The overall objective of the audit was to assess whether the RSS Programme is effective and efficient in providing assurance on the levels of payment error and the resultant risks to the integrity of Australian Government outlays for payments administered by Centrelink. Specifically, the audit assessed whether: the RSS Programme meets the objectives outlined for it in the Portfolio Budget Statements under which funding was provided; there is an adequate methodology underpinning the RSS reviews; the RSS reviews are conducted effectively and efficiently, and adequate quality assurance mechanisms exist to assure the results obtained from the RSS reviews; and reporting by the agencies of the results of the RSS Programme is adequate and takes into consideration the issues identified in Audit Report No. 44 2002–03 Review of the Parenting Payment Single Program, and Audit Report No. 17 2002–03 Age Pension Entitlements.

Summary

Background

1. In 2004–05, Centrelink was responsible for the administration of more than $63 billion in programme payments delivered on behalf of 25 purchaser departments. The vast majority of these outlays on programme payments (some 95 per cent) relate to three key purchaser departments, the Department of Families, Community Services and Indigenous Affairs (FaCSIA), the Department of Employment and Workplace Relations (DEWR) and the Department of Education, Science and Training (DEST).

2. A key element of the strategy used by FaCSIA, DEWR and DEST to assure the integrity of the significant Australian Government outlays on the various Centrelink payments for which they are respectively responsible 1 is the Random Sample Survey Programme. The Random Sample Survey (RSS) is a point-in-time analysis of sampled customers' circumstances, designed to establish whether customers are being correctly paid.

3. Under Social Security Law 2, customers are required to disclose to Centrelink information about changes in their personal and financial circumstances that affect their entitlement. However, there are risks associated with a reliance on disclosure by customers because individuals can fail to report relevant changes when they occur either through lack of understanding of their obligations, omissions, mistakes, or deliberately misrepresenting their circumstances. Centrelink uses powers under the Social Security (Administration) Act 1999 to compel randomly selected customers to participate in a RSS review, and to provide information on their circumstances.

4. The RSS sample design involves stratified sampling 3 across the 15 Centrelink Areas. Centrelink RSS Reviewers situated within each Area conduct the RSS reviews in face-to-face interviews with selected customers. However, file reviews are conducted in cases where a face-to-face interview is not possible, or if customers voluntarily cancel their payments before the interview can be conducted.

5. Customers are required to provide detailed evidence on their current circumstances during an RSS review. The Reviewer may also undertake third party verification of the information provided by the customer, such as checking with banks and employers. An RSS review may confirm that a customer is receiving a correct payment or result in a cancellation or variation of the customer's payment and/or identification of a debt or under payment.

6. Centrelink currently runs the RSS on behalf of the three purchaser departments. The RSS is run annually for all major Centrelink payments4, and minor payments are covered over a three-year cycle. Agencies advised the ANAO that, to date, the RSS Programme costs some $4.5 million a year to conduct.

How the RSS is Used

7. The purchaser departments use the RSS Programme primarily to measure the level of accuracy of outlays on income support payments delivered by Centrelink. Other purposes for which the departments use the RSS Programme are to provide a measure of the effectiveness of compliance and other review activity and to measure the level of Centrelink's administrative error, against a target agreed between the purchaser departments and Centrelink under the individual agencies' Business Partnership Agreements (BPAs).

8. At the time of the audit, a replacement programme for the RSS Programme was being developed by DEWR and DEST. DEWR informed the ANAO on 16 December 2005 that:

At the same time as the fieldwork was conducted for this audit, a review of the lapsing RSS budget measure was undertaken, led by DEWR. This review was completed in October and has informed thinking in DEWR and DEST about arrangements that might apply from 1 July 2006. These matters are being considered.

9. The ANAO notes that DEWR and DEST both received additional funding to expand the RSS programme, under a fraud and compliance measure in the 2006–07 Budget.

