Government settles legal challenge after court rules robo-debt unlawful

The government’s robo-debt scheme has been a dealt a major blow after a landmark decision in the Federal Court.

person walking into centrelink

The government’s robo-debt scheme is in tatters and debts paid must be refunded, according to emeritus professor of law at the University of Sydney Terry Carney.

Prof. Carney was speaking in the wake of a Federal Court ruling on Wednesday that ordered the government pay legal costs and interest to Victorian woman Deanna Amato. It had already waived her robo-debt of $1709.

Is this the end of robo-debt? “Every lawyer in the country certainly hopes so,” said Prof. Carney.

“There’s no way that the robo-debt system as it has operated to date can possibly continue in that form,” he said on the ABC.

“The government must go back to finding and proving the income a person receives each and every fortnight and also refund the 300,000 to 400,000 people with debt paid or hanging over their heads. All that money is required to be refunded now.”

On Wednesday, Judge Jennifer Davies ruled on the case of Ms Amato.

She had been ordered to pay back $2754 to the Department of Health and Human Services, which runs Centrelink, and her tax return of $1709 had been seized.

The 34-year-old local government employee only found out Centrelink had been pursuing her after they garnished her tax refund. They had been sending notices to an old address.

In the Federal Court, in a case run by Victorian Legal Aid, Judge Davies said that Centrelink “could not have been satisfied that a debt was owed in the amount of the alleged debt” based solely on Australian Tax Office (ATO) data.

Ms Amato said: “I had my money refunded to me, but I hope that others who have paid dodgy debts will also have a way to get their money back.

“My robo-debt should never have occurred in the first place.

“I feel pleased to have gotten this outcome, but it’s bittersweet to know so many people have paid money under this system.”

The government refunded Ms Amato’s money and was ordered by the court to pay $92.06 interest.

Government Services Minister Stuart Robert announced last week that debts would no longer to be raised where the only evidence of an overpayment was averaging income data from the tax office.

The scheme has been in place since 2015 and is estimated to have collected up to $660 million. It matches a person’s declared income to Centrelink with annual data reported to the ATO. If more income has been reported to the ATO, welfare recipients were required to prove they didn’t owe a debt.

The system has been widely condemned for averaging a person’s income across 26 fortnights, not recognising casual, part-time or intermittent work and forcing people to find pay slips and bank statements from years ago.

Civil Justice Access and Equity director Rowan McRae said the government had conceded the income-averaging process used to calculate the debts was unlawful.

A spokesman for Mr Robert said: “The decision does not affect the government’s use of data matching between income reported to DHS (Department of Human Services) and that reported to the ATO to seek clarification of income whilst receiving a welfare payment.

“We will continue to use income averaging as part of a range of options to ask a welfare recipient to engage with DHS if there is a discrepancy.”

Senior legal figures have declared the Federal Court decision “groundbreaking” and the robo-debt system as “illegal” and a “form of blackmail”.

Former Victorian chief crown prosecutor Gavin Silbert QC said he was “delighted” by the verdict, adding: “For three years, I have been saying the debt recovery scheme was illegal and it was essentially a form of blackmail.”

Shadow attorney general Mark Dreyfus said the judgment “simply confirms that we have got a commonwealth government that has been extorting money from Australian citizens with no basis for doing so”.

“It’s an extraordinary scandal, robo-debt,” he told the ABC. “I just think that the Prime Minister owes the Australian people an apology for this extraordinary program.”

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    COMMENTS

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    Horace Cope
    28th Nov 2019
    11:37am
    Good news, the system was not working because of a major flaw. Those receiving welfare had to report their income on a fortnightly basis but the robo-debt system was taking the annual income and dividing by 26 to strike an average. Worse, the welfare recipients were considered guilty and had to prove their innocence which is the opposite of normal legal practice even if all of their income was reported correctly.
    Sundays
    28th Nov 2019
    1:57pm
    Very well explained and definitely a major flaw. I’ve spoken to people who work for Centrelink. They knew it was wrong but management refused to listen.
    Farside
    28th Nov 2019
    10:53pm
    I understand the Robodebt algorithm simply automated the manual calculations to compare Centrelink data with ATO records that had been used for some years, and in doing so was much more efficient at issuing notices based upon averaging in the absence of actual earnings advised to Centrelink. Much of the kerfuffle could have been avoided if the Robodebt scheme had more management oversight and the DSS been more circumspect in its demands knowing that there was the potential for these errors if a welfare recipient did not keep Centrelink informed.
    VeryCaringBigBear
    28th Nov 2019
    11:47am
    So people tell Centrelink they earn $100 but the ATO knows they earn $1000 why shouldn't they be sent a debt for telling Centrelink lies?
    Horace Cope
    28th Nov 2019
    12:11pm
    It's not as simple as your post suggests. If a worker is only getting casual employment and is earning $1000pw but only getting sporadic employment totalling 6 months and relies on Newstart when not working, the income for the year will be $26,000. Under the robo-debt system, Centrelink will claim that the worker is getting $1000 per fortnight and is therefore ineligible for Newstart and has to repay any welfare payments given. The worker is totally correct, Centrelink is totally wrong and therein lies the problem.
    VeryCaringBigBear
    28th Nov 2019
    12:20pm
    If you earn $26,000 a year then you should not be on Newstart. One could earn that $26,000 with a couple of good share trades but Centrelink averages it over the year so why not average any income over the year?
    TREBOR
    28th Nov 2019
    12:26pm
    I used to work for $2000 a week, BB.. I could earn $26k in three months .. does that mean I should live on $26k all year round? Your premise is, as usual, flawed..and just when you showed some glimmer of hope in your reasoning yesterday...

