Robodebt scheme

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The Robodebt scheme, formally Online Compliance Intervention (OCI), was an unlawful method of automated debt assessment and recovery employed by Services Australia as part of its Centrelink payment compliance program.[1][2][3] Put in place in July 2016 and announced to the public in December of the same year,[4][5] the scheme aimed to replace the formerly manual system of calculating overpayments and issuing debt notices to welfare recipients with an automated data-matching system that compared Centrelink records with averaged income data from the Australian Taxation Office.[3][4]

The scheme has been the subject of considerable controversy, having been criticised by media, academics, advocacy groups, and politicians due to allegations of false or incorrectly calculated debt notices being issued, concerns over impacts on the physical and mental health of debt notice recipients and questions around the lawfulness of the scheme.[3][6][7] Robodebt has been the subject of an investigation by the Commonwealth Ombudsman,[8] two Senate committee inquiries[9][10][11] and several legal challenges.[12][13]

On 29 May 2020, the Morrison Government announced that it would scrap the debt recovery scheme, with 470,000 wrongly-issued debts to be repaid in full.[14] Initially the total sum of the repayments was estimated to be A$721 million,[3] however in November 2020 this figure expanded to A$1.2 billion after the Australian government settled a class action lawsuit before it could go to trial.[15] In June 2020, Prime Minister Scott Morrison apologised in parliament for "any hurt, harm or hardship caused" by the scheme.[16]

The scheme was further condemned by Federal Court Justice Bernard Murphy in his June 2021 ruling against the Government where he approved a A$1.8 billion settlement including repayments of debts paid, wiping of outstanding debts, and legal costs.[17]

Inception

Background

  • In 1990, the Australian government passed legislation enabling Data Matching for the purposes of verifying incomes of welfare recipients.[18] This legislation detailed how the data held by the Australian Tax Office would be shared with the Department of Social Security (now Services Australia). This sharing of data was to enable identification of people who had likely provided incorrect or out of date information to Centrelink under the Social Security Act 1991[19]
  • The legislation covering the use of data matching and issuing of debt included a limitation of 9 cycles per year,[18] with Centrelink drawing on data collected by the Australian Taxation Office (ATO) since the Data Matching Act 1990 was passed.
  • The process of debt investigation and recovery remained largely unchanged after the 1990 legislation, with minor changes owing to back end systems changing. The core system that was implemented in the 1984 Social Security and Reparation Act remained.[20]
  • In 2011, the Gillard Government introduced an automated system to cross-check data between the Australian Taxation Office and Centrelink, in order to "identify individuals who wrongly received welfare payments when their earnings made them ineligible".[21] Proposed by the Minister for Human Services Tanya Plibersek and Assistant Treasurer Bill Shorten, these changes were expected to gain "an extra $71 million to the budget".[22][21] Under this system, Centrelink staff manually checked customer records against data provided by the Australian Taxation Office (ATO), generating debt notices at an estimated rate of about 20,000 a year.[4][5]

Creation and announcement

  • In April 2015, measures to create budgetary savings by increasing the pursuit of outstanding debts and investigation of cases of fraud in the Australian welfare system were first flagged by the Minister for Social Services Scott Morrison and the Minister for Human Services Marise Payne,[23] and formally announced by the Abbott Government in the 2015 Australian federal budget.[24]
  • In 2015, the Department of Human Services conducted a two-stage pilot of the Robodebt scheme, targeting debts of selected welfare recipients that were accrued between 2011-2013.[25]
  • Following the 2015 Liberal Party Leadership Spill and 2016 Australian federal election, the Turnbull government implemented an overhaul of the federal welfare budget in an effort to crack down on Centrelink overpayments believed to have occurred between 2010 and 2013 under the Gillard government.[4][5]
  • In July 2016, the manual system began to be replaced with the Online Compliance Intervention, an automated data-matching technique with less human oversight, capable of identifying and issuing computer-generated debt notices to welfare recipients who had potentially been overpaid.[3][4] The new system was fully online by September 2016.[25]
  • In December 2016, Minister for Social Services Christian Porter publicly announced the implementation of this new automated debt recovery scheme – which was given the colloquial name 'Robodebt' by the media[8][26] – was estimated to be capable of issuing debt notices at a rate of 20,000 a week.[4][27]
Scott Morrison Minister for Social Services (Dec 2014-Sep 2015)

