Australian Government, 2006–07 Budget

Human Services

Fraud and Compliance

The Government will provide $282.3 million over five years to strengthen and expand activities that protect the integrity of the social security system, resulting in net savings of $266.0 million over five years (including $4.3 million in 2005-06). The major elements of this package will be coordinated by the Department of Human Services and will involve a number of other departments and agencies.

The social security system relies on people disclosing information about their circumstances, including their relationship status, earned and unearned income, assets and rental liability. Failure to report changes, unintentionally or fraudulently, leads to incorrect payment and represents a key risk to the system. This package includes a range of initiatives aimed at detecting and reducing social security fraud, minimising incorrect payments, improving compliance with the system and identifying new and emerging risks.

The package will strengthen information sharing and expand data matching activities between agencies to prevent and detect fraudulent activity across multiple Government programmes. The package will also expand the number and scope of investigations into serious social security fraud with additional powers being provided to Centrelink fraud investigators, and funding being provided to the Office of the Director of Public Prosecutions to allow for increased prosecutions arising from expanded Centrelink referrals.

Real estate assets of income support recipients, other than their primary residence, will be subject to more regular re-valuation checks to ensure the correct rate of payment is being made. In addition, data matching will be established with State and Territory Land Titles Offices to detect undeclared real estate assets.

A new compliance framework for the child care sector will be introduced covering all child care types. The key elements of the strategy include fraud and detection using risk profiling techniques, an increased level of compliance visits to child care providers, and an information campaign.

This package will also continue and broaden existing assurance activities which have been successful in detecting incorrect payments and identifying areas of emerging compliance risks, including random sample surveys for working age payments, student payments and carers, and accelerated claimant matching activity to detect incorrect Rent Assistance payments.

In addition, the package includes pilot studies to test the potential use of data mining as a technique to identify fraudulent activity and determine the feasibility of utilising Australian Taxation Office data to detect undeclared income.