    I'd venture to suggest that if you could earn $26k from a share deal, you have assets way above what will give you UB. Why not spend those down first, live off the proceeds until they are exhausted, take UB, and they repay it as a debt from your estate?

    (gotcha)...
    VeryCaringBigBear
    28th Nov 2019
    12:35pm
    Wrong Trebor your welfare should be adjusted on your yearly income not fortnightly income as one could get a contract payout of $100,000 one fortnight and be on Newstart the rest of the year.
    Lookfar
    28th Nov 2019
    12:40pm
    But is that the actual situation VCBB? - normally people working part time have to include a wage slip or such, so they can't tell c/link anything.
    Is perhaps c/link seeing one payment for $1000; and assuming that that is what they earn every week when in fact they usually earn $100?
    The only way it should go is for C/link to take it week by week, no tricky "averaging".
    It would be good to know the full story in detail.
    VeryCaringBigBear
    28th Nov 2019
    12:59pm
    It Is simply wrong that if you earn money by being self employed you get averaged over the year but if you have a job you don't. If I work for my own business and pay myself a wage then I don't get averaged. Whole system is wrong.
    leek
    28th Nov 2019
    1:53pm
    VeryCaringBigbear. You are completely wrong in your thinking about when people should and should not be on newstart. When people apply for Newstart, they have to say how much $$ they have in the bank, if they have too much $$ their claim is rejected as they are too rich, if say they have about $10k in the bank they now have to wait up to 13 weeks before they start to get Newstart. This rule or something similar has been in since the day 1. Only peole who are down to their last $5k for singles and about $11k for couples can get easily get new start.
    So back to your $26K example. the perosn whould have used probably good 1/2 of that and then lost their job. they would be penalised and would not start NS for some weeks. They are then completely entitled to NS payments after they have used up a good portion of their savings.
    You have no idea how Newstart or possibly other Centrelink systems work I suggest that you read the Social Security act before commenting on Centrelink and other Welfare payments. And that goes for pretty much every body else.
    VeryCaringBigBear
    28th Nov 2019
    2:23pm
    I can be self employed with very few assets so I am entitled to Newstart from day 1. However if I use those small assets to play the derivatives market and earn $26,000 I have to declare that income over the whole year. If however I work for 3 months and earn $26,000 I can then claim Newstart for the rest of the year. It is simply wrong that some income is average but other income is not. I could also be working on a contract and get paid $26,000 in one fortnight and be able to claim Newstart for the other 25 fortnights of the year since it is the fortnight I have earnt the money that it is counted. I certainly don't think that is fair at all. It is so easy to get around the Newstart system for those who know the rules. That's why Robodebt was so good.
    VeryCaringBigBear
    28th Nov 2019
    2:25pm
    Further I know of many parents who invest money for their children so they can get Newstart. I know of one aren't who had enough of their child's money invested so that their child was able to buy a house.
    Hoohoo
    28th Nov 2019
    6:34pm
    VCBB, wake up please.

    If you are self-employed (or gamble large amounts on the share market), the requirements for reporting income is very different to someone employed on a casual basis, AS YOU WELL KNOW VCBB!

    Self-employment involves (usually) quarterly PAYG payments to the ATO (based on the previous year's income). These coincide with the quarterly BAS payments (GST collected), which reflect your gross income and outgoings. If the designated PAYG is a long way from your quarterly income, you can ask the ATO for an exemption & pay more or less than the designated PAYG. If you want to pay more - no problems. If you wish to reduce it, you are put under the spotlight by the ATO, and you need to show more than your BAS figures to plead your case.

