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The Commonwealth Government was warned of potential legal problems about how income was to be calculated for the Robodebt scheme, two years before it began operating, a royal commission has been told.
Key points:
- The inquiry was told legal advice from 2014, flagged concerns about the way incomes were being calculated
- The commission heard there was no authoritative advice sought prior to the scheme being implemented in 2016
- In November 2019, the scheme was found to be unlawful
The warning was revealed in the first day of hearings for the royal commission into the controversial scheme, which ran from 2016 to 2019 and involved recovering debts from welfare recipients.
Counsel assisting the inquiry Justin Greggery KC told the inquiry, there was advice from departmental lawyers in 2014, which flagged concerns about the way incomes were being calculated or "smoothed out" as part of the scheme.
Mr Greggery said the in-house advice was similar to that later given by the Solicitor-General in 2019, which was sought in response to concerns being widely raised about the scheme.
He said the 2014 in-house advice from the Social Services Department's internal legal department concluded the proposal to smooth out a person's income over a confined period might not be consistent with the legal framework.
Mr Greggery said it was now clear from the commission's inquiries that authoritative advice prior to implementing the scheme had not been sought.
He said the question raised by the 2019 solicitor-general's advice was whether the Commonwealth government "was prior to that point recklessly indifferent to the unlawfulness or otherwise" of the averaged pay data used to allege and recover debts.
The Robodebt scheme matched income data from the Australian Tax Office with income reported to Centrelink by welfare recipients.
If a discrepancy was detected, people were usually sent a letter asking for further information, such as pay slips and bank statements, sometimes from years earlier.
Family 'appalled' department was aware of legal issues
The mother of a young man who died by suicide in 2019, just hours after learning he owed a Centrelink debt notice, was in Brisbane for the hearings today.
Kath Madgwick's 22-year-old son Jarrad learned he owed a debt of $2,000 in May 2019, while the Robodebt scheme was in place.
"I want to see some accountability to see that nothing like this happens again, that there's some safeguards in there for people with mental health for people applying that have got no income," Ms Madgwick said.
She said she was "appalled" to learn the department had been warned about potential legal issues in 2014, before the scheme came into effect.
"It's just disgraceful that they had that advice and just continued anyway."
In November 2019, the scheme was found to be unlawful as a result of legal action undertaken by some of those targeted for debt recovery.
A class action brought by lawyers for hundreds of thousands of Australians who had debts raised against them led to a settlement, with the Commonwealth acknowledging liability.
It led to some $721 million in recovered debts being repaid to Centrelink recipients. More than $112 million in interest was also paid on top of that.
The Commonwealth acknowledged that raising debts purely by averaging taxation data was unlawful, and that imposing a penalty fee based on the information it had was unlawful.
Two weeks before the judgement, the Human Services Department paused debt recovery activities for debts raised this way.
The royal commission is continuing in Brisbane today before Commissioner Catherine Holmes SC.