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Appendix C: Data Matching Program Report on Progress 2011 to 2013

Introduction

In the 1990–91 Budget, the then government announced new measures to detect incorrect payments in the income support system. This involved a program of computer matching of identity and income data held by a limited number of government agencies, including the Australian Taxation Office (ATO).

In order to validate these matches, people claiming Australian government financial assistance have to provide a Tax File Number (TFN) as a condition of grant of pension or allowance.

The legal authority for data matching is contained in the Data-matching Program (Assistance and Tax) Act 1990. The Act provides for participating agencies holding personal data to match that information through a central Data Matching Agency (DMA) located within the Department of Human Services (DHS). The establishment of the DMA is authorised under section 4 of the Act.

Under section 12 of the Act, each agency is required to table in Parliament a standard report every year and a comprehensive report every three years. A comprehensive report was last submitted in 2010.

This report focuses on the operation of the program within DVA from 2011 to 2013. For a full explanation of the progress of the Data Matching Program within the Department, this report should be read in conjunction with previous data matching annual reports.

Overview of the Data Matching Program

Objectives of the Data Matching Program

The objectives of the Data Matching Program are:

  • identity matching, which:
    • detects invalid Tax File Numbers (TFNs)
    • detects fictitious or assumed identities.
  • Payment matching, which detects instances where people are receiving incorrect or dual payments from one or more assistance agencies. Payment matching detects people in receipt of two payments from the same or different agencies, where the receipt of one precludes or limits the payment of the other.
  • income matching, which detects instances where the income declared to the ATO varies from the income disclosed to assistance agencies. Income matching detects instances where the income information disclosed to the assistance agency differs from the income declared to the ATO.
  • to detect instances of tax evasion; DVA is not directly involved in this form of matching. Income matching can, however, also detect instances where the client of an assistance agency has disclosed more income to that agency than has been declared to the ATO. DVA provides details of those cases to the ATO for it to investigate.

There are six steps in each data matching cycle. These are detailed in section 7 of the Act.

Agencies

The following departments are involved in the Data Matching Program and are known as assistance agencies under the Act:

  • Department of Families, Housing, Community Services and Indigenous Affairs
  • DHS
  • DVA.

The Act defines the ATO and assistance agencies as source agencies.

Specific data

The ATO provides details of identity and tax data for people in receipt of income support payment for comparison with the details provided by the assistance agencies.

Types of discrepancies

The following types of incorrect payments are detected as a result of payment and income matching:

  • non-entitlement of a client, partner, parent or child to a DHS or DVA payment, where receipt of a payment from one agency would preclude or limit payments from one or both agencies
  • income disclosed to DHS and/or DVA which has been used to calculate an income support payment is different from that reported to the ATO.

Nature and frequency of matching

Data matching is defined as the use of computer techniques to compare data found in two or more computer files to identify cases where there is a risk of either incorrect payment or tax evasion.

Data matching investigations

Invalid tax file numbers

DVA actions all discrepancies from this step by contacting the client and obtaining the correct TFN.

Identity matching

DVA actions all discrepancies from this step by correcting administrative errors, investigating anomalies that may potentially be fraudulent or seeking the correct name from the client and providing those details to the ATO for it to correct its records.

Payment matching

DVA runs payment matching in one cycle annually solely to confirm the validity of the checks and balances conducted currently within the Department.

Income matching

Income matching is run in every cycle by the Department. Income discrepancies are selected during this process for further investigation.

Deselection of cases

There are no exclusions from data matching within the Department; however, deselection is applied, which allows for an even distribution of workload for the investigators.

Deselection is applied to Step 5 income matching only, to ensure that the same case is not picked up in more than one cycle each year.

Critical analysis

Critical analysis is conducted on all discrepant cases before being released into production to ensure the integrity of the data provided, to identify areas for improvement of selection, and to ensure all data matching business rules are applied.

Investigations

Investigation of all data matching discrepancies involves examination of the client’s computer records and then, if necessary, the electronic or hard copy file. Any administrative errors are corrected at this stage without the client needing to be contacted. An example of this is Step 4 identity matching, where a husband’s TFN has been recorded for the wife, or vice versa.

Clients are sent correspondence in accordance with section 11 of the Act requesting further information and documentation to assist with the investigation. Clients are given 28 days under the Act to comply, then a further 7 days based on the Evidence Act 1995.

In cases where the initial investigation has revealed potential fraud, the investigator may use section 11(4), where a section 11 letter is not sent as it may prejudice the effectiveness of an investigation into the possible commission of an offence.

Based on the information that the client provides, the payment rate is corrected and, where appropriate, overpayments are calculated, raised and recovered.

Further information may be obtained from other Commonwealth, state or private agencies to help ascertain the correct client details.

The client’s right to privacy is protected at all times by application of the Information Privacy Principles (Privacy Act 1988), which govern the collection, storage, use and disclosure of personal information.

Action taken on discrepancies

Information required as per Act Guidelines 9(i) and 9(vi)

The Act requires that each source agency report on matters as described in paragraphs 9(i) and 9(vi) of the Data-matching Program (Assistance and Tax) Guidelines, such as the number of matches undertaken and the proportion of discrepancies. This appendix contains the details of information required by these guidelines. The comparative three-year tables are on the following pages.

Prosecutions

Reviews of entitlement by the Department may bring to notice cases where an offence may have been committed under the Veterans’ Entitlements Act 1986, the Safety, Rehabilitation and Compensation Act 1988, the Military Rehabilitation and Compensation Act 2004, the Social Security Act 1990, the Criminal Code Act 1995, or the Crimes Act 1914.