Table 10: Fraud and Compliance
  2006-07
$m
2007-08
$m
2008-09
$m
2009-10
$m
Total
$m
EXPENSE MEASURES          
ATTORNEY-GENERAL'S          
Office of the Director of Public Prosecutions          
Fraud and Compliance          
- improving child care compliance 1.3 2.2 2.2 2.2 7.9
- legal action on serious fraud 2.4 3.4 3.4 3.5 12.7
Sub Total 3.7 5.6 5.6 5.7 20.6
EDUCATION, SCIENCE AND TRAINING          
Department of Education, Science and Training          
Fraud and Compliance          
- enhanced focus on serious social security fraud .. -0.2 -0.2 -0.2 -0.6
- expansion of risk profiled customer reviews -11.6 -16.5 -17.0 -17.4 -62.4
- addressing undeclared unearned income 0.1 .. .. .. 0.1
- pilot programme addressing undeclared business income and assets 0.1 - .. .. 0.2
- continuation and expansion of the rolling random sample survey programme for student payments 1.2 0.5 0.3 0.4 2.4
Sub Total -10.1 -16.2 -16.8 -17.2 -60.2
EMPLOYMENT AND WORKPLACE RELATIONS          
Department of Employment and Workplace Relations          
Fraud and Compliance          
- maintain funding for joint compliance activity - - - - -
- enhanced focus on serious social security fraud 5.8 -22.7 -26.4 -27.3 -70.7
- address risks in payments to income recipients who reside abroad -0.6 -1.6 -1.7 -1.8 -5.6
- improving processes for updating benefit recipient information -4.5 -4.5 -4.6 -4.6 -18.2
- expand random sample surveys for working age payments 2.9 -2.4 -2.1 -2.0 -3.6
- legal action on serious fraud -0.1 -0.2 -0.2 -0.2 -0.5
- addressing undeclared unearned income 0.5 -0.5 -0.2 - -0.2
- pilot programme addressing undeclared business income and assets 0.5 -0.3 -0.1 - 0.1
Sub Total 4.6 -32.1 -35.3 -35.9 -98.8
FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS          
Department of Families, Community Services and Indigenous Affairs          
Fraud and Compliance          
- improved assessment of the value of real estate assets -1.2 -18.4 -38.7 -62.9 -121.1
- enhanced focus on serious social security fraud -0.4 -2.5 -2.9 -3.3 -9.1
- address risks in payments to income recipients who reside abroad -1.8 -4.9 -5.3 -5.5 -17.6
- detecting incorrect Carer payments -8.8 -1.5 -1.8 -1.8 -13.8
- expand random sample surveys for working age payments -0.2 -0.2 -0.2 -0.2 -0.8
Fraud and Compliance          
- improving child care compliance 11.1 11.1 10.1 10.5 42.7
- addressing undeclared unearned income 0.6 -0.5 -0.2 - -0.1
- pilot programme addressing undeclared business income and assets 0.5 -0.3 -0.2 - 0.1
- continuation of accelerated claimant matching detecting incorrect rent assistance - - - - -
Sub Total -0.2 -17.1 -39.2 -63.2 -119.8
FINANCE AND ADMINISTRATION          
Department of Human Services          
Fraud and Compliance          
- improving cross agency activities 0.3 0.1 0.1 0.1 0.5
Sub Total 0.3 0.1 0.1 0.1 0.5
HEALTH AND AGEING          
Department of Health and Ageing          
Fraud and Compliance          
- increasing Medicare compliance through education - -3.2 -6.4 -6.4 -16.0
- detecting incorrect Carer payments 0.1 .. .. .. 0.2
Medicare Australia          
Fraud and Compliance          
- increasing Medicare compliance through education - - - - -
- improving cross agency activities 0.2 - - - 0.2
Sub Total 0.3 -3.1 -6.3 -6.4 -15.6
HUMAN SERVICES          
Centrelink          
Fraud and Compliance          
- investigation of the use of data mining as a predictive and risk identification method 1.1 1.1 - - 2.2
- improving cross agency activities 1.1 0.2 0.2 0.3 1.8
Sub Total 2.2 1.3 0.2 0.3 4.0
TREASURY          
Australian Taxation Office          
Fraud and Compliance          
- maintain funding for joint compliance activity - - - - -
Sub Total - - - - -
Total Expense measures 0.8 -61.6 -91.7 -116.7 -269.2
CAPITAL MEASURES          
FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS          
Department of Families, Community Services and Indigenous Affairs          
Fraud and Compliance          
- improving child care compliance 0.1 .. .. .. 0.2
Sub Total 0.1 .. .. .. 0.2
HUMAN SERVICES          
Centrelink          
Fraud and Compliance          
- enhanced focus on serious social security fraud 5.1 - - - 5.1
- improved assessment of the value of real estate assets 2.0 - - - 2.0
Sub Total 7.1 - - - 7.1
Total Capital measures 7.3 - - - 7.4
SUMMARY OF EXPENDITURE          
Total expense measures 0.8 -61.6 -91.7 -116.7 -269.2
Total capital measures 7.3 .. .. .. 7.4
Total expenditure 8 -61.6 -91.6 -116.7 -261.8
Total revenue measures - - - - -
Net additional expenditure 8 -61.6 -91.6 -116.7 -261.8
Fraud and Compliance — maintain funding for joint compliance activity
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Australian Taxation Office - - - -
Department of Employment and Workplace Relations - - - -
Total - - - -

The Government will provide $58.6 million over four years to continue the whole-of-government approach to targeting the cash economy, involving Centrelink and the Australian Taxation Office.

This measure is expected to lead to savings of $258.2 million, resulting in net savings of $199.6 million over four years. Provision for these net savings has already been included in the forward estimates.

This measure continues arrangements announced as part of the 2002-03 Budget measure Compliance Package — prevention and detection.

Fraud and Compliance — improved assessment of the value of real estate assets
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Department of Families, Community Services and Indigenous Affairs -1.2 -18.4 -38.7 -62.9
Related capital ($m)
Centelink 2.0 - - -

The Government will review the valuation of real estate assets owned by 120,000 pension recipients. This includes pensioners in receipt of the Age Pension, Carer Payment, Wife Pension or the Widow B Pension.

The Social Security (Administration) Act 1999 will be amended to allow data matching of State and Territory Government land titles data to detect undeclared real estate assets. A 12 month education campaign will be undertaken to encourage pensioners to inform Centrelink of any changes in the ownership or value of real estate assets which are subject to the assets test, and allow them time to rearrange their financial affairs before their pension is cancelled, or reduced, as a result of a change in the value of their assets.

This measure is expected to lead to savings in social welfare payments of $204.0 million and will cost $84.9 million to administer (including $2.0 million in capital funding) leading to net savings of $119.1 million over four years.

Fraud and Compliance — enhanced focus on serious social security fraud
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Department of Employment and Workplace Relations 5.8 -22.7 -26.4 -27.3
Department of Education, Science and Training .. -0.2 -0.2 -0.2
Department of Families, Community Services and Indigenous Affairs -0.4 -2.5 -2.9 -3.3
Total 5.3 -25.4 -29.6 -30.8
Related capital ($m)
Centrelink 5.1 - - -

The Government will provide $76.4 million over four years to expand the number and scope of serious social security fraud investigations that can be undertaken by Centrelink. This measure includes $5.1 million of capital funding in 2006-07 for Centrelink to upgrade related IT systems and software.

