Flat White

Robo-debt: how bureaucratic bunglers have let rorters off the hook

26 September 2019

12:36 PM

26 September 2019

12:36 PM

The federal government’s highly controversial robo-debt program has extorted thousands of dollars from hard-working Australians and abused bureaucratic power, hurting some of the most vulnerable groups in our society and discrediting attempts to crack down on welfare fraud.

Implemented in 2016, the poorly designed robo-debt program has misled taxpayers, forcing them to pay money they never owed – all while unjustly enriching our government. It has been an unparalleled own goal of welfare reform. Now, the legality of this bureaucratic disaster will be tested through a massive class action that will hopefully suspend the system and restore our rule of law.

The Commonwealth launched the robo-debt scheme to detect overpayments to welfare recipients. The system uses information retained by government agencies including the Australian Taxation Office and examines whether it corresponds to the income reported by a person to Centrelink.

The automated system uses an algorithm intended to streamline previous time-wasting, costly and inefficient system where ATO requested personal disclosures and undertook a manual review of the individuals Centrelink was most likely overpaid.

There was nothing wrong with the intent. Indeed, government should require welfare recipients to clarify discrepancies in their reported income because the money, ultimately, belongs to taxpayers.

Yet, after implementing a poorly designed automated system that has wrongly taking at least $300 million from individuals, the government has some serious explaining to do. Approximately one in five people who receive debt recovery letters under robo-debt have never owed anything in the first place. The ATO has then slapped those innocent people with a further 10 per cent penalty for absolutely no reason.


Instead of using the amount that a person actually earned during a particular fortnight, the robo-debt scheme formula has incorrectly averaged a person’s income across a series of fortnights. The buck falls with bureaucracy. The government failed to consider the Administrative Review Council’s guidelines on machine learning and hastily implemented a faulty system, crushing people in its gears.

The ATO failed to offer adequate procedures to check that those people being issued a debt notice actually demanded one. Many individuals requesting a review of the debt claim have complained Centrelink can take a farcical 12 months to have it reviewed. This had severely impacted financially vulnerable groups.

Centrelink is forcing people to jump through hoops just to make an appeal. Centrelink clients have the onus to prove they do not owe a debt when it should be up to Centrelink to demonstrate that a debt exists in the first place. They are considered guilty until proven innocent. Applicants are required to lodge an appeal online despite the website being frequently offline or otherwise to reach out to a ‘subject matter specialist’ despite frequent struggles to get through to a representative. In addition, many people do not know how to request the right type of appeal and many are unable to locate or obtain the relevant payslips to prove they are faultless because it dates back to over seven years ago.

The few successful in getting their money back were compelled to seek legal redress, despite their obvious disadvantage in affording counsel. Deanna Amato, represented by Victoria Legal Aid, had $1,700 returned to her after legal action was taken to recalculate her debt – which only amounted to under two dollars.

The robo-debt scandal goes to the heart of the rule of law, transparency, and the democratic values of Australia. The fact that up until this class action, our administrative and judicial system failed to hold the robo-debt scheme to account is troubling. Unfortunately, where the Administrative Appeals Tribunal (AAT) has overturned rulings on Centrelink, this has remained hidden from the public and the costliness to bring the matter to Court has forced individuals to undergo less formal and consequently less transparent ways like alternative dispute resolution to seek redress.

Our accountability agencies including the Ombudsman and Audit Office have failed to test the legal foundations of the schemes publicly devaluing the significance of the rule of law.

Now, the courts are set determine the lawfulness of the robo-debt scheme by December.

One can only hope this nightmare of a situation is resolved once and for all – but can we expected a department secretary, let alone a minister – to take the ultimate responsibility for this disaster and go if the judgment goes against the government and its pen-pushers.

Their incompetence has made policing welfare fraud much harder, but in another failure of accountability, resignations are unlikely.

Anjali Nadaradjane is a Research Associate with the Australian Taxpayers’ Alliance.

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