Govt to refund $721m in unlawful debts, but won’t apologise to victims

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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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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?

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112 Comments

Total Comments: 112
  1. 0
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    Can’t imagine too many will get any money back, they will always find a reason not to pay.

  2. 0
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    I’m shocked that there is $720M to be refunded! Not to mention the cost of administering this poorly thought out scheme, and the stress on people unfairly targeted. It’s come to this because the Government and in particular Stuart Roberts refused to listen to common sense or the voices of Centrelink employees. They were obsessed with seeing all Centrelink recipients as cheats and took the easy, and very flawed approach to try and make recoveries. Recovering overpayments is essential but the onus is on Centrelink to prove there is a debt not the client. It will be interesting to see the outcome of the Class action.

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      Over 95% of those caught were cheats. it’s just the courts in this country now believe the small minority and we all suffer the consequences.

      Lets hope the class action gets thrown out of court where it belongs.

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      Do not agree with you Retiring Well. To make a claim that 95% were cheats seems irrational to me. You are, I suggest, just trying to defend the indefensible.
      The concept of averaging annual ATO data to calculate a fortnightly income for Centrelink goes against any common-sense. How could any supposedly sensible person not see the flaws in the concept. Then when the flawed rationale was pointed out to them our political masters defended the system passionately. They were only bought to book when they realised that the system was indefensible and they would have to explain in court. Also the next election was a couple of years away (so hopefully voters would forget what a mess they made of it all).
      I wonder if others who passionately defended so called Robo-debt in these columns now feel sorry for the comments they made? Maybe not.

    • 0
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      It won’t get thrown out of court as the lnp has admitted it acted unlawfully they are in the process of trying to get Gordon legal to mediation to settle, Why would you when the guilty party has admitted it’s acted unlawfully.

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      What we need to do is find out who was the architect of this ROBODEBT swindle.
      Well now we know. It was in fact our PM, Scot Morrison, who made ROBODEBT, in conjunction with his mate Corrmann.
      Why hasn’t Morrison being brought to book over this? You tell me, but he should be ousted from office NOW.
      ROBODEBT was no mathematical mistake. It was based on a deliberate falsehood and was a cruel and malicious ideological policy of the LNP.

    • 0
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      Labor was responsible for Robodebt not the LNP at all.

    • 0
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      The law disapproves of unlawful conduct because it is immoral or contrary to public policy.

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      Retiring Well. Labor may have been responsible for implementing the Robodebt programme but it was changed under the LNP Government in 2016, a Centrelink officer originally checked the results of the income matching with the ATO and sent out about 20,000 letters a year investigating the findings but in 2016 it was automated and was sending out 20,000 a week, that is when the trouble started.

    • 0
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      Thank you, Misty, for pointing out the Liberal’s part in automating hundreds of thousands of letters sent out falsely making demands on poor people, with the threat of legal action should they not comply immediately. What a MONSTROUS action by a so-called democratic government!

      If these poor and/or elderly people didn’t cough up immediately, they’d end up with a henchman/enforcer (from a private debt-collector agency) at their front door, serving them with a summons. It was nothing short of Gestapo methods by Morrison and Cormann from the LNP.

      And now they’ve been forced to admit their action was wrong, they release it to the media right after the PM has a press conference (without mentioning the elephant in the room or his own part in it!) late on a Friday afternoon, a renowned dead part of the news cycle. What a disgrace!

      It won’t matter how good Morrison has been throughout COVID or finally stimulating the economy, THIS SHIT WILL STICK all over his face, and rightly so. All I hope is that the class action continues until after the next election, so Murdoch can’t distract people from this outrageous ROBODEBT and that the LNP still doesn’t have an energy policy to address climate change, coral reef destruction and rampant bush fires ravaging our country from late Winter to Summer.

    • 0
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      Now I know why you’re called ‘Retiring Well’, Retiring Well – you must be on a government or Liberal Party pension (ironically paid for by poor people’s unjust ROBODEBT fines).

      Your comments are astounding!
      – “Over 95% of those caught were cheats” is a blatant lie.
      – “… and we all suffer the consequences.” What? You mean the government has to pay back the money it falsely took (stole)? You sound like a criminal whingeing in his gaol cell, about having to suffer the consequences of his actions. Poor pet.
      – “Lets hope the class action gets thrown out of court where it belongs.” Hello mate?, the government has already admitted guilt! I can only imagine our judiciary system will be marching those responsible INTO court, not throwing it out.

      My question is this: Is the Commonwealth or the LNP responsible for the fines incurred in error by ROBODEBT? I ask this because the only way the class action will stop is if the Class Action is offered HUGE amounts of $$$. We all know the Liberal Party has very deep pockets, due to donors who buy influence with their donations. I know it sounds like I’m alleging corruption. I am. It is. Labor’s in on it, too. All legal, of course.

