Job seekers had payments cancelled unlawfully by gov IT system

A “predominantly automated” system froze job seekers’ payments incorrectly for over two years because it wasn't updated to reflect a change in legislation, a review has found.

The system implements the Targeted Compliance Framework (TCF), which makes job seekers complete specific activities - called ‘mutual obligations’ - “to receive income support from the government,” a review by the Commonwealth Ombudsman states [pdf].

Laws governing the TCF were changed in 2022, giving human decision-makers at Service Australia additional discretion when deciding if a payment should be cut off.

But this discretionary step was not coded into an automated system that ultimately cut off the payments.

If a failure to meet mutual obligations was recorded in the system, payments were automatically cancelled.

“Not only did the system cancel the payment without reflecting the need for a discretionary decision as to whether cancellation should occur, the decision-makers themselves did not embark upon that discretionary consideration,” the ombudsman found.

The additional step wasn’t coded into the system, in part, because the “intent” of the law change was not to create rework of systems and processes.

It was incorrectly assumed that the part of the Department of Employment and Workplace Relations (DEWR) that drafted the law also knew how the automated system worked.

“In our view, the TCF automated system both constrained decision-makers from exercising their discretion and led to the failure of decision-makers to decide whether to cancel income support payments once they decided a job seeker did not have a reasonable excuse for a mutual obligation failure,” the ombudsman found.

The ombudsman criticised the time it took for the problem to be corrected.

“The error in automating cancellation decisions of income support went undetected from April 2022 until September 2023, when it was raised by external legal advisors in the context of providing advice to DEWR on a separate issue,” it said.

“From then, it took almost 10 months for DEWR to decide to pause decisions to cancel income support in July 2024.”

Other failures were identified as well.

Among these, a legislated ‘check and balance’ to ensure job seekers using digital tools are treated fairly, still does not exist more than three years later.

A number of reviews have been initiated as a result of this incident.

The ombudsman will hand down another one on decision-making processes at a later date.

DEWR itself has also kicked off a “legal review to examine the way decisions are being made under the legislation it administers to ensure alignment with the law.”

“A critical part of the review involves DEWR fully understanding what automation is occurring and the impact of this on people,” the ombudsman said.

“We are pleased that a person-centric focus is an element of this review.”

There is also an unpublished Deloitte review from June this year that found DEWR’s “computer system had become increasingly unstable, with volatility directly impacting compliance function operation and significantly increasing the propensity of the system to deliver unintended results, including flawed determinations and outcomes for job seekers.”

All told, five IT-related errors were identified with the computer system, dating back to 2018.

The ombudsman called the Deloitte review a “confirmatory call to action for DEWR.”