Centrelink has demanded payments of more than $10,000 from people with disabilities using its controversial automated debt recovery methods, causing distress and adding to financial pressure on families, a parliamentary inquiry into the "robo-debt" saga has heard.
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The debt program has caught up young people with disabilities and their families relying on income support, causing "marked emotional and financial stress", advocacy group Children and Young People with Disability Australia said.
Unable to find evidence needed to dispute the debt claims, some had paid the amounts while others expended "significant time, energy and at times additional expense to locate the necessary documentation".
"CYDA has been informed of significant distress experienced by young people and families around how they can correct overpayment notices, or pay off debts, while still meeting essential living costs," it told the Senate committee.
"This has contributed to significant stress and required young people and families to balance exceedingly tight budgets to fund basic living expenses such as food, rent and school costs.
"The additional debt recovery fee further heightens these financial challenges."
The Department of Human Services' data-matching methods cover disability support and carer payments.
DHS spokesman Hank Jongen said people identified as vulnerable were not included in the online compliance system.
"These letters are not sent in error. They are sent when the department has identified a difference between income information provided to the Australian Taxation Office and the department, and simply request people to confirm their employment and income details," he said.
"No assumption about debt is made and we invite people to provide additional information."
Labor's Human Services spokeswoman Linda Burney said the automated debt recovery program used a "dragnet approach" that had wrongly accused vulnerable people.
"It is deeply concerning that many accused may not have had the support they needed to appeal false debts, they could have been intimidated into paying debts they don't even owe," she said.
People with disabilities were vulnerable to incorrect debt claims from the DHS' data matching system because their income sources varied, CYDA said.
"There appears to have been minimal consideration of these circumstances," it said.
"Again, this highlights the crucial importance of having human oversight in relation to the identification of overpayments."