The Department’s role in the prosecution process is to investigate cases where it appears an offence may have been committed and to forward these cases, if warranted, to the Commonwealth Director of Public Prosecutions (CDPP) for a decision as to whether prosecution action should proceed.

Depending on the type of investigation required, a case may be referred to the Australian Federal Police for further investigation. For the last three years, any suspected fraud cases detected were referred to the Business Compliance Section of DVA for an initial case assessment, prioritisation and further action if appropriate.

Where sufficient evidence is obtained from investigation, the Business Compliance Section makes recommendations to senior management on the appropriateness or readiness of referring the matter to the CDPP.

Table Cl: Prosecution statistics
Detail 2010–11 2011–12 2012–13
Cases referred to the Business Compliance Section identified through data matching 9 12 7
Cases referred to the CDPP identified through data matching 0 0 0
Successfully prosecuted N/A N/A N/A
Dismissed by the CDPP due to insufficient evidence or not in the public interest N/A N/A N/A
Cases with the CDPP pending consideration N/A N/A N/A
Cases still under investigation by the Business Compliance Section 1 3 2 6
Cases finalised by the Business Compliance Section without CDPP referral 6 10 1

1 Figures may include cases that were identified in previous financial years.

Table C2: Discrepancy statistics
  2010–11 2011–12 2012–13
Total number of records read 1 155698 1 462 236 1 388 748
Matches that resulted in discrepancies 1 18 135 17 129 14 657
Proportion of matches that resulted in discrepancies 1.6% 1.2% 1.0%
Number of discrepancies referred for investigation 750 1233 2779
Number of discrepancies referred for investigation that resulted in a notice under section 11 of the Act being sent 223 228 310
Number of cases where the section 11 letter was followed up by action being undertaken 2 143 195 268
Proportion of discrepancies that resulted in action being undertaken 0.8% 1.13% 1.8%
Proportion of discrepancies which did not proceed to action after a section 11 letter was sent 35.9% 14.5% 13.5%
Number of overpayments raised 3 143 91 268
Cases where debt was fully recovered 4 73 37 102
Number of pensions cancelled, suspended or reduced 116 79 318
Number of pensions that were continued 85 106 117
Number of pensions that were increased 27 10 22

1 Discrepancies include those resulting from TFN validity checking, identity matching, payment matching and income matching. The number of discrepancies does not represent the number of pensioners: more than one discrepancy may be detected in respect of the same pensioner.

2 Refers to the action set out in section 10 of the Act – a pension was reduced, cancelled, increased or continued.

3 Overpayments raised include some for cases where section 11 action took place in a previous financial year.

4 This figure includes debts fully recovered from previous financial years.

Costs/benefits of the program

This section discusses the costs and benefits of the Data Matching Program. The Department’s involvement in the program has shown there are substantial savings to be gained through comparison of data held by different agencies.

Table C3: Departmental expenses 2010 to 11 to 2012 to 13
Detail 2010–11 2011–12 2012–13 1
Salary costs $462 348 $198 216 $174 301
Administrative overheads $80 522 $37164 $32 519
Support costs for data matching processing system $3172 $5546 $949
Total $546 042 $240 926 $207 769

Projected savings

DVA calculates savings for clients whose payments are suspended, cancelled or reduced. For clients in receipt of a pension, it is assumed that they would have continued to receive the same rate of payment for 52 fortnights. These savings are in line with the methodology used by the Department of Human Services to calculate savings. In the period 2011–13 the Data Matching Program resulted in net savings of $5 014 545.

Table C4: Projected savings statistics 2010 to 11 to 2012 to 13
Detail Number of cases
2010–11 2011–12 2012–13
Number of pensions reduced 111 75 299
Number of pensions suspended/cancelled 5 4 19
Total 116 79 318
Table C5: Total savings 2010 to 11 to 2012 to 13
Detail Number
2010–11 2011–12 2012–13
Pensions cancelled/reduced/suspended 1 116 79 318
Potential overpayments identified 2 86 102 197
Overpayments raised 3 143 91 268
Debts fully recovered this financial year 73 37 102
Detail Amount
Value of overpayments raised $1 560 389 $769132 $1 726 242
Less waivers/write-offs $83 282 $15680 $252185
Sub-total $1 477 107 $7 53 452 $1 474 057
Value of projected savings $701 268 $513 811 $1 104 614
Total gross savings $2 178 375 $1 267 263 $2 578 671
Less departmental expenses $546 042 $240 926 $207 769
Net savings $1 632 333 $1 026 337 $2 370 902

1 The number of cases that result in projected savings. Although a person’s pension may be cancelled, reduced or suspended, an overpayment may not necessarily exist.

2 Where a case officer believes there may be an overpayment, a potential debt identifier is registered. The figure reflects the number of potential debts identified.

3 The discrepancy between the number of overpayments identified and the number of overpayments raised is due to the fact that, although a potential debt has been identified, further investigation may result in a determination that no debt existed. Debts may also be raised and consequently recovered separately for both members of a couple. Overpayments raised during each financial year may also have been identified in previous financial years.

Table C6: Cumulative savings 2010 to 11 to 2012 to 13
  2010–11 2011–12 2012–13 1
Overpayments raised $1 560 389 $769 132 $1 726 242
Less waivers/write-offs $83 282 $15680 $252185
Projected savings $701 268 $513811 $1 104 614
Total gross savings $2 178 375 $1 267 263 $2 578 671
Less departmental expenses $546 042 $240 926 $207 769
Net savings $1 632 333 $1 026 337 $2 370 902
Cumulative net savings 1 $21 691 265 $22 717 602 $25 088 504

1 ’Cumulative net savings’ is a rolling total from year to year.

For a full explanation of previous years’ savings, this table should be read in conjunction with previous data matching annual reports.

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