Government Services Minister Bill Shorten has taken steps to remove three private debt-collection agencies from Services Australia. 

The controversial, “hardball” tactics of the companies were during the Royal Commission into the Robodebt scheme. 

The move expels the questionable service providers hired by the previous government, and signifies a change in the way Services Australia handles arrears and receivables purportedly owed by clients.

Under the new measures, public servants will be held responsible for generating and collecting debt claims, instead of private agencies collecting on commission. This shift puts the onus of efficiency and payment accuracy back on the government, rather than the recipients.

Shorten expressed concern over the vulnerability of Australians who were affected by these debt-collection agencies. 

“We have to stop giving their information to private companies and ensure the debt recovery process is lawful, fair, and transparent,” he said. 

The Robodebt royal commission heard repeated claims from senior social services administrators that the retrospective creation of large volumes of debt under the scheme was highly problematic. 

The toxic fake receivables were sold to commercial debt collectors, but the debts logically pointed to potential downstream failures in the checking and approvals process for social security benefit payments that should have been fixed first.

Shorten named three firms, ARL Collect Pty Ltd, Milton Graham/Recoveries Corporation Pty Ltd, and Probe Operations Pty Ltd, as those being removed from his portfolio's books. 

The debt-recovery agency, ARL Collect Pty Ltd, which is wholly owned by Panthera Finance Group, was taken to court by the Australian Competition and Consumer Commission for unconscionable conduct.

Services Australia awarded ARL Collect Pty Ltd deals totalling $3.96 million in August 2021, according to official contract notifications, more than double its previous contract of $1.65 million for the 12 months to 30 June 2021.

The power to raise lawful debts against citizens needs to be exercised judiciously, and citizens should be given the right to reply at every stage, according to Shorten. 

The move to insource receivables management back to the government is a significant shift in the administration of the social security system.