WHEN a government agency tasked with assisting some of the most vulnerable Australians is reduced to suggesting on Twitter that clients seek help via Lifeline, perhaps it is time to acknowledge there might be a problem.

In recent weeks Centrelink has been deluged with thousands of angry and frightened social security recipients who received letters informing them they need to repay, in some cases, thousands dollars in alleged overpayments.

This, according to Human Services Minister Alan Tudge, is all about “strengthening the integrity of the welfare system by cracking down on fraud and overpayments”.

That premise is something no reasonable Australian would disagree with. Quite simply, anyone caught rorting the system should be forced to repay money owing, and possibly face additional penalties depending on the scale of any deliberate fraud.

The problem is that there is mounting evidence that thousands of innocent Australians are being informed they are liable for debts that don’t exist due to issues with Centrelink’s now automated compliance system. One key issue relates to a data matching system Centrelink is now using to marry its information with that held by the Australian Taxation Office and other agencies.

In some cases this system is incorrectly concluding a person was working two jobs when they had only declared one, perhaps due to a minor paperwork discrepancy. In others, where a person may have been unemployed for a period and receiving Newstart, the system is then averaging wages earned over the remainder of the year over the whole 12 months – including the period when no or little work was undertaken.

The compliance exercise is sending out tens of thousands of letters a month, and according to Human Services general manager Hank Jongen, has so far found $300 million in overpayments.

While the majority of these assessments may ultimately prove correct, there is still an alarming number of cases where the system appears to have failed completely. For people caught in this position, the situation is made worse by the onus of proof being reversed in terms of demonstrating that they don’t have a liability, as opposed to Centrelink proving that they do.

Clients are also reporting chronic problems with Centrelink’s website and difficulty accessing staff by telephone, all of which can add up to considerable stress and anxiety for people who, in many cases, may be guilty of nothing more than a clerical error or a victim of a Centrelink software oversight.

The whole mess is reminiscent of Queensland Health’s automated payroll debacle a few years ago, a shemozzle that ended up costing about $1.2 billion to fix.

While the affair has been referred to the Commonwealth Ombudsman for investigation, this process will take time.

In the interim the Government needs to actually admit there are real problems with the new system, and suspend it until it can guarantee what are serious flaws have been rectified.