Business Assurance Framework

10. The BAF provides ‘performance assurance to the Australian Government, Centrelink's key stakeholders, purchaser departments, the Board5 and customers.'6 BAFs are included in all key Centrelink BPAs to provide assurance on the integrity of outlays, to identify risks and the control frameworks that mitigate those risks. RSS results are the primary quality assurance tool for the BAF. 7

11. In addition to the RSS, Centrelink also undertakes a broader assurance programme as part of its control framework. This programme includes a number of prevention and review activities including data matching and other risk reviews. The other review activities are targeted towards specific customers, whereas the RSS Programme is sampled across the entire Centrelink customer population for a particular payment. 8

12. Under the BAF, a payment is considered ‘correct' if: the right person is paid; under the right programme; at the right rate; and for the right date(s). ‘Correctness' is considered, in the context of the BAF, to relate only to decision-making processes within Centrelink's control. The payment correctness target contained in the individual agencies' BPAs is a measure of Centrelink's administrative errors that have an impact on payment; it does not take into account customer error.

13. The RSS takes a sample of customers and identifies errors in the information held by Centrelink compared with the information obtained from the RSS interview and follow-up procedures.

14. RSS error data for the full year 2004–05 are shown in the following table.

Notes:

A) Additional data supplied to the ANAO by Centrelink not included in report from which the remaining results reported in this table were sourced.

B) The number of reviews with a customer error with or without a dollar impact cannot be calculated by subtracting administrative error from the total number of reviews with an error with or without a dollar impact. This is because a review can have multiple errors. Centrelink also advised the ANAO that it could not provide the break down of reviews with a customer error with and without a dollar impact, without significant additional work.

C) The payment correctness figure of 96.6 per cent discussed in paragraphs 20 to 22 is calculated by subtracting the figure for reviews with Centrelink administrative error with dollar impact (3.4 per cent) from 100 per cent.

15. As can be seen from Table 1, some 45 per cent of Centrelink customers surveyed in the full year 2004–05 had at least one error in their record. Over a third (1 661 cases) of these had multiple errors9. For errors with a dollar impact on payment, 18.8 per cent resulted in a cancellation or variation to payment, 54.5 per cent resulted in a debt, and 26.7 per cent resulted in a cancellation or variation and a debt.

16. For the full year 2004–05, the total value of customer debts raised as a result of all RSS reviews was $3 213 810. The average value of all debts was $1 034. Around a third of debts were under $5010. Approximately 20 per cent of debts were over $1 000, including 4.3 per cent of debts which were over $5 000.

17. The RSS further categorises reviews with an error into those with a Centrelink administrative error and/or a customer error with no dollar impact and those with a Centrelink administrative error and/or a customer error with a dollar impact.

18. In 2004–05, Centrelink identified one or more errors in 4 552 of the 10 048 RSS reviews conducted, with the total number of 7 037 errors distributed across these 4 552 reviews. Centrelink RSS Reviewers determined that 78 per cent of these errors were due to customer error (that is customer action or inaction). The remaining 22 per cent were categorised as due to Centrelink administrative error (predominately incomplete processing), albeit that only 5.1 per cent of these errors (or 3.4 per cent of reviews) had an immediate impact on the customer's payment.

19. This information is used to calculate payment correctness. The definition agreed between Centrelink and purchaser departments for payment correctness is calculated only taking into account reviews with a Centrelink administrative error with a dollar impact. Any error attributed to customer action or inaction, and any administrative error with no dollar impact is excluded.

20. Centrelink reported in its 2004–05 Annual Report that:

Since [this] random sampling process began in July 2002, Centrelink's payment correctness figures have exceeded 95 per cent [the BPA target] every quarter, with an annual figure for 2004–05 of 96.8 per cent. 11

21. The payment correctness figure reported in Centrelink's annual report is based on preliminary data from the RSS collected in the first three quarters of 2004–0512. The figure is derived by taking the number of reviews with a Centrelink administrative error with a dollar impact as a percentage of the sampled population, and subtracting this number from 100 per cent. 13

22. Centrelink's 96.8 per cent reported payment correctness for 2004–05 does not mean that 96.8 per cent of customers received a correct payment in that year. As identified in Table 1, the RSS showed that in 2004–05 some 30 per cent of customers had an error that had a dollar impact on their payment, meaning that payment correctness (using the ordinary meaning of the term) was around 70 per cent.

