What has caused the controversy for Centrelink?

Social Services Minister Christian Porter said this week the new computer-based system for welfare compliance, introduced in July to crack down on unnecessary government expenditure, is working well - so what has caused controversy for Centrelink?

Australians who have received benefits and support payments in recent years are being asked to explain why the income employers have reported to the Tax Office might not match the income they've reported to Centrelink.

Individuals are given up to 21 days to explain the discrepancies online and if no action is taken, Centrelink will make a decision and issue a debt notice.

Welfare recipients updating their information may be asked to provide supporting documentation, including pay slips and bank statements, while a formal review process also exists for people who think they are being wrongly handed debt notices.

Critics of the data matching process say current and former benefit recipients are being wrongly handed debt notices for thousands and tens of thousands of dollars, as income is calculated on a fortnightly basis by dividing total annual income by 26.

The method means some people with inconsistent incomes over the course of a year are being slugged for earning too much, even when they may have earned nothing in some fortnights.

The system is also flagging cases where employer names and other information have inconsistent spelling across records, assuming recipients have more than one job and haven't declared income.

Mr Porter said $300 million in taxpayer funds have been recovered since July, with only 0.16 per cent result in complaints. The government wants to collect $4.6 billion over four years.

Labor has called for the automated system to be halted or scrapped, while independent MP Andrew Wilkie has asked the ombudsman to review the process.

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