BANKS will give the Federal Government the private account details of more than 40,000 customers in an unprecedented crackdown on welfare fraud.
From July 1, Centrelink will receive the balance, interest accrual, regular payments and addresses of 41,500 suspected welfare cheats who provided government agencies with conflicting information.
Banks will provide Centrelink with the data via a new encrypted electronic file system.
Centrelink compliance officers will review account discrepancies, saving taxpayers an estimated $600 million in just four years.
The Rudd Government Budget on Tuesday provided $138 million to expand a data-matching computer system with the nation's four major banks - the Commonwealth, NAB, Westpac and ANZ - to make it faster to catch welfare cheats.
Human Services Minister Joe Ludwig said the system also would allow the Australian Taxation Office and Centrelink to check whether people had under-declared or failed to declare their income.
"Centrelink anticipates carrying out an additional 278,000 reviews over four years, with the ATO," Senator Ludwig said. "There will also be 41,500 reviews with financial institutions."
But Centrelink will not have the power to take money out of bank accounts, even if a welfare cheat has been identified.
Civil libertarians have already cried foul and argued the Government was heading down a slippery slope.
Queensland Council of Civil Liberties president Michael Cope said he would write to Senator Ludwig to ask what protective measures would be used.
"Our position is we will always oppose this ever-increasing access to data matching because the end result is just Big Brother (looking into your lifestyle)," Mr Cope said.
Senator Ludwig said Centrelink already had the power to ask for the financial details of people claiming a government benefit.
But, under the old system, it was slow because banks had to allocate staff to physically check documents.
Under the new system, Centrelink will provide the details of the thousands of welfare recipients and the banks will send the information via an encrypted electronic file.
"Strict privacy provisions will apply, with specifically trained staff having access to details in limited circumstances," Senator Ludwig said.
"It is in line with the Privacy Commissioner's Use of Data-matching in Commonwealth Administration Guidelines."
Senator Ludwig said Centrelink was only accessing information from people receiving welfare benefits.
"Welfare fraud is a criminal offence liable to long jail sentences as many cases of fraud have showed this year alone," Senator Ludwig said.
"The social security system exists to give a helping hand to those people in most need.
"People who commit offences undermine community support for the system.
"The majority of Centrelink customers are honest and combating welfare fraud is about making sure that the right payments go to the right people at the right time."
The data-matching system was first trialled with the Commonwealth Bank. It projected administrative savings of $184m over five years, but instead reaped more than $405m.
A spokesman for the bank said the new system would be faster and more secure for customers who received welfare fraud.
He said customers were notified if their details were exchanged with Centrelink.
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