The Australian Government is overhauling Centrepay, its free bill-paying service, to protect vulnerable Australians from financial exploitation and ensure it meets its intended purpose.
The reforms, beginning in July 2025, include removing high-risk services, strengthening compliance frameworks, and introducing safeguards to prevent misuse. Developed through extensive consultation with advocacy groups, businesses, and community members, these changes aim to empower Centrepay users and improve financial resilience.
Table of Contents
- Why the Reforms Were Needed
- Key Changes Announced
- Removal of High-Risk Services
- Mandatory Target Amounts and End Dates
- Enhanced Compliance Framework
- Strengthened Complaints Process
- Impact on Businesses and Customers
- Advocacy and Community Consultation
- Timeline and Next Steps
- Summary
Why the Reforms Were Needed
Centrepay was originally designed to help welfare recipients manage essential expenses, such as rent, utilities, and medical bills, by automatically deducting payments directly from their Centrelink benefits. While the system has been a vital budgeting tool for many Australians, weak oversight has allowed some businesses to exploit the service, causing financial harm to vulnerable customers.
Investigations, including by Guardian Australia, revealed cases of misuse, such as energy providers continuing to deduct payments from customers long after their services had ended. Predatory rent-to-buy schemes and consumer leases also took advantage of Centrepay, particularly affecting Indigenous Australians in remote areas. Other troubling examples included extreme religious groups using the system for unethical purposes, such as funding rehabilitation centres that engaged in harmful practices.
Consumer advocates and financial counsellors, including groups like the Australian Council of Social Services (ACOSS) and Mob Strong Debt Help, have been raising concerns about these issues for years. This advocacy, combined with community consultation and a government review, made it clear that significant changes were needed to protect Australians who rely on Centrepay.
Key Changes Announced
The government’s reforms, which will roll out in phases from July 2025, aim to address the issues identified and strengthen the integrity of the Centrepay system. Key changes include:
Removal of High-Risk Services
Businesses offering high-risk goods and services, such as consumer leases, rent-to-buy arrangements, motor vehicle registrations, and basic household goods rentals, will no longer be allowed to use Centrepay. These services have been flagged for causing significant financial harm, particularly in remote and disadvantaged communities.
Eight categories of services out of the 41 currently approved for Centrepay will be removed entirely. Food provisions will be phased out, except for services like Meals on Wheels, which will remain under alternative arrangements.
Mandatory Target Amounts and End Dates
To prevent indefinite deductions, the government will introduce mandatory target amounts and end dates for most Centrepay deductions. This will address cases where payments continued unnecessarily, such as energy providers deducting funds after customers had switched providers or paid off their accounts.
Enhanced Compliance Framework
Stricter oversight measures will ensure businesses using Centrepay comply with its rules. These include:
- A new application and approval process for businesses, with tailored contracts based on the services they provide.
- Regular policy reviews to ensure Centrepay aligns with its intended purpose.
- Dedicated compliance specialists within Services Australia to monitor businesses and hold them accountable for misuse.
Strengthened Complaints Process
Businesses will be required to improve their complaints-handling processes, ensuring they are accessible and effective. Services Australia will also create a team of complaints and compliance specialists to help customers resolve disputes and take action against businesses that breach Centrepay rules.
Impact on Businesses and Customers
For Customers
The reforms aim to provide stronger safeguards for Centrepay users, ensuring their payments are used responsibly for essential services. Vulnerable groups, particularly First Nations Australians and people in remote areas, will benefit significantly from the removal of exploitative businesses and improved complaints processes. Services Australia has assured customers they do not need to take any immediate action and will be contacted as the changes are rolled out.
For Businesses
Businesses seeking to use Centrepay will face stricter eligibility requirements, with all new applications paused while reforms are implemented. Existing businesses must review their practices to ensure compliance with the new rules. Non-compliance could result in removal from the system or regulatory action.
Advocacy and Community Consultation
The government has worked closely with advocates, community groups, and regulatory bodies to develop these reforms. Organisations such as ACOSS, Financial Rights Legal Centre, and Mob Strong Debt Help have praised the government’s collaborative approach.
Minister Bill Shorten thanked advocates and community members for their contributions. “The insights provided by advocates have been invaluable. These reforms are a testament to the power of genuine collaboration between government, community groups, and experts,” he said.
Timeline and Next Steps
The Centrepay reforms will roll out in stages beginning on 1 July 2025. Key next steps include:
- Continued consultation with businesses, advocacy groups, and customers in 2024 and 2025.
- Supporting businesses and customers during the transition to the new program.
- Further public feedback opportunities before finalising the changes.
For ongoing updates, visit Services Australia’s Centrepay Reform Page.
Summary
The Centrepay reforms represent a significant step toward protecting vulnerable Australians from financial exploitation while improving the integrity of the system. By removing high-risk services, introducing mandatory safeguards, and strengthening compliance and complaints processes, the government aims to make Centrepay a safer, more effective tool for managing essential expenses.
These changes, developed through extensive consultation with advocacy groups and the community, reflect the government’s commitment to addressing longstanding issues. Implementation will begin in July 2025, and further updates will be provided as the reforms progress. For more information, visit Services Australia’s Centrepay Reform Page.
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