    I have a seasonal business, so I often get a quarterly refund of GST from the ATO because I have shelled out more than I've collected. When the busy season gets going, I have to pay that GST back (& more).

    VCBB you are deliberately conflating issues because you can't bear to think that the tax you pay (from income from your gambling habit), is going to welfare receivers.
    Imagine if everyone resented your gambling, deemed as a legitimate form of "work"? It's a form of income that poor people are denied (except family-killing pokies, of course).
    Hoohoo
    28th Nov 2019
    6:44pm
    Trebor is not wrong at all, VCBB. Your blatantly stupid comment about a contractor receiving a payout of $100,000 one fortnight and be on Newstart the rest of the year, beggars belief! LIke you didn't know that contractors are self-employed?

    Just shut tf up with your greedy, uncharitable thoughts. You are deliberately muddying the waters, but your information is ignorant and arrogant. Be quiet, like Morrison tells you.
    VeryCaringBigBear
    29th Nov 2019
    3:22pm
    So it is Ok for someone to earn $26,000 in 3 months and collect 9 months Newstart but for someone else to only earn $26,000 and get nothing because they are self employed.

    Something I very wrong here. System needs to be on an annual basic not a fortnightly one.
    Hoohoo
    29th Nov 2019
    4:41pm
    It happens to me every year, VCBB. But my income isn't received at the whim of a casual employer because I'm self-employed. Big difference.

    Anyway, who gets $26,000 being employed casually, I ask? I'll gladly take THAT job, if it really exists!
    patti
    28th Nov 2019
    11:47am
    I knew this debt recovery system was illegal, and had made up my mind that if they tried it on me, I would demand that they show proof I owed the money before I would pay up. Nice to feel vindicated. Hopefully they will repay all the money that have seized illegally.
    Nanna75
    28th Nov 2019
    11:57am
    I asked them to show proof of my debt, but was told it was my responsibility to prove I didn't owe it. I couldn't, I needed to find out something that occurred in 2003 and records didn't go back that far. The tax office was always in the picture and informed of my income. I reluctantly paid the amount due because interest was mounting up. I've now written to Mr Roberts so fingers are crossed.
    Triss
    28th Nov 2019
    12:06pm
    The court has ruled that robodebt is illegal, Nanna75, therefore you have to get your money back. If they drag there heals take them to court.
    leek
    28th Nov 2019
    1:43pm
    Nanna75. Robot debt only started in 2016, and it went as far back as 2011/2010. So it sounds like your debt for 2003 Is not a Robodebt letter. But another matching system. Centrelink has always matched up with the ATO. But the new system in 2016 did the avergaing method. Also previous debt systems a "human" at centrekink checked first to see if there was a debt. the Robodebt system did not have anybody checking.
    Triss
    28th Nov 2019
    1:46pm
    Oops, should have proof read before posting. If they drag their heels...
    TREBOR
    28th Nov 2019
    9:21pm
    Well, the heels should be dragged kicking and screaming to the public stocks.... the ones they get locked up in for a day or so in a public place so old ladies can throw rotten tomatoes at them and dogs can urinate on their feet without fear...
    Mac
    28th Nov 2019
    12:06pm
    At last justice has prevailed. This flawed system has caused considerable stress and anxiety for many people over the years with devastating effects. Centrelink should have been required to give detailed information as to the specific dates and amount that the debt amount was accrued similar to circumstances in other debt recovery cases.

    They require all financial information to be supplied to them when a person applies for any type of pension payment down to the last cent. This continues throughout the pension payment period.

    Accountability by Centrelink should be just as important but sadly is not forthcoming.
    jaycee1
    28th Nov 2019
    12:07pm
    Now all they have to do is get ride of the Indue card!
    VeryCaringBigBear
    28th Nov 2019
    12:19pm
    All those on welfare should be on the Welfare card as it's simply stupid that people can use their welfare money for non essentials.
    TREBOR
    28th Nov 2019
    12:27pm
    THEIR money, BB - thanks for coming... freedom of choice, innit?
    VeryCaringBigBear
    28th Nov 2019
    12:37pm
    No its not their money as it is welfare and should be spent on what it was given to them to spend it on. If you want money to spend on what you like then you should earn it not collect welfare.
    Triss
    28th Nov 2019
    1:56pm
    So, CB, are you going to wallow in power and make a list of of the things people are only allowed to buy.
    However you look at it there are ex politicians who have been on their taxpayer funded pensions for 20 or 30 years and must have used up the small amount of super (if any) they put in, what about directing your ire towards them as well.
    VeryCaringBigBear
    28th Nov 2019
    2:17pm
    Yes I am over people collection welfare spending it on things they don't need and then approaching charities for the things they do need.
    Mariner
    28th Nov 2019
    5:57pm
    VCBB - you are all heart! - I have mine because I gamed the system, you are stupid not having gotten yours. Most of us know how to cheat the system, some of us decide not to. Bring in the no-cash card for pensioners, no doubt it might help some people, the others find a way to get real money out of them, same way you get the full pension as you claimed in a previous post.
    Hoohoo
    30th Nov 2019
    1:52pm
    The current political climate dictates that poor people should be punished for not having a better job, or for caring for their loved ones at the cost to their own careers or any reason that doesn't reflect the government's agenda (helped by radical right wing shock jocks & Murdoch/Sky media) of kicking people while they're down.