Debt recovery efforts

In early January 2017, six months after the commencement of automated debt recovery, it was announced that the scheme had issued 169,000 debt notices,[28] and recovered A$300 million.[29] Based on these figures, it was suggested that a similar automated debt recovery system would be applied to the Aged Pension and Disability Pension, in order to potentially recover a further A$1 billion.[26]

The 2018 Australian federal budget indicated that the Robodebt data matching scheme would be extended into 2021, with the aim of recovering an additional A$373 million from welfare recipients.[30]

By September 2019, it was announced that under the scheme, Services Australia had spent A$606 million in order to recoup A$785 million.[31]

Controversy and criticism

Opponents of the Robodebt automated process say that errors in the system have led to welfare recipients paying non-existent debts or debts that are larger than what they actually owe, whilst some welfare recipients have been required to make payments while contesting their debts.[26] In some cases, the debts being pursued dated back further than the ATO requests that Australians retain their documentation.[27] Particular criticism has focused on the burden of proof being moved from Centrelink needing to verify the information, to being on the individual to prove they did not owe the funds, with human interaction being very limited in the dispatch of the debt letters.[3]

Politicians from the Australian Labor Party, Australian Greens, Pauline Hanson's One Nation and Independent Andrew Wilkie, have criticized the scheme and its automated debt calculation methods.[11][26][32][33][28] The scheme has also been criticized by advocacy groups for people affected by poverty, disadvantage and inequality, including the Australian Council of Social Services and the Saint Vincent de Paul Society.[4][27]

Allegations of misconduct

Allegations levelled against the scheme by the media, former and current welfare recipients, advocacy groups, politicians and relatives of welfare recipients include:

  • Welfare recipients suicide after receiving automated debt recovery notices for significant sums.[34][35]
  • Debt notices issued to deceased people.[36]
  • Issuing debt notices to disability pensioners.[37]
  • Revelations that debt notices were issued to 663 "vulnerable" people (people with complex needs like mental illness and abuse victims) who eventually died.[38]

Investigations and inquiries

Commonwealth Ombudsman investigation

After the Turnbull government implemented the Robodebt scheme, many recipients of debt notices filed complaints with the Commonwealth Ombudsman.[25] This led to the agency investigating the scheme, with the final report and recommendations delivered in April 2017. The recommendations from the ombudsman are as follows:[25]

  • That the Department of Human Services (DHS) "should reassess those debts already raised by the scheme where the 10% recovery fee was applied automatically, and manually reassess whether the application of the fee was appropriate, taking into account the customer’s personal circumstances, including the existence of a reasonable excuse".
  • That the DHS should " make further improvements to improve the clarity of the initial debt notices and give customers better information so they understand the information and can properly respond to it".
  • That the DHS should provide a message to welfare recipients that "clarifies that if they do not enter their income information, their ATO income will be averaged evenly across the relevant period and this may result in a debt".
  • That the DHS should notify welfare recipients that " debts based on averaged ATO income may be less accurate than debts based on actual income, especially if their income was fluctuating or intermittent".
  • That the DHS should "further assist welfare recipients to gather evidence with which to effectively respond to debt notices", such as:
    • "By taking into account the potential cost of obtaining bank statements, and use its powers to request the evidence directly from the financial institution
    • "When person contacts DHS for assistance in relation to a debt notice, DHS should use its information gathering powers to assist the person to obtain income information from a third party, such as a former employer or bank, if, despite genuine and reasonable attempts to do so, the person has been unable to obtain income information; or it would be unreasonable, in the circumstances of their case, to expect them to obtain such information.
    • "By including clear guidelines about the process for obtaining employment income evidence".
  • That the DHS should " deliver a number of changes to improve its service delivery and communication to those who've received debt notices".
  • "That a greater number of vulnerable debt notice recipients should be offered a staff assisted intervention and provided with additional assistance and support".
  • "Before further expansion of the Robodebt scheme, the DHS should undertake a comprehensive evaluation of the scheme in its current form, and give further consideration as to how to mitigate the risk of possible over-recovery of debts."

