‘Robo debt’ recovery system charged 97,300 welfare recipients the fee in the last six months of 2016 alone

This article is more than 3 years old

This article is more than 3 years old

Centrelink’s indiscriminate use of a 10% recovery fee on welfare debts could be unlawful, welfare rights groups believe.



The “robo debt” system slugged almost 97,300 Australians with a 10% recovery fee in the last six months of 2016. The fee has been applied to two of every three debts raised under the robo debt system.

The 10% penalty has traditionally been used to punish those who fail to give accurate income information to Centrelink, where they either have no “reasonable excuse” or deliberately withheld details.

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Under the old system, Centrelink officers would contact the debtor and give them a chance to explain. The officers would then assess whether it was reasonable for the person not to have provided Centrelink with the information.



But the new system, in many cases, is simply imposing the penalty automatically.

The National Social Security Rights Network’s executive officer, Matthew Butt, believes that is unlawful. He has called for the use of the penalty to be stopped.



“The minister says that the system is about ensuring people get what they are entitled to, no more, no less,” Butt said. “The penalty should be removed [including retrospectively].”

The Department of Human Services has rejected the allegation, saying it is imposing the fee in accordance with the social security law.

“The social security law provides for an additional 10% penalty to be applied to an earnings related debt where a person has failed or refused to provide information about their earnings related income,” the department spokesman Hank Jongen said.

“The legislation provides that the 10% penalty is to be applied to a relevant debt unless the decision maker is satisfied that the person had a reasonable excuse for failing or refusing to the provide the information,” Jongen said.

The government’s own guidelines to social security law state that discretion must be used to determine whether an individual has a “reasonable excuse” for failing to provide Centrelink with accurate information. That means it must be decided on a case by case basis and according to individual circumstances.



The guidelines state that decision-makers must take into account a person’s age, health, level of education, literacy and other personal factors.

“When determining if a person has a reasonable excuse for failing to declare income, the person’s circumstances must be considered,” the guidelines say.

The automated system does not do this, according to Butt.

The system does ask whether an individual’s personal circumstances prevented them from reporting accurately.

Butt says this does not go far enough. He says the system still effectively automates a decision that should be made using individual discretion.



“There appears to be a question in the new system intended to give people some opportunity to explain,” Butt said. “But it is voluntary and some of our clients did not answer it.

“But, even with this question, we still have serious concerns that the use of a computer system to apply this penalty is in breach of basic principles of administrative law.”

The 10% fee is being imposed automatically when a welfare recipient does not receive or respond to Centrelink’s correspondence about their debt.



It can also be imposed when a person logs on to Centrelink’s online system and simply confirms that the information from the Australian taxation office is accurate.

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The now defunct Administrative Review Council found in 2004 that automating discretionary decisions would be in breach of administrative law. It found that “expert systems should not automate the exercise of discretion”.

“It is the council’s view that the automation of discretion is not in accordance with the administrative law values of lawfulness and fairness because it could fetter the decision maker in the exercise of their discretionary power,” the council found.

Butt said that view applied directly to the robo debt system.

“We hold the same view and think that it is likely to breach this rule against fettering to continue to apply the 10% penalty with the [online compliance intervention] system,” he said.



The department said the penalty could be removed later if welfare recipients could prove they had a reasonable excuse.

“We strongly encourage anyone who is contacted by the department about a debt to respond and keep us updated. When we are informed about changes or difficulties they are experiencing, we can help tailor a solution for their situation,” Jongen said.



“While we’re required to recover overpayments, we can work with people to set up repayment plans appropriate to their circumstances and in some cases defer debt recovery.”

The system does ask welfare recipients whether there were any personal circumstances that stopped them from providing accurate information to Centrelink in the past. It also gives them the chance to ask for a reassessment, lodge an appeal, or make a complaint.



The guidelines also say that the fee can be imposed if individuals fail to respond to Centrelink within 21 days.



Jongen said the department’s experience was that some welfare recipients did not engage with it until their payments were suspended or they received a debt notice.

He said the department had made refinements to the system to ensure welfare recipients received Centrelink’s initial correspondence and engaged.