Crude, cruel and unlawful: Robodebt Royal Commission findings

In the lead up to Christmas 2016, the Australian Government’s Robodebt scheme had moved from a limited release of automated debt notifications to sending out more than 20,000 per week.

The impact and chronology of the scheme, which was conceptualised as early as 2014, are laid out in the Royal Commission into the Robodebt Scheme final report, released at the beginning of July 2023.

‘A crude and cruel mechanism’

“The human impacts of Robodebt were being reported: families struggling to make ends meet receiving a debt notice at Christmas, young people being driven to despair by demands for payment, and, horribly, an account of a young man’s suicide,” Royal Commissioner Catherine Holmes writes in the report.

“Robodebt was a crude and cruel mechanism, neither fair nor legal, and it made many people feel like criminals. In essence, people were traumatised on the off chance they might owe money. It was a costly failure of public administration, in both human and economic terms.”

The more than 600-page report outlines, in detail, the failures of the Australian public service, along with other government process, and implicates a number of individuals and organisations in the process.

The Commission made a total of 57 recommendations, which speak to a range of actions from strengthening the public service to offering legal advice, doing data matching and creating policies with “emphasis on the people they are meant to serve.”

Monash University’s Faculty of Law, in its submission to the Commission, made 10 recommendations focused specifically on principles for the design of automated decision-making systems, effective review and oversight processes in Australia’s administrative law system, and concerns around the use of automation in the social security context.

Administrative law specialist and Director of Monash Law Clinics Joel Townsend was involved in the submission. Townsend says the Robodebt scheme demonstrates fundamental deficiencies in Australia’s social security system.

“Government was seeking efficiencies, seeking ways of raising money in a more straightforward way, and didn’t design a system with the end users – the members of the community most affected – in mind,” Townsend says.

“It was a system which effectively shifted the onus for proving whether debt existed from Centrelink onto social security recipients.”

Initially introduced as the Employment Income Matching measure in the 2015–2016 federal budget, Robodebt used an automated process to identify discrepancies between Australian Tax Office (ATO) and Department of Human Services (DHS) figures, and subsequently raise debts with people who had received welfare payments.

Annual income for the relevant financial year was obtained by the DHS from the ATO’s PAYG program and, through an averaging or “smoothing” process, calculated fortnightly income was compared with the amount declared by welfare recipients.

If a discrepancy was found, the individual would receive a letter and be requested to either disprove the claim or pay the debt.

“As soon as you impose on disadvantaged people in the community the onus of disproving something to government, you are going to end up with lots of those people unable to do that for a variety of reasons. That’s going to just compound their disadvantage,” Townsend says.

‘Inconsistent with legislation’

While automated averaging systems had been used by the DHS in the past, the key legal argument against Robodebt is the use of a yearly average as the sole basis in determining an individual’s fortnightly income for that period.

“Where debt is being raised on the basis of the person being overpaid for the past, Centrelink would need to be satisfied that the person had improperly received that benefit in that fortnight,” Townsend says.

“You can’t reach a state of satisfaction as to any given past fortnight by looking at an annual figure for income and averaging it out across the year.”

The Commissioner’s report notes that prior to Robodebt income averaging had been used “relatively seldom, usually by agreement with the recipient, and in the context of other information which provided some assurance that it would give a reliable answer.”

“The use of income averaging, in the way it was proposed [as part of Robodebt], was in fact inconsistent with social security legislation,” the report states.

The measure was to be applied to more than 850,000 cases of potential overpayment, identified between 2010 and 2013, and was slated to collect more than $1 billion of outstanding debt.

This is a stark contrast to the scheme’s final outcome which, at the end of 2020, saw the government settle a class action involving the reimbursement of approximately 430,000 debts to the tune of more than $720 million – not including damages and legal fees. Almost $112 million of the amount claimed in compensation has been paid, with a small amount reserved to cover the Scheme Administration Costs which have not been expended. It is proposed that this will be used to assist in the funding of free legal services to social security recipients to be provided by not for profit legal services.

However, with a series of legal red flags having been overlooked or ignored in the preceding years, financial and psychological impacts were already being felt by the community.

Failure to identify legal barriers 

The essential features of what became Robodebt were presented in a DHS Minute in June 2014. The minute did not identify legislation as a barrier to the scheme’s implementation.

This conceptual framework was communicated to the Department of Social Services (DSS) in October the same year. However, direction from within the DHS made it clear the department would develop the proposal alone.

The DSS independently sought legal advice on the scheme and in November 2014 was advised that the proposed income averaging “did not accord with legislation”. There is no evidence, the Commissioner’s report says, that this advice was communicated to the DHS at the time.

On 16 January 2015, Human Services Minister Marise Payne was sent a DHS brief which identified a potential need for legislative change with respect to income averaging for a draft New Policy Proposal (NPP) titled “PAYG clean-up”. The draft NPP had the same fundamentals as the Robodebt scheme.

The DSS explicitly raised its concerns with the DHS about the need for legislative change throughout January and February 2015, as a draft brief was being prepared for Social Services Minister Scott Morrison.

On 20 February 2015, Morrison signed an executive minute that mentioned a potential need for legislative change with respect to income averaging, indicating his agreement for an NPP to be developed.

The NPP for the Employment Income Matching initiative which went before the Expenditure Review Committee and eventually Cabinet, developed by the DHS and the DSS, was found by the Royal Commission to be misleading.