23. While the proportion of payments that were incorrect was around 30 per cent, many of the individual payment variations are small. Given that the RSS is a point in time analysis, the variations relate to a fortnightly payment. The largest variation will occur in the case of a payment cancellation, that is, the largest variation will equal the customer's entire fortnightly payment. However, given that many variations are small, then the impact on outlays is not large. Nevertheless, even a small variation will have economic and other impacts on an individual customer.

Calculation of the accuracy of outlays

24. The primary use to which the three purchaser departments put the RSS programme is to measure the level of accuracy of outlays on income support payments delivered by Centrelink.

25. To do this, the purchaser departments have to first identify the ‘total payment inaccuracy'. That is the percentage of RSS reviews that have errors which have a dollar impact on payments, irrespective of the source of the error (that is customer error or Centrelink administrative error).

26. The inaccuracy of outlays is then calculated by dividing the sum of fortnightly dollar amounts of variations (upward variation, downward variation, cancellation/suspension) by the sum of the fortnightly payments to all sampled customers, the percentage figure is then calculated. To get the accuracy of outlays the purchaser departments then subtract this figure from 100 per cent.

27. FaCSIA advised the ANAO that, based on the RSS data, the accuracy of outlays for 2004–05 was 97.9 per cent for those major social security payments made by Centrelink on behalf of FaCSIA14. DEWR advised the ANAO on 9 December 2005 that its assessment of the results of the RSS between 1 July 2004 and 31 March 2005 show that the average inaccuracy rate for working age payments was 4.2 per cent. This equates to 95.8 per cent of outlays on Centrelink payments for which DEWR is responsible being accurate.

Audit approach

28. The overall objective of the audit was to assess whether the RSS Programme is effective and efficient in providing assurance on the levels of payment error and the resultant risks to the integrity of Australian Government outlays for payments administered by Centrelink.

29. Specifically, the audit assessed whether:

  • the RSS Programme meets the objectives outlined for it in the Portfolio Budget Statements under which funding was provided;
  • there is an adequate methodology underpinning the RSS reviews;
  • the RSS reviews are conducted effectively and efficiently, and adequate quality assurance mechanisms exist to assure the results obtained from the RSS reviews; and
  • reporting by the agencies of the results of the RSS Programme is adequate and takes into consideration the issues identified in Audit Report No. 44 2002–03 Review of the Parenting Payment Single Program, and Audit Report No. 17 2002–03 Age Pension Entitlements.

Key Findings

Meeting the Major Objective of the RSS Programme (Chapter 3)

30. The ANAO examined the extent to which the RSS meets the major objective of the RSS Programme, that is, to measure the level of incorrect payment. The ANAO also examined the related objective to detect undeclared changed circumstances.

Importance of Error

31. The figure for the accuracy of outlays is the most visible output of the RSS process. However, the data on error collected by the RSS is also of importance in identifying the size and nature of error. The data provide information regarding the quality of administration of Centrelink payments, and ultimately, the quality of service delivered to customers. The impact of error on the cost of providing services is also of importance.

32. Two studies have highlighted the importance of error (both customer and administrative error) for Centrelink's effective and efficient administration of payments. First, the 2004 Allen Consulting Group report FaCS and Centrelink: Compliance Review raised the impact of error. Secondly, an internal study conducted by Centrelink in 2004, Project Charlotte, highlighted the importance of identifying error. Previous ANAO performance audits have also raised issues relating to error.

33. The Allen Consulting Group report stated that:

while an [administrative] error may be immaterial to payment today – such as a coding error – it represents the possibility that compliance controls could be precluded from identifying future payment inaccuracy…From this perspective, administrative errors –whether material to outlays or not – may contribute to underlying inaccuracy.15

34. Centrelink's Project Charlotte looked at determining the cause of customer error. The Analysis Report from the project stated that:

Customer error creates an amount of rework or additional work which impacts on staff's capacity. It is also costly in both administration and program expenditure. 16

Robustness of RSS estimates

35. There are a range of issues which impact on the robustness of the estimates of incorrect payment calculated from the RSS data (and hence the accuracy of outlays estimate). But the ANAO found that the major issue affecting the robustness of the RSS estimates is the inability of the RSS to uncover all incorrect payments due to the inherent problem that not all customers will disclose all of their circumstances and/or all of the changes in their circumstances, even when asked in a face to face interview. Customer non-disclosure is a form of non-sampling error and, therefore, cannot be addressed through a greater sample size.

