Service Australia has rejected recommendations by the national auditor to remove bias from the way it reports on welfare payments.

The ANAO looked at Service Australia’s process for monitoring, reporting and improving the accuracy and timeliness of welfare payments, which in 2021–22 amounted to $124.7 billion.

Estimated overpayments came to $8 billion.

Auditor Grant Hehir found the way services Australia reports on the correctness of its payments has been biased because it excludes most incorrect payments.

“Services Australia’s payment correctness performance measure is biased, and changes to the treatment of Disability Support Pension inaccuracies have introduced bias to payment accuracy reporting,” the report says.

A recent change in the way it reports on the timeliness of payments also introduced a bias, the audit found.

“Monitoring and reporting of payment timeliness was partly effective. The methodology for measuring timeliness is not robust and reporting has been biased,” it says.

The report adds that the ANAO could only replicate 72.6 per cent of the reported timeliness results from 2018-19 to 2021-22 using the same business rules as Services Australia and the Department of Social Services.

The audit also found weaknesses in the agreement between services Australia and DSS, and weaknesses in bilateral assurance arrangements and risk management.

It also found the way data is collected doesn’t support ‘continuous improvement’.

14 recommendations

The report makes 14 recommendations for improvement including that Services Australia develop a “reliable and unbiased” external performance measure for welfare payment correctness that includes errors made by recipients.

It also recommends that it makes sure reporting on payment accuracy is unbiased by assessing the impact of changes in medical eligibility on the accuracy of disability support payments by conducting medical reviews ‘or some other mechanism’.

Services Australia rejected the recommendation for an external performance measure saying the existing system is relevant because it measures correct payment based on information provided by customers.

It adds that payment accuracy isn’t just influenced by errors made by recipients, but also by the complexity of the policy.

Services Australia rejected the recommendation for medical reviews, saying this would place an “unreasonable additional burden” on disability support pensioners.

However in a response to the auditor general, Secretary Ray Griggs said the department is committed to continuing to improve payment accuracy and timeliness.

He said the Payment Accuracy Review Program was recently the subject of an independent review and the department had introduced more efficient algorithms and increased transparency around payment accuracy.