Robodebt is far from dead, buried and cremated

Nov 23, 2020

Those who closely follow the news will believe that the dreaded Robodebt has been slain, “dead, buried and cremated”, with the Federal Government agreeing at the door of the court on 16 November to settle the Robodebt class action. But it’s not  as simple as that.

Credit – Unsplash

First, we only know the barest outlines of the agreed settlement – that the Government has agreed to pay out $832 million, plus agreeing to forgo $400 million in claims against recipients of social security benefits (Plaintiffs) for overpayments. Even that is at best half true: the “pay out” is really a repayment of money to plaintiffs – money which those plaintiffs have paid to the Government in response to letters of demand (Debt letters). Nearly all of it has already been repaid (the repayment announcement was made six months ago). The agreed settlement also includes $112 million in damages to Plaintiffs, which is inclusive of an unspecified amount for legal costs – which will presumably go to the Plaintiffs’ lawyers, Gordon Legal.

Most news report have failed to make clear that the settlement is not absolutely a done deal – it is subject to approval by the Federal Court.

Beyond the bare outlines above, we don’t know the details of what has been agreed between the Plaintiffs’ Lawyers and the Government. The Government has not issued any statement clarifying what has been agreed – and what has not. That seems like the response directed by someone from marketing rather than a lawyer’s response.

Bravely, 7 News (Gus Bruno) has published “Robodebt class action: Everything you need to know about the $1.2 billion lawsuit brought by Gordon Legal”. It seems a very good effort at explaining everything you need to know. Bruno says:

“The robodebt automated welfare recovery scheme matched annualised pay information from the Australian Taxation Office and income data reported to Centrelink to claw back overpaid welfare payments.”

That is, the ATO told Centrelink that I had earned $52,000 in the tax year. Centrelink deduced from that that I had earned $1,000 each and every week – no more and no less. If I had told Centrelink that I earned less than that in a particular period – because I was overseas or unemployed for example, Centrelink would come after me on the basis that for that period I had under-declared my earnings for the purpose of calculation of social security benefits. Centrelink has used ATO information for years, but Bruno says that in 2016 the Coalition made the system a fully automated one – Debt letters would be sent out whenever the robot found a discrepancy between the figures – no human checking was done.

Bruno says that one-in-five of these Debt letters were based on false information; about 470,000 debt letters were sent out; the Federal Court ruled the system unlawful in November last year. The Robodebt class action stemmed from that ruling.

As recently as 31 July 2020, the Secretary of the Department of Social Services, Kathryn Campbell told the Senate Committee on Community Affairs that she did not know what “Robodebt” means. The Government’s pet name for Robodebt seems to be “the Online Compliance Intervention System”.

There is useful information on the class action on the Gordon Legal website, but for a full understanding, a certain amount of inference is required. First, the class action seems only to cover cases where the calculation of the “debt” was based entirely on income averaging from the ATO’s data of peoples’ annual income. So for example, if in your case Centrelink used income averaging but did it from a pay slip or from information provided by your employer, you are not part of the class action. Even if Centrelink primarily relied on ATO information, but had some other corroboration such as from pay slips, it seems that you are not covered by the class action. But will you even know which is the case?

In August one recipient of social security benefits who paid money to Centrelink in response to such apparently automatically generated Debt letters, having heard about the class action enquired whether they would be entitled to a refund. Centrelink responded: “You are not eligible for a refund. You have not been identified as eligible for a refund as our records have not had an Income Compliance review between July 2015 and November 2019. Most Centrelink debts don’t relate to income compliance debts”.

As a pro bono lawyer, I act for half a dozen recipients of social security benefits who have been hit with Debt letters by Centrelink which seem to be based on false assumptions. None of my clients is in the class action. So the bottom line is that many disputes will continue. So people who have “repaid” a dodgy debt should take action unless they have a document that specifically says they are part of the class action.

According to Gordon Legal, if since 4 May 2020 you got a document entitled “Opt Out Notice – Federal Court of Australia – ‘Robodebt’ (Social Security Debt Collection) Class Action (VID1252/2019)” (the “Group Member Notice”), it is safe for you to assume that you are a Group Member. The inference seems to be that if you didn’t get that, you are not covered by the class action.

The Australian Council of Social Service has called for a proper inquiry into “this extraordinary abuse of government power”. According to ACOSS CEO, Cassandra Goldie: “We all need an assurance that a terrible scheme like robodebt can never be repeated. We also need people responsible to be held to account in an open and transparent manner.”
Let’s have an inquiry. But it is premature to regard Centrelink’s “terrible schemes” as being entirely past tense.

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