Have government actions caused you financial loss?
Your other avenue for compensation

Sometimes, the government gets it wrong — and when this happens,members of the public can suffer financial loss or damage. But when the cause of this loss is because of a government agency’s mistake or poor administrative practices, Australians have the option to apply for recompense through a government-wide scheme called“Compensation for Detriment Caused by Defective Administration” (CDDA).

Suffering financial detriment is not always remedied through administrative appeal, litigation or another legal mechanism, and this is where the CDDA scheme is able to provide an important service. It applies across all government agencies, including the Tax Office, Centrelink, Veterans Affairs, Customs, Medicare and many more.

Common examples of CDDA payments that have been made are where a person incurs expenses or loses eligibility for a benefit because of incorrect government agency advice; that a penalty or debt is wrongly imposed; personal property is damaged or documents are lost by an agency; or a computer error results in a delayed payment or unreasonable delay in approving an application.

The scheme exists because, as the Commonwealth Ombudsman’s office says in its information about the CDDA: “Even experienced and capable staff can give wrong or inadequate advice if they misinterpret a question or are distracted by other issues.”

The Ombudsman says the scheme was established in order to provide compensation where there is a moral rather than a legal obligation to do so.The aim of the scheme is to “restore a person to the position they would have been in if there had been no defective administration”.

The administrator of the scheme, the Department of Finance and Deregulation, defines “defective administration” as:

• a specific and unreasonable lapse in complying with existing administrative procedures;
• an unreasonable failure to institute appropriate administrative procedures;
• an unreasonable failure to give to (or for) an applicant, the proper advice that was within the officer’s power and knowledge to give (or reasonably capable of being obtained by the officer to give); or
• giving advice to (or for) an applicant that was, in all the circumstances, incorrect or ambiguous.

Detriment means “quantifiable financial loss” that an applicant has suffered. The government says there are three types of detriment:

• detriment relating to a personal injury including mental injury (personal injury loss);
• economic detriment that is not related to a personal injury (pure economic loss); and
• detriment relating to damage to property.

Payments made under the CDDA scheme are discretionary, which means there is no automatic entitlement to a payment.Any individual, company or other organisation can apply for compensation, either for themselves or for an authorised third party.The CDDA scheme is not designed to be another path to assess legal liability, although legal principles and practice are useful guides to resolve claims.

How to apply

Claims should be made in writing to the government agency to which your compensation claim relates. Your application should address:

• the criteria for determining defective administration;
• explain how the actions or inaction were defective;
• provide details of the detriment being claimed, including an explanation of how the amount claimed is calculated; and
• explain how the defective administration directly caused the loss.

It is also wise to include a copy of all relevant evidence in support of your application, such as correspondence between you and the relevant government body, medical certificates and so forth.

Find out more about the CDDA scheme at the Department of Finance and Deregulation.

DISCLAIMER:All information provided in this publication is of a general nature only and is not personal financial or investment advice. It does not take into account your particular objectives and circumstances. No person should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional advisor. To the fullest extent permitted by law, no person involved in producing, distributing or providing the information in this publication (including Taxpayers Australia Incorporated, each of its directors, councilors, employees and contractors and the editors or authors of the information) will be liable in any way for any loss or damage suffered by any person through the use of or access to this information. The Copyright is owned exclusively by Taxpayers Australia Inc (ABN 96 075 950 284).