36. Accordingly, no survey method to identify the level of Centrelink payments affected by error will be 100 per cent accurate. In addition, the cost of uncovering all customer non-disclosure, even if a robust methodology to achieve this was identified, is likely to be prohibitive.

37. However, current reporting by agencies based on the RSS programme data does not reflect the limitations of the data. The current reporting of the estimates of the accuracy of outlays on Centrelink payments suggests a level of precision that is not able to be supported by data from the RSS Programme.

Information on the potential extent of customer non-disclosure of all circumstances and/or changes in circumstances

38. The extent of customer non-disclosure of all their circumstances and/or changes in circumstances is unknown. However, there is some research which provides some information on the potential extent of non-disclosure in general, and in relation to cash-in-hand payments in particular.

39. In early 2005, FaCSIA, DEWR and DEST commissioned research to be undertaken to inform the development of the Keeping the System Fair Campaign (badged as Support the System that Supports You when released in September 2005).

40. The research found that there was ‘a high level of tolerance of and acceptance of non-compliant behaviours and practices. There was widespread sympathy and empathy with individuals who did not report certain changes in their circumstances.' The research suggested that ‘non-reporting is increasingly becoming normalised behaviour'.

41. In 2003, the Regulatory Institutions Network at the Australian National University conducted a national survey, part of which related to the cash economy. The survey was anonymous and respondents were selected from a stratified random sample of Australian households. The survey found that 9.4 per cent of respondents had worked for cash-in-hand payments (cash-in-hand was defined as cash money that tax is not paid on).

42. Importantly, in the context of the RSS, the survey found that those who were in receipt of a government benefit were more likely to be engaging in cash economy activities (11 per cent of beneficiaries, compared with 8 per cent of non-beneficiaries), although there were no significant differences in the amount of money earned. This reinforced a similar finding from surveys conducted in 2000 and 2002.

Limitations of steps taken in the RSS process to detect customer non-disclosure of all circumstances or changes in circumstances

43. The RSS has a two-part methodology. First, the selected customer is required to participate in a face-to-face interview with an RSS Reviewer using a structured questionnaire. Secondly, the RSS Reviewer undertakes follow-up procedures to obtain information from third parties (such as employers and banks) and from other sources (for example Centrelink's own database and the electoral roll).

44. As a means of going some way to overcoming non-disclosure by non-compliant customers, the RSS questionnaire has been designed to include a number of ‘trigger' questions. Depending on the customer's answer to any of these questions, there may be an indicator prompting further inquiry into an aspect of their circumstances. However, during fieldwork for this audit, Centrelink staff interviewed by the ANAO advised that while these ‘triggers' uncovered some cases of non-disclosure, they were unsuccessful in identifying other cases.

45. Further, while some Reviewers advised the ANAO that they followed up on doubts that the customer was disclosing relevant information regarding his/her circumstances, others indicated that they did not, stating they believed they did not have the evidence to allow the conduct of such follow-up action. A number of RSS staff interviewed also stated that, due to time pressures, follow-up work was not always undertaken.

Use of RSS data

46. The accuracy of outlays figure is used by agencies to provide assurance to the Parliament and the community that Centrelink payments are accurate and that, ultimately, public funds are appropriately expended. There are two issues related to how agencies have been using the RSS data as set out below.

Transparency

47. The accuracy of outlays figure derived from RSS data has been reported by agencies with no reference to its inherent limitations. In addition, a reported accuracy of 97.9 per cent, which is very high and goes to one decimal point, suggests a level of precision that the RSS data cannot provide. Users of the information may be given a false sense of confidence regarding both the robustness of the figure and the accuracy of outlays.

48. This finding mirrors the recommendation of Audit Report No. 44 2002–03 Review of the Parenting Payment Single Program which stated that ‘FaCS should ensure that the limitations of the RSS methodology are transparent to relevant stakeholders and that all stakeholders are made aware of the degree of confidence FaCS has in the methodology'.

