A royal commission into the now-defunct debt recovery scheme, commonly known as Robodebt, has wrapped up for now after two weeks of hearings in Brisbane.
The Online Compliance Intervention was introduced by the federal government in mid-2016 — an automated system meant to ensure people on Centrelink benefits were not over-receiving.
It compared income data from the Australian Tax Office (ATO) with what welfare recipients reported to Centrelink — a process known as income averaging.
Previously a Centrelink officer checked each case, but the new system meant a computer now detected discrepancies and generated an email to the welfare recipients forcing them to prove they were not over-claiming.
The system generated an exponentially greater number of interventions and came under heavy criticism for placing the burden of proof on welfare recipients.
Shortly after the scheme was implemented, people started to complain they had been issued bills for debts that simply didn't exist.
In some cases, the debts topped $24,000.
The scheme unlawfully claimed almost $2 billion in payments from 433,000 people.
Robodebt was scrapped in May, 2020, and in August this year, Prime Minister Anthony Albanese fulfilled an election promise by ordering a royal commission into the scheme.
Former Queensland Supreme Court justice Catherine Holmes is leading the commission, with the final report due by April 18, 2023 — hearings will recommence in December.
Here are some of the key takeaways from the last two weeks of the inquiry.
Lawyers 'appeared to come under pressure' from Morrison
The inquiry was shown internal emails between lawyers within the Social Services Department in 2015 — when the scheme was being formulated — relating to a draft brief being prepared for then-social services minister Scott Morrison.
The inquiry heard evidence from a principal legal officer within the department, Anne Pulford, who was involved in the preparation of 2014 legal advice that indicated the proposed scheme was potentially illegal.
Lawyers in her team provided more advice in 2015 because the Department of Human Services was advised that "Mr Morrison indicated he wants a number of potential proposals in an attached briefing be brought forward for portfolio budget statements".
Ms Pulford agreed with counsel assisting Justin Greggery KC: "That it appeared pressure was coming from a clearance by minister Morrison to have a new policy proposal developed to the point where it might be submitted to the Department of Finance".
Mr Greggery drew Ms Pulford's attention to email comments from government lawyers about the external advice including one describing it as "somewhat unhelpful" and another which stated: "They might be able to rework the advice if this causes catastrophic issues for us but there is not a lot of room for them to do so."
Commonwealth warned of potential legal problems two years prior
On Monday, October 31, Mr Greggery KC opened the hearing by highlighting that high-level external legal advice had not been sought about the scheme despite it seeking to recover millions of dollars from hundreds of thousands of Australians.
"In view of the scale of the debt recovery program initiated by the Commonwealth against its citizens it now seems obvious that the advice from the solicitor general, or other eminently qualified barrister, ought to have been obtained before the scheme was implemented,'' he said.
"Plainly that was not done."
Mr Greggery also revealed that in 2014, the department's own lawyers raised concerns about the way the scheme estimated or "smoothed out" incomes.
Among those attending the inquiry was Kath Madgwick, the mother of 22-year-old Jarrad, who died by suicide in 2019, hours after learning he owed a $2,000 Centrelink debt.
"I want to see some accountability, to see that nothing like this happens again, that there's some safeguards in there for people with mental health," Ms Madgwick said.
She said she was "appalled" to learn the department had been warned about potential legal issues in 2014, before the scheme came into effect.
Senior bureaucrat admitted to breaching code of conduct
Some bureaucrats said Robodebt was not their top priority.
Day eight of the commission heard from Serena Wilson, the former deputy secretary at the Department of Social Services (DSS), which was responsible for getting legal advice on behalf of the Department of Human Services (DHS) for the welfare debt recovery scheme.
The inquiry heard Ms Wilson received legal advice when the scheme was being designed showing the "income averaging" method was unlawful but she lacked the "courage" to tell anyone, including then-social services minister Mr Morrison.
Ms Wilson told the inquiry she was "consumed" with other government "priorities" at that time.
