Audit Report No. 7 2008-2009
Chapter 3 Centrelink’s Tip-off System
Background
3.1
Centrelink is a statutory agency within the Human Services portfolio. It
is responsible for the delivery of a wide range of social security payments and
services on behalf of other government departments.
3.2
In 2007-08, Centrelink administered $70.6 billion in payments to 6.5
million customers. Payments administered by Centrelink include the Age Pension,
Newstart allowance, and Parenting Payment.
3.3
Centerlink has one outcome, which is:
Access to Government services that effectively support:
self-sufficiency through participation in employment, education, training and
the community; families and people in need; and the integrity of government
outlays in these areas.[1]
3.4
The responsibility to ensure the integrity of government outlays relates
to ensuring customer payments are correct. Centrelink conducts compliance and
fraud programs to analyse information relevant to the circumstances of
customers, and to use this information to review customer eligibility for
Centrelink benefits. The management of tip-off information is an element of
Centrelink’s broader compliance program.
Tip-offs
3.5
Centrelink defines tip-offs as:
Allegations and/or other information provided by members of
the public about individuals who they believe are obtaining part or all of
their Centrelink payment without disclosing complete and accurate details of
their circumstances.[2]
3.6
Tip-offs represent approximately seven per cent of all compliance
reviews and fraud investigations completed. They can be difficult to manage,
given the involvement of informants, and the challenges in verifying the
information received.
Centrelink’s management of tip-offs
3.7
Centrelink’s approach to tip-offs involves:
n specialised tip-off
line operators that answer calls from the Australian Government Services Fraud
Tip-off line;
n tip-off processing
teams that focus on the assessment of tip-offs; and
n compliance review
officers and fraud investigators.
3.8
These officers and other Centrelink officers who may be required to
record a tip-off use Centrelink’s Tip-off Recording System (TORS) to manage
tip-off information, including the initial recording of the tip-off.
3.9
Tip-offs entered into TORS are assessed by specialised teams, known as
the Tip-off Processing Site (TIPS) teams. These teams assess the tip-off, and
determine whether the tip-off should be verified or investigated.
3.10
The nature of the tip-off received determines whether it is forwarded to
a compliance review team, or a fraud investigation team. Tip-offs that allege a
customer is attempting to defraud Centrelink are directed to fraud investigation
teams, while all other tip-offs are subject to a compliance review.
The audit
Audit Objectives
3.11
The objective of the audit was to examine the efficiency and
effectiveness of the administration of the tip-off system, including
Centrelink’s management of privacy issues related to the tip-off management
process.
3.12
The audit examined Centrelink’s management of the tip-off process using
two main criteria:
n ensuring the fraud
tip-off line is an efficient and effective method of identifying debt and
fraud; and
n ensuring the privacy
of callers and customers is managed appropriately and in accordance with social
security law[3] and the Privacy Act
1998.
3.13
As part of assessing the effectiveness and efficiency of Centrelink’s
administration of the tip-off system, the ANAO examined Centrelink’s compliance
review and fraud investigation processes which are mechanisms for identifying
and raising debts against customers.[4]
Audit Conclusions
3.14
The audit report made the following conclusion:
Tip-offs are one element in the spectrum of Centrelink’s
compliance measures designed to ensure that eligible customers receive the
correct entitlement. They need to be managed in a manner that delivers the best
outcome from each tip-off, while protecting the privacy of customers and safety
of informants.
Of the tip-offs received and/or reviewed or investigated[5]
in 2007–08, 17,332 or 16.2 per cent resulted in a reduction, increase,
cancellation, rejection or suspension to a customer’s payment and/or a debt
being raised against the customer.
Centrelink has a documented process and guidelines for the
collection and recording of tip-offs that is supported by a tip-off recording
system. The tip-off recording system, introduced in March 2008, incorporates
collection and recording functions designed to capture relevant information and
reduce the time taken to process tip-offs.
Centrelink’s guidelines and processes recognise Centrelink’s
privacy responsibilities in managing informants and customers. However,
Centrelink would benefit by improving the guidelines and processes that relate
to:
n the collection and
retention of tip-offs in order to provide greater consistency in their
practical application and protection of customers’ and informants’ privacy and
confidentiality; and
n contacting customers
and informants as part of compliance reviews and fraud investigations, to
provide a balanced approach to managing the interests of both informants and
customers.
Centrelink’s compliance and fraud program performance
measures are primarily quantitative and can be improved by introducing
qualitative measures to provide a more balanced assessment of the compliance
review and fraud investigation performance.
Centrelink’s ability to reliably estimate the funding and
cost of managing the tip-off process, and the subsequent savings generated from
the tip-offs received, is limited. The tip-off capability is only one part of
Centrelink’s broader compliance capability. However, an improvement in
Centrelink’s ability to cost respective compliance capabilities can assist with
decisions about the allocation of resources within Centrelink’s compliance and
fraud program; and also enhance the quality of advice to stakeholders.[6]
ANAO Recommendations
3.15
The ANAO made the following recommendations:
Table 1.1 ANAO Recommendations, Audit Report No. 7
2008-09
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1.
|
The ANAO recommends Centrelink determine a policy and
implement a time frame after which information contained in a tip-off, that
is deemed to require no further action and is not used as part of an active
review or investigation, is permanently deleted from TORS.
