Now lawRights & Fairness Introduced in the House of Representatives, 04 Sep 2025

Parliament backed old Centrelink debts and wiped small ones

For about 30 years Centrelink spread people's pay across fortnights in a way the law did not allow. This law makes those old debts legal. It sets up small payments for people hit by it and wipes debts under $250.

Official name: Social Security and Other Legislation Amendment (Technical Changes No. 2) Bill 2025

Who it affects

• People who had Centrelink debts from working while on payments, 1991 to 2020: Their debts are now legal, even though the method used was not legal at the time.
• People with affected debts from 20 September 2003 to 6 December 2020: They can ask for a one-off payment of $200 to $600 a debt, if they drop any legal claim.
• People with small Centrelink debts: New debts under $250 are wiped, up from under $200.
• Victims of money abuse or of being forced: A debt caused by being forced to give false details can now be wiped.
• People wanted on arrest warrants for serious violent or sexual crimes: Their payments and discount cards can be cancelled under a change added late to the bill.

Pay spread across fortnights unlawfully

Centrelink pays people every 14 days. If you work while on a payment, your pay can lower your payment. So Centrelink needs to know what you earned in each fortnight.

Payslips often cover a different set of days. They also do not show which days you worked.

Services Australia runs Centrelink. It, and the agencies before it, used a method called income apportionment. They took your pay for a payslip period and split it evenly across each day. Then they put each day's share into the matching Centrelink fortnight. Sometimes this made a debt.

The federal complaints officer (the Commonwealth Ombudsman) looked at this in August 2023. This officer checks how federal agencies treat people. The officer found the method broke the law when it spread pay across two or more fortnights.

The government says staff acted honestly and in good faith. It says they truly did not understand the law.

At least 3 million people had debts that may be affected, worth $4.4 billion in all. About 97% of these debts have been paid back. Around 148,000 are still owed. The average debt is 19 years old.

In mid-2021 Services Australia stopped making new debts for periods before 7 December 2020. It stopped chasing affected debts in October 2023 and April 2024.

Old method made legal

The first part of the bill makes past use of income apportionment legal. It covers payment periods from 1 July 1991 to 6 December 2020. This is called retrospective validation, which means making past acts legal after the fact.

It covers the debts themselves. It also covers debts that flowed on from them, such as family tax benefit debts. Family tax benefit is a payment to help families with children. It covers Youth Training Allowance, an old payment for young people in training. It covers an old payment for farm families too.

The government says this does not make Robodebt legal. Robodebt was a different, unlawful debt scheme. It used a different kind of pay averaging. The law also does not fix any other mistakes in working out pay.

Say Person G was an apprentice in 2018 on Newstart, the old unemployment payment, earning $1,000 a fortnight. Centrelink split that as $71.43 a day. That put $714 into one fortnight and $286 into another. It made a debt of $445.20. Under this law, that debt stands.

How pay is counted now

Sometimes a new decision is still needed about pay from before 7 December 2020. For example, a debt may have been on hold, or new proof may turn up.

The law sets three ways that must be used in order. First, the proof may show which fortnight the pay was earned in. Then it goes in that fortnight.

Second, the proof may only show the payslip period. Then income apportionment is used. Third, if neither is known, the pay counts in the fortnight it was paid.

Payments for people affected

The third part of the bill sets up a scheme to pay people whose debts were hit by this method. The debt must cover some time between 20 September 2003 and 6 December 2020.

The minister will set the details in separate rules, without a new vote. The government plans payments of $200 to $600, based on the size of the first debt. People would have 12 months to ask for it.

The payment is not taxed. The government also plans that it will not count as income for Centrelink.

To take the payment, you must agree to drop any legal claim against the federal government about this method. You can say no and keep your right to sue. You can take the money as cash or use it to lower a debt you owe.

A computer may decide some cases. People can ask Services Australia to look at the decision once more. People who should not have got the money may have to pay it back, such as where a debt came from fraud.

The fourth part of the bill lets the government spend whatever these payments cost, with no fixed limit.

Debts waived in special cases

Centrelink can already wipe a debt when times are very hard. But it cannot if the person knowingly gave false details or broke a rule. That held even when there was a good reason.

This law lets the person deciding look at the whole picture. Examples include money abuse and being forced by someone. They also include mental health, natural disasters, having no home, or serious drug or alcohol problems.

Say Person L told Centrelink her partner earned $500 a fortnight. It was really $3,500. She said the lower figure because he forced her to. Before, her debt could not be wiped. Now it can.

Fraud on purpose with no good reason still cannot be wiped. This change answers part of a 2024 look into money abuse. It was done by a group of MPs and senators who study company and finance issues.

Debts under $250 wiped

Until now, debts under $200 could be wiped only if they were not worth chasing. That cut-off was set in 1993 and never rose with prices. Student payment debts had a $50 cut-off.

From 20 March 2026, any new debt under $250 must be wiped. This covers Centrelink, family, student and parental leave payments. The cut-off rises each 1 July in line with prices, starting 1 July 2026.

Services Australia also has a pile of possible debts it never looked into. Many come from pauses during COVID-19 and natural disasters. This law wipes those under $250 in one go.

The Parliamentary Library says this is around 1.2 million debts. The Library works for all MPs and takes no side.

Payments cut for wanted people

The government added a fifth part to the bill on 29 October 2025, just before the House vote. It had not been announced before.

It lets the minister for the Australian Federal Police issue a notice to stop payments. It applies to a person wanted on an Australian arrest warrant, a court order to arrest them, for a serious violent or sexual crime. The person must not yet have been arrested.

A notice cancels all Centrelink payments and discount cards. Family payments for children can go to another person.

The minister must think about the danger the person poses. The minister must also think about the effect on people who rely on them. The notice must be looked at again each year. It does not end by itself when the person is arrested.

Start date

This bill is now law. It was brought to the House of Representatives on 4 September 2025. The House passed it on 29 October 2025. It made 24 changes from the government and 1 from an MP outside the big parties.

The Senate passed it on 26 November 2025 with 10 more government changes. The Senate is the second house of Parliament, which checks bills. The House agreed to the changes the same day. The sources do not say what those Senate changes were.

The Governor-General signed it into law on 4 December 2025. The Governor-General is the King's stand-in in Australia. It became Act No. 79 of 2025.

Most parts started the next day. The small debt changes started on 20 March 2026.

How they voted

Its journey through Parliament

Official sources

• Bill page on aph.gov.au
• Text of the bill
• Explanatory memorandum
• Bills Digest

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