Why Is Centrelink Still Chasing Welfare Debts From 40 Years Ago?
Centrelink, Australia's government agency for welfare payments, is chasing $4.93 billion in debts owed by people who received welfare. Some of those debts were first raised more than 40 years ago. This is happening even though the Australian government agreed in principle to bring back a six-year time limit on collecting old debts, following a major investigation called the Robodebt royal commission. Services Australia data shows 1.34 million outstanding debts, with about 645,000 of those under an active repayment plan (The Guardian).
About 600 of those debts are over 30 years old, with a middle value of $5,451.49. Another 76,800 are between 15 and 30 years old, with a middle value of $2,197.64. The single oldest debt was raised more than four decades ago and is currently being repaid. The department would not say how much it is, citing privacy (The Guardian).
How Did This Happen?
Until the end of 2016, there was a rule that Centrelink could only chase welfare debts for six years. After six years, a debt was considered too old to collect. But a change to the law in late 2016 removed that six-year limit, starting 1 January 2017 (The Guardian). The Department of Social Services confirms the old six-year limit no longer applies (DSS Social Security Guide). Debts that were already considered too old to collect before 1 January 2017 are still off limits, according to the Paid Parental Leave Guide (DSS Paid Parental Leave Guide). But any debt not yet expired can now be chased indefinitely, and interest is still being added to some debts where the person has not repaid or set up a payment plan (The Guardian).
The Robodebt royal commission, a formal government investigation into a flawed automated debt-recovery scheme, recommended bringing back the six-year limit. The government agreed in principle. But no date has been set for when this will happen, and the government has not said whether the new limit would cover debts that already exist. Services Australia does have the power to forgive all or part of a debt in special circumstances, which would mean the person no longer has to pay (Services Australia).
Are the Debts Even Correct?
There are also serious questions about whether the debts were calculated correctly. Last year, Services Australia identified 147,773 debts that may have been calculated unlawfully using a method called income apportionment, which involves spreading a person's reported yearly income across the year in a way that may not match what they actually earned in any given period. Freedom of information records suggest roughly 3 million Australians may have had debts calculated this way (The Guardian). The government announced payments of up to $600 for people affected by this method, covering debts from 20 September 2003 to 6 June 2019 (Services Australia). Separately, about 44,000 Australians have paid back more than they owed on their Centrelink debts, some by $20,000 or more (The Guardian).
Christopher Rudge, a welfare expert at the University of Sydney, has argued that the debt calculations cannot be trusted to be right and that any debt older than six years should not be collected. Economic Justice Australia (EJA), a leading legal body, has urged the government to bring back the six-year limit following a High Court decision. EJA made this call in a September 2025 submission to Parliament, proposing that the law be changed to include a time limit on welfare debt recovery (EJA via APH). The group repeated that call in a media release on 25 July 2026 (EJA).
The broader context here is a welfare debt system under pressure from several directions at once. Removing the six-year limit in 2017 meant there was no ceiling on how far back Centrelink could go to collect debts. The royal commission later said this needed to be fixed by law. But the gap between agreeing to fix it and actually doing so leaves about 1.34 million debts in limbo. People paying off debts right now cannot know whether those debts will eventually be forgiven, and the government has not said whether a new time limit would apply to existing debts or only future ones.
The scale of the calculation problem makes things more uncertain. Up to 3 million Australians may have been affected by the income apportionment method, but only 147,773 debts have been formally flagged. The $600 resolution payment is a real step, but it is small compared to the debt amounts involved, especially for the 600 debts over 30 years old where the typical amount is more than $5,000.
The overpayment issue adds yet another layer. The fact that 44,000 Australians have paid more than they owed, some by very large amounts, suggests the system has not had enough checks to make sure debts are not just collected but calculated correctly. Without a working time limit, mistakes can pile up over decades instead of eventually going away.
EJA and Rudge are not the only ones calling for a fresh start. A growing number of advocates want all the outstanding debts wiped. The government's agreement in principle to a six-year limit is a response to that pressure, but without a timeline or details on how it would work, that agreement remains, for now, just words rather than action.
