Corporate debt collectors are facing calls to return more than $11m in taxpayers’ money they earned by chasing down welfare recipients for debts raised under the unlawful robodebt scheme.
The royal commission’s report on Friday was damning about the involvement of private debt collection firms in the program, who were paid commissions for retrieving money from welfare recipients.
The payment of commissions, the report said, created a motive to retrieve as much money as possible, as fast as possible, creating a conflict with the need for sensitivity in dealing with vulnerable individuals.
The report showed three firms – Dun and Bradstreet, now Illion, Australian Receivables Limited and Probe Operations – were paid an estimated $11.6m by the federal government for robodebt-related work.
The Australian Council of Social Service chief executive, Cassandra Goldie, described the $11.6m figure as “shameful”.
“The millions of dollars of public money wasted on external debt collectors is a shameful reflection of the aggressive and unrelenting pursuit of Australians for debts they did not owe,” she said. “The actions of this chapter of public administration must never happen again.”
Janet Rice, the Greens social services spokesperson, said the money should be repaid. She said private debt collectors had a financial incentive to recover as much money as they can, as quickly as they can, regardless of the human cost.
“It’s disgusting that these companies have profited from the suffering of innocent people,” she said.
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“In addition to the royal commission’s recommendations, the Greens are calling on Labor to immediately suspend all debt collection, conduct a line-by-line review to ensure there are no outstanding debts from robodebt, and repay all debt to robodebt victims not covered by the class action.”
Earlier this year, the Albanese government announced Services Australia would no longer use private debt collectors and instead bring the work in-house. The royal commission’s final report welcomed that change with “some reservations”.
“The Commission has found that it was DHS which designed and managed the Scheme’s debt recovery process and it was DHS which closely managed every aspect of the collection agencies’ engagement with people under the Scheme,” the report said. “It is now proposed that the same agency conduct that process in house. It would be understandable, given what transpired under the Scheme, if people found it difficult to trust that Services Australia will sensitively and lawfully manage its debt recovery processes.”
The royal commission cited the use of Dun & Bradstreet in the case of Rhys Cauzzo, who died by suicide in January 2017 as Centrelink pursued him for a debt. Cauzzo had received six letters, two text messages and 13 phone calls from the private debt collection firm between November 2016 and January 2017.
Centrelink failed to put a vulnerability indicators on his file, something which would have altered the agency’s handling of his case.
Many victims first heard of their supposed debt through contact from debt collection firms. That includes Jack Rogerson, then 21, who lives with autism. He first learned of a $3,000 debt from a voice messages left for him by Dun & Bradstreet. He had no comprehension of what was happening, his mother Nicole Rogerson told Guardian Australia.
“If he could have paid it, he would have,” she said last week. “It was just lucky that he didn’t know how to do it.
“It just struck me – how could Centrelink let the system go after people with intellectual disabilities to recover debt? That’s just a broken design.”
Another victim, Felicity de Somerville, had $11,500 taken from her account in one hit by a debt collection firm, despite agreeing to a payment plan. The amount was the equivalent of six months wages. It was removed at a time when her daughter was sick and she was struggling to afford medication.
“It was like I really was the most useless, worthless piece of existence,” she said last week. “It was like, ‘Why am I here? My daughter is better off without me. My husband is better off without me.’ How do I go home and tell my husband ‘Hey we can’t afford rent for the next six months, I can’t afford to contribute to groceries or bills, we’re going to have to pull [their daughter] out of daycare.’”
The commissioner, Catherine Holmes, said private debt collection agencies were “primarily motivated by the desire to maximise their revenue”.
“The attributes of social security recipients and the circ*mstances in which their debts arise are not the same as those of commercial debtors,” her report said. “It is appropriate that debt recovery of social security payments be handled by properly trained government officers.”
A spokesperson for Probe CX said it had “at all times” followed the directions of the department and managed calls in a “respectful, sensitive, professional and compliant manner”.
“The commission did not make any findings of wrongdoing on the part of debt collectors, specifically noting ‘external debt collectors are required to operate lawfully, and perform in accordance with their contractual obligations to creditors,” the spokesperson said. “The commission does not suggest they did otherwise.”
An ARL spokesperson said it had no involvement in the assessing of debts.
“ARL Collect has longstanding relationships with numerous local, state and federal government agencies and bodies and our work principally relates to the collection of overdue funds on behalf of our clients,” a spokesperson said. “ARL does not have any involvement in our clients’ assessment of their customer accounts.
Illion was approached for comment.