Mr Greggery told the commission Ms Wilson met with Mr Morrison in 2015 but did not raise her concerns with him.
Ms Wilson said she thought they had "come to an understanding" that what became Robodebt – in particular, the income-smoothing or averaging method – would not go ahead.
"I thought we'd killed it.
"In hindsight, I was clearly wrong."
Crossed-out phrase in brief for Morrison 'watered down' seriousness of potential legal issues
The commission heard paperwork was altered, seemingly to weaken some of the warnings about Robodebt.
A copy of a brief, drawn up in February 2015 for Mr Morrison contained a "watered-down" warning about legal and policy problems with Robodebt, the commission heard.
The draft executive minute, which noted the need for legislative and or policy changes, had crossed out a phrase warning of the issues with the proposals and replaced it with the reference that they may have "significant implications".
The crossed-out phrase flagged the "fundamental impacts" on social security policy and legislation.
The draft was located by Deputy Secretary of Social Security Matthew Flavel in response to a request by the commission to find all relevant documents and emails relating to the Robodebt proposals.
He agreed that "the language has been in effect watered down from a very clear position".
Manager described day-to-day pressures of 'overwhelmed' department
Bureaucrats at the DHS, which initially proposed the Robodebt scheme, felt pressured to find new ways to rein in potential welfare fraud and non-compliance.
The agency's former national manager of compliance risk, Scott Britton, told the commission the department was "overwhelmed with work".
"I loosely called it [the department] a 'big machine' as far as there was a lot of operational activity, a lot of processing, a lot of staff, a lot of issues, just generally, day-to-day challenges."
Mr Britton told the inquiry DHS staff were under "internal" pressure to come up with new budget savings for the department.
The commission heard Mr Britton nominated former DHS director, Jason Ryman for an Australia Day Achievement Award in 2017 for his role in leading the "Online Compliance Intervention" project – which became known as the Robodebt scheme.
"I don't recall receiving anything to say that he was successful in the nomination I put forward," Mr Britton said.
Department head signed off on scheme without knowing if it was legal
Ms Wilson's boss, Finn Pratt AO PSM, who was the DSS secretary from 2013 to 2017, told the commission the scheme's problems were "not a priority" and he was more "focused on other matters".
He repeatedly said he did not have any knowledge of the scheme or its illegal "income averaging" method until 2017 when the Ombudsman was investigating.
Mr Pratt said he signed a letter to the Ombudsman saying his department was satisfied it was operating legally because he "trusted" the advice his officials provided.
"Every bit of advice I saw … suggested we as a department thought everything was working reasonably. Obviously, that was wrong and I was wrong in my assertion to the ombudsman, I take responsibility for that," Mr Pratt said.
Commissioner Holmes said: "I appreciate you had multiple headaches, that's the life of a secretary of a department isn't it? But this was a pretty large and obvious one [issue] given the senate attention, media attention?"
Mr Pratt interrupted: "Commissioner, I don't want to debate with you on this but in my world … this was one headache which wasn't my headache."
'Not my responsibility' says department head
On the final day of this stage of hearings, the former head of the Department of Human Services would not admit Robodebt was a "massive failure".
The commission heard from Kathryn Campbell AO CSCE, who was the secretary of the Department of Human Services (DHS) from 2011 to 2017.
When asked by Mr Greggery if she thought the scheme was a massive failure, Ms Campbell said: "I think it is a significant matter, I have been involved in other significant failures, but I don't think it's helpful to talk about those."
Despite being involved in the drafting of an executive minute sent to Mr Morrison in 2015, Ms Campbell had a "lack of curiosity" into the legislative changes needed to validate the 2015-2016 budget proposal that became Robodebt.
The commission heard Ms Campbell did not seek detailed legal advice for the scheme when it was being conceived because income averaging using tax office data had been used by DHS for years.
"That had been a practice that had been in place for over 30 years," Ms Campbell said.
"Burglars probably use the same practices for 30 years; it won't make them lawful," Commissioner Holmes said.
