New South Wales government agencies have illegally charged people about $144m in merchant fees on an estimated 92m credit card transactions for services such as licence renewals, car registrations and fine repayments since 2016, the state government says.
The finance minister, Courtney Houssos, on Wednesday said the government had referred the issue to the NSW Ombudsman for an investigation into “possible serious maladministration” after the state auditor-general alerted it to the issue.
Houssos said the surcharges had been passed on to tens of millions of customers despite “repeated legal advice” during the former Coalition government’s term that Revenue NSW and Service NSW could not lawfully charge merchant fees.
NSW Treasury had directed the agencies to recover the cost of merchant fees in 2012, but the Crown Solicitor’s Office between February 2016 and December 2022 advised that the payments were unlawful, a government statement said.
The secretary of the Department of Customer Services, Graeme Head, has referred the matter to the Independent Commission Against Corruption, the statement said, “noting the apparent failure to act on the 2016 Crown Solicitor’s advice”.
Houssos said that although most government transactions took place through Service NSW, every department had been instructed to report to Treasury by 30 November on whether they charge merchant fees and if they have the legal authority to do so.
“Families, households and businesses expect governments to conduct themselves lawfully. That’s why all agencies have been instructed to examine their own processes,” she said.
“Our immediate efforts are focused on switching off the payment methods that charge these merchant fees as quickly as possible.”
A taskforce had stopped merchant fees being charged directly by Revenue NSW and the Rental Bond Board, and on more than 80% of Service NSW transactions, the government statement said.
It said the fees had been switched off for more than 90% of online payments, including the top 12 Service NSW transactions, with the taskforce working to urgently stop any remaining surcharges.
Typical surcharges on Service NSW transactions included 30 cents for a 1-year licence renewal, 29 cents for a marriage certificate and $1.92 to renew registration for a small car such as a Toyota Corolla, according to the government statement.
The average surcharge on a Revenue NSW payment in 2023-24 was $0.92.
People who have been charged fees are encouraged to register for updates on the Government’s response at www.service.nsw.gov.au or by calling Service NSW on 13 77 88.