13 May 2022

Robodebt

The latest report from the Senate Community Affairs Committee inquiry into RoboDebt comments 

I really lost my trust in the government. This is you, as an individual, fighting the Commonwealth of Australia. This is your government saying something that's just not true. When they're saying to me on the phone, 'Your circumstances have changed,' my circumstances haven't changed. How do you fight that? How do you trust a system that treats you like that?

2.1 The Income Compliance Program has been described, credibly, as a ‘massive failure of public administration’.  The committee’s second interim report outlines the significant failures of the program and the human cost of compliance. 

2.2 This chapter summarises some of the most significant errors in the Income Compliance Program, changes that have been brought about through appropriate scrutiny of the Government’s actions and discusses the Government’s repeated failure to provide key information and documents to the committee and the Senate. 

The role of automation 

2.3 Much of the initial criticism of the Income Compliance Program stemmed from automated processes and the operation of online systems in the assessment of a discrepancy, as well as on the steps taken to advise a person of the assessment and the requirements to verify or update their income.4 Although there have been improvements to these online systems, concerns about the reliance on automation in administrative decision‑making have persisted. 

2.4 Submitters and witnesses noted that automated data-matching services have a legitimate role to play in income compliance programs; however, such methods should be fair, transparent and accountable.  Economic Justice Australia submitted that income data matching should ‘only ever be used as a starting point which triggers further investigation by Services Australia compliance officers’. 

2.5The experiences of a client of the Welfare Rights and Advocacy Service demonstrate the extent of automation and how Services Australia employees were unable to override automated processes:

…a client with an acquired brain injury on [the disability support pension]…was referred to us from the [Administrative Appeals Tribunal]. Debt recovery was supposed to be paused whilst the review was completed…[Services Australia] confirmed that this was noted on her record. Despite this, she kept getting calls from a debt recovery team demanding she start repaying the debt. When I queried this, I was initially told it was probably a scam call and she should ignore it. She then got two more calls from debt recovery, and we went back to Centrelink. Then they basically said, 'Oh, yes. Actually it was us. The computer is initiating these calls and they can't be overridden. The best we can do is reduce the amount that she has to repay’. 

2.6 Several submitters examined the potential implications for individuals when administrative decisions rely on automation. These submitters noted that automated technologies can improve the quality and efficiency of administrative decisions provided there are safeguards in place, such as review rights and transparency over the use of data in these decisions. 

2.7 The Australian Human Rights Commission has recommended that where artificial intelligence is used to support decision‑making, governments must ensure these decisions remain ‘lawful, transparent, explainable, [that artificial intelligence is] used responsibly, and subject to appropriate human oversight, review and intervention’. 

Use of averaged income data to assert the existence of a debt 

2.8 A central feature of the Income Compliance Program was the reliance on averaged income data to identify potential overpayments.  This method was found to be unreliable because averaged income calculations do not reflect the reality of how many income support recipients earn income over time. 

2.9 One witness told the committee how their work pattern made it impossible to accurately report their earnings to Services Australia 

I was working shift work for an out of home care for youth in out of home trauma care. I worked dayshift, afternoon shift and night shift. We had 3 different pay levels and never knew when we would be working. We could get called in at the last minute. I never knew how much I would be getting paid. I informed this to Centrelink and they told me I had to guess my earnings for the fortnight...I ended up guessing like I was told to and they hit me with a huge debt. I was so devastated. I gave them some payslips but that didn't change a thing. 

2.10 Witnesses and submitters told the committee that the Government’s use of incorrect or incomplete income information called into question the legality of debts raised under the Income Compliance Program.  These concerns were confirmed in Deanna Amato v The Commonwealth of Australia (Amato), where Justice Davies ordered by consent that calculations based solely on averaged fortnightly income data are insufficient to establish the existence of a debt. 

2.11 The decision in Amato supported a successful class action against the Commonwealth.  This was discussed in the fifth interim report.   

Interactions with Services Australia 

2.12 Deficiencies in online systems, the methods used to calculate debts, and communication processes have been consistently raised as areas where Services Australia has not fulfilled its own service commitments. These failures have had a demonstrably negative impact on people’s interactions with Services Australia in the course of their efforts to understand and resolve debts. 

