Flaws in the administration of State Government concessions on household bills are a “looming catastrophe for taxpayers”, a project insider has told InDaily.

Failed attempts to fix over-payments – estimated by the insider at $50 million – stretch back five years, attracting the ongoing attention of the Auditor-General in his reports on the Department of Communities and Social Inclusion (DCSI), which runs the concession schemes.

DCSI today rejected the estimate, but did admit it is now seeking to recoup overpayment of concessions.

“There is no evidence to support the assertion that the total value of any ineligible concession payments is in the tens of millions of dollars,” a spokesman for the department said in an email today.

“Discrepancies are currently being followed up with concession partners.”

In the period since the eligibility issues were first raised by the Auditor-General, concessions administered by DCSI have totalled more than $600 million.

The largest provider of concessions, SA Water, told InDaily that despite the audit concerns, it had not asked for further information from DCSI.

“It’s a matter for the department,” SA Water’s media spokeswoman Lisa Lalic said.

“We have not been directly advised. SA Water has not been made aware of any ineligible customers receiving concessions.

However, when pressed last week on the loss of revenue and why SA Water had not acted on the Auditor-General’s repeated concerns, Lalic said questions “may soon be asked”.

“From here, we’ll be talking to the department; I’m sure that conversations will occur sometime soon.”

By Friday, SA Water’s position hardened.

“SA Water takes this matter seriously and will be raising it with DCSI,” SA Water said in a statement.

SA Water receives a community service obligation payment from DCSI to cover the concessions paid to customers on the basis of DCSI’s information.

DCSI today told InDaily it would seek to recover any rebates paid to ineligible customers from SA Water, leaving it up to the agency to recover the funds from householders.

“Any incorrect payments made by concession partners to ineligible clients will be recouped by DCSI from the partners. It will be up to the relevant retailer to determine if they recoup that from the client,” a DCSI spokesman said.

Last month InDaily revealed the interstate company hired to fix the database problems, Endpoint Pty Ltd, had gone into liquidation.

One of Endpoint’s former directors and one-third shareholder, Wolfgang Schumacher, has revealed the extent of the “real disaster” that he said “would be an enormous catastrophe for the taxpayer” if it’s not addressed.

“It will end in disaster,” he said.

“The Concessions and Seniors Information System (CASIS) project has been hampered from the beginning because the department didn’t draw up a ‘requirements document’, so there’s nothing to measure progress against.

“It’s like going to a car yard and asking for a car, wanting a VW and then having a Bedford truck delivered.

“This project has been wandering along, out of control for some time.

“The bureaucrats keep telling the Minister there’s no problem, but there is.

“The CASIS database should be able to give a one-stop shop single view platform to administer the concession schemes. But it doesn’t.

“It’s been estimated by the software designers that around $50 million has been paid in concessions to ineligible recipients.”

Last financial year the DCSI administered $138 million worth of concessions for water, sewer and council rates, electricity, transport charges and various levies.

Concessions on SA Water bills totalled $35 million, council rates $32 million, energy bills $30 million, transport services $31 million and other charges $8 million.

In the five years since the eligibility issues were first raised by the Auditor-General, concessions administered by DCSI have totalled more than $600 million.

“Over a number of years audit reviews of the administration of concessions payments have highlighted areas where controls could be improved,” the Auditor-General wrote in 2008.

In 2009 the department said it had the problem in hand and would fix it that year.

Four years and several million dollars in payments to IT consultants later, the problem remains.

In 2011 the Auditor-General repeated the concerns he had with the ongoing deficiencies in the system and the delays in fixing them.

He also raised a separate problem relating to electricity and gas bills.

“The Department has not adjusted the Energy Concessions Scheme for increases in electricity concessions as at July 2010 and July 2011.

“As a result, energy concessions provided by electricity entities do not match those set out in the scheme.”

An audit review in 2011-12 “again found the Department was unable to confirm the concessions provided by service providers (SA Water, Revenue SA and energy providers) were complete and made only to eligible customers”.

The department promised to fix the problem by April 2013, a deadline it has already missed and pushed out to December.

It also said it would “develop an internal audit plan to ensure only eligible customers receive concessions”.

InDaily has asked DCSI for a progress report on that plan.

“In response to the internal audit, a new process was introduced in July 2013,” the department said.

“While we anticipate that some ineligible concession payments may be detected, at this stage none have been found.

“As part of the audit program, the Auditor-General has requested further information on the project and the department is responding.”

In the 2012 financial year, DCSI administered payments of concessions on water, rates, energy, transport and levies totalling $138 million, up from $128 million the year before and $117 million in 2010.

When the audit concerns were first raised in 2007, the concessions totalled $106 million.

InDaily revealed in July that the interstate company hired to develop and run CASIS, Endpoint Corporation Pty Ltd, had gone into liquidation less than a year after it started its $1.29 million contract to deliver the project.

The State Government confirmed that it had a current deal with Endpoint – but it now transpires that there were other deals going back to 2009.

“This contract commenced on 1 November 2012 with an anticipated conclusion of the project being 31 March 2014,” a DCSI spokesman first told InDaily last week.

“The contract value was $1,294,000 (GST exclusive).”

When a reader contacted InDaily with further information, we asked the department what the total expenditure on the project had been.

“The initial business case was developed in early 2009 and a contractual agreement with Endpoint Corporation Pty Ltd was finalised on 5 May 2009,” a department spokesman said on Tuesday. “In 2009 DFC entered into contractual arrangements with Endpoint to develop and supply a single entry point for CASIS.

“These arrangements continued until a new contract with Endpoint was negotiated in late 2012 and executed in February 2013.

“Total expenditure was $3.62 million.”

The costs have increased further after the department signed on a former supplier to Endpoint, DMI Pty Ltd, to finalise the project.

“A contract is currently being finalised between DCSI and DMI,” the department said.

Endpoint’s managing director Stephen Alexander has not responded to InDaily’s calls or emails.

Leo List, employed by Endpoint and now by DMI to work on the project, refused to answer any questions when contected by InDaily.

Alexander has described the CASIS project on his own website as “a cloud based welfare concessions model that will fully automate applications, eligibility verification, entitlement calculations and payments for seven concessions”.