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RUBY:

From Schwartz Media, I’m Ruby Jones. This is 7am.

It was 2020 when the government first discovered that a glitch in its systems was wrongfully kicking welfare recipients off their payments.

But rather than fixing the error then and there, the department did nothing about it for three years.

In that time, ten people died. Whether their deaths were the result of suicide or destitution from having their payments cut, Services Australia won’t say.

Today, senior reporter for The Saturday Paper Rick Morton with his exclusive story about the ministers who failed to act, protecting the interests of private companies over the vulnerable.

It’s Wednesday February 26.

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RUBY:

So, Rick, tell me where this story begins for you.

RICK:

So I've been covering this for almost a year now and there was always something kind of fishy about it because, you know, like in January last year, so in 2024, the Department of Employment, they kind of sheepishly admit that there's this problem with the IT system that deals with employment services, right? And they say, oh, the IT system stuffed up. There was a bug and it affected about a thousand people who were hit with financial penalties or had their welfare payment cut off entirely because of this IT system. But then by the time I was writing about it in July, the number of people affected was revised up again, so now it's about 1300 people. And then come November, this source from the government says they're about to announce this new issue. And then also, by the way, all those IT glitches, the number affected by those has gone up again. Now while all of this is happening, people, of course, are watching it very carefully and one of those is this guy called Jeremy Poxon, who's a welfare rights activist. He's been around for ages now, really, and he knew about these issues, obviously, because there was bits and pieces being fed out in the media. And so Jeremy says, well, I don't think they're being forthcoming. I'm going to FOI, you know, lodge a freedom of information request.

RUBY:

Right. What did that uncover?

RICK:

So the briefings he got back, it's fair to say they were quite shocking because there were 80 pages in there of ministerial briefs to both Tony Burke, the former employment minister and the current employment minister, Murray Watt, from the Department of Employment about the issues with the IT system. And it showed that the problem was first identified in April 2020 and the department just didn't do anything about it for another three years.

RUBY:

Okay. And so what was the actual problem? What was the kind of technical glitch or whatever in the system that had caused all of this to happen?

RICK:

I mean, let me just start by explaining this is all about Workforce Australia, right? So ever since Howard privatised employment service providers, the government has paid private, nonprofit and for-profit providers to administer a compliance regime around, you know, if you're on a job seeker payment, you have to do mutual obligations. So you have to do work for the dole or you have to do some kind of training or be in study. And if you don't and if you don't look for work, a certain number of jobs every month, then you're going to get penalised.

Audio excerpt — Workforce Australia PSA video:

“Let’s learn more about the Targeted Compliance Framework…”

RICK:

And in 2018, the coalition introduces the new targeted compliance framework. And it is an insanely complicated traffic light system, I guess, is the best way to describe what it is about how to penalise people who are not meeting their mutual obligations, who don't have a reasonable excuse, in the words of the department.

Audio excerpt — Workforce Australia PSA video:

“Your job plan will include your mutual obligation requirements tailored to your individual circumstances. You need to meet and report on these requirements, including meeting your monthly points target on the Workforce Australia website…”

RICK:

It's a Rube Goldberg machine. It's like: ‘if this, then that’, and if you don't do this, then you spend 90 days in a penalty zone. And if you're in the penalty zone for so long, then all these other things happen. It is so complicated. There’s a little bit of human oversight, but mostly it's an automated IT system. And so by the time the department actually realised that people were being cut off welfare or they were being financially penalised, there were 1300 of them in the end who were hit with fines or who were cut off from their payments. And that happened 3400 different times.

RUBY:

Right. Okay, so there is this kind of technical stuff up in 2020 that the department finds out about, but doesn't do anything about for three years. In that time, there are 1300 people approximately cut off their welfare payments. So at what point does the department decide to do something about this?

RICK:

So that 1300, you know, those 1300 people who were affected, that happened mostly later on after many years. And the department only noticed it again in 2023. You know, I think it was actually around August, and then by September, they're briefing, ‘we need to fix this thing’, and by October, they've released the first fix for this IT glitch that was first identified in 2020. The problem is that fix created another problem, trying to fix the first problem, which had almost exactly the same effect and hit another 73 people with wrong financial penalties or cancellation of payments. That should never have happened. And in the course of briefing their ministers, at that point it was Tony Burke. They said that, you know, there might be an additional 55 bugs. I'm quoting this from the FOI briefing: “Our initial analysis suggests the majority of these bugs will not have significant impact on penalties. The number of participants impacted by all bugs is still under investigation”. And that's a very important point because they don't actually know.

RUBY:

Right. So at this point, the minister, though, is being warned that there are serious problems, I suppose. So does he or the department at this point try and do anything to fix it?

RICK:

I mean, I think it would be unfair to say that the ministers are not concerned. So the department and they're the ones who control the system, right. So they're briefing the government, and in the briefings to Watt they say, literally, I'm quoting: “IT changes would likely require significant government investment”.

RUBY:

Well, that makes sense, because it sounds like it was very broken.

