The Australian Government this morning announced a suite of reforms to be made to Centrepay, with the aim of improving customer protections and reducing financial harm. After years of strong advocacy, Economic Justice Australia (EJA) welcomes today’s announcement and commends the Government on finally taking seriously the elimination of predatory business behaviours from a system which, until now, has facilitated them.
Centrepay is a system administered by Services Australia (the Agency) which allows government-approved businesses to take money directly from a person’s Centrelink payment before it is deposited into their account.
Four areas of concern have been carved out in the announcement, with reforms to be implemented incrementally as part of a transition to new program settings from 1 July 2025:
- Removal of high-risk service reasons
- Robust, enforceable compliance and complaints framework
- Strengthening policy and contracts
- Strengthening business application requirements and process.
Our response to the Centrepay reform discussion paper in July this year noted that Centrepay has long been misused by businesses as a vehicle for economic abuse, with an insufficient complains system and compliance framework widening the scope for bad behaviour.
EJA is pleased to see the Agency’s commitment to act on our calls for a more accessible and transparent Centrepay complaints system, as well as to improve compliance and enforceability settings for businesses.
“The strengthening of contracts and enforceability of compliance by businesses is key to these reforms. It was shocking to see how poorly these businesses were monitored previously – even businesses that generated the majority of their income from Centrepay deductions – which left the door wide open for abuse,” says EJA CEO Kate Allingham.
In one case study provided to EJA, a financial counselling service described the process for making a Centrepay complaint as “difficult” and “dysfunctional”. As it stands, there is no acknowledgement that a complaint is received, pathway of the complaint or outcome of the complaint. It is unclear whether that complaint even gets to the Centrepay division of Services Australia “because nothing is ever heard of it again”.
“Rather than Centrepay complaints disappearing into a black hole, un-investigated and ignored, these reforms will enable individuals and advocates to be heard by both businesses and Centrepay, and to have their complaints proactively handled,” says Ms Allingham.
The Agency has reviewed the current 41 service reasons used by Centrepay and has announced the removal of five that represent risk of financial harm to customers:
- Household Goods Lease and Rental
- Funeral Expenses
- Basic Household Items
- Food Provision (to be phased out over time)
- Social and Recreational Commitments
“The areas that are being removed under the new program settings are the areas where advocates have seen the most exploitation and harm being done,” says Ms Allingham.
In another case study provided to EJA, a client contacted an EJA member centre thinking their income support payments had been stopped. A lawyer enquired through the Advocates Channel and discovered that over $600 per fortnight was being deducted from their payments, including amounts of $100, $100 and $50 to three different private businesses with the deduction type ‘basic household items’ and no target amount, meaning the deductions continue indefinitely. The client did not know what they were paying for.
The removal of household goods lease and rental will also help prevent Centrepay recipients from paying significantly more for items than what they are worth.
“It is necessary that the transition is done carefully with safer alternatives, such as the No Interest Loan Scheme. This is particularly important in regional and remote communities,” says Ms Allingham.
EJA has been a key stakeholder in the Centrepay Reform Peak Advisory Reference Group where, alongside other advocates, we advised the Agency on the various ways Centrepay has enabled dodgy businesses to flourish via the abuse of people’s Centrelink payments. Other key members of the reference group included Financial Rights Legal Services, Mobstrong debt, Anglicare NT, CatholicCare NT, ACOSS and MoneyMob Talkabout.
We commend the Government on what has been, and will continue to be, a genuine consultation process.
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Media contact: Kirsty Sier | 0435 075 085 | kirsty@ejaustralia.org.au
Further reading:
- EJA response to the Centrepay reform discussion paper
- Minister Bill Shorten media release: ‘Centrepay improvements to protect and empower Australians’
- Centrepay reform homepage