Government senators came armed with arguments to defend the welfare debt recovery program – and attack those who want to see it dismantled

Robodebt inquiry: how the Coalition tried to defend the indefensible

If the public critics of the Coalition’s welfare debt recovery scheme thought they were in for an easy ride, they were sorely mistaken.

At Senate hearings over the past two weeks, government senators have come armed with arguments to defend the program – known to most as robodebt – and to attack those who wish to see it dismantled or reformed.

Leading the charge, the Liberal senator Hollie Hughes asked two legal academics if it was their usual practice to “use media slogans” in their submissions. She called that “disrespectful”.

In the Western Australian town of Mandurah, community legal clinics seemed to be blindsided when Hughes accused them of creating anxiety by using the “robodebt” moniker. It was a “misnomer”, she said, because the system now included far more human oversight.

[Robodebt] requires people to disprove alleged debts on the basis of very limited information. Jacqui Phillips, Acoss

“I’m just wondering if you understand, or if you understand now, how the income compliance system works under the [the new system] and if you’re aware of how those debts are generated,” Hughes told the legal clinics.

Critics of the scheme – from social services groups, academics, Victoria Legal Aid, which is challenging the scheme in the courts, Labor and the Greens – say they know exactly how it works.

“Despite some improvements to the implementation of the program, two fundamental design flaws remain inherent,” the Australian Council of Social Service’s Jacqui Phillips told a hearing in Canberra.

“One is the use of the averaging of ATO-reported annual income over the period someone has received income support, which is leading to incorrect calculations of overpayments.

“The other is the reversal of the onus of proof, which requires people to disprove alleged debts on the basis of very limited information.”

‘It fails maths’

Terry Carney has a novel way of explaining the problem he sees with the scheme, which the government hopes will reap $2.1bn over the next three years.

He likens it to watching Don Bradman’s last innings and using it as a basis to demand he prove his batting average. “Bradman got 99.94, not a duck,” Carney says, noting the Don’s ill-fated final time at the crease.

Carney is a former member of the administrative appeals tribunal, which has the legal power to overturn Centrelink decisions. He has 35 years’ experience dealing with social security issues.

The system, according to Carney, who was among the critics who appeared before Senate inquiry hearings into robodebt over the past two weeks, “fails maths”.

“What comes from the ATO is an average,” he told the inquiry. “What is required … is an exact calculation.”

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Officials from the Department of Human Services told the inquiry that initial debt review letters are generated when a compliance staff member uses what they colloquially described a debt “predictor”.

The process, as described by critics, uses a person’s annual income from tax office data and compares it to what a welfare recipient reported to Centrelink fortnightly over the same 12-month period, dating back as many as seven years.

“You’re going to get a letter if the discrepancy is significant,” the Department of Human Services’ Jason McNamara told the inquiry this week. “More than $1,000 … we think there’s a better than 95% chance that you have a debt. Then we will start a review process.”

For an exact calculation, Centrelink needs to know exactly how much a person was paid over the fortnightly periods they received welfare.

Before the scheme was ramped up by the Coalition in 2015, Centrelink would gather this information itself. It was a slow, manual process that involved contacting former employers and banks to ask for a person’s payslips and financial statements.

Facebook Twitter Pinterest Liberal senator Hollie Hughes, pictured, asked two legal academics if it was their usual practice to ‘use media slogans’ in their submissions. Photograph: Mike Bowers/The Guardian

It would send about 20,000 letters to people each year. Now, about 10,000 are sent each week. Rather than obtain the pay information on behalf of the welfare recipient, Centrelink now demands they get it.

If they don’t, the department will use the average and the person will likely get a debt. If they can’t get the information, the department says it will help people to do so.

But at a hearing in Canberra, officials from the Department of Human Services confirmed that, since February 2017, Centrelink has contacted only 1,000 businesses to obtain payslips on behalf of the welfare recipients facing a debt review.

Given many people would have multiple employers in their work history, it means the number of people Centrelink has assisted would be even lower. In the life of the scheme, more than 900,000 debts have been issued.

“There would be hundreds of thousands of people who would have had difficulty contacting their employers,” the Labor senator Deborah O’Neill told the inquiry.

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A department official snapped back: “There is no evidence of that. We help the people who contact us and tell us they are in difficulty.”

Buoyed by evidence by the Australian Privacy Foundation, Hughes argued that it would “trample” on a welfare recipients’ individual rights if Centrelink obtained their pay or bank information without their knowledge.

“If they need to consent, Senator, let them consent,” the legal academic and robodebt critic Darren O’Donovan told the inquiry.

Carney argued that, if they did not respond, Centrelink should gather the evidence using special legal powers it has to compel companies and banks. That would always be better than calculating a debt without all the evidence.

Ken O’Shea is a licensed rigger who received a robodebt for $7,000. “The nature of the work means short bursts of intense activity of up to 100 hours a week, followed by nothing,” he told the inquiry.

O’Shea asked Centrelink for help gathering the information. “Historical bank statements are expensive – $4 per page over 12 months,” he said. “This was money I didn’t have. I asked Centrelink for a billing address so they could pay but they refused to do so. Almost two years ago, they said they would contact my employer for payslips. They have not done this.

Historical bank statements are expensive – $4 per page over 12 months. Ken O’Shea

“It seems very unfair that they expect me to incur costs and do their work for free because they have an idea in their head about my income.”

Amid all that, there is the question of who was affected by this scheme. It was one thing to say that people should contact Centrelink – but those being asked to do are among the most vulnerable in the community.

The department’s own data showed that of those contacted by registered mail or read receipted email, 30% did not engage in the process, and another 30% did not complete it.

“These debts are shaped by the resources, the misunderstanding of ordinary people, rather than the best possible, objective evidence,” says O’Donovan, who was lashed by Hughes for using the robodebt term. He stands by it.

He told the committee: “Every Australian has a stake in this policy … Life-changing government decisions are being distorted by our status, our resources, our fear, our vulnerability.”

With or without the reforms, Carney argued the current system needs to be “stopped and fixed”.

Carney noted the department never appeals robodebt cases to the second division of the tribunal, which publishes its decisions. “I don’t believe it has any confidence at all in the legal foundations for its position,” he says.