The federal government announced on Friday it will refund $721 million to hundreds of thousands of Australians charged debts under the flawed robo-debt welfare scheme.
Repayments will be made for 470,000 debts to about 373,000 Australians.
Government Services Minister Stuart Robert said Services Australia had also admitted the system was “not sufficient under law”.
“The government started this program over half a decade ago based on the best information at the time,” he said.
“We have advice now that shows that when the program started, the information for the use of averaged ATO [Australian Tax Office] income was not sufficient and further proof points were needed.”
Australia’s attorney general, Christian Porter, who was social services minister in 2017 when the robo-debt scandal began, said the government thought the scheme was lawful at the time.
“We received advice at the time the program was lawful, and many governments have used ATO averaging data over many years – Labor and Liberal,” he said.
“We had proceeded on the basis it was lawful.”
A robo-debt class action is still pending, but all welfare payments the government recovered using the ATO’s discredited income averaging calculations would be repaid, said Mr Robert, along with interest and recovery fees.
Any unlawful debts raised after 2015 under the scheme are now the subject of a class action from Gordon Legal, which is also demanding compensation on top of refunds.
Mr Porter also did not rule out compensation for those hit by debts after 2015, saying the government had not finalised its position.
“That’s something we’ll deal with in mediation and no doubt that’s a position put by the class action,” he said.
Mr Porter, who described the whole saga as an “unfortunate outcome”, still would not apologise – citing the ongoing class action – nor concede the government’s handling of the program was negligent.
“I’m not going to use that word because there’s litigation ongoing and, as attorney general, I can’t use that sort of language in the context of the litigation,” he said, defending his government’s methods of recouping “large amounts of money paid out in the welfare system that exceed what the person should have received”.
“That’s often a mistake on the part of the person who nominates their income.
“Sometimes it’s other matters. But every government has to try and work out a way to recoup overpayments. In this instance, we used a method that had been used for many years. It later became clear that was an insufficient basis and we’re refunding the money.”
Government services shadow minister for Bill Shorten has demanded an apology for anyone who had suffered “untold hardship and distress” and who deserved an ironclad guarantee the ordeal was over.
“This government has not fully realised the error of their ways,” he said.
“The government needs to rule out today the people they are refunding, they are not going to try and get again,” he said. “After all, the government spent $63m on debt collectors over the last few years, chasing debts they were never the owed, using taxpayer money.”
Mr Shorten said some robo-debt notices were “the final stress straw” that broke some who had been “already mentally pretty vulnerable” before the issue arose.
“We do have reports of people taking their own lives,” he said. “This has been illegal hardship by a government against its most vulnerable citizens.”
Opposition Leader Anthony Albanese says the government should apologise to thousands of Australians wrongly made to repay funds to Centrelink.
“The government should apologise … People were distraught, people receiving these debt notices in the mail, many of them having no idea what it was from – and many of them, getting notices from the government, just paid it,” said Mr Albanese.
Greens senator Rachel Siewert said repayment was a positive step, but it was impossible to count the social and economic cost of the scheme.
“This is a historic day. I am overwhelmed thinking of the untold suffering that this illegal scheme has caused,” she said.
Mr Shorten claims the payback may be a sleight of hand Coalition politicians are using to avoid scrutiny in court.
“They’re now facing a court trial courtesy of the class action … So, when the ministers have to appear in court – that’s what’s motivating them.”
However, Liberal backbencher Fiona Martin defended Mr Robert, saying that when he was made aware of the problem in November 2019, he immediately pressed pause on the robo-debt scheme.
“The issue has now been addressed. So he has acknowledged that the ATO data was not sufficient and he is making steps to rectify it,” she said.
Mr Robert’s announcement came right after Prime Minister Scott Morrison held his own major press conference in which he had made no reference to the illegal robo-debt scheme.
NSW Labor senator Tim Ayres believes this was designed to avoid media scrutiny.
“Last Friday [22 May] was an announcement late on Friday afternoon about a $60 billion error in the government’s JobKeeper scheme,” said senator Ayres.
“This Friday afternoon [29 May] it is a $720 million bungled robo-debt scheme. I really worry about what next Friday afternoon is going to bring.”
According to Guardian Australia, Services Australia had informed cabinet ministers in February the program was “no longer viable” and advised it be scrapped. The report was based on leaked government advice prepared for ministers Robert, Anne Ruston [Minister for Families and Social Services] and Christian Porter.
“The income compliance program is currently estimated to deliver $2.1b in fiscal savings and $1.2b in underlying cash over the forward estimates to 2023-24,” read the ministerial submission.
“However, the program is no longer viable or cost effective given legal advice about the use of averaged ATO income data.”
Services Australia had also admitted it received legal advice from the Australian government solicitor saying it was “not possible to use bank account information, by itself, to raise debt”.
Anyone who had made repayments through the robo-debt scheme will not need to do anything to obtain a refund for a debt that was raised wholly or partially using the ATO data, says Mr Robert. From 1 July, Services Australia would be actively contacting affected individuals.
“Services Australia will now put in place the mechanisms needed to start making refunds, including how affected customers are advised of next steps,” said Mr Robert.The “proactive refund strategy” would “reduce the incentive for the applicants to persist with the class action and minimise the commonwealth’s potential liability for interest and legal costs”, Services Australia told government ministers in February. It said the move would show the government was not “waiting for the court process to dictate its actions” and could “assist to temper criticism of the government’s actions.”
However, the firm handling the class action is sceptical the refund is in its clients’ best interest.
Gordon Legal partner James Naughton said the federal court should ensure that robodebt victims did not waive their rights to damages or interest on their refunds, should they automatically receive one.
Mr Naughton said it was not reasonable that the government “having now conceded that it acted unlawfully, should unilaterally decide that it can take its time to pay it back”.
“Our clients will also want the government to explain to the court why it made this announcement without any consultation with them or the court and has chosen not to address their claims for damages for the distress and inconvenience or the interest they are entitled to receive because the government has had the benefit of their money unlawfully,” he said.
There have been calls to scrap the income compliance program. However, the government says it will continue, although it will no longer use income averaging of ATO data. The government claims it has not raised any debts wholly or partially using averaged ATO income data since November last year.
Do you think robo-debt should continue in light of all these revelations?
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