Australia’s controversial mutual obligations framework is on pause after a series of IT issues that have hit the system, as two separate reviews are conducted into the legality of the systems that monitor mutual obligations and have the power to cancel Centrelink payments.
The mutual obligations scheme forces jobseekers to complete tasks such as applying for jobs or attending training, or have their payments stopped.
During 2023 and 2024, investigations by the Department of Employment and Workplace Relations (DEWR), which manages the mutual obligations system, found 1,326 people had “financial penalties being applied incorrectly” due to an IT issue. The department sought legal advice on whether about 1,000 of those people had possibly had their payments unlawfully suspended as a result. The department did not respond to questions on what that advice was, but afterwards “immediately stopped” the cancellation of these payments.
DEWR is now conducting an internal review of the IT system and legislative framework supporting its Targeted Compliance Framework – which ranks and penalises jobseekers when they are not meeting mutual obligations requirements.
A separate external review, which is being undertaken by Deloitte and costing $439,142, began in 2024 and is expected to be delivered in May after the federal election. It will investigate whether the mutual obligations system is functioning properly.
“The review will build on existing assurance work undertaken by the department, as well as identify and support appropriate next steps for future improvements,” the department said on Tuesday.
In a statement on Wednesday, Murray Watt, the minister for employment and workplace relations, said the Albanese government took a “strong view that Australians deserve a fair compliance system that doesn’t penalise people unfairly”.
“An external assurance review is being undertaken, so that any further anomalies or errors are identified and corrected as soon as they are detected,” he said.
“The Department is also undertaking a legal review of key elements of the Targeted Compliance Framework.
“I recognise the Department acted swiftly to rectify the issue when it was identified, by immediately pausing payment cancellations and finding solutions for those who may have been impacted.”
On 7 January, the government paused mutual obligations for all recipients due to an IT issue – separate to the issue that caused the instances investigated in 2023-24 – on the Workforce Australia online portal. From 17 January, the pause was extended until 27 January.
What are mutual obligations?
- People getting Centrelink payments must complete these tasks and activities in order to receive their benefits.
- The obligations vary depending on a person's circumstances and are listed in a "job plan", which people on benefits must sign with their job agency to get their first payment.
- To meet their mutual obligations, people on the new Workforce Australia program can complete various activities each month, such as job applications or education and training. These tasks are allocated a number of "points" and most jobseekers need to reach 100 points to keep their benefits.
- Jobseekers in the Disability Employment Services program must also agree to a job plan with their consultant, which generally sets how many job applications they must send off each month. But they are not subjected to the points system.
- Those on the ParentsNext program must agree to a similar plan – and complete tasks related to pre-employment preparation or parenting – to receive their payments.
What happens if people don't meet their mutual obligations?
- They will receive a "payment suspension", which means their benefits will be temporarily stopped unless they agree to rectify the problem with their job agency. They have two days to do this or their payment may be delayed. The suspension is generally automated.
- Those found not to have a "reasonable excuse" for failing to meet their obligations will be given a "demerit point" by their job agency. After a sixth demerit point, jobseekers can have their payments docked by 50% or 100%, and then stopped completely.
The Australian Council of Social Service has called for an ongoing pause to mutual obligations, a suspension of the TCF – and a “fully independent, arms-length legal and human rights review”.
“We cannot have any confidence in a system which repeatedly fails, placing even greater stress on people living on the brink,” the Acoss CEO, Cassandra Goldie, said.
“The compliance system cannot continue to operate against hundreds of thousands of people whilst the IT system is vulnerable to failure and the legality of decisions are in question,” Goldie said.
A spokesperson for the department said on Tuesday there were no ongoing issues with the IT system.
“Extending the pause … is to enable better assurance that all issues are resolved and to provide more certainty for participants,” the spokesperson said.
“Pauses of mutual obligations mean that no participant will be subject to payment suspensions or penalties during that period.
“The department acknowledges and apologises for the impact, including potential confusion and distress as a result of the disruptions or the communications about them, that pausing of requirements has on people.”
