More than 50,000 welfare recipients could now get compensation after the government unlawfully stopped their payments, claiming they had failed to meet "mutual obligation" requirements.
That scheme, which was partially paused in July 2024 when concerns it may have been operating unlawfully first arose, has now restarted with advocates warning the problems have not been fixed.
A Commonwealth Ombudsman investigation last year found 964 payment cancellations were not made in accordance with the law.
Adelaide man Daniel* was one of those affected. His Centrelink payments were suspended in 2022, despite being exempt from mutual obligations with no compulsory activities to complete.
"I kept ringing them and saying, 'I've got zero points, I've got no requirements, why am I getting these suspensions?' But it just kept happening," he said.
His payments were later cancelled, leaving him without income support for more than three years.
Daniel said without income support, he could not secure rental accommodation, experienced periods of homelessness and relied on help from family and friends to get by.
"Without my pensioner dad helping me, I honestly don't know what would have happened. There were times I had nowhere to live."
The 51-year-old challenged the Centrelink decision after he was alerted to the Ombudsman's findings last year.
A week before his case was due to be heard in October 2025, the department conducted a minister-initiated review, reversed the cancellation decision and paid him about $53,000 in back pay.
More than 50,000 people are being invited to apply for compensation under the Compensation for Detriment caused by Defective Administration (CDDA) scheme. (ABC News: Matt Roberts)
The Department of Employment and Workplace Relations (DEWR) said it had fixed the issues identified by the Commonwealth Ombudsman through IT system changes, system testing, improved participant communications and additional training for decision-makers.
But advocacy groups fear not enough has been done to fix the underlying issues, with questions set to be put to the government over the scale of the payment cancellations and what evidence it relied on before resuming the program.
The department said one reason identified for the system failure stemmed from an IT system change introduced in December 2020, which caused some welfare recipients to have their payments cancelled up to four days earlier than legislation allowed.
The department's 2025-26 annual report released last week showed $870,000 has been paid in compensation to more than 600 people following the review.
It is now inviting a further 50,652 people to also apply for compensation. However, advocacy groups argue the number of people affected by unlawful cancellations may be substantially higher, with estimates ranging from more than 100,000 people to as many as 300,000.
Advocates question the fixes
Anti-poverty centre coordinator Jay Coonan said advocacy groups including the Australian Council of Social Service, Economic Justice Australia, National Aboriginal and Torres Strait Islander Legal Services and Inclusion Australia, remain unconvinced the underlying problems of the compliance system have been resolved.
He said the government has yet to demonstrate the system can operate fairly and lawfully at scale.
"We have both publicly raised and privately raised with the department that we do not believe that the targeted compliance framework and the current regime of payment suspensions is used fairly or lawfully," he said.
Despite participating in the department's Targeted Compliance Framework Reference group, Mr Coonan said advocacy organisations had not been provided evidence that the issues identified by the Ombudsman had been fixed.
"None. None whatsoever," he said.
Disability groups have also criticised the decision, arguing people with disability are disproportionately affected by payment suspensions and cancellations and calling for the framework to be abolished.
DEWR said it would closely monitor the resumed provisions and noted the most serious cancellation powers remained paused until further safeguards were put in place, with those measures expected to return in 2027.
The department has not publicly disclosed its estimated total compensation liability.
*Daniel is identified by his first name only because of concerns about the impact of identifying him as a recipient of income support payments.