The legal foundations of the controversial robodebt scheme will be tested in court as part of a new class action lawsuit that will argue the government’s use of an “imperfect computer algorithm” to issue debts is illegal.
The class action, to be brought by Gordon Legal and announced by shadow services minister Bill Shorten in Parliament on Tuesday, will claim that the government’s automated data matching and debt recovery program is illegal and has resulted in hundreds of millions of dollars being unlawfully taken from Australians.
If the class action is successful, Australians who have paid back a robodebt raised in the last three years will potentially be in line to have the amounts recovered repaid, along with interest and potential damages.
The Online Compliance Intervention system was launched by the Coalition in July 2016. It uses an algorithm to average out a welfare recipient’s yearly income using data from the ATO and cross-matching this with income reported to Centrelink.
If the system detects a discrepancy, the individual is issued with a please explain notice. The robodebt scheme has been found to regularly incorrectly match this data and produce incorrect or non-existent debts. This process was previously completed mostly manually but is now done with little human oversight.
According to the government, there have been about 800,000 income compliance checks as part of robodebt since July 2016, with about 20 percent of them not resulting in a debt being raised.
Gordon Legal senior partner Peter Gordon said the lawsuit will test the legality of the government’s use of a “one-size fits all online compliance system”.
“The Commonwealth has used a single, inadequate piece of data – the robodebt algorithm – and use it to seize money and penalise hundreds of thousands of people,” Mr Gordon said.
“We’ll allege that to simply collect money from hundreds of thousands of people by the simplistic application of an imperfect computer algorithm is wrong.”
Mr Shorten, who has driven the Opposition’s renewed campaign against robodebt since the May election, said the use of an algorithm to generate supposed debts is “faulty, immoral and quite possibly illegal”.
“This will test the legal foundations of robodebt, and my own research has led me to believe that it is almost certainly illegal. There is a sickness at the heart of robodebt which needs to be cured,” Mr Shorten said.
“We’ve asked the government to fix robodebt, they don’t want to fix it. They’ve said that 20 percent of the people they’ve just gotten it wrong. If the government through Parliament won’t fix the problem then I form the view that giving justice to the victims through the use of a class action is a legitimate political action to take.”
The class action will argue that the government is not legally able to raise these debts under the Social Security Act as it is “not appropriate or reasonable for it to seek to shift the onus of doing so onto the individuals concerned”.
In a statement, Gordon Legal said the process and algorithm behind robodebt is “fundamentally flawed”.
“The law firm will challenge, on behalf of affected persons, the government’s use of a flawed calculation system by Centrelink to unlawfully take back tens of millions of dollars from many thousands of Centrelink recipients, including pensions,” the law firm said.
“The basis for the challenge is that the federal government financially benefited when it wrongfully took and banked money that legitimately belonged to recipients.”
The robodebt scheme has been found to average out individual fortnightly earnings based on ATO data, rather than work out an individual’s actual fortnightly earnings. According to the law firm, this “does not appear to be a lawful method of establishing that a debt is due to Centrelink”.
“The unfair and incorrect assumptions had a devastating financial impact on people’s lives. The emotional distress for people who have done nothing wrong has been high. The robodebt system put debt collectors onto innocent people to chase unlawful debts. They have been unfairly financially disadvantaged and must be repaid with interest, penalties dropped and damages paid,” it said.
Gordon Legal will now determine which individual case to use as a test case for the class action. While it will not involve exactly the same cases, there are enough similarities for a class action to be successfully, Mr Gordon said.
“Under class action law, not every case needs to be exactly the same. They only have to be roughly similar. Not every case needs to be bound to succeed.
You simply need to demonstrate that there are cases that have similar issues that the court can resolve for the benefit of everybody,” Mr Gordon said.
The class action comes just a week after Centrelink wiped the debt at the centre of a federal court case also challenging the legality of robodebt, the second time it has done so to avoid legal scrutiny.
Victorian Legal Aid, who was representing the individual, said her reported debt of $2754 had been wiped after a recalculation found she actually owed only $1.48.