Unclear reporting

49. While the RSS figure generally cited is the measure of the accuracy of outlays, Centrelink also reports a figure for the correctness of payments in its Annual Report and to the purchasing departments. In Centrelink's 2004–05 Annual Report payment correctness was reported as 96.8 per cent. Centrelink's payment correctness figure, which is also derived from RSS data, is a measure of a target contained in the individual agencies' BPAs.17 The payment correctness figure contained in the BPA is actually a measure of Centrelink's administrative errors which have an impact on payment.

50. This figure of 96.8 per cent ‘payment correctness' compares with for example the 97.9 per cent accuracy of outlays figure reported by FaCSIA for those major social security payments made by Centrelink on behalf of FaCSIA However, they are measures of very different factors. Given these figures are of similar magnitude, this in itself may cause some confusion regarding what this payment correctness figure is measuring.

51. While the definition of payment correctness may be agreed and understood between Centrelink and the purchasing departments, external reports quoting payment correctness may be misleading to the outside reader. The statement that Centrelink payment correctness in 2004–05 was 96.8 per cent, given the ordinary meaning of the words ‘payment correctness', would suggest that 96.8 per cent of customers receive a correct payment. However, the RSS data show that it is actually around 70 per cent of customers who receive a correct payment (see Table 1), albeit that the variations required to make correct the some 30 per cent of payments which had been found to be incorrect were mostly small, given it relates only to a single fortnight's payment.

52. It is useful for the purchaser departments to use the RSS data to gain an insight into the level of Centrelink administrative error and its impact on both the number of customers receiving a correct payment and also the overall accuracy of outlays. However, in the absence of readers of Centrelink's Annual Report being provided with a definition of what Centrelink means by payment correctness, a reader may not understand that the only errors included in calculating the payment correctness figure reported related to Centrelink administrative errors with an impact on payment, and that customer errors are excluded. The ANAO suggests that future external reporting of Centrelink's performance against this target in the BPAs would be clearer if it were to convey a focus on administrative correctness rather than payment correctness.

Meeting the Other Objectives of the RSS Programme (Chapter 4)

53. The following sections examine the extent to which the RSS Programme meets the remaining objectives for the Programme as articulated in annual reports and relevant FaCS Portfolio Budget Statements.

Measure the reasons for incorrect payment and rigorous information on how incorrect payment occurs

54. Part of the purpose for which the RSS was originally funded was to measure the reasons for incorrect payment and to provide rigorous information on how incorrect payment occurs (particularly the circumstances in which customers do not fulfil their obligations to advise of changes in their personal and financial circumstances).

55. The RSS does provide information on the reasons for payment incorrectness to the extent that it detects this. However, the RSS does not provide rigorous ‘information on the circumstances under which customers do not fulfil their obligations to advise of changes in their personal and financial circumstances', that is, the RSS does not provide information on why customers do not fulfil their obligations.

56. In any case, the ANAO notes that Centrelink already holds detailed information on the reasons for payment incorrectness, caused by customer error, collected through its review and compliance activities. However, this information is not recorded in Centrelink's Integrated Review System, and is consequently not easily aggregated and analysed.

Effectiveness of the compliance framework/control framework and identification of emerging risks

57. The RSS does not provide a direct measure of the effectiveness of the compliance/control framework because it does not directly test this. Rather, there is an inference that positive results in the RSS equate with the compliance/control framework being effective.

58. The RSS questionnaire does not include any questions regarding the outcomes of any compliance/control activity a customer may have been subjected to prior to selection in the RSS. There is also no follow-up during the RSS process to match back to any compliance activity the customer may have been involved in to see if it was effective. That is, where an error is identified during the RSS process, there is no checking back in the customer record to see if there was any previous compliance activity that had failed to identify the error.

59. Using the identification of incorrect payment from the RSS as a proxy for the effectiveness of the compliance/control framework may lead to an overestimate of the level of effectiveness, due to the potential that the RSS is not detecting all cases of payment errors, particularly in relation to the most non-compliant customers.

60. While some emerging risks may be identified in the RSS, those relating to the most non-compliant may not be identified, leading to skewed data. In this circumstance, if compliance activity is targeted on the basis of risks identified through the RSS, there is also a risk that compliance activity will not be directed to the most non-compliant customers, and therefore, may not be the most cost effective.