    The crazy thing is that some of these kicked people actually voted for this government. Morrison placates them with pats on the head, calling them "The quiet Australians". Yeah right, Alan Jones & Andrew Bolt are SO DAMNED QUIET. These creatures who make out they are holier than thou also think they're entitled to tell people on welfare what they must do with their allowances. What arrogant hypocrites!

    People on welfare should be able to elect whether they are paid via no-cash cards or not. Only then will it be helpful to the recipient, as opposed to punishing.
    TREBOR
    28th Nov 2019
    12:22pm
    Robberdebt was always in doubt, it's just that the government wouldn't admit it... they hoped, with every fibre of their black hearts, that it would just sail through as so many tiny depredations have over the past thirty years... with the peasants targeted one at a time and thus unable to mount any coherent defence, and the reliance eternal of government on the inherent inability of the electorate to challenge its moves.

    The greatest threat to parliamentary government is democracy - and the greatest threat to democracy is parliamentary government....... told yez that many times...

    There are principles at stake here - principally who rules - the people by right or the government by divine right...
    cupoftea
    28th Nov 2019
    1:25pm
    As was said this morning when Labor bought in Robodebt it was humans who worked it out not rig a computer up as it was to get rid of public servents and take money with out proving that you owed it if you think that that the government was right in taking money you are a member of the LNP or IPA or just hate people getting social securety
    leek
    28th Nov 2019
    2:02pm
    What is IPA? But I agree with you. I grew up a Liberal. In fact I was in the Young Liberal movement the same time as Peter Costello(he was amazing back then).
    But now as life has dealt its hand to me with redundancy when i was 52, and watching my kids and their friends struggle to get work, rent etc. and watch the horrific price rises of homes in the last 20 years. I have completely changed my way of thinking. I am not even
    sure that Labour is the solution either. But I do know that our current government is really bad. I cried when I realised they they got back in last year.
    The housing price rise has been good for me, but the long term future is bleak for my kids.
    Hoohoo
    28th Nov 2019
    6:58pm
    Thanks for your thoughts, leek. You can stand on the good mat with the likes of former Liberal leaders like Malcolm Fraser & John Hewrson, who have also realised their personal version of being a small "l" Liberal included having a heart & wanting all people to have a good life for a better society, for everyone to enjoy.

    The problem with the current LNP is that very few of them can admit they were wrong (just look at them still coal-clutching, all the way into the fire). They'd rather do that than admit they got it wrong.

    They can't even understand that the fossil fuel industry is negatively connected to water resources in our arid country, both directly & indirectly. They don't care that frackers & coal-miners are sucking up & polluting HUGE AMOUNTS of ground water, often in areas that receive very little average rainfall. They need to extract their heads from the burning sand.
    Hoohoo
    30th Nov 2019
    5:41pm
    Regarding my last paragraph, do people know that now the traditional ex-owners at the Adani mine must beg for permission to carry out ceremonies at their sacred sites? That they can be arrested for trespass on their own Country?

    Meanwhile, the mine not only threatens their access to fresh water for survival (in the form of springs, a sacred dreaming site) but Adani have been given access to unlimited ground water that goes way beyond their own lease. For free! It is so unjust. Our governments (QLD Labor and the federal LNP) continue to treat indigenous people like animals, or worse.
    cupoftea
    28th Nov 2019
    1:25pm
    As was said this morning when Labor bought in Robodebt it was humans who worked it out not rig a computer up as it was to get rid of public servents and take money with out proving that you owed it if you think that that the government was right in taking money you are a member of the LNP or IPA or just hate people getting social securety
    Intellego
    28th Nov 2019
    1:35pm
    Yet another stuff-up from the heartless, incompetent LNP morons … err … 'government'.
    SuziJ
    29th Nov 2019
    11:20am
    It was actually the Labor Party that brought it in, not the LNP. Stop political bashing
    Hoohoo
    30th Nov 2019
    1:16pm
    Labor didn't introduce THIS draconian version of robbodebt. It was the lazy and incompetent LNP government. They outsource everything so it looks like they are cutting red tape & reducing public service workers, just so they can brag about their bloody-minded so-called SURPLUS.