Centrelink response: Agree.
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2.
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To mitigate the risk of fraud investigators unnecessarily
contacting customers, the ANAO recommends Centrelink revise the Fraud
Investigation Manual to:
·
provide parameters for when it may be appropriate for
investigators to contact customers without a suspicion of criminal conduct;
and
·
require fraud investigators, with a suspicion of criminal
conduct, to have ‘reasonable grounds’ prior to contacting a customer and
consider classifying this process as a critical decision.
Centrelink response: Agreed. Updates to the Fraud
Investigation Manual, subsequent to its provision to the ANAO, have included
guidelines that detail when it may be appropriate for investigators to
contact customers without a suspicion of criminal conduct.
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3.
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To ensure protection of customers’ privacy and informants’
safety during compliance reviews and fraud investigations, the ANAO
recommends Centrelink:
·
revise guidelines for compliance officers to include when it is
appropriate to contact an informant and any privacy implications for the
customer; and
·
consolidate its existing fraud investigation guidance relevant
to informants into a central source, which includes an informant management
policy that addresses the requirements of the Australian Government
Investigation Standards.
Centrelink response: Agreed.
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4.
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To provide a balanced set of internal performance
measures, the ANAO recommends that Centrelink introduce measures for
compliance officers and fraud investigators which assess the conduct and
quality of the reviews and investigations, to supplement current quantitative
measures.
Centrelink response: Agree.
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5.
|
The ANAO recommends that Centrelink develop and maintain
budgetary funding details and accurately identify and attribute all material
costs associated with the tip-off process.
Centrelink response: Agree. Centrelink will attribute
details of recent revenue received for tip-offs and will consider affordable
options to track costs associated with the delivery of the tip-off process
where they may materially impact on measuring the performance of the wider
fraud and compliance program.
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6.
|
To improve the reliability of savings figures required for
reporting purposes, the ANAO recommends that Centrelink, the Department of
Education, Employment and Workplace Relations, the Department of Families,
Housing, Community Services and Indigenous Affairs and the Department of
Finance and Deregulation develop a savings methodology that more accurately
estimates an amount realisable by the Australian Government.
Centrelink response: Agree. Centrelink is currently
working with the Department of Human Services and the Department of Finance
and Deregulation to improve the measurement of fraud and compliance programs,
including savings methodologies.
DEEWR response: DEEWR agrees to the recommendation.
FaHCSIA response: FaHCSIA welcomes Recommendation 6 of the
Australian National Audit Office (ANAO) to participate, in consultation with,
the Department of Finance and Deregulation, Centrelink and other policy
departments in the development and implementation of a new, robust savings
methodology.
Finance response: Finance agrees with Recommendation 6.
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The Committee’s review
3.16
The Committee held a public hearing on Monday 16 March 2009, with the
following witnesses:
n Australian National
Audit Office (ANAO); and
n Centrelink
3.17
The Committee took evidence on the following issues:
n improvements since
the audit;
n costs of the tip-off
scheme;
n receipt of, and
action taken on tip-offs; and
n data handling and
management.
Costs of the tip-off scheme
3.18
Centrelink reported to the Committee on the improvements made since the audit.
It noted that staff training had improved, with staff at all 25 fraud sites
receiving face-to-face training in tip-off handling. Additionally Centrelink
reported that it had implemented a quality assurance framework for fraud
investigations, and that the framework would be replicated across the
compliance reviews area.[7]
3.19
The Committee noted the ANAO finding that tip-off data was being
collected inconsistently by operators. Centrelink replied that data collection
had been streamlined with the introduction of the new Tip-offs Recording System
(TORS), and that there was now more targeted questioning of people making
tip-offs.[8]
3.20
The Committee looked at the total amount of recovered debt and the cost
effectiveness of the tip-off scheme. Centrelink advised that approximately 70
per cent of the debt base was currently under recovery.[9]
It noted that it was difficult to determine whether or not the tip-off system
paid for itself, as it was difficult to disaggregate the costs of some of the
functions within the tip-off scheme, as some staff did not work exclusively on
tip-offs.[10] However, Centrelink
estimated that the amount of money returned to Centrelink would be considerably
higher than the cost of tip-offs, and that there was a high deterrent value in
maintaining the tip-off system.
