A government-appointed reviewer who warned the government of serious problems with its Centrepay debt recovery system 11 years ago says her report was “mostly buried” and ignored and has expressed “huge sadness” that people continued to suffer.
Anna Buduls was tasked by the Gillard government in 2012 to review the controversial system. She recommended a significant overhaul of the system to stop the “exploitation of financially vulnerable people by some unscrupulous operators”.
Buduls, who was made an Officer of the Order of Australia in 2018 in part due to her advocacy to reduce homelessness, says her report was delivered just before the Coalition won government in 2013.
“It has been mostly buried ever since, although there was a flurry of minor activity around some of its recommendations in 2015,” she told Guardian Australia.
More than a decade later, the Labor government has again initiated a review of the system after Guardian Australia revealed shocking alleged examples of non-compliance, including by rent-to-buy operators targeting remote Indigenous communities, an extreme Christian rehabilitation centre allegedly practicing gay conversion therapy and exorcisms and three major energy retailers who allegedly used Centrepay to continue deducting money from the welfare payments of hundreds of departed customers.
Buduls said she feels a “huge sadness” that the system has been allowed to continue to cause financial harm to vulnerable Australians – including Indigenous Australians – in the years since her report.
“Why has the system been allowed to persist when everyone in the regulatory space and government already knew about its shortcomings?” she said.
“If there’s something that really drives me, it’s equity. Having people still being ripped off is just so unfair.”
Q&A
What is Centrepay?
Show
Centrepay was established in 1998 under the Howard government as a voluntary bill-paying service for people receiving Centrelink payments to make automatic deductions for essentials like rent and utilities.
It currently has more than 620,000 users. A large percentage of them are receiving disability support payments. Almost a third are Aboriginal people, predominantly women, from remote areas, receiving jobseeker or parenting payments.
Over time Centrepay has expanded to include a range of businesses and services.
There are now more than 15,000 companies approved to access Centrepay, which facilitated 23.7 million transactions last year worth $2.7bn. Each transaction incurs a 99c fee, paid to the government by businesses using the system.
Over the past decade, consumer advocates have raised concerns that several of the businesses registered to access Centrepay may be causing financial harm to vulnerable customers.
The corporate regulator is investigating dozens of companies. At least four that it has already penalised remain on the system.
In May 2024, the government announced a full review of the system to increase compliance, transparency and strengthen auditing processes.
Services Australia, which operates the system, says it is working towards improving delivery.
In 2022-23, contracts ended for 12 Centrepay businesses due to non-compliance.
The Centrepay system was designed as a voluntary bill-paying service that allows welfare recipients to make sure they first pay for essentials, like rent and healthcare, provided by approved businesses.
But the federal government has since allowed alleged predatory businesses access to the system – including the targets of Asic investigations – giving them direct access to a person’s welfare payments prior to them hitting their bank accounts.
At the same time, the government’s enforcement and policing of the system has been roundly criticised, including by Asic, which repeatedly warned Services Australia that it should review and consider removing more than 100 companies from the scheme. The corporate regulator said the warnings didn’t have “any impact”.
In her 2013 report, Buduls warned of the dangers of a relaxed approach to compliance.
“This hands-off approach has at times left highly vulnerable Centrelink customers worse off through their dealings with Centrepay [and] uncertain how to raise concerns about service provider practices or how these concerns would be handled,” she warned.
She recommended a code of conduct be developed to ensure the government had a “stick” with which to threaten approved Centrepay businesses for misbehaviour.
after newsletter promotion
Buduls had advised a dedicated Centrepay complaints phone line be set up – something that was not done but is again being explored in the current reform process. Her report also advocated for the implementation of a “more rigorous approval process before allowing a provider to become an authorised Centrepay scheme participant”.
“Despite the deeply held concern about, and desire to improve, customer welfare amongst all Centrelink staff, the administration of Centrepay requires a cultural shift to more of a watchdog status than currently exists,” she warned in the report.
“However, given the non-statutory nature of the Centrepay scheme, department staff have to date been reluctant to take on such a role. Instead they have relied on other regulators enforcing legislation, at a distance somewhat removed from the daily Centrepay operations.”
She pointed to an example of a rent-to-buy company using Centrepay to take $2,500 from the welfare payments of a customer for a television worth $700.
More than a decade later, that type of conduct is still occurring. Guardian Australia recently found one case in which a single mother of five was charged $6,500 on Centrepay for a TV worth $1,400.
Buduls told the Guardian that some of her recommendations only required rule changes, rather than additional investment, to better protect welfare recipients.
“Even if they didn’t invest money in it, if they had just changed the rules it would have gone a long way,” she said. “I remember speaking with one Indigenous family at the time who were on the receiving end [of financial abuse]. They said to me ‘but this is the government, it must be right’.”
Services Australia did not comment on suggestions Buduls’ report was buried. Hank Jongen, the agency’s spokesperson, said priority work to reform Centrepay policy was underway.
“It includes significant government, industry and customer consultation with a focus on safeguards and protections for customers to reduce financial harm, including Centrepay overpayments,” he said.