2.13 When the Income Compliance Program was first introduced Services Australia’s described its service commitments as being ‘at the core of the way we develop and deliver our services’,  and were supported by a range of business improvement priorities, including to ensure: individual circumstances are taken into account; customers are able to access the information they need; decision-making timeframes and processes are clear and available to customers; products and services take into account customer feedback; and Services Australia acts in a manner that is transparent and consistent. 

2.14 From 2019–20, Services Australia’s vision became ‘to provide customer‑centred, trusted services that are respectful, simple, helpful and transparent’.  Evidence from inquiry participants indicated these service delivery standards were not met in respect of the Income Compliance Program. 

2.15 Submitters and witnesses told the committee that Centrelink’s debt notification letters were unclear and did not provide an explanation of how or why a debt had been raised. When these people contacted Centrelink to seek an explanation, staff were unable to assist them. Inquiry participants reported being told their information was not on file; the information held by Centrelink did not align with their records; or they were given information that contradicted previous communications. 

2.16 One submitter described the impact of their interactions with Services Australia as follows: …

dejected, beaten, stomped on and feeling dehumanised I just paid the full amount to get it over and done with. I was done with fighting because I knew I was dealing with Centrelink. The government agency that just doesn’t care about the people they serve.  

2.17 The committee was informed that Freedom of Information (FOI) requests were often the only way to gather information relating to debt cases, and that information released under FOI enabled advocates to identify the possible origins and test the validity of a client's alleged debt. 

The impact on current and past income support recipients 

2.18 The committee received evidence that people issued with debts under the Income Compliance Program were disproportionately from vulnerable cohorts or were more likely to become vulnerable when a debt was being collected.  The committee also received evidence that vulnerable people were forced to engage with the program without appropriate support from Services Australia, causing them to rely heavily on support from the community sector.  For example: [ 

Paul] worked at a supermarket pushing trolleys and received a modest income, which supplemented his disability support pension. His income was reported to Centrelink, and then, in the previous year, he received a debt notice of [$14 500] going back to around 2012. He did not understand the letters…The debt was raised and, as far as I'm aware, no support was provided to him in that process. 

2.19 The severe impacts for many people issued with debt notices cannot be understated. The underlying vulnerability of people issued with debts and the lack of support, combined with the difficulties interacting with Services Australia, created an environment where the notification of a debt was not simply a bureaucratic inconvenience, but an antecedent of serious harm to people’s emotional and financial wellbeing. 

2.20 Many people repaying debts issued under the Income Compliance Program experienced considerable financial hardship, pushing them further into poverty and making it more difficult for them to meet basic living expenses and exacerbating their stress and anxiety.  For some, particularly those experiencing financial difficulty and long‑term poverty, the shock of a sudden and unexpected debt, had a ruinous impact on their mental health. 

2.21 One submitter told the committee about their friend’s experience receiving several debt notices:

She had already repaid two debts [totalling approximately $300 in April and May 2017] when she received another debt call while at my house in June 2018. She broke down crying and shaking as she was told she owed [at least another $700]. She said “I can’t do this all over again”. 

2.22 The Australian Council of Social Service (ACOSS) told the committee that ‘no one should underestimate the stress and anxiety caused' when individuals have received initiation letters and debt notices: People have reported their life being ruined as a result of robodebt. People have experienced breakdown, anxiety, depression requiring medication, sleeplessness, stress causing physical illness, and fear. 

2.23 Several individuals have described thoughts of self-harm and suicidal ideation as a very real consequence of being in these circumstances.  Recognising that the issues around the causes of suicide are complex, the committee has received evidence of at least two suicides—Jarrad Madgwick, 22, and Rhys Cauzzo, 28—related to the Income Compliance Program and it is not clear how many more may also be linked to the program. 

2.24 The committee passes its deepest condolences to the families of those two young men and acknowledges that the acute and enduring impacts of this program on the mental health of many Australians remain undocumented and unacknowledged by the Government. 