  3. 0
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    Stuart Robert and Anne Ruston to make an apology about this bungle,that would be an absolute impossibility…it’s always someone else’s fault with issues like this.Another case of nothing to see here and both Robert and Ruston remain in their ministry jobs….Business as usual.

  4. 0
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    Stuart Robert and Anne Ruston to make an apology about this bungle,that would be an absolute impossibility…it’s always someone else’s fault with issues like this.Another case of nothing to see here and both Robert and Ruston remain in their ministry jobs….Business as usual.

  5. 0
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    I have no issue with the Government recovering benefits obtained fraudulently but the Robodebt scheme was clearly flawed from the start.
    \Anyone with even a small knowledge of how welfare recipients’ benefits were calculated using fortnightly earnings would or should have been aware that Averaging annual Taxable income to calculate overpayments was a nonsense.
    Successive Ministers responsible for the scheme participated in a large scale white collar crime against some of the most vulnerable people in society, purely to appear to be decisive against so called welfare fraud.
    The matter should be referred to the Federal Police for investigation and charges laid where appropriate.
    The dodgy financial dealings of some banks are bad enough but for our elected representatives to resort to coercion and extortion is worse.
    Apologies should be made, resignations offered and accepted and charges followed up when laid.
    Lets hope that the current class action brings some justice – refunds of monies collected illegally are a start, but interest and compensation are also necessary.

    • 0
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      If your taxable income is a lot higher than what you told Centrelink then you deserve to be investigated.

    • 0
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      The key word Retiring Well is ‘investigated’. That is exactly what Centrelink did not do. Anyone who wilfully understates their fortnightly income to Centrelink could be guilty of fraud same as if one wilfully understates their annual income to ATO. However since ATO assess annual income and Centrelink uses fortnightly income the two systems are not compatible. Any disparity between ATO data and Centrelink data could be used as a tool to initiate an investigation but in Robo-Debt it was used as absolute proof. Therein lies the problem, no actual investigation, just assumption and reversing the onus of proof.

    • 0
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      Well said Eddy, I completely agree with you.

    • 0
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      Centrelink needs to rehire those put off and do some actual investigating and checking. Sorting out the data entry training. Too many documents are lost or wrongly entered.

      Perhaps it’s a bad idea to let and Jane or Joe at the computer system at all. Just employ some operators and make Centrelink an easy service to access with few glitches.

      It worked years ago without all the computerisation.

    • 0
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      Retiring well…my taxable income was correct, the robo debt got all the dates wrong, even when I reported correctly…and centrelink admitted fault and I am still owed more money.

    • 0
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      Retiring Well, according the Centrelink, if my partner and I jointly own an asset worth $2000 then the asset must be worth $4000 and our respective shares are worth $2000. With that sort of mathematical incapacity, it’s a wonder their stuff ups only impacted some 350,000 people. I would bet there were hundreds of thousands more impacted by other mistakes, illegal acts and outright bullying. I certainly know of several instances of honest people being persecuted by Centrelink based on miscalculations and mis-interpretations.

  6. 0
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    This whole business is totally shocking and just totally destroys the credibility of the government. Given that we have all probably seen on TV some of the victims of this injustice, and noted how ill -equipped they were and are to find their way through any kind of battle with anybody let alone Centrelink or the ATO amounts to cruelty.
    Any apology at this stage would be meaningless coming as it would be, to try and redeem some political points.

    • 0
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      So it’s OK to ignore letters until the debt collector arrives at yo door.

    • 0
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      Retiring Well of course it is not OK to ignore letters, but the onus of proof should have always stayed with CentreLink not put on people to prove they were innocent.

    • 0
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      The trouble seemed to be, Retiring Well, Centrelink had the idea that, right or wrong, they could walk over people roughshod and no-one was going to stop them or hold them to account so their abuse escalated.

    • 0
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      Yes Retiring it certainly is if you owe no debt. You then proceed to court where you prove no debt and receive an apology from the creditor who got it wrong.

      Of course when you do this type of intimidation to poor and fragile people they do pay up. When criminals do it we call it extortion.

      What kinds of people are the Liberal Party and IPA encouraging in the Party?

  7. 0
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    Just to clarify this; recovering overpayment of Centrelink benefits was started by a Labor government and the RoboDebt scheme was introduced by a Liberal coalition after obtaining legal advice that to use that system was within the law. Subsequent legal opinions have shown the system to be flawed and therefore not within the law. It has to be pointed out that any person with even a rudimentary mathematical ability would have known that dividing an annual income by 26 can never accurately produce how much a person has earned in any particular fortnight.

