Govt backs reforms to Centrepay welfare payments

The Federal Government has defended its reforms of the Centrepay welfare process used in remote and very remote First Nations communities to assist with paying important expenses like bills and medications.

Changes come into effect from November 3 with a government statement explaining that Loopholes in the current system were been exploited by a small number of businesses to take payments from Centrepay customers, even when it was not in the customers’ interests.

But concerns have been raised over some changes that have seen ‘high risk services’ and some household goods removed from the list.

These include the purchase of clothing, footwear, furniture and appliances and payments towards a regulated lease for whitegoods, electrical or furniture under the National Consumer Credit Protection Act 2009.

Community consultation

“These changes are about making Centrepay fairer, protecting vulnerable customers, and reducing the risk of financial harm,” a government spokesperson told First Nations News.

“We know that some businesses have continued to take deductions from Centrepay customers’ pay each fortnight, even if that customer has not shopped at the business for months or even years.

“Community consultation has been at the heart of the Centrepay reform process.

“The improvements we’re making to Centrepay are based on extensive public consultation and co-design with customers, advocates and advisory groups, business, and across government over the past 18 months.”

Tne reforms include:

• Removing around 250 businesses from the scheme that currently provide high-risk goods and services, ensuring customers don’t hand over money for products they don’t need
• Mandating end dates for deductions on most services, ensuring customers do not continue paying for services longer than they need to
• Mandating that businesses set target amounts, so that customers do not accrue large credit accounts with businesses that they may never spend
• Businesses being removed from Centrepay will start a 12-month transition period. During that transition period, Centrepay customers who already have arrangements in place with these businesses can keep paying through Centrepay, but no new deductions can begin, and existing deductions can’t be increased.

“We’re acting on this feedback by taking Centrepay back to basics as a service for paying bills,” the spokesperson said.

“The reforms considered what types of products and services were appropriate for a regular bill paying service, as well as safeguards such as mandatory target amounts and end dates for Centrepay deductions.

“These changes do not stop customers from purchasing goods and services using other payment methods.”

Putting in safeguards

Centrepay customers will still be able to buy goods and services from businesses that have their Centrepay eligibility revoked through normal payment methods.

“Centrepay is an important tool to help Australians manage their household budgets each fortnight, and we are taking steps to ensure it stays that way,” Minister for Government Services Katy Gallagher said.

“The feedback we’ve heard from customers, businesses, and advocates is clear – we need the right safeguards in place to ensure people aren’t being ripped off and can make more informed decisions about their finances.”

You can find details of of the changes here:

https://www.servicesaustralia.gov.au/centrepay-changing?context=22366