“[T]he language used in the NPP did not explain how that information would be used, nor did it disclose the intended use of income averaging to determine social security entitlement,” the report states.

“Additionally, the NPP did not make any reference to any legal impediments associated with the use of income averaging. References to the need for legislative change of the kind that had appeared in the Executive Minute were not included in any iteration of the NPP.”

The Commission’s recommendations

In the report, the Commissioner makes extensive recommendations regarding the public service. These include reviewing the structure of government departments, holding agency heads to account, and developing a standard for documenting important discussions within and between departments.

While the report also lays out recommendations for the training of department lawyers, and the development of practices around draft legal advice, there is a strong focus on NPPs.

The recommendations call for legal advice and legislative change, in standard, specific language, to be used in NPPs and, where legal advice is required, for the Australian Government Solicitor to include a statement saying the advice has been reviewed and agreed with.

“What is striking about Robodebt is that there was a lack of willingness to engage with views that it was unlawful and unfair,” Townsend says.

“We need to ensure that there’s proper ventilation of government policies and their issues of lawfulness at an early stage so that we avoid this kind of mess in future.”

Along with reforms to legislation around automated decisions making, the Commission recommends establishing a body to monitor and audit automated decision making. This at the heart of the Monash submission, which calls for a body “with specific responsibility for improving the fairness and accountability of automated decision making by government in Australia.”

“Robodebt is an example of how difficult it can be, through ordinary processes, litigating the lawfulness of decision making to hold automated processes properly to account,” Townsend says.

“We are saying you need somebody who is tough to positively dig into automated decision-making systems and to determine whether they are fair, appropriate and lawful.”

Examples are evident, throughout the development and implementation of the Robodebt scheme, of shortfalls in the ability to hold government processes to account.

Townsend points to two specific review processes: the Administrative Appeals Tribunal (AAT) and the Commonwealth Ombudsman. These, he says, “are not always sufficient to identify major failures of public administration.”

‘Behaviour designed to mislead’

In January 2017, the Ombudsman launched an investigation into the Robodebt scheme.

The Commissioner’s report identifies deception around legal advice disclosed by social services to the Ombudsman and notes that “DHS and DSS officers engaged in behaviour designed to mislead and impede the Ombudsman.”

“This, coupled with deficiencies in the Ombudsman’s own processes, had the consequence of diluting the effectiveness of the investigation. The illegality of the Scheme was not brought to light. The Scheme continued for years after the Ombudsman’s work was done,” the report states.

For these reasons, the Ombudsman’s findings did not deal with the issue of legality and, the Commissioner notes, were subsequently held up as an example of an independent enquiry to defend the scheme.

The Monash submission identifies the need for a log of communications by the Ombudsman to ensure “proper scrutiny” on government processes, Townsend says.

As well as accepting this Monash Law recommendation, the Commission proposes that departments should have a statutory duty to assist Ombudsman investigations, and that the Ombudsman be given further powers to obtain information and to refer cases to whatever review body replaces the AAT, which is set to be abolished.

Throughout 2016 and 2017, the AAT made a series of decisions which questioned the legal basis of the DHS’s use of income average. One such decision, made on 8 March 2017, explicitly found that the methodology of income averaging was unlawful.

The Commission found that due to a lack of a mechanism to systematically review these decisions, and a failure on the part of the two departments to examine the decisions and further raise them with relevant bodies, the tribunal’s findings were effectively ignored.

The Commission recommends identifying the AAT’s significant decisions, and publishing all decisions made by it (or whichever organisation replaces it); it also recommends re-establishing the Administrative Review Council (ARC), which was abolished in 2015.

Re-establishing the ARC is also key to the Monash submission.

“The council was established in the 1970s to ensure that we had processes for review of government decisions which were robust,” Townsend says.

“It was a highly regarded institution and it ran until very recently, when its functions were incorporated into the Attorney-General’s Department.

“That was not effective because it was not proper oversight of the way in which those review processes were operating.”

Townsend says it is important for whatever administrative review body takes the place of the AAT not just to resolve individual cases but also to “speak to best practice in government decision making.”

Shifting the focus from profits to people

In a scathing overview of the scheme, the Commissioner states that Robodebt exemplifies a view of welfare recipients “as a drag on the national economy, an entry on the debit side of the Budget to be reduced by any means available.”

The report speaks at length to the environment in which the scheme was conceived – demonstrated in a quote by Scott Morrison in which he describes himself as a “strong welfare cop on the beat”.

This attitude, the Commission heard, translated to pressure on public servants and a “powerful drive for savings”.

“The environment in which the development of what would become the Scheme occurred was fraught,” the report states.

“It was not an environment which was conducive to instances of careful consideration, well-reasoned decision making, and proper scrutiny and supervision.”

At the heart of decision making

Recommendations in the report propose greater consideration of individual circumstances when developing policy, along with the strengthening of advocacy groups and legal services for welfare recipients.

This is reflected in the Monash Law recommendation for a review of the debt waiver provision in social security legislation. Townsend argues there needs to be a fundamental change in the system to address a power imbalance between government and welfare recipients.

“The reality is that government has enormous power to identify and raise debts,” he says.

“It has technology which allows it to readily identify debts owing by social security recipients from under-declaration of income and yet the provisions in social security legislation are stacked in Centrelink’s favour.

“These processes are designed without proper regard to the people who you might think were at the heart of decision making about social security and debt collection.”