The royal commission ended on Friday, having heard shocking testimony from officials and politicians, and heart-rending accounts of the impact of the botched scheme.
Sat 11 Mar 2023 01.00 AEDT
Last modified on Sat 11 Mar 2023 09.03 AEDTRobert was announcing what he called a “refinement” to Centrelink’s income compliance program – known to most people by then as robodebt.
Robert was peppered with questions from the media.
How many people did Robert mean when he said the program affected only a “small cohort”? He wouldn’t say.
Wasn’t this a massive change to the controversial program? It was a “refinement”.
How would the “refinement” change the system? There was no change to the “onus of proof”.
Would he apologise? “We make no apologies.”
He repeated: “This is a small cohort of Australians.”
The “small cohort” turned out to be 443,000 individuals, according to the court judgment in a successful class action that forced the government to pay out $1.8bn in refunds and wiped debt.
In August, Labor called a royal commission into the scheme, describing the robodebt scandal as a “human tragedy”.
Over five months, victims have told of financial suffering, mental health effects, and the frustration, anger and hopelessness of coming up against an opaque government system designed for budget savings, not fairness. Several said they would never access social security again.
Two mothers, Jennifer Miller and Kathleen Madgwick, told how their young sons had taken their own lives while dealing with the robodebt system, including one who was hounded over an unlawful debt of $17,000.
Frontline Centrelink workers and some officials have described how their attempts to raise concerns – legal, ethical or practical – were dismissed, ignored or obstructed.
Meanwhile, public servants giving evidence to the commission have faced claims of dishonesty, “reconstructing” events and deliberately withholding relevant documents.
The commissioner, the former Queensland supreme court chief justice Catherine Holmes SC, will have to consider whether senior public servants from two departments knowingly implemented an unlawful program targeting hundreds of thousands of people, including some of the most vulnerable in the country – and if so, whether they did so by collusion or because one department deceived another.
She will need to evaluate the role – if any – of implied pressure by ministers, and the possibility of a public service cover-up to protect the reputations of those initially involved.
Holmes will also consider whether, as lawyers assisting the commission have suggested, public servants were “recklessly indifferent” given the countless legal warnings they received. Reckless indifference is a key feature of the civil tort of misfeasance in public office.
What follows is the inside story of the robodebt scandal, based on evidence given to the royal commission over 46 days of public hearings and many of the thousands of exhibits tendered to the inquiry.
The ‘tough welfare cop’
In late 2014 Scott Morrison had just been moved from immigration to social services minister, after prosecuting the Coalition’s Operation Sovereign Borders agenda. As Morrison would later tell the media – and much later the royal commission – he intended to bring the same enforcement zeal to his new portfolio.
Morrison believed Australians wanted a “tough welfare cop” on the beat. He was happy to be that person.
In their first meeting, Morrison asked Kathryn Campbell, the secretary of the Department of Human Services (DHS), for a brief outline of welfare compliance arrangements, and what might be done to strengthen them. It so happened that officials in Campbell’s department were already canvassing options to do just that.
Months earlier, on 14 October, officials from human services and the Department of Social Services (DSS) had met to discuss possible measures for the next budget.
Scott Britton, then a national manager of compliance risk at DHS, told the royal commission there was always pressure to come up with ideas for savings.
The compliance system compared tax office PAYG data – which were annual figures – to the fortnightly income that social security recipients reported to Centrelink. If there was a significant difference between the fortnightly figures and an averaged version of the annual ATO data, a compliance officer would investigate. As Colleen Taylor, a frontline worker who bravely tried to convince her bosses to stop the scheme told the commission, they would get pay records from the person’s employer to check if there was a debt.
Britton’s team, led by a more junior official, Jason Ryman, believed there were likely to be discrepancies that were never investigated, and as a result millions of dollars owed to the taxpayer that were not recouped.
The plan they devised was to remove the human investigator and automatically generate a welfare debt if the averaged PAYG data did not match what the welfare recipient declared each fortnight and the recipient could not explain the difference. It promised to save the budget about $1bn, but fundamentally changed how the system worked. Rather than government proving debts were owed, welfare recipients would need to prove they were not.
Due to the division of responsibilities between the two departments, DHS needed DSS approval to bring forward the plan.
