A series of IT system errors have led to the wrongful cancellation of payments for at least 1,326 Centrelink recipients under the Targeted Compliance Framework (TCF), bringing renewed scrutiny to the legality and effectiveness of the system.
These cancellations, which took place between 2018 and 2024, disproportionately impacted vulnerable individuals, cutting off essential financial support for many.
According to 7NEWS, the errors left affected recipients in severe financial distress, forcing some to reapply for benefits or seek alternative means of support. The situation became even more concerning when it was revealed that at least ten individuals had died before Services Australia attempted to issue back payments.
In response to growing pressure, the Employment and Workplace Relations Department has paused payment cancellations related to mutual obligation failures, while ongoing investigations examine whether past enforcement actions were lawful.
Delays in Addressing System Errors
The first of the three major Centrelink IT glitches was identified in 2020, but its full impact was only understood in July 2023. The issue had gone undetected for over three years, leading to Centrelink payment reductions or cancellations for recipients who should have continued receiving benefits.
In September 2023, 1,165 recipients were officially notified that their payments had been wrongly cancelled due to system errors.
The second and third glitches, which left individuals stuck in the TCF “penalty zone”, where payments were automatically withheld, were identified in 2024, impacting additional recipients.
According to Natalie James, Secretary of the Employment and Workplace Relations Department, some recipients only became aware of these errors when back payments were issued—often 12 weeks after the issue was identified.
During a Senate Estimates hearing, James apologized for the delayed response, stating:
I am incredibly sorry for the impact that this has had on individuals.
She also acknowledged the failures in communication, adding:
People should have been informed of these issues earlier, and that did not happen.
Impact on Recipients and Potential Legal Concerns
The wrongful cancellations had severe consequences, particularly for vulnerable individuals, including First Nations Australians. Many affected recipients faced homelessness, an inability to afford essential medications, and severe financial distress.
During the hearing, Senator Penny Allman-Payne raised concerns about whether the deaths of ten affected recipients were linked to the payment cancellations. She criticized the lack of investigation, stating:
We’re talking about people who are at risk of homelessness, not able to afford essential medications, and at risk of destitution. We’ve heard that large numbers of these people are First Nations. In that 12-week period, what steps did the department take to determine whether people were at risk of harm?
Officials from the department stated that there was no evidence that these individuals had taken their own lives, but admitted that no formal investigation had been conducted to determine whether the cancellations contributed to their deaths.
Tania Rishniw, Deputy Secretary of the Employment and Workplace Relations Department, responded:
There was nothing on the record to suggest to Services Australia that these were people who had taken their own lives, but we cannot rule it out.
She further explained that no family members or next of kin had contacted Services Australia to raise specific concerns about the wrongful cancellations.
Calls for a Review of the Compliance Framework
The Targeted Compliance Framework (TCF), which determines when mutual obligation failures result in payment cancellations, is now under scrutiny.
James explicitly acknowledged that some aspects of the automated system were “not lawful” and confirmed that the government is conducting a review to determine whether the TCF should continue to operate in its current form.
Despite the pause in cancellations, James emphasized that she is legally required to continue administering the system unless an official finding deems it unreliable or inconsistent with the law.
She stated:
People are entitled to expect better. I am conscious that this has been going on for a while and we have not explained what has been going on, and that’s not my preferred way of doing things.
So I am incredibly sorry for the impact that this has had on individuals, and I apologize for the fact that we hadn’t identified these things earlier and acted on them more quickly.
Concerns Over Lack of Transparency and Future Actions
While Centrelink has started issuing back payments to affected recipients, concerns remain over the transparency and reliability of the system. Many recipients were only notified of the errors at the time of repayment, rather than when the issue was first identified.
The delays in addressing the IT failures, combined with the lack of direct communication with affected recipients, have led to mounting pressure on the government to improve oversight of Centrelink’s compliance processes.
The Australian Council of Social Service (ACOSS) has called for the immediate suspension of the TCF, arguing that it has consistently caused harm since its introduction in 2018.
Cassandra Goldie, ACOSS Chief Executive, stated :
Since its introduction in 2018, ACOSS has consistently opposed the compliance framework and formally warned successive ministers about the serious harm it causes, including homelessness, relationship breakdown and destitution
The minister acknowledges the compliance framework is overly punitive and in need of a complete overhaul, and cannot say if it is operating legally, yet chooses to continue harming people by refusing to have the system suspended
Government Response
Workplace and Employment Relations Minister Murray Watt stated that he is “confident” that payments are no longer being unfairly cancelled, adding that work to overhaul the system is underway.
However, he also made it clear that the government does not plan to suspend or abolish the TCF entirely.
I do believe that we’ve been transparent in how we’ve dealt with these matters,” Watt told the committee.
Since this issue was first brought to my attention after I became the minister, my focus, along with the department’s, has been to fix these problems.
Meanwhile, James reiterated her responsibility to ensure that the department addresses the systemic issues, stating :
This is my top priority. People are entitled to expect better from the government.
