The longest-serving member of Australia's government review tribunal has offered a withering assessment of the Department of Human Services' automated debt recovery program, describing it as a form of extortion.

Key points: Terry Carney, former member of the Administrative Appeals Tribunal, has described the robo-debt scheme as "extortion"

Terry Carney, former member of the Administrative Appeals Tribunal, has described the robo-debt scheme as "extortion" Victoria Legal Aid has launched two federal court cases challenging robo-debts

Victoria Legal Aid has launched two federal court cases challenging robo-debts The Department of Human Services says it is legally obliged to pursue debts

Terry Carney served as a member of the Administrative Appeals Tribunal's social security division for 39 years until his term ended in September 2017.

As part of his work he heard some of the first cases about the Federal Government's online compliance initiative, dubbed the "robo-debt" scheme by some.

Since leaving his position he has become an outspoken critic of the scheme.

Terry Carney, a former member of the Administrative Appeals Tribunal, has become an outspoken critic of the robo-debt scheme. ( ABC News )

Mr Carney told 7.30 that Centrelink repeatedly refused to offer any clear legal defence of the program.

"The [Human Services] Department's conduct is abysmal," he said.

"It's the conduct that you would expect [from] a tinpot, third-world country.

"At no stage does Centrelink ever seek to defend the unlawful basis on which it's raising those debts.

"[It's] a bit like the Mafia saying, you know: 'You owe me money. Do I have to prove that you owe me money? No I don't.'

"That … is what we usually say is extortion."

The robo-debt scheme matches income data from the Australian Tax Office with income reported to Centrelink by welfare recipients.

If a discrepancy is detected, people are automatically sent a letter asking for further information such as payslips and bank statements, often from years earlier.

Since 2016 some of those receiving payments such as Youth Allowance and Newstart have been asked to verify their income dating back as far as 2010.

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If the recipients do not respond or are unable to find proof of their employment details, a further letter is sometimes sent raising a debt against them. Crucially, it puts the onus on the individual to prove they do not owe any money.

'A huge impact on people's lives'

Devi Barker said she first became aware of her debt when she was contacted by debt collectors saying she owed $7,616.05.

"They were demanding that I make payment. I felt quite stressed, especially when they said that … my wages would be deducted, and that I wouldn't be able to leave the country," Ms Barker told 7.30.

Devi Barker says Centrelink made her "out to be a criminal". ( ABC News: Carrington Clarke )

The debts were raised from a period dating from 2010 to 2012. The Department of Human Services no longer raises debts dating back to this period after it undertook a review of the system.

"When I went to try and get bank statements from the bank they said that they don't hold records for longer than seven years," she said.

"I'm confident that I gave Centrelink the correct information."

Ms Barker's case outlines the challenge that a number of recipients of automated debts face: finding payslips from employers or records from banks can be difficult. Without that proof they can face a major obstacle in contesting the debt.

"I'm being made out to be a criminal," Ms Barker said.

"These debts are having a huge impact on people's lives and people's wellbeing.

"It's extremely stressful and especially when you can't prove that you don't have any debt. You have no power, and yet they're still pursuing the debts."

The Department of Human Services told 7.30 it could not respond to individual cases for privacy reasons.

The robo-debt scheme is now facing a major legal challenge. Victoria Legal Aid has launched two federal court cases challenging the validity of the automated debts raised against their clients.

It filed the second case in June this year after the Department of Human Services wiped the debt of the first court applicant.

Victoria Legal Aid executive director Rowan McRae, who is leading the team of lawyers in the court challenges, told 7.30: "We're asking a court to scrutinise the scheme and determine whether or not it is in fact lawful.

"We know it's unfair. We know it's having a terrible impact on our clients. But we also think the scheme is unlawful and we'd like a court to test that."

If the challenges are successful it could have broad ramifications for the scheme and the manner in which the Department of Human Services is able to lawfully raise debts.

Legal Aid Victoria's Rowan McRae says the robo-debt scheme is unlawful. ( ABC News )

Figures from the department released in Senate Estimates in March 2019 show that 444,989 robo-debts were raised from July 2016 to December 2018.

"Many people will be watching these cases with much interest to see what implications they may have for their own robo-debts," Ms McRae said.

The Department of Human Services declined an interview request from 7.30, but said in a statement it would not comment on matters currently before the courts.

It stressed that people were not automatically sent debt notices and were first given an opportunity to respond to any discrepancies identified.

"Debt recovery is a fundamental principle of our welfare system — when someone has a debt, the department is legally obliged to pursue recovery of the overpayment," a spokeswoman said.

The spokeswoman added that a review from the Commonwealth Ombudsman found that it was "reasonable and appropriate" for the agency to ask people to explain discrepancies in data from other government agencies.



Minister for Government Services Stuart Roberts declined an interview request from 7.30 and referred to the department's response.