An Australian Taxation Office bureaucrat "threatened to shut down" the robodebt scheme in 2017, asking a federal department to cease and desist using tax office data if there wasn't further explanation, a royal commission has heard.
Tyson Fawcett has given evidence to the Robodebt royal commission in Brisbane, which is examining how the scheme was designed and implemented, and its impact on individuals.
Robodebt unlawfully claimed almost $2 billion in payments from 433,000 people.
It automatically issued notices to welfare recipients, identifying debts through income averaging — using ATO income data compared with the income a recipient reported to Centrelink.
The royal commission was shown an email from Mr Fawcett, written in July 2017, to Ali McRae at the Department of Human Services (DHS).
The Commission heard it followed a meeting earlier in the day.
'A request followed by a big stick'
Mr Fawcett's email requested another meeting the next week and said "the ATO is seeking an assurance on the use of its exchanged data provided to DHS, on how it is being used, with any future bulk compliance approaches (lessons well documented)."
"I am seeking an urgent discussion (next week at the latest) on this, otherwise I ask that you cease and desist, the usage of the data, until we have your assurance around the data use," Mr Fawcett wrote.
"You want an urgent meeting, and if they're not going to agree to it… you want them to stop using the data?" asked Senior Counsel Assisting Justin Greggery.
"I'm unable to recall precisely the events but what you infer is a likely scenario," Mr Fawcett said.
"I actually cannot recall but it was that I was wanting much stronger assurance around what was happening."
"But it wasn't just that Mr Fawcett, it was a request which was followed by a big stick — a request to cease and desist in the absence of that assurance?" Mr Greggery asked.
"It most definitely uses language to that effect, yes," Mr Fawcett replied.
Under questioning from Mr Greggery, Mr Fawcett couldn't say exactly what triggered the email but said he was aware of adverse media coverage in 2017 that referenced the role of ATO data in the Robodebt measures.
The royal commission was shown Ms McRae's response, which discussed facilitating a face-to-face meeting to work through the technical aspects of the data-matching program.
"There are currently a range of measure (sic) the government has asked us to deliver which rely on the data matching capabilities of our organisations and this work needs to continue. However, I agree that we need to work closer," the email read.
Mr Fawcett was asked to summarise the response from Ms McRae.
"I think its probably best to ask Ms McRae around her response. At the time I really can't recall how I reacted to that," he said.
"It effectively disregarded your assurance and said, this is an important scheme to the government," Mr Greggery responded.
"I think what you infer in what has been written there would be an accurate assessment," Mr Fawcett said.
'Back off'
Commissioner Catherine Holmes joined the questioning.
"It looks very much as if she's telling you to back off, because this is what the government wants," she put it to Mr Fawcett.
"How did you take it?"
"In terms of what I can remember, Commissioner, I sort of can only rely on that I provided a later response which was somewhat shorter," he said.
"You stopped saying 'cease and desist' and instead said, 'I can explain to you what the problem is if you can't grasp it'," the Commissioner said.
"That would be a fair categorisation," Mr Fawcett said.
He was asked if he recalled any follow-up about the lawfulness of the use of the data, or the limits of its application, but said he couldn't find anything to suggest that.
"That is, despite the bold step that you took… in an attempt to gain some assurances… you didn't receive those and the scheme rolled on?" Mr Greggery asked.
"There's nothing I've been able to discover that provided me further insight to that," Mr Fawcett said.
Mr Greggery kept questioning Mr Fawcett around what else he could remember from that time.
"It was a very significant point. Are you sure you are entirely unable to recall anything surrounding this email — where you threatened to shut down the Robodebt scheme?"
"I am sure — I'm just unable to recall the preciseness of those events back then, that's all."
Assurances given DHS 'weren't doing anything different'
Another ATO employee, Michael Kerr-Brown, who reported to Mr Fawcett, told the royal commission that the data exchange between ATO and DHS had been going on for about 20 years.
"I was being given assurances that they weren't doing anything different with the data, they were just doing more of the same with the data," he said.
"Is that just something you took their word for or did you satisfy yourself somehow about what Services Australia was doing with the data?" Mr Greggery asked.
"Initially, I took their word for it," he said.
Mr Kerr-Brown said the ATO began to seek more information after media reporting that suggested there had been a change to how compliance reviews were being done.
"We kept being assured — it's the same thing, just more of it. That line from Services Australia was consistent over time," he said.
The royal commission heard the ATO had concerns that averaging a year of income data may not be accurate as recipients may not have worked all year.
Mr Kerr-Brown said he personally reviewed less than 20 cases and this was an issue in three or four of them.
He said he had "certainly" flagged internally that there were concerns with the averaging.
ATO response to media 'not accurate'
Mr Kerr-Brown also faced questioning about the ATO's responses to media inquiries by three journalists in early 2017 with questions about income averaging.
The inquiry heard they all received a similar response, which Mr Kerr-Brown conceded were "not accurate" and was "not really saying anything".
The royal commission heard the ATO liaised with DHS staff about how to respond.
Under questioning, Mr Kerr-Brown said he believed there was "spin" involved in the media responses but it was "the prerogative" of the media unit to respond that way.
"Can you explain why the ATO embarked on a course of conduct to not address the issue that was being asked of it by the media?" Mr Greggery asked.
"I cannot comment on that," Mr Kerr-Brown responded.
"And in doing so, avoiding any scrutiny of the issue that had been identified within the ATO?" Mr Greggery persisted.
"Again, you'd have to put to our media unit the reasons for them choosing to respond this way."
Mr Greggery countered that the ATO was too big to ask everyone, and pressed Mr Kerr-Brown for his take.
"We were making a consistent response across the Commonwealth," he responded.
"It's not our remit to advise Services Australia on how to conduct their business, and I would be offended if Services Australia approached the ATO and told us how to administer the tax system."
