The government’s welfare agency has been accused of ‘deliberately’ miscalculating payments, as it struggles to explain errors in aged-care refunds. By Rick Morton.

Exclusive: Services Australia can’t say how many caught by glitch

Minister for Government Services Bill Shorten.
Minister for Government Services Bill Shorten.
Credit: AAP Image / Mick Tsikas

A Services Australia computer error has resulted in a bizarre series of events in which a nursing home resident was given a refund on care fees worth almost $7000 only for her family to be told almost a year later the money should never have been paid out.

The agency – which handles more than $200 billion in government payments, including in social security, families, health and aged care – told Audrey’s family it would waive the debt. However, it claimed its calculations in the matter were “restricted” and could not be released, not even to the woman’s daughter, who holds her enduring power of attorney.

Privately, Services Australia insists this computer error is unrelated to a systemic issue it discovered and “resolved” in 2017, but it has not conducted an internal investigation that would require manually checking the files of tens of thousands of nursing home residents. It cannot say with any certainty if the problem is isolated.

The inability to catch both system and policy failures as they happen, or adequately investigate them once discovered, has been thrown into sharp focus in the past year as Services Australia faces rolling crises involving the incorrect calculation of social security debts going back 20 years, botched child support assessments, the fallout from robodebt and a catastrophic resourcing crunch that has brought the agency to the brink of collapse.

In the 2023/24 financial year up until last August, average processing times for the age and disability pension almost doubled to 61 and 80 days respectively, when compared with 2022/23, while wait times for JobSeeker applications, parenting payment partnered and single claims, and the job search category of youth allowance, almost tripled to between 29 and 58 days.

A clear pattern of institutional breakdown is evident from mid-2022, when Services Australia had 39,412 claims for payments “on hand” or awaiting processing. By the end of June last year, this number had more than tripled to 128,379. In just another two months, to the end of August, claims on hand ballooned to 152,786.

Within a day of being sworn in, Social Services Minister Amanda Rishworth and Government Services Minister Bill Shorten issued a media release that criticised “payment accuracy” under the former Coalition government and said pauses on social security debts would need to recommence.

In the media release from June 2022, Shorten said the pauses had “also meant that the agency has been unable to undertake compliance activities, meaning welfare debts have remained unchecked for years”.

Debts were restarted in September 2022 and, according to Services Australia in response to questions on notice released five days before Christmas last year, this was a key contributing factor to an explosion in claim processing wait times.

“The increase in claims on hand coincides with Services Australia … removing wide scale debt pauses in September 2022 that had been placed on customer accounts during both the COVID-19 Pandemic and natural disasters,” it said on December 20.

“The agency, in consultation with ministers, is now pursuing a clear framework for managing future debt pauses that supports customers acting in accordance with their individual circumstances.”

Services Australia noted an emergency $228 million funding injection for 3000 new employees made late last year “will be critical to reducing call wait times, speeding up claim payments and giving Australians back some time in their busy lives”.

These roles are now ongoing but any structural reform, if attempted, will likely not be revealed until May’s budget.

Recruitment at the agency is hard because of a broader problem that is even harder to change: a bad culture.

When Services Australia became aware in late 2020 that it may have been incorrectly raising debts with a basic misreading of its own social security legislation since at least 2003, the agency kept this information in-house for two years. The Commonwealth Ombudsman had been investigating complaints related to the use of “income apportionment” across the same two-year period but noted Services Australia “did not inform us, as part of these investigations, that these review delays were affected by this underlying legal issue”.

In 2018, a single complaint to the ombudsman had revealed the then Department of Human Services had experienced an IT error that resulted in the incorrect calculation of child support payments. The system was fixed in 2020 but the new agency, Services Australia, decided not to tell almost 16,000 customers who had already paid their former partners. The Ombudsman said this was obviously unfair.

A follow-up report on the agency’s handling of income apportionment was clear.

“When errors happen, agencies owe it to the public to act promptly to assess the impact of the error and develop and implement fair and proportionate remedies,” the ombudsman said.

“Agencies should acknowledge errors and, where appropriate, apologise. Being transparent and accountable can help to build and maintain public trust in agency decision-making.”

For the family of Audrey, who lives in a nursing home in the ACT, Services Australia has been anything but forthcoming. They have still not been given an adequate explanation for irregularities in their mother’s fee arrangements, despite asking in writing for clarification last July.

The family’s questions were prompted by two automatic letters from the agency, beginning with one in April that stated: “We have worked out that you have paid more fees than you needed to and are entitled to a refund for the period from 8 December 2015 to 28 February 2023.”

Audrey was told she would receive a $1205.30 refund. A similar letter arrived in July that informed Audrey she was entitled to a $3972.46 refund for the three months from March to June 2023.

Both refunds were for the means-tested care fee.