This measure will increase by 4,200 the number of investigations using covert optical surveillance to detect fraudulent Disability Support Pension claims.

In addition, this measure will fund an additional 14,000 targeted data matching reviews to detect undeclared marriage-like relationships, as well as an additional 6,480 serious fraud investigations resulting from tip-offs and other suspected cases identified in Centrelink's ordinary work processes.

The Government will also give Centrelink fraud investigators increased information gathering powers. This includes search warrant powers, and the capacity to work with the Commonwealth Director of Public Prosecutions on Proceeds of Crime matters.

This measure is expected to lead to savings of $151.5 million over four years resulting in net savings of $75.2 million over four years.

Fraud and Compliance — expansion of risk profiled customer reviews
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Department of Education, Science and Training -11.6 -16.5 -17.0 -17.4

The Government will expand the number of risk profiled reviews for Youth Allowance recipients by 35,000 to 75,000 a year, and of AUSTUDY student recipients by 5,000 to 10,000 a year.

Risk profile reviews are a compliance mechanism undertaken to help reduce the level of incorrect payment.

The measure, which builds on arrangements announced in the 2002-03 Budget measure Youth and student assistance — restructured reviews, will cost $10.6 million over four years to administer and is expected to generate savings of $73.0 million, leading to net savings of $62.4 million over four years.

Fraud and Compliance — address risks in payments to income recipients who reside abroad
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Department of Employment and Workplace Relations -0.6 -1.6 -1.7 -1.8
Department of Families, Community Services and Indigenous Affairs -1.8 -4.9 -5.3 -5.5
Total -2.4 -6.5 -7.0 -7.3

The Government will review the circumstances of 10,275 income support recipients who reside in Greece, Italy, Malta, Turkey and the United Kingdom to help reduce social security fraud. The reviews will focus on undisclosed income, assets, marriage-like relationships, and posthumous payments.

This measure builds on the 2002-03 Budget measure, International data matching pilot with the Netherlands; and the 2005-06 Budget measure Age Pension — detection and prevention of incorrect payments arising from overseas income.

This measure is expected to lead to savings in social welfare payments of $33.7 million and will cost $10.4 million to administer, leading to net savings of $23.3 million over four years. Administration of this measure will be undertaken by Centrelink.

Fraud and Compliance — improving processes for updating benefit recipient information
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Department of Employment and Workplace Relations -4.5 -4.5 -4.6 -4.6

The Government will not continue funding for the element of the 2002-03 Budget measure Compliance Package — prevention and detection related to updating benefit recipient information. The initiative introduced an online reporting system that allows recipients of Government payments to update incorrect records. The system is now in place.

This measure will result in savings of $22.5 million over five years (including $4.3 million in 2005-06).

Fraud and Compliance — increasing Medicare compliance through education
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Medicare Australia - - - -
Department of Health and Ageing - -3.2 -6.4 -6.4
Total - -3.2 -6.4 -6.4

The Government will increase compliance with the Medicare Benefits Scheme, through provision of targeted feedback to medical practitioners on anomalous claiming practices. Savings of $16.0 million over the period 2007-08 to 2009-10 are expected to result from this measure. The cost of implementing this measure will be met from existing resources within Medicare Australia.

Fraud and Compliance — detecting incorrect Carer payments
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Department of Health and Ageing 0.1 .. .. ..
Department of Families, Community Services and Indigenous Affairs -8.8 -1.5 -1.8 -1.8
Total -8.7 -1.5 -1.7 -1.8

The Government will introduce data matching between Centrelink and the Department of Health and Ageing to detect those individuals who are claiming Carer benefits where the care recipient has been placed in a care facility such as an aged hostel or nursing home.

This measure is expected to lead to savings in social welfare payments of $18.7 million and will cost $5.0 million to administer, leading to net savings of $13.7 million over four years.

Fraud and Compliance — expand random sample surveys for working age payments
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Department of Employment and Workplace Relations 2.9 -2.4 -2.1 -2.0
Department of Families, Community Services and Indigenous Affairs -0.2 -0.2 -0.2 -0.2
Total 2.7 -2.6 -2.3 -2.2

The Government will increase the sample size of the programme of random sample surveys of working age payment recipients by 10,000 annually. Increasing the sample size of the survey will improve the measurement of the level of payment accuracy across working age payments and provide information to refine and improve the targeting of compliance programmes.