3.21
The Committee asked the ANAO whether it had made any recommendation to
conduct a cost-benefit analysis of the tip-off scheme. The ANAO advised that it
was an issue that had been examined, but that it had been difficult to obtain
the relevant data to conduct a cost-benefit analysis.[11]
Further, the ANAO noted that given the size of Centrelink, and the diverse
nature of its business, that it was difficult to cost different activities down
to smaller levels.[12]
3.22
Examining the issue further, the Committee was advised that in the
financial year to date in February 2009, that 10,000 out of 63,000
investigations arising out of tip-offs had led to a customer debt being
incurred, or a reduction, cancellation or suspension of payment, and that the
total amount of savings identified was just over $80 million.[13]
Receipt of, and action taken on tip-offs
3.23
The Committee asked about the way tip-offs were reported to Centrelink,
with Centrelink reporting that for the financial year up to the end of February
2009, that 18,495 tip-offs were received via the internet, 31,857 were received
via the Australian Government Services Fraud Tip-off Line, and that 10,372
tip-offs were reported in person or via the general Centrelink call centre.
Additionally, 207 tip-offs were reported directly from the Australian Taxation
Office, and 2,867 were received through other channels such as other government
agencies.[14]
3.24
The Committee asked whether Centrelink reported policy flaws uncovered
by tip-offs and investigations to client government agencies such as the
Department of Education, Employment and Workplace Relations (DEEWR), and the
Department of Families, Housing and Community Services and Indigenous Affairs
(FaHCSIA). Centrelink reported that all of its activities provided feedback to
agencies, and that it worked closely with them on these matters.[15]
3.25
The Committee examined the actions taken on tip-offs deemed worthy of
further investigation. Centrelink reported that for the financial year up to
the end of February 2009, that 29,206 compliance reviews had been conducted,
and that there had been 3,093 fraud investigations.[16]
The Committee asked why, given there had been over 100,000 tip-offs, there had
only been slightly over 32,000 actions taken.
3.26
Centrelink replied that there were two reasons why there were such a
large number of uninvestigated tip-offs, with approximately 15,000 tip-offs
relating to people who are not customers of Centrelink, and the remainder
having been assessed by analysts as not having enough information to proceed
with further investigations.[17]
Data handling and management
3.27
The Committee noted the Audit Report's finding that handling of
complaints data could be improved by Centrelink, and asked about Centrelink's
data handling process. Centrelink advised that complaints about non-Centrelink
customers were deleted after 90 days, and that unsubstantiated complaints about
current Centrelink customers were retained for a year[18]
within the TORS, a separate entity to the Centrelink customer record.[19]
3.28
The Committee expressed some reservations about staff being able to
access such data, and asked who had access to the TORS database. Centrelink
replied that analysts who determined whether or not a tip-off was investigated
and the individual officer conducting the compliance review or fraud
investigation would be able to access such data.[20]
Further, Centerlink noted that its staff were trained and held appropriate
security clearances, and that they signed privacy declarations.[21]
3.29
The Committee noted that the ANAO had recommended some changes to the
TORS, with Centrelink replying that a new TORS was implemented during the
audit, and that a more refined database and set of questions had been put in
place. The Committee asked the ANAO for its perspective on the new TORS, with
the ANAO advising that it had examined the new TORS, and it had found that
records were still being kept in the system once it had been decided that there
was no further need for the information to be retained.[22]
3.30
The Committee asked Centrelink whether unsubstantiated tip-off data on
customers really was deleted from TORS after 12 months. Centrelink replied that
data could be de-identified and used for trend analysis and identification of
emerging fraud controls, and that Centrelink was currently working with its
legal branch to determine its obligations under the Archives Act to retain
identified data.[23]
Recommendation 2
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The Committee recommends that Centrelink fully implement Recommendation
Number 1 from the Australian National Audit Office Report Number 7 2008-09, and
ensure that information in a tip-off deemed to no longer require any action
be permanently deleted from the Tip-off Recording System as soon as it is
identified as such.
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3.31
The Committee asked whether enough data was now collected to enable
better measurement of the effectiveness of the tip-off scheme. Centrelink noted
that the data collected had enabled it to better examine trends and patterns,
providing it with information for point-in-time analysis.[24]
3.32
The Committee noted the ANAO finding that customers who had been
informed they were the subject of a compliance review were often not told of
its result. Centrelink reported that it was now mandatory for a compliance
officer to inform a customer of the result of the compliance review.[25]
3.33
Centrelink was asked how funding was determined between the fraud and
compliance sections, with the agency replying that Government policy and
measures determined the funding balance, and that it was generally provided on
an aggregated amount and then divided within the agency.[26]
The Committee asked whether the area of tip-offs was receiving enough funding,
with Centrelink indicating that it was receiving sufficient funding for this
area of its business.[27]
Conclusion
3.34
The Committee is again pleased to see Centrelink acting quickly on the
recommendations of the ANAO to improve Centrelink’s interactions with its
customers.
3.35
It is pleasing to see Centrelink providing feedback to agencies like
FaHCSIA and DEEWR reporting policy flaws that have been identified through the
review of tip-offs.
3.36
The Committee remains concerned that Centrelink is retaining data on
Centrelink customers that has been investigated and found to be
unsubstantiated, and urges Centrelink to adopt its recommendation to prevent
possible further investigations of customers being prejudiced by the presence
of unsubstantiated allegations.
3.37
Overall, the Committee is satisfied with the progress made by Centrelink
since the audit and looks forward to seeing further improvement in the near
future.