Operation of the Random Sample Survey (Chapter 5)

61. The ANAO examined the operation of the RSS Programme and concluded that there were a range of issues with the operation of the RSS Programme. These issues ultimately affect the quality of data produced from the RSS. Accordingly, addressing the opportunities to improve the operation of the RSS programme will improve the quality of the data produced. However, these improvements will not address the inherent problem of customer non-disclosure.

62. The ANAO considers that purchaser department should implement improvements to the governance of the RSS programme to gain a greater level of assurance regarding the operation of the programme and to allow them to better assess the efficiency, effectiveness and independence of Centrelink's operation of the RSS Programme. There are also a range of operational issues which affect the identification of non-disclosure by customers of changes in their circumstances, including differences amongst RSS Reviewers in approaches to probing and following up on doubts.

63. The ANAO found that the quality of the data collection for the RSS was also affected by issues with:

  • quality assurance of the conduct and results of the RSS;
  • recruitment, training and performance management of RSS staff;
  • questionnaire design;
  • Centrelink staff other than RSS Reviewers conducting the interview; and
  • the attribution of error between Centrelink and its customers.

Overall audit conclusion

64. The RSS Programme is a tool used by FaCSIA, DEWR and DEST primarily for the purpose of measuring the level of accuracy of some $63 billion in Australian Government outlays on income support payments delivered by Centrelink. These purchaser departments also use the RSS Programme to provide a measure of the effectiveness of compliance and other review activity, and to measure the level of Centrelink's administrative error.

65. The ANAO acknowledges the purchaser departments' efforts to find a method to measure the accuracy of outlays, and to monitor the level of Centrelink's administrative error, and the value of such information. However, the RSS is unable to uncover all incorrect payments due to the inherent limitation that not all customers will disclose all of their circumstances and/or all of the changes in their circumstances, even when asked in a face to face interview.

66. The ANAO recognises that no survey method to identify the level of Centrelink payments affected by error will be 100 per cent accurate. In addition, the cost of uncovering all customer non-disclosure, even if a robust methodology to achieve this was identified, is likely to be prohibitive.

67. Notwithstanding this, the RSS programme has been relied upon by the purchaser departments and Centrelink to provide a measure of Centrelink's achievement against an agreed target in the individual agencies' BPAs for Centrelink's payment correctness, and is the key plank in the assurance of around one-third of Australian Government outlays.

68. While an internal definition of payment correctness may be agreed and understood between Centrelink and the purchasing departments, external reports quoting payment correctness based on this definition may be misleading to the outside reader. Centrelink reported in its 2004–05 Annual Report payment correctness of 96.8 per cent. Using the ordinary meaning of the words ‘payment correctness', this would suggest to a reader that 96.8 per cent of customers receive a correct payment. However, the RSS data show that it is around 70 per cent of customers who receive a correct payment.

69. The ANAO suggests that future external reporting of Centrelink's performance against this target in the BPAs would be clearer if it were to convey a focus on administrative correctness rather than payment correctness.

70. The figure reported by agencies for the accuracy of outlays (for example, 97.9 per cent for FaCSIA payments in 2004–05, and 95.8 per cent for DEWR payments) suggests a level of precision that is not able to be supported by data from the RSS Programme due to the inherent limitation that not all customers will disclose all of their circumstances to Centrelink.

71. The purchaser departments have received additional Budget funding to increase the sample sizes for the RSS programme. While there may be other benefits realisable from the increase in the sample size, this will not address the non-sampling error associated with customer non-disclosure. As noted in paragraph 35, customer non-disclosure is a form of non-sampling error and, therefore, cannot be addressed through a greater sample size. The purchaser departments are also proposing enhancements to the RSS programme to uncover further non-disclosure, however, these will not, in themselves, uncover all non-disclosure.

72. The ANAO considers that it is important that agencies use the accuracy of outlays figure calculated from RSS data as an indicative measure of the level of accuracy of outlays on Centrelink payments, recognising its inherent limitations. The indicative RSS measure would need to be appropriately supplemented by, and used in conjunction with, other relevant information collected by Centrelink and the purchaser departments to provide the required level of assurance for these significant Australian Government outlays.

Recommendations

73. The ANAO made nine recommendations aimed at, first, ensuring the RSS data were appropriately used and reported, and secondly, improving the operation of the RSS programme.

