21:37, June 09 204 0 theguardian.com

2020-06-09 21:37:04
Robodebt: total value of unlawful debts issued under Centrelink scheme to exceed $1bn

The true value of all welfare debts unlawfully issued through the federal government’s robodebt scheme and soon to be wiped is expected to easily exceed $1bn, the Guardian has learned.

In a humiliating backdown, the government last month promised to repay $720m to 330,000 past and present welfare recipients over 470,000 unlawful demands for money calculated using faulty “income averaged” annual pay data as part of Centrelink’s income compliance program.

But as new polling showed significant support for a royal commission into the debacle, it can also be revealed internal estimates have shown the total value of those 470,000 unlawful debts will be close to $1.5bn, according to a source familiar with the refunds process.

Since 2015, a total of $2.1bn is estimated to have been raised through the income compliance – or robodebt – program, including about 200,000 debts the government still considers legal and which it is not proposing to refund.

The total value of the debts raised is much larger than the refunds being issued because much of the money has not been paid back, in many cases because people have sought payment plans, including through forced deductions from their Centrelink benefits.

Overall, it means about three-quarters of all money banked from the robodebt program will likely need to be either repaid or wiped.

It is also understood an estimate of the service delivery costs of processing the hundreds of thousands of refunds – which is expected to take about three hours for a complex debt – was in excess of $200m.

A spokesperson for Stuart Robert, the government services minister, told the Guardian: “It is inaccurate to suggest the process will cost $200m.

“The work involved to administer the process will be undertaken by Services Australia using existing resources.”

The spokesperson did not respond to questions about the overall value of unlawful debts raised.

Last year, Services Australia told a Senate committee the total cost of delivering the program was $606m between 2015-2019.

It suggests when the process is over, the government will have spent hundreds of millions of dollars to issue debts and then refund them as part of program it has now been told privately is “not viable”.

Timeline

The robodebt scandal

 

  • Growing complaints of faulty Centrelink debts, amplified by social media campaigning
  • Guardian reports first call to halt “automated” debt recovery scheme
  • Centrelink whistleblower breaks ranks and tells Guardian only a fraction of debts were genuine
  • Commonwealth ombudsman launches investigation
  • Leaked Centrelink staff logs show fundamental failings of debt recovery process 
  • Government makes minor adjustments after backlash
  • Guardian reports that robodebt victims may be able to sue
  • Department of Human Services accused of doxing robodebt victim
  • DHS blames debt recipients as Senate inquiry begins
  • Commonwealth Ombudsman criticises scheme in report
  • Government warned scheme is illegal after losing AAT cases
  • Senate inquiry calls for robodebt suspension
  • Data shows one in six robodebts later wiped or changed
  • Former AAT member claims robodebt is illegal
  • Victoria Legal Aid launches federal court challenge
  • Centrelink wipes debt in court challenge, argues case cannot proceed
  • Victoria Legal adds second plaintiff to court action
  • Flood-hit Townsville caught up in robodebt scheme
  • After fresh scandals, Labor calls for robodebt to be scrapped
  • Guardian reveals scheme in shambles, secret plan to target vulnerable
  • Gordon Legal launches a class action with support of Labor’s Bill Shorten
  • Government abandons “reverse onus of proof”, promises to only raise debts once it can substantiate them with pay records
  • Government settles Victoria Legal Aid action
  • Emails show government was warned scheme was unlawful
  • In class action defence, government claims no duty of care on welfare
  • Guardian reveals leaked documents showing size and scale of the scandal

That does not include any legal fees that may arise from the ongoing class action brought by the law firm Gordon Legal, which is demanding interest on refunds and damages. The firm has said it believes interest and damages would be worth hundreds of millions of dollars. Guardian Australia understands the interest on refunds are estimated about $90m.

Guardian Australia has revealed the government is confident it can defend the class action’s negligence claim, although it expects it will need to pay interest on debts as part of Gordon Legal’s “unjust enrichment” claim.

The government also paid millions in contracts to external debt collection agencies to claw back Centrelink overpayments – including as part of the robodebt program – although it has never revealed how much it has forked out, claiming the figures are commercial-in-confidence.

The scandal-ridden robodebt scheme saw hundreds of thousands of people hit with Centrelink debt letters – sometimes for sums in excess of $10,000 – until a successful federal court challenge brought by Victoria Legal Aid in November.

The government has proposed kicking off robodebt refunds from July and has said it hopes the majority of the money will be repaid by November.

But it has not ruled out legislating to allow a return to the scheme and had taken legal advice on the proposal late last year.

It comes as new polling conducted by Essential Media for Guardian Australia shows overwhelming support for a royal commission into the robodebt fiasco.

Asked if there should be a royal commission, 53% of respondents agreed, compared to 23% who disagreed, and 22% who neither agreed nor disagreed.

Even among Coalition voters, 45% of respondents supported the call for a royal commission, which has been floated by the Greens’ senator Rachel Siewert as well as some experts and advocates.

Labor’s Bill Shorten, who helped launched the class action, has also said there should be an inquiry of some kind, pointing to the turmoil the program caused for victims.

The families of some people who have taken their own lives since the program was established have claimed receiving a robodebt letter was a factor in their loved ones’ suicides.

The poll found an even larger majority – 74% – said the government should apologise, while 66% said the victims should receive interest and damages on top of their refunds.

Essential’s survey of 1,073 respondents had a margin of error of plus or minus 3%.

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