Contributed by a Centrelink recipient

No doubt many will find that news that the Department of Human Services has farmed out its debt collecting on commission distasteful. It is not hard to see how this is bound to create bullying.

Probe Group chief operating officer Jarrod Kagan told a Sydney hearing of the inquiry into the “robo-debt” system his company was paid commission where it received a percentage of the debts it recovered for Centrelink, but no base rate.

Two other agencies are contracted to carry out robo-debt collections and they are Dun & Bradstreet and Australian Receivables. They are paid by commission too.

“It’s a commission based on the amount collected for each debt… no flat fee, it’s just commission,” an official from the department told the inquiry. But the rate has not been given under the “commercial in confidence” argument.

The Australian Council of Social Services (ACOSS) told the committee that private debt collectors had threatened to seize clients’ assets or take them to court if they refused to repay their debt immediately. More than 6,600 people had received a knock on the door from a debt collector without first receiving a debt letter from Centrelink.

“In the lead up to this program being unleashed there was a perception created that if you do not comply, you may go to jail,” ACOSS chief executive Cassandra Goldie said.

Goldie said the number of people who had been intimidated into repaying debts they did not really owe was unknown thanks to the creation of a “climate of fear”.

Since moving to an entirely automated system in July last year, 169,000 letters have been sent by Centrelink asking people to explain discrepancies in welfare payments and reported income.

But at least one in five debt letters – which compare annual income information from the Australian Tax Office to the fortnightly income reported to Centrelink – were based on incorrect figures.