Robodebt: total value of unlawful debts issued under Centrelink scheme to exceed $1bn.

Extract from The Guardian

Centrelink debt recovery

Exclusive: three-quarters of all money banked from the welfare program will likely go through the refund process or be wiped

Luke Henriques-Gomes

@lukehgomes

Wed 10 Jun 2020 16.23 AEST First published on Wed 10 Jun 2020 11.17 AEST

While an estimated $2.1bn has been raised through Centrelink’s robodebt welfare scheme, the total value of unlawful debts the government is expected to wipe or refund will be close to $1.5bn. Photograph: James Ross/AAP

The true value of all welfare debts unlawfully issued through the federal government’s robodebt scheme and soon to be wiped is expected to easily exceed $1bn, the Guardian has learned.
In a humiliating backdown, the government last month promised to repay $720m to 373,000 past and present welfare recipients over 470,000 unlawful demands for money calculated using faulty “income averaged” annual pay data as part of Centrelink’s income compliance program.
But as new polling showed significant support for a royal commission into the debacle, it can also be revealed internal estimates have shown the total value of those 470,000 unlawful debts will be close to $1.5bn, according to a source familiar with the refunds process.
Since 2015, a total of $2.1bn is estimated to have been raised through the income compliance – or robodebt – program, including about 200,000 debts the government still considers legal and which it is not proposing to refund.

The total value of the debts raised is much larger than the refunds being issued because much of the money has not been paid back, in many cases because people have sought payment plans, including through forced deductions from their Centrelink benefits.
Overall, it means about three-quarters of all money banked from the robodebt program will likely need to be either repaid or wiped.
It is also understood an estimate of the service delivery costs of processing the hundreds of thousands of refunds – which is expected to take about three hours for a complex debt – was in excess of $200m.
A spokesperson for Stuart Robert, the government services minister, told the Guardian: “It is inaccurate to suggest the process will cost $200m.
“The work involved to administer the process will be undertaken by Services Australia using existing resources.”
The spokesperson did not respond to questions about the overall value of unlawful debts raised.
In parliament on Wednesday, the prime minister, Scott Morrison, again declined to apologise to robodebt victims, citing the class action brought by Gordon Legal, despite the firm’s lawyers pledging not to use any apology in court.
The government also declined to say when it first learned the scheme was unlawful.
Seeking to deflecting the blame, Robert told parliament he had asked his department to conduct a “random sample” of 500 debts issued in 2009 and 2011 under the previous Labor government.
He claimed – without providing details of how the sample was conducted – that 16% of debts raised in 2009 and 24% of those raised in 2011 were done so using “income averaging”.
However, his spokesman would not directly answer questions posed by the Guardian about whether the government also believed these debts were unlawful and, if so, why they were not also being refunded.
The government’s own advice – revealed by Guardian Australia this month – has only ever claimed the income-averaging practice was as a “last resort” until 2015, when the Coalition proactively used it to raise 20,000 debts a week, compared to 20,000 a year.
Last year, Services Australia told a Senate committee the total cost of delivering the program was $606m between 2015-2019.
It suggests when the process is over, the government will have spent hundreds of millions of dollars to issue debts and then refund them as part of program it has now been told privately is “not viable”.
That does not include any legal fees that may arise from the ongoing class action, which is demanding interest on refunds and damages. The firm has said it believes interest and damages would be worth hundreds of millions of dollars. Guardian Australia understands the interest on refunds are estimated about $90m.
Guardian Australia has revealed the government is confident it can defend the class action’s negligence claim, although it expects it will need to pay interest on debts as part of Gordon Legal’s “unjust enrichment” claim.
The government also paid millions in contracts to external debt collection agencies to claw back Centrelink overpayments – including as part of the robodebt program – although it has never revealed how much it has forked out, claiming the figures are commercial-in-confidence.
The scandal-ridden robodebt scheme saw hundreds of thousands of people hit with Centrelink debt letters – sometimes for sums in excess of $10,000 – until a successful federal court challenge brought by Victoria Legal Aid in November.
The government has proposed kicking off robodebt refunds from July and has said it hopes the majority of the money will be repaid by November.

But it has not ruled out legislating to allow a return to the scheme and had taken legal advice on the proposal late last year.
It comes as new polling conducted by Essential Media for Guardian Australia shows overwhelming support for a royal commission into the robodebt fiasco.
Asked if there should be a royal commission, 53% of respondents agreed, compared to 23% who disagreed, and 22% who neither agreed nor disagreed.
Even among Coalition voters, 45% of respondents supported the call for a royal commission, which has been floated by the Greens’ senator Rachel Siewert as well as some experts and advocates.
Labor’s Bill Shorten, who helped launched the class action, has also said there should be an inquiry of some kind, pointing to the turmoil the program caused for victims.
The families of some people who have taken their own lives since the program was established have claimed receiving a robodebt letter was a factor in their loved ones’ suicides.
The poll found an even larger majority – 74% – said the government should apologise, while 66% said the victims should receive interest and damages on top of their refunds.
Essential’s survey of 1,073 respondents had a margin of error of plus or minus 3%.

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