Zaneta Mascarenhas MP
House of Representatives, Parliament House, Canberra
Bills (Social Security and Other Legislation Amendment)
I rise today not just to support the Social Security and Other Legislation Amendment (Technical Changes No. 2) Bill 2025 but also to affirm this government's commitment to listening to those who are often unheard—often our most vulnerable. This bill is a testament to what happens when we listen, when we hear stories of people navigating complex systems and when we act to make those systems fairer, clearer and more humane. It is practical, it is careful and, above all, it is a compassionate reform.
This bill fixes technical problems that have lingered for years. It clarifies how employment income was treated before 7 December 2020. It values good-faith assessments that used income apportionment. It sets out lawful methods for any decisions to be made about those historic periods. It also improves our approaches to small debts.
I'll start with schedule 1, which inserts a new part into the Social Security Act. It validates the historical use of income apportionment from 1 July 1991 to 6 December 2020. This was a practice which resulted in the spread of known income across the employer's payroll period. Officials then attributed daily amounts to the relevant entitlement periods. It was based on pay slips; it was grounded in real payroll records. It was done in good faith, but at times it did not match the strict letter of the law as it stood then. So this bill validates the method for the past and it preserves general legal rights.
This schedule also gives decision-makers a clear rule book for any new decisions about pre-December-2020 income. There is a strict hierarchy: first, if the evidence shows when the income was earned, allocate it to that entitlement period; second, if the precise days are unknown but the payroll period is known, it is apportioned across that payroll period; third, if neither days nor the payroll period can be identified, take the income into account in the entitlement period in which it was received—evidence first, consistency next and guesswork last. The hierarchy respects real-life circumstances. Pay slips often show a fortnight or a month, not each shift. Rosters rarely line up with Centrelink fortnights. This method turns messy paperwork into fair decisions.
This bill also ensures consistency for youth training allowance decisions and former farm household support. It also makes sure that the old frameworks that referenced social security calculators line up with the same approach.
Let's think about the scale of this issue. Over three decades, there were about 5.5 million debts that were potentially affected, which touched around three million people. The estimation of this debt is around $4.4 billion. Most of these debts are old—on average, 19 years old. About 97 per cent of these have already been paid. Around 148,000 debts were paused while the issue was resolved. Sampling tells us that not every debt used apportionment, and, when it was used, the change in the final amount was usually very modest. On the sample, the median change was under $100, and about two-thirds decreased and one-third increased.
Schedule 2 of this legislation makes debt management fairer. It reforms special circumstance waivers, it lifts and standardises the small debt waiver threshold and it clears a backlog of tiny, undetermined amounts. Under current law, decision-makers cannot waive a debt if a person, or another person, knowingly made a false statement. This was a very hard line, and it does not reflect real stories. It does not reflect the realities of coercion or financial abuse. It does not reflect fear. This bill responds to what we have heard. It lets decision-makers consider the broader context. If conduct occurred, but it was justified by the circumstances, the waiver can be applied. That includes coercion, financial abuse, acute mental ill health, homelessness and serious dependence.
This change is in accordance with recommendation 58 of the 2024 Parliamentary Joint Committee on Corporations and Financial Services inquiry into financial abuse and with the National Plan to End Violence against Women and Children. Recommendation 58 of the Financial abuse report called for reforms so that victims-survivors aren't blocked from special circumstances waivers if the perpetrator lies to Services Australia without the debtor's knowledge or if the debtor makes a false statement due to coercion or duress.
I was proud to work with Senator Deborah O'Neill on that inquiry, and I am reminded of the submission from the Council for Single Mothers and their Children: 'We regularly hear from women whose former partners used Services Australia systems to continue financial control. This includes manipulating Centrelink reporting requirements, lodging false claims or deliberately triggering compliance actions that result in payment suspensions. These actions are often taken without the woman's knowledge, leaving her without income and in financial distress.' We listened to some of the hard truths about the government systems, and we are acting. In that inquiry, what we saw was perpetrators using systems, whether it be banking or government systems, to perpetrate violence, abuse and financial coercion against their victims. It's unacceptable, and this government is acting to change our systems.
The explanatory memorandum describes the case of person L, whose then partner lied to them about their earnings. Any rational person would recognise that was not their fault nor their failing; it was coercion and control, and it was wrong. This is similar to other cases that I recall about abuse being enabled by structures long neglected. For too long the law said no because of the word 'knowingly', which left out coercion.
This bill also standardises the small debt waiver. The new threshold is $250 indexed each year to CPI. It removes clunky cost-effectiveness tests. This means fewer low-value debts, less churn and less stress on vulnerable people. There is a one-off clean-up too. If the amount under the threshold in the system at the commencement is not raised as a debt, the right to recover is waived. This clears backlogs created by pauses during COVID and natural disasters.
