Government backflip as robo-debt income automation paused

Minister for Government Services Stuart Robert said his department wants to ensure fairness and consistency for 'income compliance'.
Written by Asha Barbaschow, Contributor

The federal government will be pausing the most controversial part of its welfare debt collection program that has become colloquially known as robo-debt, with Minister for Government Services Stuart Robert saying the move is about ensuring fairness and consistency for income compliance. 

As reported first by the ABC, an email circulating within the Department of Human Services (DHS) asked compliance staff to not base debt calculations on data solely from the Australian Taxation Office (ATO).

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In 2016, DHS kicked off the data-matching program of work that saw the automatic issuing of debt notices to those in receipt of welfare payments through the Centrelink scheme.

The OCI program automatically compared the income declared to the ATO against income declared to Centrelink, resulting in debt notices -- along with a 10% recovery fee -- being issued whenever a disparity in government data was detected.

One large error in the system was that it incorrectly calculated a recipient's income, basing fortnightly pay on their annual salary rather than taking a cumulative 26-week snapshot of what an individual was paid.

Addressing the media on Tuesday, Robert, who previously justified robo-debt by saying the government has a lawful responsibility to claw back money from welfare recipients, said he has also asked his department to identify the "small" cohort of Australians who have a debt raised solely on the basis of income averaging to discussions on seeking "further points of proof" can begin.

Last week Robert was still defending the project.

"Using averaging as the basis to say to a citizen, 'There may be a debt, can you please engage with us?' is entirely appropriate," Robert said on Thursday at the National Press Club.

"And that process of using averaging -- using ATO tax receipts or end of the year assessments -- to say to Australians, 'There may be a problem, please engage with us' is absolutely appropriate and we have responsibility to do that."

The Australian Greens welcomed the move from DHS, saying it appears the government has finally realised how fundamentally flawed the system is.

"It's about time that the government recognised how damaging this program is, that income averaging and reversing the onus of proof is wrong and totally unfair," Greens spokesperson on Family and Community Services Rachel Siewert said.

See also: Why Australia is quickly developing a technology-based human rights problem (TechRepublic)  

Similarly, the Australian Labor Party said the government was "junking the reverse onus of proof where victims have to prove they don't owe debts".

"This means robo-debt is being taken to the wreckers yard," a statement from former Opposition Leader cum Shadow Minister for Government Services Bill Shorten said.

Shorten in September said the government knows robo-debt is illegal, and hence the department wipes debts before court appearances.

"Clearly the government does not want the legality of their bureaucratic standover racket tested in court," he said at the time. He also previously labelled robo-debt as having the same essential logic and ethics of a mob standover.

"Our social security legislation holds that something is a debt only if proven. But robo-debt victims are not given the courtesy of the detail. They are given the figure that an automated algorithm arrives at but not shown the 'working out'," Shorten said. "Many are frightened into paying off debts that may be wrong or non-existent."

Last month, Services Australia claimed its robo-debt error rate was around 1%.

Providing an update on the program during Senate Estimates, Services Australia general manager of debt and appeals division Anthony Seebach said robo-debt had contributed under 10% of all debt recovery that Centrelink has performed since it came into force. 

"If we just look at debt recovered for the life of the income compliance program ... we've recovered about AU$0.64 billion through the income compliance program," he said.

"At the same time, or over the same period, we've collected AU$6.73 billion in the broader debt recovery program."

For overall debt recovery, as of August 30, approximately 1.47 million outstanding social welfare debts were identified with a value of AU$4.89 billion, Seebach said.

"In the 2018-19 financial year, the department recovered AU$1.85 billion in social welfare debts, up from AU$1.7 billion in 2017-18," he said.

"For the period 1 July [2018] to 28 June [2019], approximately 2.27 million debts with a value of approximately AU$3.36 billion was raised in connection to social welfare payments, in that year."

Up until June 2018, DHS had spent a total of AU$375 million on robo-debt.

Figures provided by Services Australia to the committee show the program had also cost a further AU$231 million in 2018-19, taking the total to AU$606 million so far.


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