DHHS public housing debt management 'unconscionable': ombudsman

By David Donaldson

October 31, 2017

Victorian ombud Deborah Glass

Victoria’s Department of Health and Human Services is failing to live up to its commitment as a social landlord and is wasting public resources through its “inept” management of maintenance claims at the end of public housing tenancies, Victorian Ombudsman Deborah Glass has found.

Disadvantaged Victorians are being charged thousands of dollars for the repair of damaged public housing, even when there’s no evidence they caused the damage, she says.

In a statement issued with the Monday release of her report into DHHS’ management of claims against public housing tenants, the ombudsman did not hold back.

“The effect on the lives of already disadvantaged people caught up in the department’s egregiously unfair processes cannot be overstated,” Glass argues.

“The stress of a huge debt which could arrive at random, years after the end of a tenancy often comes on top of the social, economic and other challenges already faced by those dealing with disadvantage.

“There is the powerlessness of the already powerless, pitted against the state: the refusal of services until they enter a payment plan must be one of the most unconscionable acts of a government department I have encountered.”

The ombudsman said her office had uncovered systemic problems in the way the department manages and pursues maintenance claims against former public housing tenants. This included:

  • A default practice of raising maintenance claims against former tenants for almost the entire cost of repairing a vacated property, failing to take into account special circumstances (such as family violence, mental and physical illness or evidence of third party damage) or fair wear and tear and depreciation, which can add up to thousands of dollars.
  • Sending letters advising former tenants of claims against them to addresses the department knows they have left.
  • Failing to negotiate with tenants or their advocates.
  • In effect outsourcing its responsibilities to determine a debt to VCAT, wasting public resources and breaching its responsibility as a model litigant.
  • Withholding future housing from former tenants until a payment plan is agreed to.

Around 165,000 Victorians live in public housing, and another 35,000 households are on the waiting list. It’s a hugely important asset for the state, worth around half a billion dollars.

Originally designed to support people with low incomes, it now houses some of the state’s most disadvantaged people, with many households containing at least one person with disability, and many experiencing things like family violence. This makes it “surprising” and “deeply disturbing” that the department does not routinely take account of such problems, Glass argues.

“No allowance is made for who caused the damage, or even fair wear and tear. Notices are posted to the address the tenant has vacated. Eventually, an order is made by VCAT. The former tenant may not even become aware of the debt until they seek services again, years later, and is told that any services will be withheld until the debt, now greatly expanded, is settled,” she notes.

Last year the department raised maintenance claims against 38% of vacating tenants, claiming over 90% of the total cost of repairs.

“The evidence of this investigation is that department staff wrongly assess debts beyond a tenant’s liability, send correspondence to an address they know the tenant has left and routinely use VCAT to determine a debt — in breach of their requirement to be a model litigant,” Glass explains.

The department is the highest sole litigant on the VCAT Residential Tenancies List and more than 80% of claims proceed uncontested. VCAT rarely awards the full amount claimed; in many cases compensation awarded to the department is half the original claim.

Public resources are also wasted by the department’s pursuit of debts against public housing tenants who are “judgment proof” — where an order for compensation cannot be enforced due to the debtor’s financial situation.

The department has accepted all 18 of the ombudsman’s recommendations, committing to many measures, including:

  • Removing the requirement for applicants to make a debt repayment plan prior to an offer of public housing where the claim is in dispute.
  • Implementing a change management package to equip department staff with the necessary knowledge, skills and resources so they engage with former tenants when determining the cause of any damage and liability for the repair costs.
  • Establishing a high-level user group for public housing services to monitor the implementation of new and improved guidance.

The department is conducting a review on its allocations and tenant property damage operations guidelines is underway to ensure compliance with the Charter of Human Rights and Responsibilities Act 2006.

“It’s time to inject both common sense and humanity into the bureaucracy here. To its credit, the department recognises the need to change. But more is needed than simply improving policies and guidance,” says Glass.

“All those involved need to recognise that they are dealing with people, many of them vulnerable, and must do so with the fairness we should all expect.”

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