Schedule 3 of the legislation creates the Income Apportionment Resolution Scheme. It's simple, optional and time limited. It covers debts affected by income apportionment between 20 September 2003 and 6 December 2020. Eligible people can receive a small, fixed resolution payment—in most cases between $200 and $600. It recognises the modest effect seen in sampling. It gives closure without forcing people to rebuild their work history. It avoids case-by-case recalculation. Why those dates? The daily attribution rules came in from September 2003 and interacted with the apportionment. In 2020 we moved to paid-date attribution, which made apportionment unnecessary.
The scheme will run for approximately 12 months. There will be flexibility for special cases. Some decisions can be made by a computer, where appropriate. There will be internal review for scheme decisions. Payments are tax free, and it is intended that they will be exempt from the social security income test by instrument. If a person accepts a resolution payment, they release the Commonwealth from liability for a claim about the use of apportionment for that debt. If they do not accept, they keep their rights—it's their choice.
Schedule 4 provides a special appropriation. It funds resolution payments and it funds amounts payable when division 3 income is worked out.
Let me be clear on one point: the payment systems at Services Australia may remind members of the public of the trauma of robodebt. This system cannot become robodebt, and it is a direct response designed to prevent it. Robodebt used tax data averaging to fabricate fortnightly income. It punished the vulnerable. It was unlawful. This bill validates a method grounded in evidence—real pay slips and real payroll records. It sets a lawful hierarchy for historical records. It preserves rights and adds safeguards. The bill also includes a full human rights statement. It engages the right to social security and the right to an adequate standard of living. It expands discretion where justice demands it. It lifts the small debt threshold. It offers a simple resolution payment.
Some will ask: why not recalculate everything? It's because that would take years and we must act now to shore up our social services system. It would force people, employers and banks to dig up ancient records, and it would deliver very small changes in most cases. So it would be a drag on resources and take away from actually servicing people today. Others will ask: why not waive everything? It's because in most cases the debt still exists under the proper method, because many debts were unaffected by the apportionment and because blanket refunds are not fair to others who followed the rules or repaid unrelated debts.
This bill reflects what fairness demands: validate what was done in good faith, fix the waiver rules, raise and index the small debt threshold, clear the old undetermined amounts and offer a modest optional resolution payment. That is guided, as I said, by evidence, order and clarity. Safeguards are built in. Justification must be evidenced for special circumstances waivers. The scheme is optional and time limited. Review rights exist within the scheme. The appropriation is specific. Validation is tightly confined to apportionment of employment income. General laws are preserved. The approach reflects consultation and evidence.
The ombudsman urged prompt, transparent remediation. Sampling showed that the impact of apportionment on the final amount was usually very small. Advocates argued for compassion; administrators argued for practicality. This bill blends both. Behind the scenes everyone is a person. It could be casuals juggling shifts, parents saving every pay slip or people whose payroll cycles never matched up with Centrelink fortnights. They deserve clarity, not years of reconstruction. They deserve decisions that reflect reality.
In passing, let me return to the financial abuse inquiry. Our job was to ensure that our systems do not entrench control. As one recommendation of the financial abuse inquiry said, victims must not be blocked from relief because an abuser compelled a mistake. Schedule 2 delivers that change. That's why I was proud to work with Senator Deborah O'Neill. From listening to the people, the victims-survivors, we were able to shape this reform. A majority female government is shaping systems that used to disempower victims to now disempower abusers, and we're acting on the national plan to prevent violence against women.
I also welcome the government's commitment to clarity for those who need payments. Services Australia will need a plain English guidance, clear tools for staff, letters tested with customer reference groups, outreach to those with paused debts, simple pathways into the scheme and support for people who need help to engage.
Policy choices have consequences. Australians expect systems that are lawful, humane and respectful. Let me address the safeguards in law. The validation is tightly confined to apportionment of employment income. To speak plainly, robodebt was the coalition's scheme. It used tax-year income averaging to invent fortnightly earnings. It ignored warnings. It hurt people. It was unlawful. This bill is part of the government's answer. It validates only assessments grounded in real pay slips and real payroll periods. It draws a bright statutory line that excludes income averaging. It has been scrutinised. It builds safeguards, transparency and a voluntary, time limited resolution scheme. The coalition's record shows that ideology overruled integrity. Our record shows evidence, lawfulness and respect. This bill sits squarely within Labor's social justice agenda, which seeks a fair social security system that is lawful by design, humane in practice and careful with public money and that validates good-faith decisions.
