A former top federal government lawyer has revealed he did not share legal advice that the Robodebt scheme was illegal with the department responsible.
Paul Menzies-McVey, who was previously chief counsel at the Department of Social Services (DSS), fronted the royal commission into the scheme in Brisbane on Tuesday.
The inquiry is holding a final block of hearings into Robodebt, which used income averaging and tax and Centrelink data to calculate social security debts.
Mr Menzies-McVey was grilled by counsel assisting Justin Greggery KC and Commissioner Catherine Holmes over the fact he was aware of three separate pieces of legal advice that determined the income recovery scheme was unlawful, but did nothing, while working at DSS in 2019.
The advice was issued between 2014 and 2019.
When asked about draft legal advice issued by top-tier firm Clayton Utz about one year before he worked in the department, Mr Menzies-McVey said despite it being "excellent practice" to share legal advice between departments, he did not make the Department of Human Services (DHS) aware its existence.
"I don't think I contemplated sending it to them … perhaps I should have," he told Mr Greggery.
Referring to the same advice, Commissioner Holmes asked: "This is a bit of a concern because it's saying that a program that the government's been operating for a couple of years now actually is illegal … so it doesn't trouble you that's been left to fester?"
Mr Menzies-McVey replied: "I wouldn't characterise the advice as saying that the program was unlawful".
'Magical thinking'
He told the inquiry the advice did not consider what inferences could legally be drawn if someone did not provide an alternative account of their income that disproved a debt notice, such as a bank statement.
However, he said he was not certain about the issue and did not seek legal advice about it because "the correct answer, whatever that may be, was being sought by the solicitor-general".
Commissioner Holmes said it was "magical thinking" to suggest an inference should be drawn by a person's failure to respond to a letter because they had no obligation to do so.
Mr Menzies-McVey said he believed the draft advice was "no longer of significance" and he "didn't give much regards to it" during his time in the job because other advice was being sought.
He was asked by Mr Greggery: "You appreciated that if those advices were correct then the scheme under which debts were raised for the last three-and-a-half years under the various ideations of the scheme had no legal basis?"
In reply, Mr Menzies-McVey told the royal commission: "That would have been the consequence, yes".
'I'm not sure I turned my mind to that'
In a later exchange, Mr Menzie-McVey said he appreciated after viewing three sets of advice stating Robodebt was illegal that it would be a "very serious issue for the Commonwealth".
Mr Greggery asked if he appreciated the continuation of the scheme while waiting for further legal advice had "very significant consequences for further recipients of debt letters".
"I'm not sure I turned my mind to that," Mr Menzies-McVey said.
However, he later said: "I would be uncomfortable, clearly, with the department oversighting a program that was unlawful of any type, especially a large program such as this."
The royal commission was on Tuesday shown several emails, which outlined the number of people who had lodged applications for internal review after being subject to illegal debt letters.
One email shown to the inquiry showed in 2016, there had been 6,654 appeals out of 182,515 matters.
'It was going to be inaccurate'
Services Australia compliance and debt operations officer Jeannie-Marie Blake told the inquiry she first came into contact with the Robodebt scheme when she was working in Mornington in Victoria.
Ms Blake explained from the stand her area manager had told her there was going to be a "complete change" in doing business, involving the increased use of automation.
In her statement to the royal commission, she said she had "immediate concerns" about the scheme and was worried that some people would not understand the letters.
She also said the the nature of welfare recipients' income was that it was irregular so averaging would not work.
"You knew it was going to be inaccurate," she said.
Ms Blake told the inquiry many customers were "vulnerable" and that she was concerned the homeless or elderly would not be able to use the online services.
She said the fact the scheme could be problematic was "absolutely obvious to me and I think to everyone in my team".
Ms Blake ended her testimony with an emotional recount of the toll administering the Robodebt scheme had taken on her.
She has called for an apology to staff for being forced to be at the frontline of the unlawful debt recovery.
Ms Blake said she believes she was a "conduit" for an unlawful policy and that her concerns were ignored by management.
"We were speaking about the incorrectness from the start to the end," Ms Blake told the inquiry.
"All the management, all the higher levels that I've sat and listened to through this that can't recall, can't recollect and couldn't put your mind to it — I can't forget and I know there are many more staff just like me who can't forget what happened and what we were forced to deliver to customers.
"I felt strongly to stand up and speak the truth when you know something is wrong. Whether or not it pleases your managers, it is the right and ethical thing to do and it serves the public and as a public servant that's what I've been instructed to do.
"We deserve a voice in this room as much as every manager you've heard."
Ms Blake said she wanted customers to know they were not "crazy" and she remembered what happened through the scheme.
"For every customer has had to listen to, I want to say, I do remember. I remember and maybe I'll be the only person who wants to stand here and say I work for Services Australia and I'm proud to work for Services Australia and customers have a right to know," she said.
'It didn't work'
Michael Johnson, assistant secretary for the Office of Legal Services Coordination (OLSC) in the Attorney-General's Department, took the stand and said office is designed to help agencies comply with their legal obligations.
He said issues relating to Robodebt were raised because of conversations with DHS, but it was decided it would not be significant enough to escalate to the Attorney-General for further investigation.
The inquiry heard the decision not to escalate the matter was made because DHS had told OLSC they did not believe there was a legal issue with the scheme.
Commissioner Holmes asked Mr Johnson: "DHS ran a program they'd been warned [about] at the outset because it used income averaging it would not conform with the Social Security Act, they went ahead and did it anyway, the ombudsman was easily deflected, you [OLSC] were easily deflected, what does that say about our checks and balances?"
He replied: "I think a retrospective review about what happened here can only reach one conclusion — that it didn't work."
The royal commission continues.