Changes in Services Australia’s approach 

2.25 Improvements in Services Australia’s approach to income compliance have been supported by appropriate scrutiny of the Government’s actions through this and other inquiries. This section of the report summarises some important changes that are directly related to the issues discussed in this chapter. 

Debts will no longer be calculated solely using averaged income data 

2.26 In November 2019, the Government announced that it would no longer solely rely on averaged income data from the Australian Taxation Office. 

2.27The Government has also acknowledged that relying on averaged income data ‘to determine a debt where other information was not available or people did not engage with [Services Australia]’ was based on a ‘flawed assumption’. On 15 September 2021, the Government committed that ‘no debts will be re-raised based on annual income averaging.’ 

Move to near real-time compliance 

2.28 Services Australia has noted that data-matching activities have been undertaken retrospectively and that the agency is seeking to move towards near real-time compliance.  Changes implemented from July 2020 have enabled income support recipients to report the gross income as it appears on their payslip. 

2.29 The implementation of Single Touch Payroll (STP) is also likely to reduce discrepancies between earned and reported income, and therefore help to prevent overpayments.  STP introduced a mandatory requirement for employers to report payroll information to government. For most employees, this will occur each pay day. 

2.30 While inquiry participants were cautious about the introduction of STP,  many submitters and witnesses supported its use to help prevent overpayments and ensure that there is accurate information available to Centrelink.  Efforts to improve communication and transparency 

2.31 As noted in the second interim report, several other inquiries into the Income Compliance Program have highlighted the need for improved communications and transparency. 

2.32 For example, the Office of the Commonwealth Ombudsman’s (Ombudsman) most recent report made several recommendations to Services Australia and covered themes of communications, fairness and transparency. Services Australia has accepted, and worked with the Ombudsman to implement, many of these recommendations. 

2.33In relation to specific concerns about debt notification letters, Services Australia informed the committee that the current ‘content and the format of and the approach to the letters is based on the feedback from customers and other customer advocates’. 

2.34 Additionally, Services Australia told the committee that they are improving the explanations they provide to customers about overpayments. In particular, Services Australia noted that it provides explanations in simple English and ‘tips’ to assist with the prevention of debts in the future.   Services Australia advised that they aim to be ‘simple, helpful, respectful and transparent’ in their engagement with social security recipients. 

The deliberate withholding of information 

2.35 Throughout this inquiry, the committee has repeatedly requested crucial information from the Government, which has been refused on the basis that the release of information would harm the public interest (referred to as claims of public interest immunity or PII claims).  These claims require a clear statement of the ground on which immunity from production is asserted and the harm to the public interest that could result from disclosure of the information. 

2.36 Key information requested by the committee includes: briefings provided to Government throughout the course of the program; whether legal advice was obtained at various stages of the program, how many times the Government sought legal advice and the date of any such advice; the Government’s legal costs attributable to the program; and an Executive Minute to the Minister for Social Services, proposing a ‘new online approach to compliance’, dated 12 February 2015. 

2.37 These documents could reveal what the Government, the Department of Social Services and Services Australia knew about the legality of the Income Compliance Program and when they were alerted to the systemic failures of the program. These documents would provide the public with an understanding of the cost of government action to continue and defend the Income Compliance Program. 

2.38The Government’s rationale for withholding the relevant documents and information is that it ‘would or could’ reveal cabinet deliberations, is subject to legal professional privilege or that it could prejudice current and future court cases.  The Government’s failure to sufficiently establish PII claims was discussed and provided the basis for recommendations in the first, third, fourth and fifth interim reports of this inquiry. By adopting these recommendations, and thereby ordering that documents be produced, the Senate has signalled its rejection of the Government’s reasons for withholding this information. 

2.39 Rather than engage with public interest considerations in a genuine way, the Government has continued to offer the same public interest grounds as have been repeatedly rejected by the Senate, without genuinely describing the harm to the public interest that would be caused due to providing this information. At the same time, the scope of information being withheld on public interest grounds continues to expand. 

