Australia dispatch: Robodebt Scheme royal commission hearings confirm the Australian Government was warned about illegality Dispatches
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Australia dispatch: Robodebt Scheme royal commission hearings confirm the Australian Government was warned about illegality

Australian law students are reporting for JURIST on law-related events in and affecting Australia. Gwendolyn Devoy is a law student at Newcastle University. She files this dispatch from Newcastle, New South Wales, Australia. 

After the closing of the third block of hearings of the Royal Commission into the Robodebt Scheme earlier this month, it has been revealed that the Australian Government received numerous warnings that the Scheme was unlawful. Despite this, few senior officials have accepted responsibility for something that has caused a furor in Australia.

The Robodebt Scheme was an automated system used to assess whether overpayments of welfare to eligible Australians had been made. The Scheme was based on averaging income information provided to the Australian Taxation Office. The system would then issue a debt to customers that it considered had fraudulently received excess welfare payments. The Scheme was an attempt to create a budget surplus and ran from July 2015 until 2019.

In 2019, the Federal Court of Australia approved a settlement that found that a demand for payment of debt issued during the Robodebt Scheme was not valid. Notably, the Court made the settlement orders by consent, meaning that both of the parties agreed to the Court’s findings. The government therefore conceded in that case that debt calculated by averaging income reported to the Australian Taxation Office was not valid.

In 2021, the Federal Court approved another settlement, this time of a class action brought by Melbourne law firm Gordon Legal. The settlement was worth $1.8 billion, which included $112 million of repayments of interest to victims. Following the settlement, over 400,000 debts raised by the Australian Government were either repaid by the government or zeroed.

In May 2022, a report recommended a Royal Commission into the scheme and outlined significant flaws in the Scheme, noting:

 ‘[a] troubling feature of the program has been the Government’s resistance to changing its approach in the face of unequivocal evidence that systemic issues were undermining the program and causing harm to people, during and after the end of the program.’

In August 2022, the Royal Commission into the Robodebt Scheme was established. The Royal Commission was tasked with inquiring into the design of the scheme, its use of third-party debt collectors, its complaints process and the impact of the scheme on individuals and their families.

Though the Royal Commission is yet to conclude and determine who was responsible for the Scheme, the strain that the Scheme put on affected individuals has been palpable, reinforcing the need for the Royal Commission. In January, the Royal Commission was told of one age pensioner, Rosemary Gay, who was issued with a debt of $65,000, which she was told needed to be repaid in one month. After complaining about this, the debt was first reduced to $6,600 then it was reduced again to $120, which was repaid and eventually refunded by the government. During the ordeal, Gay feared she would lose her home.

In its first block of hearings in late 2022, the Royal Commission heard key evidence, including that the Department of Social Services (DSS) had received legal advice in 2014 that the scheme, which had not yet come into action, “may not be consistent with the legislative framework.” That hearing block also saw the former secretary of the Department of Human Services (DHS), Kathryn Campbell, describe the scheme as “a failure of public administration on a significant scale.”

The most recent block of hearings, however, has produced the most significant evidence as senior government officials took the stand as witnesses. Notably, the Royal Commission heard from former Human Services Minister Alan Tudge, who denied responsibility for failing to obtain legal advice on the scheme, despite recognising that the income averaging method could produce inaccurate debts. The Royal Commission heard that both Campbell and counsel for the DHS, Annette Musolino, had been briefed on comments made in a June 2017 conference by renowned barrister Peter Hanks KC, in which he contended that the scheme was unlawful. However, when questioned on this, Tudge contended that it was Musolino’s responsibility to check the legality of the scheme after hearing those comments, and denied that it was his ultimate responsibility as minister to ensure the scheme was lawful.

The Royal Commission also heard that in early 2017, Campbell commissioned consulting firm PricewaterhouseCoopers to investigate the legality of the Scheme. The firm completed a draft report but was purportedly told by the Department that the report was no longer needed. The Royal Commission heard the report found the scheme had ‘a lot of flaws’.

The Royal Commission heard that another law firm, Clayton Utz, was tasked by the DSS to provide advice on the scheme. Clayton Utz found that the use of income averaging was unlawful, however, their draft report was never actioned. When questioned, in-house lawyer for the DSS, Anna Fredericks, agreed that there was inaction in the DSS on the advice provided by Clayton Utz.

Coupled with the failure to question the legality of the program, the Scheme has been discredited during the Royal Commissions hearings due to the media relations used to promote the Scheme. The media advisor to Former Human Services Minister Alan Tudge, Rachelle Miller, revealed in her evidence that she was not concerned by the increased negative coverage of the Scheme as this was published by ‘left-wing’ media. When criticism of the Scheme began to increase, Miller developed a strategy that involved placing stories in the ‘right-wing’ media about the success of the program in finding individuals who had misrepresented their income.

After the conclusion of the third hearing block, it still remains unclear who was responsible for the Scheme. However, the evidence provided during these hearings has highlighted continued government inaction on the issue.

The last hearing block of the Royal Commission is set to begin in late February. The Royal Commission is expected to hear evidence from numerous government officials including the former Chief of Staff to Scott Morrison who acted as the Minister of Social Services at the time that the Robodebt Scheme was established, and later went on to become the Australian Prime Minister.

The Royal Commission’s report is set to be laid down by 18 April 2023.