November 2014 - The Sydney Morning Herald
A NSW parliamentary inquiry has recommended the Baird government should curb its debt collection agency, and limit how much money can be taken without notice from a person's bank account.
The use of garnishee orders by the State Debt Recovery Office - allowing money to be taken from a bank account to recover a debt - leapt from 7000 a month to 24,000 a month in 2013, after the Liberal and Nationals government strengthened its powers to pursue unpaid fines such as traffic infringements.
But Legal Aid, the Financial Rights Legal Centre, Redfern Legal Centre and the NSW Ombudsman, told the inquiry many of the fine defaulters were Centrelink recipients, and they were being left with nothing to live on.
Although the law prevents creditors from taking Centrelink payments, it doesn't protect the money once it is deposited in a bank account.
The inquiry's report said there was evidence of "the harmful social impact" of some State Debt Recovery Office practices on people who simply cannot pay their fines.
A minimum of $458.40 should be left in bank accounts to protect consumers from hardship, the inquiry chaired by the Liberal MP for Campbelltown, Bryan Doyle, found.
This is equivalent to the protection provided by the law to stop creditors taking the entirety of a person's wages under a garnishee order.
Mr Doyle said he was surprised to learn the law hadn't been updated to reflect the fact most workers were no longer paid in cash in a weekly packet, but were paid electronically into their bank account.
Mr Doyle will meet Finance Minister Dominic Perrottet to discuss the issue next week.
The parliamentary committee also cautioned the NSW government about the potential impact of plans to allow the debt recovery office to access the account details of any bank listed on a person's credit history.
The Financial Rights Legal Centre said people were suffering "enormous hardship" when money was taken out of their account by the government's debt office without notice, and some had been left to survive on nothing for a month.
"This creates unnecessary reliance and pressure for emergency and charity services to fill this gap," the centre said.
The inquiry heard the office was refunding $100 over the telephone in emergencies or where it had "overstepped the mark", but the Ombudsman said this wasn't sufficient to cover necessities.
The median rent in Sydney is $490 a week.
Kirsty Needham, State Political Editor
Read the article on The Sydney Morning Herald website.
