Federal minister Alan Tudge introduced the underpinning legislation, which would make welfare recipients report income when it’s paid rather than earned, to parliament today.

The government believes this will prevent people from being paid the wrong amount of welfare, saving a total of $2.1 billion over four years.

The July start date hinges on the draft legislation passing by mid-May otherwise it could be set back.

People reporting income to Centrelink currently have to estimate a figure based on how many hours worked in a fortnight and rate of pay, taking into account penalty rates.

Tudge said the confusing system could lead to errors.

An online portal will be set up to help people with the change, with videos and written examples to help explain the system.

The changes will impact about 550,000 Australians.

The draft legislation also triggers the start of single touch payroll, which means a person’s income data from the Australian Taxation Office will be automatically uploaded to the government system so bureaucrats can double-check figures.

Ensuring correct welfare payments is a major headache for the government due to the reporting method.

Rather than changing the reporting system itself, the government had used a robodebt system which contacted people to say they might owe Centrelink money because of incorrect income reporting.

The system, which has now been wound back, was recently declared unlawful by the Federal Court and is the subject of a separate class-action lawsuit.

– AAP

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