The Federal Court of Australia has found that Centrelink’s debt recovery system is unlawful, in a decision that could pave the way for more Australians to take legal action.
Deanna Amato is just one of robodebt’s victims, but her case is typical of many who have found themselves on the receiving end of a debt notice.
The robodebt system decreed that she owed a debt of $2900 to the Department of Human Services (which runs Centrelink), based on the period between 2011-12 when she was receiving Austudy.
The overpayment notice was a result of robodebt’s system of ‘debt-averaging’, whereby the software calculates a person’s average fortnightly income based on their annual tax return figure.
The problem, however, is that the software does not make allowances for those who work part-time or on a casual basis, or people who have seasonal jobs, or claim welfare payments for part of the tax year; resulting in thousands being issued with debt notices in error, and vigorously pursued, despite there not being a debt at all.
Many have also received notices with inflated debt figures based on incorrect calculations or misinformation within the system. Others, receiving payments such as Youth Allowance and Newstart, have been required to verify their income dating back as far as 2010, an arduous and sometimes almost impossible task.
Many simply paid what was asked of them, while others who could not afford to pay were driven to depression or even the brink of suicide.
Ms Amato versus the federal government
Victoria Legal Aid challenged the federal government on behalf of Deanna Amato, in what is believed to be the first legal case of its kind.
Ultimately, Justice Jennifer Davies found that the court “could not have been satisfied that a debt was owed in the amount of the alleged debt”.
Her Honour also remarked, “the demand for payment of an alleged debt… was not validly made”, finding that the notice garnishing the plaintiff’s tax return was “not a lawfully issued notice”.
The court ordered the federal government to reimburse Ms Amato interest of $92.06, and pay her legal fees. The Department had already waived its debt of $1709.87 prior to the court ruling.
Robodebt’s official name is Online Compliance Intervention. It is an automated debt recovery system that Turnbull Government introduced into the Department of Human Services in 2016. It has been a source of controversy ever since, not just for the way debts are calculated, but also for the aggressive tactics being used to pursue those debts.
Thousands of Australians have suffered distress and trauma as a result.
Just two months ago the Australian Competition and Consumer Commission (ACCC) announced it’s intention to take legal action against Panthera, the parent company of ARL Group, one of the agencies contracted to the federal government to pursue welfare recipients over robodebts and other overpayments for alleged harassment, coercion and unconscionable conduct.
Is this the end for robodebt?
At this point, the Federal Government has no plans to scrap robodebt, but in recent weeks the Minister for Human Services, Stuart Robert, has announced the Department would no longer raise debts based solely on debt-averaging, and that people who have received a robodebt notice based on debt-averaging will have their debts reviewed. He also promised that all future debt notices would cease while a review is underway.
This is cold comfort for those people who have already paid debts in good faith, or suffered as a result of robodebt. According to recently to reported data, more than 2000 people died after receiving a robodebt notice between July 2016 to October 2018.
While no cause for death has been recorded, almost a third, (663 people) were classified as “vulnerable”, which means they had complex needs like mental illness, drug use or were victims of domestic violence.
As previously reported, it’s difficult not to believe there may be a link between these deaths and alleged debts owed to Centrelink, particularly considering that in January 2017, the department itself began tweeting the contact number for Lifeline, while refusing to admit at the time that the recovery system, which was only 6 months old could be defective.
The Department of Human Services says a million letters have been sent out to 700,000 people since the existing robodebt system started in 2016. It also estimates that as many as 20 percent of these notices result in no debt what so ever.
A class action legal challenge against the federal government over robodebt, which is reported to have 4,000 plaintiffs and is being championed by the Labor Party, is yet to have its day in court.
Lawyers will argue that the collection of money based solely on a computer algorithm is unlawful. They also allege that up to 160,000 errors, amounting to millions of dollars, could be blamed on robodebt.