The federal government’s robodebt scheme was a “massive failure in public administration”, according to the Federal Court judge who has approved a $112 million settlement over the “unlawful” program.
The Federal Court approved a $112 million robodebt settlement on Friday morning, with Justice Bernard Murphy criticising the government over the “unlawful” program”, labelling it a “shameful chapter” in Australia’s social security history.
The Judge also said it should have been obvious to the public servants and Ministers presiding over the program that it was faulty.
“The proceeding has exposed a shameful chapter in the administration of the Commonwealth social security system and a massive failure of public administration,” Justice Murphy said.
The settlement was agreed upon by Gordon Legal, which led the class action lawsuit, and the Commonwealth in November last year, after legal action was launched in 2019.
The Online Compliance Intervention system, launched by the Coalition government in 2016, used an algorithm to average out a welfare recipient’s yearly income using data from the ATO and cross-matched this with income reported to Centrelink.
If the system found a discrepancy, a “please explain” notice was sent automatically, and the onus was placed on the individual to prove a debt didn’t exist before a repayment notice was issued.
The scheme was found to regularly incorrectly match this data and issue inaccurate or non-existent debts. The government backed away from many elements of this scheme in late 2019, and announced plans earlier last year to refund debts raised wholly using the averaging of ATO data.
In November last year the Commonwealth agreed to pay $112 million in compensation to victims of the robodebt scheme, and to refund $720 million in debts and scrap a further $400 million in debts.
Through the robodebt program, Justice Murphy found that the government “unlawfully” raised $1.7 billion in debts against 443,000 people. It pursued 381,000 people and recovered $751 million, including through private debt collectors, he said in his judgement.
He slammed the scheme as a “shameful chapter” and a “massive failure in public administration”, and that it should have been “obvious” to the senior public servants involved that the system was “unreliable”.
“It should have been obvious to the senior public servants charged with overseeing the robodebt system and to the responsible Minister at different points that many social security recipients do not earn a stable or constant income, and any employment they obtain may be casual, part-time, sessional, or intermittent and may not continue throughout the year,” Justice Murphy said.
“It should have been plain that in such circumstances the automated robodebt system may indicate an overpayment of social security befits when that was not in fact the case.”
But the Judge said he believed the scheme was a “stuff up” and not a “conspiracy”.
The proposed settlement is “fair and reasonable”, Justice Murphy said, with less than 0.4 per cent of members objecting to it.
“One thing that stands out from the objections is the financial hardship, anxiety and distress, including suicidal ideation, and in some cases suicide, that people say was suffered as a result of the robodebt system,” Justice Murphy said.
The $112 million in compensation will be shared among the robodebt victims, with the pay out size determined by the size of the original debt and how long it’s been since the payment was made.
To be eligible for the settlement, a debt had to be raised based on ATO data matching, and the welfare recipient had to have made some repayments on it. About 200,000 people involved with the class action will not be eligible for the settlement payment.
Shadow government services minister Bill Shorten on Friday said robodebt is the “worst failure of a compliance scheme in history” and renewed his calls for a Royal Commission into the program.
“Nothing less than a Royal Commission will appease the hundreds of thousands of Australians who were shamed and stigmatised by the robodebt scandal. This is a shameful chapter in Australian history,” Mr Shorten tweeted.
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