The measure will cost $33.6 million over four years for the Department of Employment and Workplace Relations; Department of Families, Community Services and Indigenous Affairs and Centrelink to administer and will realise gross savings of $38.0 million resulting in net savings of $4.4 million over four years.

This measure builds on arrangements that were announced in the 2002-03 Budget as part of the measure Compliance Package — assurance, research and development at a cost of $14.8 million over four years with associated savings of $17.2 million resulting in net savings of $2.4 million over four years. Provision for this funding has already been included in the forward estimates.

Fraud and Compliance — improving child care compliance
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Department of Families, Community Services and Indigenous Affairs 11.1 11.1 10.1 10.5
Office of the Director of Public Prosecutions 1.3 2.2 2.2 2.2
Total 12.4 13.3 12.3 12.7
Related capital ($m)
Department of Families, Community Services and Indigenous Affairs 0.1 .. .. ..

The Government will provide $50.8 million over four years to the Department of Families, Community Services and Indigenous Affairs (including $0.2 million in capital funding) for that agency to implement directly a new compliance framework for the child care sector.

The compliance strategy will cover all child care types and examine the integrity of Child Care Benefits, Jobs, Education and Training Child Care and Child Care Support Programme payments. The key elements of the strategy include an information campaign for child care services and families, fraud detection using risk profiling techniques, and an increased level of targeted and random compliance visits to child care providers.

The measure also includes additional funding of $12.6 million over four years for quality assurance in the Long Day Care sector. Funding will support the growth in the number of Long Day Care services that need to be accredited through the quality assurance system.

Fraud and Compliance — legal action on serious fraud
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Office of the Director of Public Prosecutions 2.4 3.4 3.4 3.5
Department of Employment and Workplace Relations -0.1 -0.2 -0.2 -0.2
Total 2.3 3.2 3.3 3.3

The Government will provide $12.7 million over four years to the Office of the Director of Public Prosecutions to allow for an increase in prosecutions arising from an expanded programme of Centrelink referrals of suspected cases of serious social security fraud.

The Department of Employment and Workplace Relations and Centrelink will work together, within existing resources, to give priority to the preparation of cases of alleged serious social security fraud for referral to the Office of the Director of Public Prosecutions. This measure will result in minor savings to the Department of Employment and Workplace Relations of $0.5 million over four years.

Fraud and Compliance — addressing undeclared unearned income
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Department of Families, Community Services and Indigenous Affairs 0.6 -0.5 -0.2 -
Department of Employment and Workplace Relations 0.5 -0.5 -0.2 -
Department of Education, Science and Training 0.1 .. .. ..
Total 1.2 -1.1 -0.4 ..

The Government will provide $3.1 million to investigate 1,500 cases where income support recipients may have undeclared unearned income.

This pilot, which will be undertaken by Centrelink, will test the feasibility of utilising data held by the Australian Taxation Office as a means of detecting those receiving a Government payment who do not correctly report income derived from investments such as shares, bank interest, unit trusts and term deposits.

This measure is expected to lead to savings in social welfare payments of $3.3 million, resulting in net savings of $0.2 million over four years.

Fraud and Compliance — pilot programme addressing undeclared business income and assets
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Department of Families, Community Services and Indigenous Affairs 0.5 -0.3 -0.2 -
Department of Employment and Workplace Relations 0.5 -0.3 -0.1 -
Department of Education, Science and Training 0.1 - .. ..
Total 1.1 -0.5 -0.3 ..

The Government will provide $2.6 million to investigate 1,000 cases where income support recipients may have undisclosed business income or assets.

This pilot, which will be undertaken by Centrelink, will test the feasibility of matching Centrelink data with Goods and Services Tax and Business Activity Statement data from the Australian Taxation Office, to address payment risks associated with undeclared business income and assets.

This measure is expected to lead to savings in social welfare payments of $2.2 million, leading to a net cost of $0.4 million over three years.

Fraud and Compliance — investigation of the use of data mining as a predictive and risk identification method
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Centrelink 1.1 1.1 - -

The Government will provide $2.2 million over two years to investigate the use of data mining as a technique for identifying incorrect payments made by Centrelink, the Child Support Agency and Medicare Australia.

Fraud and Compliance — continuation and expansion of the rolling random sample survey programme for student payments
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Department of Education, Science and Training 1.2 0.5 0.3 0.4

The Government will continue and expand the current Rolling Random Sample Survey programme for student income support payments. This programme randomly reviews the circumstances of income support recipients to provide assurance regarding the integrity of income support programme outlays.

