As part of MYEFO the Government is providing new funding for safeguards in relation to decisions taken under the Social Security (Administration) Act 1999 that may reduce or cancel a person’s social security payment.
This includes funding for targeted compensation for people who experienced detriment as a result of unlawful payment cancellation decisions.
Safeguards for decision-making
Reviews of the employment system have found that further safeguards are needed to ensure discretion is appropriately applied in decisions that might reduce or cancel of a person’s social security payment.
The department will work with Services Australia to implement human decision-makers as a key part of the decision-making process as soon as possible. Once implemented, a job seeker’s individual circumstances will be comprehensively considered before any decision to reduce or cancel their income support payment for mutual obligation failures. This will include taking into account factors such as the risk of homelessness, a person’s experiences of family or domestic violence, and other barriers to meeting mutual obligations requirements.
Over 2026, the department will work closely with Services Australia to:
- resolve known system issues which have impacted some payment cancellation decisions;
- update decision-making processes to remove automated decision-making processes where required by law; and
- update guidelines and processes to ensure fair, transparent, and lawful decisions.
This delivers on key reports released by the Commonwealth Ombudsman, as well as findings from legal and assurance reviews overseen by the department.
Approach to compensation
The Government has set aside funding for compensation under the Compensation for Detriment caused by Defective Administration scheme.
Compensation will be available for people who experienced detriment as a result of unlawful payment cancellation decisions. A targeted approach will focus on those who are most likely to have experienced detriment.
The compensation process will consider a person’s individual circumstances and what was occurring at the time their payment was cancelled. This will include:
- whether a person no longer needed income support as they had secured a job,
- had earnings above the income support threshold; or
- they were receiving a different government payment at that time.
The process for applying for compensation will be straightforward, taking into account lessons from previous compensation processes and review findings.
More information on the compensation approach will be provided in early 2026.
Next Steps
The measures announced today are a key part of a broader program of work underway to assure the integrity of the Targeted Compliance Framework and return it to lawful administration.
Social security payment reductions and cancellations remain paused and will not resume unless and until it can be clearly demonstrated that the process to support decision making complies with the law.
Any decisions to reinstate payment reductions or cancellations will be communicated clearly and well ahead of those decisions being re-activated.
We will continue to provide updates at Assuring the integrity of the Targeted Compliance Framework.