The department responsible for Robodebt failed to disclose documents to Commonwealth investigators which would have prompted them to stop the program, an ex-senior staffer at the Ombudsman's office has revealed.
Former Acting Senior Assistant Ombudsman Louise Macleod, who was involved in an investigation by the Office of the Commonwealth Ombudsman into the illegal Robodebt scheme in early 2017, gave evidence to the royal commission on Wednesday.
The investigation began after an increase in complaints from welfare recipients raised a "red flag" with the Ombudsman.
Ms Macleod was shown draft documents of the policy proposal which became Robodebt, and legal advice from the Department of Social Services (DSS), when she took the stand.
The draft documents included legal advice which had flagged the scheme was potentially illegal years before the 2017 Commonwealth investigation, but Ms MacLeod said she had never seen the documents before.
She said the Ombudsman was only ever provided with the final New Policy Proposal, which did not mention the scheme's potential illegality.
But the draft New Policy Proposal had flagged the possible unlawfulness, the royal commission heard.
Ms MacLeod said if investigators had seen the documents, they would have called for the scheme to be stopped.
Ms MacLeod was told another document drafted by DSS's public law branch confirmed the "suggested calculation method does not accord with social security legislation" and specified income must be assessed fortnightly.
Counsel Assisting the Commission Angus Scott KC asked Ms MacLeod: "Was the Ombudsman's office provided this document or any of the draft New Policy Proposals?"
"This is the first time I've seen the document," Ms Macleod replied.
Ms Scott asked further: "Had you seen these documents in the course of your investigation, would it have any impact on it?"
She replied, "I would like to think so" and explained she would have brought them to the attention of her superior".
"We would have definitely been asking questions of the department," she said.
"Basically a 'please explain what this is about' and calling out, I would hope, that this was enough to say it was unlawful."
Mr Scott said: "When you say calling out?"
Ms Macleod replied: "Publicly".
"In a report?" Mr Scott continued.
"In a report," Ms Macleod said.
'It annoys the hell out of me'
Ms Scott asked Ms Macleod if she felt “misled” by not having been provided several crucial documents by DHS that suggested the scheme was unlawful.
“Look, to be honest it annoys the hell out of me, yes. And, it’s really disappointing. You know, it demonstrates to me they know they weren’t participating in good faith," Ms Mcleod replied.
The inquiry earlier heard the Ombudsman's office had concerns about Robodebt, including that when people phoned to complain about their debts they were not given a formal decision by the Department of Human Services, which meant they were unable to seek a formal legal review of what had happened.
She explained when social security recipients phoned about debts, which they claimed were incorrect, staff were "going in and making changes" or "tweaking" things but not making formal determinations or undertaking real reviews.
"So, it was never actually triggering the internal review option and our concern was, in some respects, the departments was therefore circumventing proper administrative process," she said.
Ms Macleod later said: "You're also talking about a cohort of people … they are accessing the welfare system. They don't have the means to take it [a debt review decision] to the Administrative Appeals Tribunal, to take it to the Federal Court and we were concerned about that."
Ms Macleod said the Ombudsman's investigation, known as an "own motion investigation" began because Robodebt was "ticking lots of boxes" for concern.
"We were getting lots of complaints from a diverse range of people," she explained.
"We were concerned about the responsiveness of the Department [of Human Services] in engaging with the issue and we'd had several meetings with them in the lead up to the 5th of January [2017] and the department seemed very comfortable with what they were doing even though we were raising concerns and we were not sure what they were doing was in accordance with the legislation."
'I feel like a failure'
Through tears, Ms Macleod told the inquiry she felt like a "failure" because she could not convince others the scheme was illegal in the years before it was stopped.
After being questioned for the entire day and discovering key documents which indicated Robodebt might have been illegal were never supplied to investigators, she became emotional on the stand.
Ms Macleod was shown a document that explained more than 75 per cent of debts had been raised through income averaging.
She told the inquiry she found seeing the document's contents "upsetting".
"It confirms it [income averaging] was very much the default," Ms Macleod said.
When asked further by Commissioner Catherine Holmes AC SC why she felt upset discussing the matter, Ms Macleod said: "I suppose I couldn't convince others."
Ms Holmes replied: "I've spent most of my career trying to convince others, so you're not alone there."
Earlier, Ms Macleod told the inquiry it was her view that the Commonwealth Ombudsman should have referred DHS to the Administrative Appeals Tribunal over Robodebt.
'No appetite' to take department to court
She said despite raising her views with the acting ombudsman, the final report on the scheme contained softened language and there was no appetite to go to court against DHS.
"Ironically now, there were concerns about pitting the Commonwealth against [the] Commonwealth," Ms Macleod said.
Ms Macleod then clarified she meant "the ombudsman's office against a department in a tribunal".
She explained she and her staff believed at the time of filing the report the scheme could be illegal.
"We had concerns … Ultimately, though, it was a decision for the acting ombudsman what was put in the report," Ms Macleod said.
She said many in her team had "doubts" about Robodebt and the recommendations that eventually made it to the report, which was that DHS should make some improvements.
"How were those doubts overcome?" the commissioner asked.
"I don't think they were overcome," Ms Macleod replied.
"I briefed the acting ombudsman … we drafted the section for the report … but ultimately it didn't go any further".
'It's not lawful, don't you know?'
The inquiry has previously heard about a keynote speech constitutional barrister Peter Hanks KC made to an administrative law conference.
In the presentation, he criticised Robodebt and foreshadowed it was illegal, explaining he was seeking a test case to prove this.
Prior to the presentation, Ms Macleod, said she received a phone call from Mr Hanks, who told her he was likely to criticise the ombudsman's report into the scheme.
"[The] gist of the conversation was he was letting me know he was giving the keynote at the conference and he would be focusing on Robodebt and in his speech he would be critical of the ombudsman's office and the report," she said.
Ms Macleod said Mr Hanks told her: "It's not lawful, don't you know?"
She said she replied: "Yes, I know".
The inquiry continues.