2.40 Odgers Australian Senate Practice provides the following commentary on resistance by government to orders for documents:

While the public interest and the rights of individuals may be harmed by the enforced disclosure of information, it may well be considered that, in a free state, the greater danger lies in the executive government acting as the judge in its own cause, and having the capacity to conceal its activities, and, potentially, misgovernment from public scrutiny. It may also be considered that a representative House of the Parliament is the best judge of the balance of public interests. 

2.41 The committee remains deeply troubled that the Government has not released critical information about the Income Compliance Program, either publicly or in camera. The committee again reiterates its rejection of the PII claims advanced by the Government and its concern that this is impeding necessary scrutiny of the Income Compliance Program. 

Calls for a Royal Commission 

2.42The second interim report referred to ‘growing pressure for the establishment of a Royal Commission’ and contained a recommendation that a broad‑based independent review with ‘powers to compel witnesses and evidence’ be established immediately. 

2.43 Royal Commissions may be established for a range of pragmatic reasons, including where there is a need ‘to investigate allegations of impropriety where the government, or an individual working in government, is involved.’  Royal Commissions have broad powers to compel the production of evidence and independently determine whether such evidence ought not be published. 

2.44 Although the settlement of the class action has seen money returned to people unlawfully issued with debts, it did not make any findings that would satisfy the need for an independent review. Important questions remain regarding how the failures of the Income Compliance Program were allowed to occur and what action is required to ensure these mistakes are not repeated. The devastating impacts of the Income Compliance Program intensify the need for absolute transparency and accountability. 

Committee view 

2.45The Income Compliance Program indiscriminately targeted some of Australia’s most vulnerable people. It caused significant and widespread harm to their psychological and financial wellbeing. The committee reiterates its concern that many people may not receive any form of compensation (monetary or otherwise), for the severe hardships they endured because of the program. 

2.46The Income Compliance Program relied extensively on online systems and data-driven processes. These methods can play an important role in supporting the efficient delivery of government services. However, use of technology by Government must be supported by appropriate safeguards, especially to protect vulnerable people. Rights to an explanation of administrative decisions and to have those decisions reviewed should never be displaced by the use of technology or online systems. 

2.47At a more fundamental level, the Government must ensure there is rigour in the methods used to determine the existence of debts and always ensure that people are treated fairly and with care and consideration for their circumstances. This did not occur for those issued with debts under the Income Compliance Program. Those who access payments through Services Australia are among Australia’s most vulnerable communities. Those who were sent illegitimate debts were often unable to challenge the debts due to the opacity of the system and their own difficult circumstances. 

2.48 A harmful program was allowed to continue despite warnings about its shortcomings that began within months of the decision in July 2016 to switch to automated, online systems. Claims for debts that had no basis in law continued for well over three years before a case in the Federal Court of Australia left the Government with little option but to ‘pause’ debt recovery. It took another six months for the Government to commit to repay the money it had already collected and cancel all debts based on income averaging. Recovery of supposed debts should have stopped as soon as the scale of the harm caused by the Income Compliance Program became apparent. 

2.49Despite numerous reports and inquiries, significant questions remain. This is due to a Government that continues to withhold critical information about the Income Compliance Program. This resistance takes place in the context of major public policy failures that have corroded public trust in both the Executive and the public service and may cause many to question what these documents contain. 

2.50 The committee met with entrenched resistance and opacity to its request for information from Government Ministers and departments, severely hindering its ability to produce this report for the Senate. The committee was met with a dynamic and changing barricade of Parliamentary and departmental tactics to hide the faulty or non-existent legal advice underpinning the Income Compliance Program. The Government made frequent and often overlapping claims of public interest immunity, on the basis of legal professional privilege and disclosure of cabinet deliberations and, later, ‘unreasonable diversion of resources’. These claims created a mosaic of obfuscation that leaves many significant and necessary questions unanswered. 

2.51 In the absence of immediate production of the information being withheld, the committee considers that a Royal Commission is required to completely understand how the failures of the Income Compliance Program came to pass and why they were allowed to continue for so long despite the dire impacts on people issued with these debts. 

2.52 These failures cannot be ignored or left in the past. The Australian public, and especially the people harmed by this program, deserve to know what advice was provided to Government and how this advice informed decision‑making.