The Commonwealth Ombudsman has released a 'statement' titled Lessons in lawfulness: Own motion investigation into Services Australia’s and the Department of Social Services’ response to the question of the lawfulness of income apportionment before 7 December 2020.
Why did it take so very long, given the background to the RoboDebt Royal Commission report, and involve such a weak conclusion?
The Statement indicates
In February 2023, Services Australia and the Department of Social Services (DSS) told our Office there was an issue with how Services Australia had been apportioning income to calculate social security payment rates before 7 December 2020, when the law changed.
‘Income apportionment’ is different to ‘income averaging’ that was at the heart of Robodebt. The Administrative Appeals Tribunal (AAT) sent some debts back to Services Australia to be recalculated. This raised concerns about whether income had been lawfully calculated.
Services Australia advised it paused approximately 13,000 debt reviews while the agencies sought legal advice. Another 87,000 files which may become debts were also potentially affected by unlawful or incorrect income apportionment calculations.
Given the scale, significance and potential impact, the Ombudsman decided to conduct two investigations into income apportionment: Investigation 1 – lawfulness of the agencies’ approach to income apportionment. Investigation 2 – examining the agencies’ administration of income apportionment decisions, communication with customers, and handling of complaints, internal reviews and AAT or Federal Court appeals.
This statement relates to Investigation 1. Investigation 2 is ongoing.
Since at least 2003, Services Australia (and its precursor the Department of Human Services), was unlawfully apportioning customers’ income across two or more Centrelink instalment periods. This in turn likely affected social security payment rates and may have lead to unfair debts against customers.
Since becoming aware of the issue in October 2020, the agencies took steps to seek legal advice, but could have acted quicker to finalise advice. There is an unresolved and significant difference of opinion between some of the legal advices. The General Instructions that DSS developed to guide how decision-makers should recalculate the approximately 100,000 actual and potential debts need further development.
The agencies could have acted quicker to inform us of this issue, particularly since Services Australia knew our Office had investigated some of the affected complaints.
The same might be said for the Ombudsman's office.
The Statement continues
The agencies are still determining how much the known and potential debts are affected – that is, how much payment rates went up or down because of unlawful or inaccurate income apportionment calculations. It is unknown how many other customers may have been impacted by unlawful or inaccurate debts or underpayments.
We made four recommendations (one with two options) and one suggestion for the agencies to establish clear and lawful positions on income apportionment, and to foster cooperation with other Commonwealth agencies to resolve other outstanding issues.
DSS and Services Australia undertook to implement all four recommendations (partially accepting one and accepting the other three) and the suggestion. We will monitor their progress.
The Solicitor-General advised, in the first instance, the agencies should see if a clear legal position can be reached by the legal professionals who provided advice. The agencies agreed to pursue this.
Note that
Income apportionment is different to the Robodebt scheme or ‘income averaging.’
In the Robodebt scheme, Services Australia used an automated process to raise debts using yearly income data (income averaging). If Centrelink suspected a customer owed a debt, it sought information from that customer to disprove the existence of the debt. If the customer was unable to provide this, debts were calculated by taking a Centrelink customer’s reported income for a year, dividing it by the number of fortnights in the year, and assuming the customer earned the same amount in each fortnight. No part of social security legislation permitted Centrelink to do this. In many cases, Centrelink raised and recovered debts for which there was no probative evidence.
The Robodebt calculation methodology frequently switched the burden of proof away from Centrelink to prove a debt existed, and onto the customer to prove a debt did not exist.
Additionally, a central criticism of the Robodebt scheme was that many debts were calculated and issued with little or no human intervention.
By comparison, ‘income apportionment’ relates to a method Centrelink used to calculate some payment rates, which Services Australia and DSS have accepted is unlawful because of an incorrect application by decision-makers of section 1073B of the Social Security Act 1991 prior to 7 December 2020.
Income apportionment miscalculations may result in over- or under- payments depending on individual circumstances. The income apportionment issue we investigated does not involve averaging of yearly income and relates to the method Services Australia used to apportion employment income over a payslip period – typically a week to a month.
Finally, based on our investigation, we were satisfied that – unlike the Robodebt scheme, which was initiated and continued without legislative changes the agencies knew were required – the incorrect and unlawful use of income apportionment arose due to the agencies genuinely holding an incorrect understanding of relevant legislative provisions.
So that's ok?