    As regards an apology, why is it deemed necessary? If the system was considered legal at one stage and subsequently found to be illegal at a later stage with an immediate reimbursement put in place, why should an apology be offered. With a repayment averaging just over $1500, is that in and of itself an admission that things were wrong?

    • 0
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      You are very hard on the thousands of people who suffered horribly as a result of wrongful claims. Granted, an apology wouldn’t fix the situation, and even if the govt. thought it was legal, it would be the decent thing to do.

    • 0
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      I am sure all the banks, insurance companies and superannuation funds who took funds from their clients for no service thought that what they were doing was ‘legal’ and were probably advised so by their legal advisors. However a Royal Commission, ASIC, APRA and other regulators came to the realisation that it was not legal. Most of them apologised and paid some money back. Why cannot the Government?

    • 0
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      Speeding tickets are unlawful under our Constitution too. So should the money be given back?

    • 0
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      With the gap between wealthy and non-wealthy widening daily our speeding tickets should be caluclated in the same way as Finland.
      The Finns have a day fine system that is calculated on the driver’s daily disposable income divided by two. Not unusual for fines to be in the $1000’s.

    • 0
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      Please explain Retiring Well where speeding tickets violate the constitution. My reading of the constitution is that it is no more than an agreement between the states to facilitate federation, dividing up governmental responsibilities of the Commonwealth and the states. In basic terms if a responsibility (ie Defence, foreign affairs, immigration, customs etc) is not ceded to the Commonwealth then it is a state responsibility.

    • 0
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      Retiring Well – haha, okay if you say so. Sounds like sovereign citizen folks.

    • 0
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      Why an apology Horace Cope.did you ever apologize when you did something wrong,or is it a case it happened no worries.

    • 0
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      Why an apology Horace Cope.did you ever apologize when you did something wrong,or is it a case it happened no worries.

    • 0
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      retiring well : dual citizenship is unlawful under the constitution also did any of those caught pay Australian Taxpayer’s funds back that they received unlawfully.

    • 0
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      Gee I must be very unlawful then with not dual citizenship but citizenship of 3 countries.

  8. 0
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    Totally agree with all the comments. This is criminal, heads should roll, but i’m not holding my breath. People have committed suicide over these non-debts. What a disgrace and a debacle. This government couldn’t run a chook raffle and do they take lessons in cruelty to belong to the LNP. Honestly! Jobseeker should also be kept at the level it is now.

    • 0
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      So easy to pull the suicide card with no evidence, libsareliars, but then anything else wouldn’t fit the Labor narative now would it?

    • 0
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      A young man, Rhys Cauzzo, 28, was reported to have taken his own life, KSS, after being hounded for $17,000.

    • 0
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      Nor yours kss. you have shown no proof there wasn’t.

    • 0
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      When I was Googling Robo Debt one sentence was about the no of deaths where Robo Debt was supposed to be a contributing factor.

    • 0
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      Is something unlawful also criminal?

      It’s No Crime To Be Unlawful

      Well, technically, it’s not. No criminal sanctions are attached to the Act and nothing in the Act makes any form of vilification a criminal offence. … ‘Unlawful’ is conduct prohibited by law, an ‘offence’ is also conduct prohibited by law but at a more serious or higher level.

  9. 0
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    When you have a system so complex that even the people responsible don’t understand what hope have we got. I am a self funded retiree & have to fill out 196 pages of pure BS every year just to get a Low Income health card. To top it off data that was entered by Centre link is wrong & no amount of trying can get it corrected, have even logged a complaint & 6 Months later they marked it as resolved so I can fully understand how errors occur. There needs to be a compete over haul of this department & not by insiders who are locked in just protecting their jobs.

  10. 0
    0

    My son has been one of those caught out by this Robo ATO programme, he has been forced to pay back Family Tax Benifits that the ATO says he owed them and now they are asking for income records 15 years ago or he will be hit with another debt, I thought you only needed to keep records for 7 years and how come they waited until now to ask for these, he did his tax returns for 2016/17 with an accountant and nothing was said then, he can’t do fis 2018,19 returns until this is sorted out, a nightmare.

    • 0
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      Family Tax Benefits are balanced out each year with your tax return so his debts have nothing to do with Robodebt at all.

    • 0
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      Family tax is not a Centrelink welfare patment and therefore would not have been part of the Robodebt. It has to do with his tax returns to the ATO.

    • 0
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      I just Googled “Is Family Tax Benefit classed as welfare?’, and it comes under welfare payments such as pensions, New Start etc and my son has to estimate his salary and cannot do his last Tax Return as the ATO wants a record for the year 2005 which he no longer has.

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