    The fact that centrelink staff were given TARGETS TO REACH, especially given that people had to prove they were NOT guilty, the LNP deserve to be roundly criticised. They have been getting away with lots of things while Morrison is still doing his victory lap, instead of running the government with competence.

    Whoever gave that directive about targets for robbodebt is a criminal, imo. They should be personally held to account. But the Minister will never cop the flak - it'll be a (real) public servant in the Department, if anyone.
    cupoftea
    28th Nov 2019
    2:26pm
    Leek the IPA is the Institute of Public Affairs started by Murdoch and friends in 1943 there members are people who hate workers and they would pay $2 an hour if they could they believe in serfdom not a word they use
    Farside
    28th Nov 2019
    11:14pm
    check out MPs James Paterson and Tim Wilson as examples of IPA alumni, wonderful human beings. Former senators Bob Day and David Leyonhjelm were also members. https://ipa.org.au/
    cupoftea
    28th Nov 2019
    2:55pm
    The Indue card which was started because a member of the IPA thought make it hard and when people cant get to an ATM or the machines go down they cant pay there rent buy food so what we have another 2.5 yrs of this but don't forget the ex President of the Liberal party runs Indue
    leek
    28th Nov 2019
    4:09pm
    Yep Indue is inhumane as well. One win at a time though. Robodebt- tick. The clever people will start on the either Indue or the Job providors next.
    TREBOR
    28th Nov 2019
    9:24pm
    In order to go forward again this nation needs to go back forty years and start again... scrub everything set in place after that ...
    Laura52
    29th Nov 2019
    5:37am
    Here is my story. I am a carer for my parents. I received a robo debt of $774 for the period of 2015 to 2016. My carers payments commenced in November 2015. I changed jobs at that time. I appealed the decision which required me contacting fairwork to get payslips from the previous employer who refused to provide payslips , since I could only provide my wage details from that employer from my bank account. Centrelink got it all wrong. My robo debt was calculated from even before I applied for carers payments and centrelink also got my starting dates of my new employment all wrong as well, as my debt was calculated from a job which I left. It took 9 months to get this all sorted out. My appeal was not looked at, it was passed on from 2 people until one kind person , the third person, sorted it all out and said the calculations by the robo were incorrect. He worked it out manually. I got most of my money back, just reduced, including a tiny amount of interest and a refund from the ATO. It is imperative to follow up on a robo debt, persist with phone calls...from my understanding centrelink has targets to reach, for robo debts, so that is why my appeal was pased from one person to another, not looked at until the third person helped me out.
    Hoohoo
    30th Nov 2019
    12:56pm
    Wow Laura62. That's your reward for caring for your parents? So while you were saving the government thousands of dollars because of your sacrifice, kindness & generosity, you then had the boldness to ask for a Carer's Allowance so the govt decides you deserve to be punished.

    It is bloody-minded highway robbery. It should be called "Robbery Debt".

    The fact that the centrelink staff were given TARGETS TO REACH, especially given that people had to prove they were NOT guilty. Whoever gave that directive is a criminal, in my humble opinion. They should be personally held to account.
    Laura52
    1st Dec 2019
    8:22am
    Thanks for your kind words Hoohoo, much appreciated. It doesn't make sense, doesn't it? My life is at home with my elderly mum and dad so that I don't have to ask the government for extra financial help/assistance , preventing any medical issues to the best of my abilities and keeping them at home as long as I can to avoid nursing home costs. The government wants the elderly to be cared for more in their homes, but then I had to pay the robo debt which caused me financial distress, as I have my own bills to pay. My 2 day a week job which helps with my sanity and is my only social life, paid for that robo debt. I wasn't given a full refund, DHS kept $280 of it which I needed financially. I work in the health profession so I see many people rorting the system and they sure know know how to rip off the system too. 2 weeks ago my frail, immobile 77 year old mother, who doesn't have much money in the bank, hardly any assets has been randomly selected to do undergo an age pension review and I was asked to bring both of my frail parents, immobile... to Centrelink to do this! And I was asked to bring all of their identification despite being on the system 20 or so years. And they lost my father's identification as well....for some reason??


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