Making things right? Ombudsman's statement highlights welfare department's recalcitrance

A new Ombudsman's statement reveals how Services Australia exempted itself from notifying some 15,000 welfare recipients (out of of a total of 47,000) whose entitlements were affected by IT errors

Today, yet another illuminating record of Services Australia's irresponsible governance regime has been published by the Commonwealth Ombudsman — only some 28 days following the appalling Lessons in Lawfulness statement from the very same agency.

The statement, titled ‘Making things right: Insights into Services Australia’s handling of the impact of a system error on certain historic child support assessments,’ is seemingly buried deep within the Ombudsman’s website. Either that or it has not yet been indexed.

Statements such as this now appear to be the preferred way of releasing public communications at the Ombudsman’s office — as opposed, that is, to releasing the thorough or comprehensive reports that are said to sit behind these short summaries. In any event, the statement reveals another instance of recalcitrance and deresponsiblisation at Services Australia.

The story may be summarised tersely. In 2018, complaints to the Ombudsman and subsequent follow-ups revealed that an ‘IT error’ had led to some 47,488 child support assessments being erroneously determined. Naturally, many of these inaccurate assessments would have led to inaccurate payments.

In the year of that discovery, 2018, the individual complaint that revealed the problem was remediated. And in June 2020 — which is quite a long time thereafter — the IT problem was remedied too. Notably, the Ombudsman’s report does not go into what the IT problem was, nor how it was remedied. Neither does the report offer much about why it may have taken so long for the IT problem to be remedied. Does this mean that recipients remained subject to the IT problem between 2018 and 2020? There is very little to be learnt about what has happened here.

Seemingly before the IT issue had been patched, Services Australia, some time in 2019, gave assurances to the Ombudsman that it would reassess and remediate all of the 47,488 inaccurate assessments.

Then, in July 2021, Services Australia changed its position and advised the Ombo it intended only to deal with those cases which were either ‘active or finalised with arrears.’ The Ombo’s statement does not tell us what this description means, but a plain reading of the words in the context of the Ombudsman’s duties would probably suggest that the Services Australia owed the customer an ‘arrears.’ (If it meant otherwise — eg, that the customer owed Services Australia an ‘arrears’ payment — then presumably the Ombudsman would not simply note the advice and move on). Adopting that meaning then, Services Australia said it would only remediate those customers whom it had identified were owed money. Now, some may say this is fair enough; why, after all, should Services Australia bother reassessing the entitlements of those customers who were not underpaid?

But I am not sure that is exactly what it means. The Ombudsman’s statement says that Services Australia would ‘not revisit any of the cases which were finalised without arrears.’ What, here, does ‘finalised’ mean? Does this mean that Services Australia called the customer and managed the IT problem in some way that did not involve a reassessment? It is unclear.

In any event, the Ombudsman was, unsurprisingly, unsure whether ‘this was fair,’ and so the office ‘sought further information from Services Australia to help us determine the extent of the issue and the action taken to remediate affected cases.’

As the statement notes,

We were concerned about the proposed lack of action to address the impacts on the 15,803 [cases that were not 'in arrears’]. While Services Australia’s approach to the [‘arrears’ cases] – advising customers that an error occurred and correcting the error – appeared fair and transparent, we were concerned that customers in the [other] group would be unaware that they may have been affected, potentially significantly, and may have rights to seek review.

Indeed, those customers who were not ‘in arrears’ were seemingly not advised of any issues; they would have had, it seems, no clue that their assessment had been affected by an IT error. They would, in short, had had no opportunity to determine whether there was any error made on their own motion.

This is a problem with transparency. The cogent question is as follows: How should government departments respond when it is revealed that an error affecting almost 50,000 government accounts has occurred? Should they government department be entitled to tell only those that the department, according to its own internal investigation, thinks is worse off? It would not appear to smack of ‘best practice.’

As the Ombo continued:

We found no evidence that Services Australia had considered the Remaining Cases on their merits, either individually or as part of an information sample, to make a risk-based decision about how they should be treated. There had been no assessment of the monetary quantum of the errors involved. There was also a lack of contemporaneous records setting out the reasons for Services Australia’s decision not to correct the errors. Although we were offered reasons why the [15,000 leftover cases] should not be corrected, these reasons were not matters that had been considered by the actual decision-maker. We also noted that the systems error had the practical effect of causing financial disadvantage to one party due to no fault of either party and that Services Australia should consider options to remedy the errors without negatively impacting the parties.

In short, the Ombudsman found that there was a lot lacking in the way that Services Australia responded. This, it could be said, is one of the problems with ‘responsive regulation.’ With no rule book to manage these processes, it is all ad hoc and guestimation. Perhaps a general rule could be enshrined somewhere — at any level — requiring decisions subject to any error to be notified to the affected party? I suppose that would defeat the purpose of a risk-based regulatory regime: namely, to ensure that the costs of any remedial or compliance action never exceed the government savings to be achieved through that process. Put another way: if there is nothing in it for government, then do not do it.

In the last section of the write-up, the Ombo states the essential problem that silence on the part of Services Australia engenders:

Services Australia advised us that if a customer were to contact them to question the assessment, it would then review the assessment. In our view, customers were not aware that an error caused by Services Australia’s systems had occurred, so would likely not be aware they could exercise their rights to question an assessment. This approach created an unfairness between those customers who contacted Services Australia and those who didn’t.

This is another emblematic case of responsibility for a systems error being devolved to the harmed or affected party. This is sometimes known as ‘deresponsibilisation.’ It is a reverberation of one of the most egregious examples of the same.

In 2014, after a High Court decision, it eventuated that some 15,000 people had been likely wrongly convicted of social security offences in circumstances where those 15,000 had engaged in conduct that, as it turned out, was not actually a criminal offence. In any event, for them to be guilty of any criminal offence, more should have been adduced in evidence at the time of the prosecution for the putative offending. What had occurred was both the departments and the Commonwealth Director of Public Prosecutions (CDPP) had misunderstood the law for some 11 years. Between 2001 and 2011, people had been prosecuted for failing to notify the departments about changes in their circumstances when the obligation to do so was really only — unless certain notices were sent out — a civil wrong. And there was never any evidence that these people were sent notices. In short, some 15,000 dodgy and very likely unlawful convictions were now in question.

There is a part of this story that I am leaving out: namely, the part about the retrospective amendment introduced in 2011 before the High Court found the prosecutions to be uncertain in order to ‘shore up’ the prosecutions retrospectively. That amendment, however, was rendered ineffectual in 2014.

In any event, in 2014, Senator Siewert asked a question of the CDPP, and the same answer we have seen from Services Australia — the same devolution of responsibility — was articulated then. For the reader’s perusal, that question and answer is reproduced below:

As I have intimated, in social security matters — both in terms of civil errors and disputes as well as criminal matters — the level of responsibility appears to be minimal at best. Trivial would be a better adjective.

Improving the criminal and civil regulatory response to welfare law will require the Ombudsman to continue urging the departments to ‘make things right’ — not just for matters that will arise in the future, but for those that stretch into the past.