Government to Pay $1.8 Billion Over Illegal Robodebt Extortion Scheme

A Federal Court judge has approved a $1.8 billion settlement for victims of the Federal Government’s illegal Robodebt recovery scheme, while at the same time delivering a scathing assessment of the government’s failure in ‘public administration’.

The approval signals the final part of the civil liability process, vindicating the thousands adversely impacted by the government’s unlawful extortion of some of our nation’s most disempowered and vulnerable.

Taxpayers will also foot the government’s legal costs

Justice Bernard Murphy also ordered the Commonwealth to pay legal costs of $8.4 million to the law firm that brought the class action on a no-win, no-fee basis.

The judgement will go some way towards repaying those against whom the government unlawfully claimed debts and pursued.

Robodebt

Between 2015 and 2019, the automated Robodebt debt collection system used data-matching across information gathered from government agencies including the Australian Taxation Office, in an attempt to identify the overpayment of social security debts.

However, there were a litany of problems with the system which calculated incorrect amounts and then put the onus on the social security recipient /debtor to prove the debt was not valid.

Many succumbed to the demands under the threat of further action, paying debts for which they were never legally liable.

Prior to the automated system being implemented, a Centrelink officer would undertake a basic investigation before deciding whether or not to send out a letter.

But since 2016, the computer has been printing and sending letters on its own. Before automation, only about 20,000 interventions were made each year, but Robodebt was a machine and raised thousands more.

Unlawfully raising debt

The court heard that as part of the scheme, the Commonwealth had unlawfully raised $1.73 billion in debts against 433,000 people.

Of this, at least $751 million was wrongly recovered from 381,000 people.

But more than that, it put many thousands of Australians, many of them already vulnerable, under significant anxiety and distress; leading some to take their own lives.

Judge’s remarks

In his address to the court, Justice Murphy stated:

“The proceeding has exposed a shameful chapter in the administration of the Commonwealth social security system and a massive failure of public administration. 

“One thing … that stands out … is the financial hardship, anxiety and distress, including suicidal ideation and in some cases suicide, that people or their loved ones say was suffered as a result of the Robodebt system, and that many say they felt shame and hurt at being wrongly branded ‘welfare cheats’.”

He said ministers and public servants should have known the method of using taxation income records to estimate a social security recipient’s average income was flawed.

‘We’ve apologised.’

The Federal Government has accepted the settlement, and today treasurer Josh Frydenberg told media: “We’ve apologised.”

While financial compensation is welcome, it doesn’t address the emotional fallout caused by the unlawful scheme – or the fact that the Government largely ignored numerous ‘red flags’ – including the fact that Centrelink began tweeting the contact number for Lifeline around Christmas time in 2017, after the system had been in place about six months – until legal challenges were mounted by Victorian Legal Aid in the Federal Court.

Prior to the legal challenges, several experts including Terry Carney who served as a member of the Administrative Appeals Tribunal’s social security division for 39 years until his term ended in September 2017, publicly pointed out very serious concerns over the way the scheme operated and the potential consequences.

But with the settlement now signed off by the Federal Court  it’s hoped that the government will stop preying on the most vulnerable members of out society to fill public coffers.