The latter in particular suggested to Audrey’s daughters their mother had actually reached the lifetime cap on fees in March last year; that is, the ceiling on means-tested care fees beyond which no aged-care recipient need pay any more money. Other fees still apply.

Despite being told over the phone by a Services Australia officer earlier this month that their mother had reached this cap in the first half of last year, a follow-up call with a different officer prompted by inquiries from The Saturday Paper indicated Audrey had not yet reached the lifetime cap and that was why she was still being charged fees.

If it sounds complicated, that’s because it is.

The interaction between aged-care payments and a person’s income and assets is one of the most complex elements of social policy. Yet Audrey’s circumstances had not otherwise changed, so it is unclear what else could have triggered the computer to produce false refunds.

An echo of a “glitch” in the file from about 2016 appears to be causing problems now.

“Whatever happened in 2016 was not picked up until July 2023,” Audrey’s daughter Jan says.

“So the explanation is that on 22 March and 7 July, the computer had prematurely calculated that Mum had reached the lifetime limit and therefore it gave back all that money.

“They have failed to explain how those refunds were calculated or with what they were constituted.”

Services Australia says Audrey’s case is not related to the system error it discovered in 2017, in which the lifetime cap “code” had simply fallen off. It says that problem was contained to 500 of the then 250,000 aged-care residents, but those numbers were just the people who were at or above the cap then. Many more have since crossed that threshold.

Whatever happened, Jan was “assured at least twice” on the phone that “even though the fees should have been applied and weren’t, they’re not going to ask for it back”.

She says the Services Australia worker “told me there was a glitch in 2016 where the means-tested care fee was not applied for six months and I actually asked her, ‘Well, how many other people are affected by this?’

“I can’t see that if the computer had a glitch, it only sent it to one person. It should have applied it across the empire.”

Greens Senator Janet Rice, who has repeatedly queried the dogma and testimony of Services Australia officials during Senate estimates, tells The Saturday Paper the sequence of mistakes is “more than just a series of stuff-ups”.

“It seems to me to be an agency that is badly managed, under-resourced and incapable of being trusted to do the work it is responsible for,” she says.

“They seem incapable of running their services reliably, basically, and in a way that people can trust so that you don’t have to be keeping your own spreadsheets.”

In the 2022/23 financial year, Services Australia reported it suffered 64 “major or significant system issues” that led to customer services being “unavailable or severely degraded” and critical functions being affected.

This is a resourcing issue that has been a long time in the making, Rice says, but needs urgent attention now.

“Again, it’s this culture of secrecy and there’s an unwillingness to admit that they have got big problems with the way that their services are being rolled out,” she says.

“And is it a stuff-up or is it, you know, deliberate? I think it has been deliberate in terms of deliberate under-resourcing of the agencies.

“The main thing is that there are what seem to be symptomatic, what seem to be pervasive problems, and the government needs to be upfront and acknowledge that there are problems and work out how to fix them.”

In an environment where resources are constrained, the little details count.

Audrey’s daughter Jan says she is “not confident they are charging what they say they should be” but cannot check because Services Australia has stated the information is restricted.

“There is no transparency on this,” she says. “If the machine, the computer, thought that [Mum] had reached the lifetime limit, it should have generated a letter explaining this, but there was no correspondence.”

Many families, unlike Audrey’s, do not heavily scrutinise the variety of charges and fees between aged-care providers, the elderly and the federal government. Where Services Australia issues updates on fees and refunds, it does so most often to the nursing home or home-care provider, which typically processes these without the involvement of family. Separate letters are sent to the person receiving the payment.

“We decided not to allow any of the automatic direct debits and things like that because, frankly, we wanted to see what was going in and out of Mum’s account and to be sure,” Jan says.

“Most people wouldn’t have a clue what is happening or, if they see the correspondence, are inclined to trust the numbers. I would like to know how many people have been affected by this ‘computer error’ and right now, they can’t tell me.”

Services Australia’s general manager, Hank Jongen, said the agency “sincerely apologise to [Audrey] and her family for the service they’ve experienced from us, which is not up to our standard”.

“We’ve thoroughly investigated to ensure this issue is resolved and have reached out to the family,” he said.

“In 2017, we identified and resolved a lifetime cap system issue impacting approximately 500 of our then 250,000 aged care customers. We wrote to all impacted recipients, providers and nominees about the issue at the time.

“Following this, we increased manual checks and updated our systems to better accommodate individual complexities and policy requirements. We continue to engage the aged care sector for feedback to inform services improvements.”

An earlier version of this article stated that 3000 additional staff at Services Australia are not permanent. This is incorrect.

This article was first published in the print edition of The Saturday Paper on January 27, 2024 as "Exclusive: Services Australia can’t say how many hit by glitch".

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