Funding for Centrelink payment cancellations ignores rot at the heart of welfare compliance: Anti-Poverty Centre

Welfare advocates have criticised the Albanese government’s response to a second damning report from the Commonwealth Ombudsman that links stigma against welfare recipients to unlawful suspensions of Centrelink payments.

As part of the Mid-Year Economic and Fiscal Outlook (MYEFO) Labor announced $44 million in funding to “resolve known system issues” and other processes under the Targeted Compliance Framework (TCF).

The funding will largely go towards “human decision-makers” so recipients’ “individual circumstances will be comprehensively considered before any decision to reduce or cancel their income support payment for mutual obligation failures”.

It will also provide some compensation to people who’ve had their payment unlawfully cancelled.

“Having more staff in Services Australia will make zero difference to the hundreds of thousands of people who have their payment put on hold by an unaccountable outsourced providers every year,” said Antipoverty Centre spokesperson Jeremy Poxon.

“It will not stop the threats, the bullying, abuse and the unlawful payment suspension decisions that derail people’s lives.”

It’s the Ombudsman’s second investigation into TCF, which requires job seekers to complete “mutual obligation” tasks such as agreeing to job plans, searching for jobs and attending appointments and interviews.

The first report (in August 2025) found 964 jobseekers had their income support payments unlawfully cancelled between April 2022 and July 2024 due to chronic maladministration.

This is a fraction of the approximately 310,000 people who, according to analysis from Economic Justice Australia had their Centrelink payments unlawfully cancelled between 2020 and 2024.

In August, the Ombudsman recommended the establishment of a compensation scheme.

“People needing income support are economically vulnerable and may also have other vulnerabilities that require special consideration,” noted Commonwealth Ombudsman Iain Anderson.

In reporting back, the Department of Employment and Workplace Relations (DEWR) said it had made 651 recommendations for immediate compensation, worth a combined total of $936,124.80.

With the assistance of Services Australia, it had repaid 604 people a total of $872,963.80.

Upon review the Mr Anderson found the department’s remediation approach and cancellation decisions “not to be fair and reasonable”.

“DEWR’s oversight of providers in monitoring and responding to inconsistent or inappropriate decision-making by providers is poor and lacks transparency.”

Around 2.7 million payment suspension notices are issued each year.

“The Ombudsman has already called out the so-called compensation scheme for its failings,” said Mr Poxon.

“It is a joke that forces people to jump through unnecessary hoops just to get backpay, with no actual compensation for the harm caused by unlawful decisions.”

Mr Anderson’s investigation into the remediation also found “information for job seekers to be vague and incoherent, while the information for agency decision-makers was unduly complex”.

In addition, the Ombudsman said the high rate of provider decisions being overturned “raises concerns about the quality, consistency and appropriateness of provider decision-making in the TCF”.

Welfare advocates have also emphasised the “devastating effects of ripping away poverty level income from people who are trying to survive”.

“This pitiful attempt to paper over the harm compulsory activities cause will not make the problems exposed in the Commonwealth Ombudsman’s damning report disappear,” said Mr Paxon.

“Both non-profit and for-profit providers are doing immense damage and the Department of Employment and Workplace Relations is enabling it to continue unabated.

The Antipoverty Centre says the latest round of funding “ignores rot at the heart of welfare compliance”.

Backed by more than a dozen advocacy groups, it’s calling for Centrelink payment penalties related to compulsory activities to be stopped and for all “forced activities” to be abolished.

“Neither the minister nor her department seem able to grasp the scale of the mess they’re in,” said Mr Poxon.

“Continuing with payment suspensions is more evidence that the financial viability of welfare cops is more important to this government than the wellbeing of people who depend on Centrelink payments to live.”