Robo-debt goes to federal court

James Riley
Editorial Director

The legality of the Australian Government’s highly controversial robo-debt system is set to be tested in federal court in a landmark case in Victoria.

Victoria Legal Aid has filed papers in the Federal Court challenging the legality of the Department of Human Services’ robo-debt scheme, arguing that the system uses “crude calculation” and is in breach of the law by placing the onus on welfare recipients to prove they have not been overpaid.

The controversial robo-debt scheme, launched in 2016, utilises an algorithm to average out a person’s yearly income using data from the ATO and cross-matches this with income reported to Centrelink. If this doesn’t match, the system automatically issues a debt notice to the recipient.

Paul Shetler: The robot-debt issue is a problem of government ethics, not algorithms or technology

The system has been found to often incorrectly match the data and issue inaccurate and non-existent debt notices, and has placed the burden on welfare recipients to prove their income and that they haven’t been overpaid.

This process was previously completed mostly manually by public servants, but the scheme now has little human oversight, and this will be a key point in the upcoming court case.

Robo-debt has been the subject of highly critical Ombudsman and Senate reports, and has been branded a “disaster” by the Opposition. But the government is ploughing ahead with the scheme, announcing plans in the 2018 budget to extend it for another year until 2022.

This is despite it being revealed that the system has barely recovered enough debts to cover the costs of developing it. Robo-debts notices had recovered $279 million in unpaid welfare debts as of May last year, but cost $276 million to administer.

Victoria Legal Aid’s case against robo-debt centres around 31-year-old nurse Madeleine Masterton, who received a $4000 debt notice from Centrelink stemming from 2011 when she was receiving youth allowance support.

Ms Masterton said she had reported her earnings correctly, but has now entered into a payment plan after a third-party collection company was tasked with chasing down the alleged debt.

“At the time, I was given no information about how my debt was calculated. I feel a social responsibility to push forward, especially if that means that people who are less equipped or less able do not have to deal with this as well,” Ms Masterton said.

The case could “pave the way for a fairer, smarter and more accurate system”, Victoria Legal Aid executive director of civil justice, access and equity Rowan McRae said.

“The way robo-debt averages people’s income assumes that they work neat, regular hours throughout a year. In reality, we know people work part time or sporadically throughout the year, because they’re studying, can’t get regular work, have multiple jobs or are unwell. This means the calculation of alleged ‘overpayments’ is often inaccurate,” Mr McRae said.

The central legal argument is that Centrelink can’t legal impose the debts issued by robo-debt as they are based on these inaccurate numbers and processes.

While the upcoming case may have significant ramifications for the government’s use of technology and automation to deliver public services, former Digital Transformation Office chief executive Paul Shetler said the algorithm isn’t to blame.

“You can’t blame technology for this, people knew it wasn’t working, they knew it would cause damage to people but they still rolled it out,” Mr Shetler told

“The problem here was not automation, the problem was literally the fact that they knew they were getting these high rates of error, and they still rolled it out.”

“Personally I don’t see it as being a problem with algorithms or anything like that. It’s not algorithms that are the problem, the problem is whether they are doing the right thing or not. These aren’t technical questions, they’re ethical questions.”

Mr McRae said the case is not about preventing the government from using technology to deliver services, but doing so in a way that is more reliable and accurate.

“The government should embrace technology, but it has to do it smartly. We hope the court will ultimately find that robo-debt is unlawful and that a system with integrity will follow,” he said.

Ms Masterton said the robo-debt scheme should be completely scrapped.

“If my case proves the whole robo-debt system is wrong under the law, then I hope that the system is wiped and that everyone else who has a debt is freed from it until a better system is in place that calculates transparently and correctly,” she said.

“This case isn’t just about me and if I can make life easier for other people then that would be a successful outcome.”

Losing the case would be massive budgetary blow to the federal government, which plans to claw back hundreds of millions of dollars through the robo-debt scheme over the next four years.

The government has claimed that the scheme has already saved $865 million, but this is including debts that it has claimed to “prevent” due to the scheme being in place.

A Labor-led senate report in mid-2017 found that robo-debt is a “fundamentally broken program” that has had a “profoundly negative impact on the lives of thousands of Australians”, and called for it to be put on hold until the issues were addressed.

Robo-debt has been one of the worst government tech failures in recent years, Mr Shetler said.

“People that are interacting with DHS are at their most vulnerable, they should be getting the best services, not the worst,” he said.

“They should understand the situation their users are in, but instead what we see is the opposite in this case. It’s a total anti-pattern for how to do service delivery.

“This is the one thing that whenever I talk about the Australian government I’m most embarrassed about.”

Do you know more? Contact James Riley via Email.

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