Labor claims Commonwealth racked up AU$34 million robo-debt legal bill

The federal opposition is still calling for a Royal Commission.

Tender documents have revealed the amount the government has spent on legal advice and related services, which according to the federal opposition is for Centrelink's troubled Online Compliance Intervention (OCI) initiative, colloquially known as robo-debt.

Labor said the Department of Social Services and Services Australia have awarded more than AU$34 million in contracts for legal services since robo-debt litigation "ramped up" in Federal Court.

"The full cost of the Morrison government's pig-headedness over the illegality of robo-debt has been laid bare," a statement from former Labor leader Bill Shorten said. "Australian taxpayers are footing a whopping AU$34,000,000 legal bill for advice and services that would have been better sought before the questionable scheme was unleashed."

A spokesperson for the department told ZDNet the contracts do not relate to any spend on legal services related to the OCI program or the class action. Instead, the spokesperson said they were awarded for "general corporate legal responsibilities".

The Department of Human Services, now Services Australia, kicked off the data-matching program of work in 2016, which saw the automatic issuing of debt notices to those in receipt of welfare payments through the Centrelink scheme. Centrelink's OCI program, from 1 July 2016 through 31 August 2019, saw 1,159,662 assessments be initiated using the automated data-matching technique.

Shorten, who is now the Shadow Minister for Government Services, accused the government of still covering up robo-debt's origins and said it was "dragging its heels" over the imminent class action.

He said the government "got it backwards", paying lawyers after the fact.

"This is great news for lawyers who want swimming pools but terrible news for the Australian taxpayer," Shorten continued. "We are being stonewalled over the origins of this disaster and it's not entirely clear whether legal advice was sort at all before this extortion was let loose on innocent Australians."

Shorten said the "illegal scam" never would have happened if lawyers were consulted in the first place.

In November, Gordon Legal launched a robo-debt class action on behalf of five representative applicants and hundreds of thousands of people who are included in the case as group members.

The essence of the applicants' case is that debts raised by robo-debt are unlawful, and all recipients should be compensated by the federal government.

The Department of Social Services, the respondent in the class action, spent over AU$5.1 million on legal services in the 12 months since the robo-debt test case was launched by Victoria Legal Aid, Shorten said.

Services Australia, meanwhile, has contracted AU$29 million in legal services over the same period, he added. 

On Friday, a case management hearing was held, with concerns over the viability of sticking to the September 21 timeline for the class action raised.

"It is looking like the case will not be ready," Justice Bernard Murphy declared. "We're getting perilously close to the trial ... for the moment, let's push forward."

During an interlocutory hearing on the same day, counsel for the Commonwealth claimed privilege over 90 documents sought by the applicants. The ongoing discovery process could also delay the kick-off of legal action. Shorten said this could come at a "further AU$2.8 million slug to taxpayers for each month that the hearing is delayed".  

Shorten also renewed his party's calls for a Royal Commission into robo-debt, which followed the Greens asking for the same earlier that month.

Updated 18 August 2020 at 9:30am AEST: Included comment from Services Australia and changed headline to reflect the claims were made by Labor.