RICK:

It's very broken. And also, we know that IT is always an incredible cost. But in this case, IT is complicated, not because, you know, we're trying to do quantum computing, but because the legislation is incredibly complicated.
So when the Department of Employment was briefing Tony Burke on the IT glitch issue in a way that they could be sure that they wouldn't affect people unnecessarily, they came up with two options. Option A was to basically prevent people from attracting financial penalties or cancellations in the first place. Just take them out of the penalty zone after so much time. The second option was to turn off what they called the penalty zone altogether. And they didn't want to do that because doing that would actually remove the threat of consequence. If you switch off consequences for people who don't engage, then suddenly they don't engage with private employment service providers that the government pays about, you know, one and a half billion dollars a year in Workforce Australia to provide these services. And they said there was a financial viability problem if they turned that off because suddenly these private operators would not be making any money from unemployed people. And that was untenable.

RUBY:

And so what about can we go back to these people, Rick, who were cut off from their payments? What do we know about what happened to them after that?

RICK:

So the government decides for people who were given financial penalties, which is, you know, in some cases, one week or two weeks of their payment, they can pay that back. They find those people in the system, they track them down, they give back, I think it's something like $600,000. For the people who had their welfare payments cancelled, they try and track them all down for a start. There's 41 people they can't get a hold of. These FOI briefings show. And also there are 10 people who died after the welfare payments were cancelled and before the government has been able to try and find them to pay the money back.

Services Australia obviously learned that these people have died. We know that the glitch problem could only have led to cancellations after a long period of time. So they didn't die that long ago. And Services Australia won't tell me how they died or whether they know how they died or if they even asked how they died. That's a problem because to me, there is at least the chance that maybe one of these people died because of something that happened with this system. We don't know the answer to that because they haven't investigated it.

RUBY:

After the break, is the system still broken?

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RUBY:

Where is the system at now, Rick, because it sounds like at every turn, when the department did decide to try and do something about the problem, they only created more problems. So is it actually functioning correctly now?

RICK:

No, it's not. So just in January, just last month, they had to pause mutual obligations for two weeks because there was another IT glitch. I mean, there's an IT glitch every other Friday. And we know that they keep discovering these issues. Might not be the old ones, but there's new ones. And there's a separate issue now where they're going back to 1,000 different people who had their welfare payments cut off because the delegate for the secretary of the Department of Employment wasn't giving due discretion to whether people would be thrust into financial hardship.

I mean, these are people who are living pretty tough lives. And they're people who are most likely to get in the penalty zone in this crazy system, people with a lot of comorbid things going on in their life. They might have mental health problems. They might be living in remote Indigenous communities. They might be partially considered able to work because they've got a disability, but they're not on the DSP. All of these things, right? And so to have your payment cancelled means in practice that you get cut off your only income support and you are forbidden from reapplying for at least four weeks. Now, even when I was earning money in my 20s, if I got cut off from my payment for a week, I wouldn't have any money. I didn't have savings. I couldn't make rent. These are people who definitely don't have money in the bank. So no, the model, the system, the IT, whether it's the IT or the human oversight, none of it is up to scratch. And the only people that can order a stop to it are the ministers of the Crown. And that has not been done.

RUBY:

Well, tell me a bit more about that then, because a lot of what you've uncovered has come through reporting and through this FOI, freedom of information request. But as you have continued to look into this, how would you characterise the official response that you've been getting from the department, from the minister?

RICK:

It's sheepish is the best way to describe it, where they know they've done something wrong, not deliberately, but the reaction to the errors that have been found could be characterised as kind of downplaying what has happened. And so it feels a little bit like on the fourth and fifth and sixth occasion where they've found an error, that you might wanna start to consider, as is your obligation as a public servant with duties and responsibilities under the act, as ministers who have the ultimate responsibility for these systems, you might wanna actually consider stopping this system. All we have at the moment is they've stopped the bits that they literally cannot get away with not stopping. So they've paused cancellation of welfare payments. Great. They're automatically taking welfare recipients out of the penalty zone at 91 days. Great. But they've kept everything else. And again, they don't know what else the system is or is not getting right. They've paid more than half a million dollars now to Deloitte to do an external assurance review. But again, the system carries on its merry way. And the Commonwealth Ombudsman is now investigating, but explicitly in their response to me, they said, we are not looking at whether employment services is a good system all over. We're looking at whether the targeted compliance framework, which is a coalition era policy, whether that's been implemented properly.

And we had these very similar issues with RoboDebt, where the question was always so narrow. It was not whether this RoboDet was illegal. It was not whether it was even moral. It was whether if the department had come up with a set of rules and procedures, were those rules and procedures being followed and implemented properly? That cuts out a lot of understanding from the problem. And it will do so again, in this case, if you don't actually take a step back and go, hang on a second. The IT system is not the diagnosis. It is a symptom of a wildly complicated, arcane, bureaucratic and quite cruel system of compliance designed to force people into jumping through these hoops. And so far, no one's taken any action on that.

RUBY:

Rick, thank you for your time.

RICK:

Thanks, Ruby, I appreciate it.

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RUBY:

Also in the news today,

The Albanese government has promised mobile phone reception, quote, “anywhere where Australians can see the sky”.

If re-elected, Labor says it will introduce laws that would require Telcos to provide outdoor mobile coverage across all areas of Australia by 2027, meaning an extra five million square kilometres of the country would gain service.

And

The Vatican says Pope Francis has shown ‘slight improvement’ and has resumed some work, as he battles double pneumonia and the onset of slight kidney failure.

The 88-year-old pontiff was admitted to hospital in Rome on February 14 after experiencing difficulty in breathing.

An unnamed Vatican official has told the media the Pope is now eating normalling and is “alert and well-oriented”.

I’m Ruby Jones, this is 7am. See you tomorrow.

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