Centrelink pursuing debts that are more than 40 years old despite agreeing to waive old arrears

Centrelink is pursuing $4.93bn in unpaid debts, with the oldest dating back more than 40 years, despite the government agreeing to implement a six-year statute of limitations on debt recovery.

A growing list of advocates, including peak legal body Economic Justice Australia, want the debts wiped, while Australia’s leading welfare expert has warned it is impossible to trust whether the huge amount of debt is accurate.

Services Australia’s debt collection system has been in chaos, with the government announcing last year it would provide resolution payments of up to $600 for people affected by unlawful income apportionment. Around the same time, it was also revealed that about 44,000 Australians have overpaid their Centrelink debts, some by $20,000 or more.

Now, data from Services Australia shows there are 1.34m outstanding Centrelink debts, amounting to $4.93bn in debt. Approximately 645,000 have a repayment arrangement in place.

About 600 of the outstanding debts are over 30 years old, with the median amount for those sitting at $5,451.49. There are 76,800 debts between 15 and 30 years old, with a median amount of $2,197.64.

The oldest outstanding debt was raised over 40 years ago and is now under a repayment arrangement, but the department would not say how much it was because of privacy.

Interest is also applied to some outstanding debts owed by former recipients who have not repaid the debt or maintained an acceptable repayment arrangement.

The Australian government had agreed in principle to the Robodebt royal commission’s recommendation to reinstate the limitation of six years on debt recovery but has not said when that will be implemented or if it will apply to current debts.

Christopher Rudge, a welfare expert and academic at the University of Sydney, said the debt’s “calculations cannot be trusted to be correct. For those debts already admitted to be wrong via the income apportionment resolution scheme, they are being ‘corrected’ on a likelihood test.

“And for most debts under $2,000, no manual review will occur; instead, a computer program will determine whether it is ‘likely’ correct or not,” he said.

“For all other remaining historical debts, many are decades old and were calculated long ago by systems incompatible with today’s auditing tools.”

He said the in-principle acceptance from the government should mean any debt more than six years old should “be out of bounds” – and that the cost of trying to administer older debt could be greater than the debt itself.

“In many circumstances where people have held debts for a decade or longer, it is likely that they are in financial circumstances that are prohibitive,” he said.

“You could hear multiple narratives about this. One would be, well, this needs to be cracked down on harder,” Rudge said. “But I would not agree with that.

“When you have these huge numbers and the economic circumstances have changed so much in the last few decades, you need to consider whether these debts should be waived.”

Last year Services Australia undertook two investigations, finding 147,773 debts that may have been unlawfully calculated with income apportionment, though FoI records showed about 3 million Australians could have had a debt calculated that way.

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New data from the department shows 78,000 of the suspected 3 million Australians who were given an illegal debt by Centrelink have made a claim to the Income Apportionment Resolution Scheme. The applications relate to more than 201,000 debts, with $92,000 in resolution payments paid so far.

Economic Justice Australia’s CEO, Kate Allingham, said up until 2017 the government had a time limit that prevented the recovery of a social security debt more than six years after a Centrelink officer knew or could reasonably have been expected to know about the circumstances that caused it.

“This time limit was in place in recognition of the fact it is near impossible for someone who allegedly owes a debt to not only remember the specific circumstances they were in, but to pull together evidence from that time to defend themselves,” she said.

In the 1990s, for example, payslips were in paper form. “How is it fair for the government to expect you to have held on to a paper payslip for decades?” she said.

Allingham said in most states in Australia, limitation periods apply to most debt categories mean they can only be recovered within six years.

“If government systems aren’t robust enough to identify and raise issues within a six-year time frame, that is an issue with the government system,” she said. “And not one that should be passed on as financial hardship to individuals.”

A spokesperson for the Department of Social Services said the government believed “the recovery of social security related debts must always be legal, fair, and done so with compassion towards Australians who are doing it tough”.

“Since 2022, we’ve delivered a suite of reforms to strengthen the social security system and ensure the injustices of past debt collection practices like Robodebt will never happen again,” the spokesperson said.

This included a $300m package to increase the small debt waiver threshold for the first time in 30 years, expanding the special circumstances waiver and introducing the Income Apportionment Resolution Scheme.”

More than 1.1m debts were waived or no longer need to be raised in 2025-26, with the small debt reform waiving “more debts than reintroducing the original six-year limit”, the spokesperson said.