Another big little Targeted Compliance Framework crisis you might not have heard of yet

There is currently a crisis of confidence in the job seeker “compliance” framework (known as the TCF) because of concerns about its adherence to the social security law which authorizes the use of financial penalties for non-compliance with mutual obligations. In this blog @simonecasey summarises the TCF crisis through a digital social policy lens and explains why it raises fundamental questions about the intersection of technology, bureaucratic accountability, and social policy implementation.

The TCF is a complex system of rules, largely administered through automated calculation of payment suspensions and demerit points, that lead to increasingly harsh financial penalties involving reduction and cancellation of income support payments.

The TCF crisis has manifest in the form of IT bugs, as well as failures of administration. Due to concerns about the integrity of this administration, the Secretary of Employment took the unprecedented step of pausing payment reductions and cancellations while three separate reviews are underway. These reviews include a review by the Commonwealth Ombudsman, the consulting firm Deloitte, and internal and externally validated legal reviews. Nevertheless, the payment suspension threats that affect approximately 200,000 people per quarter continue to operate despite the legal concerns that prompted the pause of more severe penalties.

In summary, three major IT bugs resulted in nearly 1,800 incorrect penalties being applied to job seekers, while departmental records show a total of 55 IT defects in the system, some of which had been known since 2020 but left unaddressed. The most serious bug operated undetected for five years, incorrectly keeping people in the "Penalty Zone" longer than legally required. When the department attempted to fix this issue, their coding errors created a second bug that prevented people from exiting the penalty system even when their infractions were removed. A third bug lowered the threshold for severe penalties without any legislative authority, allowing people to face payment cancellations with fewer violations than the law required.

Separate to the IT bugs, there have been failures in administrative integrity involving 986 payment cancellation decisions without properly considering whether people had reasonable excuses for missing requirements, such as illness, caring responsibilities, or transport problems. Legislative changes in 2022 gave decision-makers additional discretion by changing the word "must" to "may" in key provisions, but this discretion was never implemented in administrative practice. Of further concerns is the fact that employment service providers, who have delegated powers as social security decision-makers, have frequently misused their authority by failing to provide adequate notification of requirements and implementing payment suspensions and demerit points without sufficient regard to the law.

The government has been reviewing these payment cancellations, and offering a process for back pay, and potential compensation, depending on whether the people affected are able to provide information that satisfies the overlooked administrative discretions. A similar remediation process occurred with the IT bugs.

It is likely that the review of other decisions applied through the TCF will lead to even higher numbers of payment reduction and cancellation decisions being reviewed. Existing data on payment reductions and cancellations indicates these could exceed 10,000 depending on the findings of the integrity reviews.

The suspension of major penalty provisions while three concurrent reviews investigate widespread operational failures represents an unprecedented acknowledgment of institutional breakdown within Australia's employment services compliance system.

There has been pattern of technological failure that exemplifies broader challenges in digitally-mediated social service delivery. This technological dysfunction operated across multiple temporal dimensions: the primary defect persisted undetected for five years, systematically extending punitive measures beyond legislative parameters, while subsequent remediation efforts introduced additional coding errors that compounded the original failures. A third defect effectively altered policy implementation by lowering penalty thresholds without legislative authorization, demonstrating how technical failures can constitute de facto policy changes outside democratic oversight.

The administrative dimensions of this crisis illuminate deeper questions about discretionary decision-making and procedural fairness within largely automated processes. The department's implementation of 986 payment cancellation decisions without adequate consideration of statutory "reasonable excuse" provisions suggests either systematic training deficiencies or institutional pressures that prioritized administrative efficiency over legal compliance. The delegation of decision-making authority to employment service providers has compounded these issues, with evidence of systematic misuse of suspension powers and inadequate provision of procedural safeguards.

From a social policy perspective, the human costs documented in the briefing reflect broader theoretical concerns about punitive welfare approaches and their distributional effects. There is now an extensive academic literature questioning the efficacy of sanctions-based approaches to unemployment support. The documented consequences including housing instability, debt accumulation, and mental health deterioration represent what social policy analysts might characterize as counterproductive effects, where the intervention itself creates additional problems for the population it purports to assist. It is notable that the payment cancellations affected First Nations people at a higher rate than anyone else.

These problems cannot be fixed through technical adjustments or policy tweaks. The TCF should not be allowed to continue to administer threats to income support security based on spurious behavioural assumptions and unsound administrative practices.

This crisis justifies abolishing the TCF entirely, including payment suspensions. This stance reflects a judgment that the problems are fundamental rather than peripheral failures. This position aligns with broader academic debates about whether complex socio-technical systems exhibiting systematic failures can be meaningfully reformed or require complete reconceptualization. While we should not rush into decisions about what comes next, it is clear there is a need for a rights-based approach developed through participatory processes involving those with lived experience.

The TCF crisis thus provides a significant case study for examining the folly of implementing complex compliance systems in digitally-mediated welfare states. The systematic nature of the failures across technical, administrative, and legal dimensions suggests deeper questions about the governance of automated decision-making systems and the adequacy of existing accountability mechanisms in ensuring both procedural fairness and substantive justice in social policy implementation. The ultimate resolution of these issues may have broader implications for how democratic societies approach the intersection of technology, bureaucracy, and social rights in an era of increasing administrative complexity.

References

Department of Employment and Workplace Relations. (2024c). 2024–25 May Budget. Australian Government. https://www.dewr.gov.au/about-department/corporate-reporting/budget/2024-25-budget

Department of Employment and Workplace Relations. (2025a) Briefs and communications to the Minister of Employment about IT issues identified by the Department of Employment and Workplace Relations. Retrieved from https://www.dewr.gov.au

Department of Employment and Workplace Relations. (2025b) Information and complaints regarding the number of job providers the department identified as potentially in breach of the department’s rules on pay slips. Retrieved from https://www.dewr.gov.au

Department of Employment and Workplace Relations. (2025c) Secretary's statement on payment cancellations under the Targeted Compliance Framework. Retrieved from https://www.dewr.gov.au/assuring-integrity-targeted-compliance-framework/announcements/secretarys-statement-21-march-2025

EJA Briefing: Concerns regarding the integrity of the Targeted Compliance FrameworkJuly 10, 2025

Views are of @simonecasey in her role as a research associate @RMIT