Government settles legal challenge after court rules robo-debt unlawful

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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Written by Janelle Ward

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