Tanya Plibersek and Katy Gallagher have released a statement announcing the government “will wipe almost half of Australia’s social security debt backlog and roll out resolution payments of up to $600 for those impacted by the historical debt calculation method known as income apportionment”

From the statement:

A new $300 million package will invest in a range of measures to ensure our social security system is producing fairer outcomes for Australians.

The threshold for waiving small, accidental debts will be increased for the first time in over 30 years to $250, with around 1.2 million debts expected to be waived or no longer needing to be raised in 2025-26 as a result.

Often, the administrative cost of recouping small, accidental debts is higher than the value of the debt itself, making the process of debt recovery uneconomical. This decision will mean Services Australia can spend more time on significant matters and upholding the integrity of our social security system.

Existing safeguards will be strengthened to ensure the waiver cannot be manipulated.

It will not be available in circumstances of significant non-compliance or fraud and we’ll continue to recover every cent of debt in these circumstances.

People with historical debts affected by income apportionment from 2003 to 2020 will also be eligible to apply for a resolution payment, in recognition of the fact that we now know this method of calculating entitlements was invalid.

To assist those affected to navigate the Resolution Scheme, Economic Justice Australia and the Australian Council of Social Service will each be given $400,000 in funding.

New legislation will be introduced into the Parliament in the coming weeks to implement these measures.

The legislation will also include a measure to provide legal clarity to the historical practice of income apportionment, which ran from the early 1990s to 2020, to avoid the need to recalculate potentially millions of debts at a significant cost to Australia’s social security system.

It’s important to remember that in many cases income apportionment only changed the amount of debt owed by an individual by a small amount, and up to a third of those affected actually ended up with a lower debt. Income apportionment was never used by the Albanese Labor Government, but we are dealing with its legacy in the most responsible and cost-effective way that we can.

Today’s announcement is an important first step toward systemic social security debt reform.

More information about the operation of the Income Apportionment Resolution Scheme and how to apply will be available following the passage of legislation. People who then have questions about their debt can contact Services Australia’s income apportionment line on 1800 560 870 or check Services Australia’s website.