The social policy-minded folks at DSS were scathing. Policy advisers found it “unethical”, and on 18 December 2014 the DSS lawyers Simon Jordan and Anne Pulford said it would be unlawful.
That legal advice was the first bombshell of the royal commission – showing for the first time that the robodebt scheme had been implemented not because internal lawyers got a legal question wrong, but because their advice had been flagrantly ignored.
Ordinarily Jordan and Pulford’s advice would have meant the robodebt proposal was dead on arrival.
But the environment in early 2015 was far from ordinary. Officials told the royal commission of a culture of fear and pressure, chiefly led, according to witnesses, by the DHS deputy secretary, Malisa Golightly, who had policy responsibility for the scheme. Golightly died in 2021. In one incident, Golightly was accused of throwing her phone at her desk, breaking it. In another, she is said to have yelled abuse for several minutes.
And then there was the political context. Morrison had declared his desire to be the “welfare cop” in a series of interviews, starting with a Sky News interview on 21 January 2015. In evidence to the commission Campbell acknowledged that interview was a signal about where Morrison wanted to take the portfolio.
The senior counsel assisting the commission, Justin Greggery KC, suggested Morrison’s signal to the department may have been so strong as to revive what might otherwise have been a dead budget proposal.
A series of crucial events between late February and 4 March paved the way for the unlawful scheme to be approved by cabinet.
On 27 February, Ryman made a key change. He reworded the policy proposal, removing references to income averaging and inserting a new sentence: “The new approach will not change how income is assessed or overpayments calculated.”
Ryman said the change was made at the direction of either Britton, or Britton’s boss, DHS general manager of business integrity, Mark Withnell. He told the commission he would not have made it without their direction. Asked if he accepted it “looks very much as if [income averaging] has been removed to deceive people into thinking it’s not happening”, Ryman said: “I see your point, commissioner.”
Britton and Withnell said they had no recollection of why the change was made.
The
reason for the change appears to hinge on a conversation between
Golightly and the then deputy secretary of the DSS, Serena Wilson.
Wilson told the commission Golightly assured her the new program would not use the income-averaging method DSS’s lawyers had warned against. Wilson claimed that Golightly also suggested Morrison wished to pursue a number of options, but “in particular” what became the robodebt proposal.
Campbell told the commission she was not informed by Golightly of the agreed change, and she had not noticed it buried in the lengthy budget submissions and costing documents. Campbell accepted that was a “significant oversight”.
On 17 June 2015, Morrison told parliament a new “welfare cop on the beat” would increase the “number of fraud investigations and compliance interventions by over 900,000 over four years”, saving $1.8bn.
“We will be stopping the rorts,” he said.
Wilson and other officials at DSS told the commission they were completely unaware “income averaging” was being used to raise debts in the robodebt program for the first year and a half of its operation.
This question is key to whether DSS officials were “deceived” by their counterparts at DHS, or whether they engaged in what the commissioner, Holmes, described as “collusion” during the hearings.
DSS officials were confronted with evidence at the royal commission that pointed more to the latter, including a forum in March 2016 where Britton outlined the way the robodebt scheme worked. Wilson, who gave a speech at the event, could only say she was unsure whether she was there for Britton’s presentation.
The first time Wilson appeared at the commission, in December, she essentially broke down under questioning, dramatically conceding she knew the scheme was using averaging and she had breached the public service code of conduct because she “lacked courage”.
The second time, despite being accused by Greggery of reconstructing events and dishonesty, Wilson maintained her initial defence: she had been misled by Golightly.
‘Chilling effect’ of campaign
Until late 2016, the robodebt scheme had been in a pilot phase. Its full-scale launch was flagged in the 2016 election campaign (as further budget savings) and then marked with a “drop” to the Australian newspaper on 5 December, which reported how the new so-called “welfare debt squad” would generate 20,000 “compliance interventions” a week, up from 20,000 a year, saving $4bn to the budget.
Only two days later, Guardian Australia reported concerns raised by the independent MP Andrew Wilkie, who said constituents were being hit with year-old debts and given three weeks to provide documents to prove they had not been overpaid.
