Yahoo News Robodebt scandal: leak reveals unlawful debts predate 2015 but government has no plans to pay back money
The Australian government has privately acknowledged the robodebt scandal may go beyond the unlawful 470,000 debts already identified for refunds, but it has no plans to pay back the money because it believes it would be too difficult to identify victims.
Amid growing fears unlawful debts could date back decades, the Guardian can reveal ministers were told in February the now unlawful ATO income averaging method was a longstanding “last resort” practice used to enforce Centrelink overpayment debts.
Confidential advice seen by the Guardian said: “As the identified invalidity would apply to all versions of the practice, there is a risk of Commonwealth liability for all actions outside the Programme including pre-1 July 2015 actions.
“The proposed approach would not address that potential liability. Any claims will be managed on a case-by-base basis.”
Related: Coalition told robodebt 'no longer viable' and should be abolished, leaked advice reveals
The government on Friday conceded the practice – which enforces debts using ATO annual income data compared against fortnightly pay reported by Centrelink recipients – was unlawful as it vowed to repay 330,000 people affected by faulty debts.
But it only promised to issue refunds to “all income compliance debts raised from our use of income averaging since 2015-16”.
The advice does not state the potential number of debts issued to people before 2015 that were raised using income averaging, or their value, but experts said it was likely to be much smaller than the post-2015 debts.
However, the Department of Human Services has previously told the commonwealth ombudsman it had used the practice since the early 1980s. Guardian Australia has seen records from one likely case dating back to 2008.
In the ministerial submission, prepared for Stuart Robert, Anne Ruston and Christian Porter by Services Australia, it was claimed that pre-2015 victims would be too difficult to identify.
The ministers were also told the issue was less pressing because any pre-2015 debts were not targeted by the ongoing class action brought by Gordon Legal.
It is the latest in a series of revelations from the leaked advice, which allowed the Guardian to report in March that the government had conceded it would need to refund hundreds of thousands of robodebts.
Darren O’Donovan, a prominent expert on the robodebt scheme, called for a full independent judicial inquiry and a forensic audit of all files.
“We must have the full truth about this department’s stubbornly unlawful debt raising,” O’Donovan said. “Were they ever going to tell people?”
The La Trobe University administrative law academic acknowledged the number of unlawful debts raised before 2015 would be “much smaller” when “compared to the industrial upfront averaging which began in 2015”.
“But each and every one of these will have been life-changing for those on the margins,” he said. “We have no idea how many employers answered requests for information, how many records were unavailable.”
Guardian Australia approached Robert and Services Australia for comment about whether it would repay pre-2015 income-averaged debts, and whether unlawful debts could date back to the early 1980s.
Robert’s office referred questions to the agency, whose spokesman, Hank Jongen, said: “This announcement only relates to the Income Compliance Program introduced in the 2015-16 financial year.
“Services Australia conducts all welfare payment administration in good faith, based on the best understanding of social security law when decisions are made.
“All decisions can be appealed and anyone who has concerns about a ruling made by the agency can seek a review at any time.”
Ahead of a potential class action trial, Robert, the government services minister, announced on Friday his agency would begin processing $721m worth of refunds from July.
Services Australia justified excluding pre-2015 debts by arguing a lack of “standardised tools and systems” meant “in most other cases it is not possible to identity the use of averaged ATO income data” outside the income compliance – or robodebt – program.
The advice also noted the class action brought by Gordon Legal “related only to debts raised after 1 July 2015 in the Programme”, which meant not addressing these debts “therefore will not affect settlement of the class action”.
But O’Donovan said every debt “regardless of age must be audited”.
That included debts substantiated using bank statements, which the Guardian on Saturday revealed the government had also admitted could not be legally used to enforce Centrelink overpayments.
“Any debt issued on the basis of averaged data alone must be set aside,” O’Donovan said. “The fact that averaging was used as a last resort after unsuccessful searches for payslips does not change the legal position. A debt must be based on rational proof of actual earned fortnightly income.”
(December 12, 2016)
Growing complaints of faulty Centrelink debts, amplified by social media campaigning
Guardian reports first call to halt “automated” debt recovery scheme
Centrelink whistleblower breaks ranks and tells Guardian only a fraction of debts were genuine
(January 1, 2017)
Commonwealth ombudsman launches investigation
Leaked Centrelink staff logs show fundamental failings of debt recovery process
(February 2, 2017)
Government makes minor adjustments after backlash
Guardian reports that robodebt victims may be able to sue
(March 3, 2017)
Department of Human Services accused of doxing robodebt victim
DHS blames debt recipients as Senate inquiry begins
(April 4, 2017)
Commonwealth Ombudsman criticises scheme in report
Government warned scheme is illegal after losing AAT cases
(July 7, 2017)
Senate inquiry calls for robodebt suspension
(February 2, 2018)
Data shows one in six robodebts later wiped or changed
(April 4, 2018)
(February 2, 2019)
Victoria Legal Aid launches federal court challenge
(May 5, 2019)
Centrelink wipes debt in court challenge, argues case cannot proceed
(June 6, 2019)
Victoria Legal adds second plaintiff to court action
(July 7, 2019)
Flood-hit Townsville caught up in robodebt scheme
After fresh scandals, Labor calls for robodebt to be scrapped
(August 8, 2019)
Guardian reveals scheme in shambles, secret plan to target vulnerable
(September 9, 2019)
Gordon Legal launches a class action with support of Labor’s Bill Shorten
(November 11, 2019)
Government abandons “reverse onus of proof”, promises to only raise debts once it can substantiate them with pay records
Government settles Victoria Legal Aid action
(February 2, 2020)
Emails show government was warned scheme was unlawful
In class action defence, government claims no duty of care on welfare
(March 3, 2020)
Guardian reveals leaked documents showing size and scale of the scandal
Guardian Australia has seen records from one appeal made to Centrelink in 2017 that refers to the agency having used ATO data as the “most accurate source of information” to raise a debt in May 2008.
It is understood the welfare recipient had appealed about a decade later, once the robodebt scandal had emerged.
A Centrelink authorised review officer said in the 2017 decision the “unavailability of … wage records or bank statements” in late 2007 meant it was “correct to use annualised ATO information to determine the overpayment”.
Under income averaging, Centrelink staff used ATO pay information to calculate a debt by dividing a yearly income summary into 26 fortnights and data-matching the results against what a welfare recipient reported to the agency while they received benefits.
Compliance officers manually conducted this work before it was automated on a small scale using data-matching by the former Labor government in 2011.
The results of ATO income averaged pay calculations were used to ask welfare recipients to “update” their income records and if a discrepancy remained, Centrelink would issue an overpayment debt and in some cases seize the person’s tax return.
Income averaging was used only as a “last resort” until 2015, when the Coalition turbocharged the income compliance program, boosting the number of “compliance interventions” from 20,000 a year to 20,000 a week in the quest for budget savings.
Do you know more? luke.henriques-gomes@theguardian.com
