Government to replace old Centrelink welfare system

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The Federal Government is taking action to replace a 30-year-old welfare payment system that delivers around $100 billion in payments to 7.3 million people each year.

Minister for Social Services, Scott Morrison, and Minister for Human Services, Marise Payne made the announcement on Friday.

“This important long-term investment will allow the government to properly address the challenges facing Australia’s welfare system, maximise the benefits of e-government, reduce the costs of administering the system for taxpayers and help crack down on welfare cheats,” Senator Morrison said.

The government is expected to pay $1 billion for the updated infrastructure, and efficiencies expected from the new system mean it will pay for itself over time.

The project will be carried out in multiple tranches and Centrelink customers will begin to see the benefits of the upgrade by the end of 2016, the government said.

“This investment will also help us stop the rorts by giving our welfare cops the tools they need on the beat to collar those who are stealing from taxpayers by seeking to defraud the system,” Senator Morrison said.

“ICT reform will also ensure more government systems are talking to each other, lessening the compliance burden on individuals, employers and service providers,” he said.

Minster Payne said the multi-year project will be one of the world’s largest transformations of a social welfare system.

“Work will begin immediately to mobilise the project team so that we can go to the market early in the new financial year,” Minister Payne said.

He said the government will benefit from faster, less costly implementation of social policy changes and better data analytics to inform policy decisions. Improvements in real-time data sharing between agencies will mean that with customer consent, their information won’t have to be provided twice.

“Improved data sharing will also significantly increase the government’s ability to detect and prevent fraud and non-compliance. This means customers who fail to update their details with us will be less likely to have to repay large debts, and those who wilfully act to defraud taxpayer will be caught much more quickly,” Minister Payne said.

The National Commission of Audit last year recommended the government replace the existing welfare system, which is complex due to many policy decisions about its structure and goals, and ad hoc changes that have been made over decades.

Many of these changes are enshrined in legislation, the commission said last May.

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Follow Byron Connolly on Twitter:@ByronConnolly