Services Australia prepares to match payroll data to prevent overpayments

Services Australia is set to begin matching the data of welfare recipients against single touch payroll (STP) data, as it looks to simplify income reporting while boosting the accuracy of compliance measures.

Just months after agreeing to pay back more than $700 million wrongly raised through its 'robodebt' income compliance program, the agency has issued a notice outlining plans for a new data matching program.

The program will see Services Australia match STP data held by the Australian Taxation Office, including wages and tax paid, with its own data for the first time to improve customer service and welfare integrity.

It follows the passage of the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Act earlier this year, which enables the agency to use the data.

The ATO has been collecting STP data from all employers since July 2018, though it wasn’t until July 2019 that all businesses were expected to report up-to-the minute wage and superannuation details through their payroll software.

Until now it has only provided STP data to Services Australia for the purposes of discovery activities in connection with the planned data matching program, which the pair are now ramping up.

Services Australia plans to use STP data to simplify income reporting obligations for welfare recipients by “pre-filling employer details … onto Services Australia online services for review by customers”.

In doing so, customers will no longer have to estimate their earnings when pay periods don’t align with reporting periods, reducing the likelihood of welfare recipients unknowingly accruing debts like those seen with the income compliance program, otherwise known as robodebt.

According to Services Australia's website, welfare recipients will start to see this data in their Centrelink online account from mid-September, though they will still need to enter hours worked and earnings for the time being.

But the data will also be used to identify any “significant difference between STP income and the estimate the customer has provided to Services Australia, and nudging the customer to suggest that they revisit their income estimate”.

The Department of Social Services has long wanted to tap STP data to help it to continue recovering billions worth of welfare overpayments.

In last year’s budget, it put savings from using STP to automate employment income reporting at $2.1 billion over four years.

“The data matching program involves the exchange of STP data from the ATO for individuals who have a relationship with the agency (clients of interest),” the notice published on Monday reads.

“The STP data will be matched against Services Australia records.”

Clients of interest are customers of Services Australia, as well as individuals related to customers whose income may impact a welfare payment or entitlement, such as a partner or ex-partner.

Customers and relatives that are matched “to a high level of confidence” in the ATO’s STP records will be added to the Mutual Client Register (MCR), which provides Services Australia with STP dataset on a daily basis.

A document outlining protocols for the data matching [pdf], published this month, reveals that the data of as many as 12 million individuals will be contained in an STP data exchange during the 2020-21 financial year.

“Services Australia estimates that the exchange will consist of 460 million pay events … for approximately 10 to 12 million individuals,” the protocol states, adding that this may change due to the “evolving impacts of COVID-19”.

Services Australia has stressed, however, that it will “not solely rely on any matched STP data to make decisions affecting customers’ eligibility, entitlements, or child support assessments based on only STP data”.

Data will be exchanged in encrypted form between the two agencies on a daily basis using a new IBM Sterling gateway, and will only be accessed by “Services Australia staff with a business need to access data”.

Services Australia added that measures have been taken to “maintain integrity levels” such as “designing systems that will not accept records that are incomplete and identifying records that have data items that are inadequate or corrupt”. 

In a LinkedIn post, government services minister Stuart Robert said Services Australia has “already started introducing the benefits of STP to customers”, citing a series of pilots that began in May 2020 to test the use of the data. 

“Services Australia worked with families earlier this year as part of a pilot using payroll information reported through STP. So far, this suggests 90 percent of those taking part will benefit from STP pre-filled information appearing in their Centrelink digital services,” he said.

“Last month we started using payroll information reported through STP in another trial, where we were able to get child support payments to families in half the time it usually takes and the results have been positive.”