Agency Responses

FaCSIA

74. Assurance on the accuracy of payments made on FaCSIA's behalf by Centrelink is an important issue. We welcome the ANAO's recommendations as they will enhance FaCSIA's reporting of RSS data and strengthen the governance and management of the RSS programme. FaCSIA agrees with the recommendations contained in the report.

DEWR

75. The Department of Employment and Workplace Relations (DEWR) recognises the important role of the Random Sample Survey in providing assurance on the accuracy of outlays, and in enabling improvements to payment accuracy, including measurement of transactional error. The commitment to this measure is reflected in the recent Budget announcement to extend Random Sample Surveys for all working age payments for a further four years. DEWR support the ANAO audit findings and agrees with the recommendations.

DEST

76. The Department of Education, Science and Training (DEST) agrees with the audit report's overall findings and supports its recommendations. The implementation of the recommendations will enhance the governance and operation of the Random Sample Survey (RSS) Programme and DEST's reporting of the RSS data.

Centrelink

77. Centrelink welcomes this report and considers that implementation of its recommendations will enhance administration of the random sample survey and reporting of its data and the correctness of Centrelink's decision making. Centrelink agrees with the recommendations in the report.

Footnotes

1 Until October 2004, the former Department of Family and Community Services was responsible for all of the programme payments covered by the RSS Programme. Following major machinery of government (MoG) changes that occurred at that time, DEWR and DEST now each are responsible for some of these programme payments. See Chapter 1 for further information.

2 The Social Security Law comprises the Social Security Act 1991, the Social Security (Administration) Act 1999 and the Social Security (International Agreements) Act 1999.

3 The population is divided into subpopulations (strata) and random samples are taken of each stratum.

4 Major payments are Age Pension, Youth Allowance, Parenting Payment (Single and Partnered), Disability Support Pension, and Newstart Allowance.

5 The Centrelink Board of Management was abolished upon commencement of amendments to the Commonwealth Service Delivery Agency Act 1997 on 1 October 2005. The authority which formerly rested with the Board now rests with the Chief Executive Officer (CEO) of Centrelink.

6 Centrelink, Annual Report 2004–05, pp. 37-39

7 ibid.

8 A range of customers are excluded from selection in the RSS, including those who are currently being reviewed in another Centrelink process and those who reside in remote areas.

9 Centrelink, Rolling Random Sample Surveys, Final Results Quarter 4 of 2004–2005, including full year, Compliance and Review, February 2006, p. 11.

10 Centrelink automatically waives debts of less than $50, as it is not cost effective to recover these debts. The power to waive in this circumstance is provided under section 1237AAA(1) of the Social Security Act 1991.

11 Centrelink, Annual Report 2004–05, p. 39.

12 The final validated results of the RSS for 2004–05 were not available until February 2006. Accordingly, these results were not available for inclusion in agencies' 2004–05 Annual Reports. Centrelink advised the ANAO in April 2006 that the purchaser departments had agreed that the Centrelink's CEO's Statements of Assurance for 2004–05 be based on the first three quarters of data for 2004–05 as the fourth quarter data would not be available by the time the Statements of Assurance were required.

13 The relevant final validated results for 2004–05 are set out in Table 1 and using these figures it can be seen that the final payment correctness figure for 2004–05 is 96.6 per cent, within 0.2 per cent of the preliminary figure reported in Centrelink's 2004–05 Annual Report.

14 These payments are Age Pension, Carers Payment and Child Disability Allowance.

15 The Allen Consulting Group, FaCS and Centrelink: Compliance Review, 2004, p. 43.

16 Centrelink, “Charlotte” – the Web Unfurls, Analysis Report, December 2004, p. 7.

17 Centrelink's Annual Report 2004–05 states (p. 39): ‘To ensure effective delivery of government programs, random sample survey results are used to assure the correctness and accuracy of social security program outlays and are the primary quality assurance tool for the Business Assurance Framework……The target for payment correctness is set at 95 per cent. Since this random sampling process began in July 2002, Centrelink's payment correctness figures have exceeded 95 per cent every quarter, with an annual figure for 2004–05 of 96.8 per cent.' This is opposed to the 97.9 per cent accuracy of outlays result for 2004–05 for FaCSIA payments only.

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