients it believed had been overpaid. It said payments would not need to be paid until February next year.

"Delaying debt recovery until February 2021 recognises the difficulties many people are still facing," a spokesperson said.

"It is providing time for people to consider their circumstances, engage with Services Australia about their options in a transparent way, and plan for their future.

"As debt activity starts again, Services Australia will work with people to make the process as clear and simple as possible. The agency will explain how debts arose, where to go for more information, how to self-service and offer other support."

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The resumption of debt recovery comes at a dire time for many Australians. The federal government's Mid-Year Economic and Fiscal Outlook released last week showed unemployment was expected to peak at 7.5 per cent in March 2021 - a month after debt recovery activities resume.

It's for this reason Mr Wallace believed the former human services department should instead focus on supporting those who were most in need.

"Services Australia should be focusing on supporting the additional income support customers who are coping with unemployment and exclusion from the labour market," Mr Wallace said.

"[It] should be investing in new systems which learn from the results of the numerous inquiries, including the senate inquiry into robodebt, and ensuring that we have the human factor and human systems and human resources within Centrelink that can make appropriately nuanced, fully informed and discretionary decisions.

"Hearing about an outsourcing regime of this size once again is not comforting."