First Senate committee inquiry

The Robodebt scheme was the subject of a Senate committee inquiry in 2017.[9] The inquiry had a number of findings and made a number of recommendations,[39] including:

  • "That a lack of procedural fairness is evident in every stage of the program, which should be put on hold until all procedural fairness flaws are addressed".
  • "That the Robodebt scheme disempowered people, causing emotional trauma, stress and shame".
  • "That the Department of Human Services has a fundamental conflict of interest – the harder it is for people to navigate this system and prove their correct income data, the more money the department recoups".
  • "That the Department of Human Services should resume full responsibility for calculating verifiable debts (including manual checking) relating to income support overpayments, which are based on actual fortnightly earnings and not an assumed average; and provide those issued debt notices with the debt calculation data required to be assured any debts are correct".

Second Senate committee inquiry

The scheme was again the subject of a Senate committee inquiry, begun in 2019.[10][11] Initially meant to report its findings in December 2019, this deadline has been extended twice, with the Senate committee due to deliver its report on 19 August 2020.[10] During senate hearings in July 2020, former head of Services Australia Kathryn Campbell initially stated that she did not know what Robodebt was. She later denied that the scheme had led to welfare recipients committing suicide after receiving debt notices, despite allegations from Centrelink staff and the family members of welfare recipients who took their own lives.[34]

Legal challenges

In February 2019, Legal Aid Victoria announced a federal court challenge of the scheme's calculations used to estimate debt, stating that the calculations assumed that people are working regular, full-time hours when calculating income.[12] In November 2019, the federal government agreed to orders by the Federal Court of Australia in Amato v the Commonwealth that the averaging process using ATO income data to calculate debts was unlawful, and announced that it would no longer raise debts without first gathering evidence – such as payslips – to prove a person had underreported their earnings to Centrelink.[14][40]

In September 2019 Gordon Legal announced their intention of filing a class action suit challenging the legal foundations of the 'Robodebt' system.[13][41] On November 16, 2020, the day before the trial was due to begin, the Australian government announced that it had struck a deal with Gordon Legal, to settle out-of-court.[15] The deal saw 400,000 victims of Robodebt share in an additional A$112 million compensation,[42] on top of the additional 470,000 Robodebts (totalling around A$720 million) that the Commonwealth government had already agreed to refund or cease pursuing.[15] In June 2021, Justice Bernard Murphy approved a settlement worth at least A$1.8 billion, calling it "a shameful chapter" and "massive failure in public administration" of Australia's social security scheme.[43]

Demise

Stuart Robert, Minister for Government Services (May 2019 - March 2021)

On 29 May 2020, Stuart Robert, Minister for Government Services announced that the 'Robodebt' debt recovery scheme was to be scrapped by the Government, with 470,000 wrongly-issued debts to be repaid in full. The total sum of the repayments is estimated to be A$721 million.[3]

On 31 May 2020, Attorney-General Christian Porter, who was Minister for Social Services when the Robodebt system was first implemented, and who had previously defended the scheme,[29] conceded that the use of averaged income data to calculate welfare overpayments was unlawful, stating that there was "no lawful basis for it".[7][44]

Aftermath

After weeks of criticism from the Opposition,[32] in June 2020, Prime Minister Scott Morrison apologised for any hurt, harm or hardship cause by the scheme.[16] As of 31 July 2020, it was announced that A$224 million had been repaid to more than 145,000 welfare recipients.[45]

On 11 Jun 2021 the Federal Court approved a A$1.872 billion settlement incorporating repayment of A$751 million, wiping of all remaining debts, and the legal costs running to A$8.4 million.[46] In ruling against the scheme, Justice Bernard Murphy described it as a "shameful chapter in the administration of the commonwealth" and "a massive failure of public administration”.[17] The Federal Treasurer Josh Frydenberg said the government accepted the settlement but distanced himself from the suicides and mental health issues surrounding the administration of the scheme.[46] Services Australia have stated they will commence repayments in 2022 to persons for whom debt recalculations have shown an overpayment by that person.[47]

See also

References

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