Prompted by the activism of the digital rights campaigner Asher Wolf, a group of concerned individuals led by Lyndsey Jackson formed NotMyDebt, a grassroots advocacy service that would be pivotal in pushing back against the scheme, sharing victims’ stories, and providing one-on-one practical assistance for years to come.
Legal groups started to raise concerns, including Victoria Legal Aid in
an ABC news story. Guardian Australia reported on 9 January 2017 that robodebt victims might be able to sue, and on 21 January that the law firm Slater and Gordon was investigating the scheme’s legality.
With Campbell and the chief counsel, Annette Musolino, on leave over the holidays, it was left to more junior officials to respond. Officials went so far as to write draft instructions to the Australian government solicitor on the scheme’s legality.
Barry Jackson, a deputy secretary who was acting in Campbell’s role, made the legal request to Golightly.
He said he informed Campbell of this when she returned from leave, a claim she denies. She and Musolino both told the commission they were never told about the moves to seek legal advice from the AGS.
But the advice from AGS was never sought and no witnesses could say why. Jackson said only Campbell had the authority to withdraw the request.
The human services minister, Alan Tudge, returned from a holiday in the UK to find the program in crisis, according to officials. Tudge told the commission he didn’t turn his mind to legality, as in his view the key issue was that people caught up in the program were not getting initial notification letters asking them to provide payslips.
As a result, often the first time they were contacted was through a debt letter, sometimes from a private debt collector. Tudge says he had a “laser-like” focus on this.
But his office also embarked on a media campaign led by his press adviser, Rachelle Miller, to push back against criticism of the scheme and “correcting the record” in cases where victims spoke out in the media. Miller accepted the corrections had a “chilling effect”. Tudge denied it was the intention.
A nurse takes on the commonwealth
From January 2017 the former senior assistant commonwealth ombudsman Louise Macleod led an inquiry into the scheme. As Macleod told the royal commission, it was her first and last investigation.
She broke down in tears on the stand when shown documents over the course of several hours revealing that vital internal emails questioning the legality of the scheme had been withheld from her investigation. The one that finally got to her showed a huge proportion of debts were being raised using income averaging.
“Seventy-six per cent?” Macleod stammered, before she began to cry.
After a break, Holmes asked Macleod to explain her emotional reaction.
“I suppose I feel like a failure,” Macleod said.
Holmes replied: “Why should you feel like a failure when you clearly raised a lot of important issues that just weren’t taken up?”
Macleod said: “Because I couldn’t convince others.”
The ombudsman’s “own motion investigation” should have sparked a reckoning for both departments, because the only legal advice they possessed at this point was the opinion from DSS’s internal lawyers that said the scheme was unlawful.
But according to the DSS lawyer Anne Pulford, her superiors simply came back to her for a second bite of the cherry.
Pulford said she was approached by a DSS branch manager, Emma-Kate McGuirk, on 16 January 2017, and informed there was a “business need” for advice to justify the use of “income averaging” through the robodebt scheme as a “last resort”. McGuirk told the commission she did not recall using that language.
Appearing for a second time at the commission, McGuirk was shown emails that revealed she had given program approval to the robodebt scheme in May 2015 in an earlier role at DHS. That is, she is alleged to have sought legal advice to justify the scheme she had approved two years earlier.
McGuirk, who was not overly senior in either department, said she could not recall those 2015 emails. She said she had not located them while preparing for the commission and denied intentionally withholding them.
Pulford’s new advice, sent to McGuirk a week later on 24 January 2017, gave a tentative, heavily caveated legal backing to the robodebt scheme.
DSS officials sent the new advice to the ombudsman. Later, when the ombudsman learned of Pulford’s initial opinion from 2014, DSS responded by sending them both, and explaining that the 2014 advice had been based on an old proposal. After DHS had informed DSS how robodebt was really going to work during the 2015 budget process, DSS’s concerns were supposedly allayed.
Holmes told the commission: “You could drive a convoy through that rationalisation.”
The ombudsman’s April 2017 report listed some process issues with the scheme but was muted on the issue of income averaging and completely silent on legality. Rather than call out the scheme’s questionable legal basis, as Macleod had pushed for internally, it allowed the Coalition to use the ombudsman as a shield, a posture it maintained until the very end. For the scheme’s critics, the report was a hammer blow.