This measure, which continues and expands upon arrangements announced in the 2002-03 Budget measure Compliance Package — assurance, research and development, will increase Youth Allowance reviews from 1,500 to 2,000 per annum, and AUSTUDY reviews from 500 every three years to 1,000 annually. 750 ABSTUDY reviews will also be undertaken on an annual basis.

This measure involves costs of $9.6 million over four years, including $8.6 million for Centrelink to implement the change, and is expected to generate savings of $7.2 million, resulting in a net cost of $2.4 million over four years.

Fraud and Compliance — improving cross agency activities
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Centrelink 1.1 0.2 0.2 0.3
Department of Human Services 0.3 0.1 0.1 0.1
Medicare Australia 0.2 - - -
Total 1.6 0.3 0.3 0.3

The Government will provide $2.6 million over four years to improve internal data transfers between the agencies responsible to the Department of Human Services to support and supplement existing fraud and compliance activities.

This involves the exchange of alias, false and suspect identity information, establishing arrangements to share tip-off information, and increased data matching activity to detect sources of incorrect payment, such as undeclared income, between Centrelink, the Child Support Agency and Medicare Australia.

Funding for Centrelink and Medicare Australia will be appropriated directly to those agencies. Funding for the Child Support Agency will be appropriated to the Department of Human Services given it is part of the Department.

Fraud and Compliance — continuation of accelerated claimant matching detecting incorrect rent assistance
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Department of Families, Community Services and Indigenous Affairs - - - -

The Government will provide $14.2 million over four years for the continuation of the element of the 2004-05 Budget measure, Compliance — continuation of data-matching measures to improve control of incorrect payment and fraud. This measure has proved successful in detecting Rent Assistance recipients who have incorrectly declared their rent liability or living arrangements.

This measure involves funding for Centrelink of $3.5 million in 2006-07, $3.5 million in 2007-08, $3.6 million in $2008-09 and $3.6 million in 2009-10. Provision for this funding has already been included in the forward estimates.

Other measures in the Human Services portfolio

Health and social services access card — introduction
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Centrelink 86.6 122.2 125.6 75.6
Medicare Australia 34.3 97.5 131.7 110.1
Department of Human Services 13.5 55.4 54.9 51.5
Department of Veterans' Affairs 2.3 6.0 2.4 1.4
Department of Families, Community Services and Indigenous Affairs 0.1 0.1 0.1 0.1
Total 136.7 281.2 314.7 238.6
Related capital ($m)
Centrelink 57.2 6.0 - -
Medicare Australia 11.5 1.3 0.3 0.3
Department of Veterans' Affairs 1.9 1.5 .. -
Department of Human Services 0.5 - - 0.1
Total 71.1 8.8 0.3 0.4

The Government will provide funding of $1.1 billion over four years, including capital funding of $80.6 million, to introduce the health and social services access card system.

The card will replace seventeen existing health and social services cards and vouchers, providing Australians with more convenient and efficient access to Australian Government health and social services benefits.

The card will be phased in over a two-year registration period that begins in 2008. From early 2010, clients will only be able to access Australian Government health and social service benefits including those provided by Centrelink, Medicare Australia and the Department of Veterans' Affairs, if they have an access card.

The one-off process to register for the card will validate the identity of the applicant. The access card will contain the cardholder's photograph, name, signature and card number. The addition of a photograph on the card will significantly enhance the protection of the cardholder's identity and reduce opportunities for fraud.

In addition, a microchip in the card will store a digital photo, address, date of birth and details of any children and other dependants of the cardholder. There is also the capacity for the cardholder to voluntarily enter details such as emergency contacts, allergies, health alerts, chronic illnesses, immunisation information and organ donor status.

The system is expected to generate savings in health and social welfare outlays. The vast majority of these savings will be realised from 2010 when it becomes a requirement to hold the card in order to access Australian Government health and social services benefits. Savings therefore are expected to accrue beyond the period of the forward estimates.

The measure includes funding of $47.3 million over four years for a communication strategy to ensure all Australians are aware of the processes for registering for the card.

Further information can be found in the press release of 26 April 2006 issued by the Prime Minister.

Medicare Easyclaim — continue funding
Expense ($m)
2006-07 2007-08 2008-09 2009-10
Medicare Australia - - - -

The Government will provide $9.6 million over four years to continue funding Medicare Easyclaim facilities located in 200 community pharmacies. These facilities were established to provide Australians living in outer metropolitan areas with access to Medicare claiming services.

This measure involves funding of $2.4 million per year from 2006-07 to 2009-10. Provision for this funding has already been included in the forward estimates.

 

Miscellaneous