About three months later, on 20 July 2017, Macleod was in the room when the respected barrister Peter Hanks QC gave a law conference speech arguing the scheme was unlawful.
DHS lawyers were also there, but no action was taken to check whether Hanks was right.
The department took the same course throughout 2018. It dismissed an academic paper first reported by Guardian Australia by Terry Carney, a former member of the administrative appeals tribunal, who said the scheme was unlawful. Carney handed down five decisions finding the robodebt scheme was unlawful throughout 2017. For his troubles, Carney was not reappointed to the tribunal – a decision that, according to evidence aired at the commission, was made at the last minute by cabinet.
The DHS never appealed these AAT decisions, which thus remained confidential.
In August 2018, draft legal advice on an AAT case from private firm Clayton Utz finding robodebt unlawful was never finalised, not shown to the DSS secretary, now Kathryn Campbell, and not acted on. Clayton Utz was paid however.
As Holmes this week put to Campbell on a separate 2015 brief that never reached her: “You do seem to have been shielded from a lot of bad news, would you agree?”
Campbell responded grimly: “A lot of bad news got to me on other topics. It was bad news most hours of most days in those departments.”
Victoria Legal Aid filed papers in the federal court on 4 February 2019, making good on warnings it had raised back in January 2017.
It had found a plaintiff, a then 31-year-old registered nurse named Madeleine Masterton, who had bravely agreed to take the commonwealth on.
The DHS was forced to seek legal advice from the Australian government solicitor – some two years after instructions for the AGS were drafted but mysteriously never sent.
The AGS told the DHS Masterton had good prospects of winning her case; the robodebt scheme was probably unlawful. The advice was dated 31 March 2019. The AGS recommended the department seek an opinion on the scheme as a whole from the solicitor general.
DHS tried a legal manoeuvre, recalculating Masterton’s debt to zero and then arguing there was no matter for the court to consider. It was a setback for the court challenge, but VLA later found a second plaintiff, Deanna Amato. Hanks ran the case for VLA.
‘Advice is just advice’
While the start of the scheme was dominated by gaps in recall from key witnesses, its conclusion was marked by explosive claims and counter-claims.
Robert, the final minister to oversee the scheme, claimed officials withheld legal advice over several months, pointing to the fact such advice was never communicated to him in a written brief until November 2019. In Robert’s account, he had developed “serious misgivings” about the scheme, and claimed credit for the decision to seek the solicitor general’s advice. (Remarkably, he also admitted making false statements defending the program, citing cabinet solidarity.)
But the commission heard claims Robert had been briefed on the AGS advice orally by the DHS chief counsel Timothy Ffrench on 4 July 2019, and again by the DHS secretary Renée Leon on 29 October. Those public servants told the commission that Robert dismissed those concerns using words to the effect of “legal advice is just advice”. Robert denied those claims in his evidence.
He also denied telling Leon in November 2019 in response to her suggestion the government cease the scheme and apologise: “We will double down.”
It all came to a head on 12 November. Robert was standing outside the cabinet chambers to be called for an expenditure review committee meeting to discuss the future of the robodebt scheme. Leon and French were there, as were other officials from DHS, DSS and Finance.
The group was informed the robodebt agenda item had been pushed to the following day. Robert approached the attorney general, Christian Porter, to ask if he agreed with the solicitor general.
“I called him ‘the attorney’, not Christian,” Robert told the commission. “So it was very clear to everyone in the room, the first law officer, ‘Do you agree with the second law officer?’ And he said yes.”
Robert claimed he had finally got the approval he needed to stop the scheme.
Leon and Ffrench recalled the conversation differently. Leon said it was only “from that point that Minister Robert, and the government as a whole” felt they had to “abide by the solicitor general’s opinion” because Porter “had confirmed it”.
Ffrench told the commission he overheard Porter say to Robert: “It’s right, mate.”
A month later, Leon lost her job when the Coalition announced her department would be replaced by a new agency, Services Australia.
Days later, Robert stepped up to announce the “refinement” to an unlawful government program that the commission has heard has been linked to suicides, stress and anxiety, and prompted many victims to avoid the social security system at all costs.
He did not apologise.
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