September 22, 2022

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Prime Minister Anthony Albanese has announced the details of a $30 million royal commission into the Robodebt scandal, which led to a $1.8 billion class action settlement between victims and the federal government.

In announcing the royal commission, Albanese described the robodebt scheme as “a human tragedy with very real consequences for its victims” and the “coalition’s brainchild”.

A total of $1.73 billion in unlawful debts were raised against more than 400,000 people during the disastrous scheme, which ran from July 2015 to November 2019.

The establishment of a royal commission into Robodebt was a key election promise from Labor.

A key component of the government's robodebt scheme has been halted.
A key component of the government’s robodebt scheme has been halted. (AAP)

What will the royal commission cover?

The inquiry will probe the implementation of the disastrous scheme by the former coalition government and how it was allowed to continue for more than four years.

A key line of inquiry will be what legal advice the coalition government received over the scheme and when. 

Former prime minister Scott Morrison, who was social services minister at the time Robodebt was introduced, is likely to be called to give evidence. 

Other former government ministers expected to be drawn into the investigation are Alan Tudge and Stuart Robert, who both acted as social services minister during various iterations the scheme, and former attorney general Christian Porter.

Government Services minister Bill Shorten said the class action had left several questions unanswered.

“We never got to hear how the scheme got to be conceived, designed,” Shorten said.

“It was unlawful, there was no legal power to do what they were doing, to take the humans out of the system, to rehearse the onus of proof.

“We never got to hear why did the government continue it for 4.5 years?

“The government has never satisfactorily explained how this monster scheme got away from the system and just had a life of its own.”

Centrelink has been using an unlawful averaging system since the 1990s, and possibly even as far back as the eighties.
The income averaging system used by Centrelink was deemed unlawful. (Supplied)

These are the key terms of reference for the inquiry:

  • The establishment, design and implementation of the scheme; who was responsible for it; why they considered Robodebt necessary; and, any concerns raised regarding the legality and fairness;
  • The handling of concerns raised about the scheme, including adverse decisions made by the Administrative Appeals Tribunal;
  • The outcomes of the scheme, including the harm to vulnerable individuals and the total financial cost to government; and
  • Measures needed to prevent similar failures in public administration. 

Former chief justice of the Supreme Court of Queensland, Catherine Holmes, has been appointed the royal commissioner.

Holmes led the Queensland Floods Commission of Inquiry after the 2010-11 floods and acted as counsel assisting the Commission of Inquiry into Abuse of Children in Queensland Institutions in 1998-99.

The final report will be delivered to the governor-general by 18 April 2023.

When Robodebt was rolled out in 2015 it was hailed by the government as a key tool to be used in tracking down welfare fraudsters.

The automated scheme made use of data matching algorithms. It assessed annual income data from the Australian Tax Office against fortnightly Centrelink welfare payments.

But Robodebt’s averaging system used to calculate debts was problematic and in some cases inaccurate. It was first challenged in the Federal Court in a case brought by Victoria Legal Aid in 2019. 

The case led to a landmark ruling, with the court finding a Robodebt given to Victorian woman Deanna Amato was unlawful.

Around the same time, Gordon Legal’s enormous class action had been announced and the legal pressure led to the government agreeing to repay the $751 million that was wrongly recovered from 381,000 people.

Have victims been compensated?

No, robodebt victims are yet to be compensated. Damages for pain and suffering were not included in the scope of the class action.

The class action settlement came with a $112 million payment for victims, minus legal costs, however this amount relates only to the interest owed to victims who repaid unlawful debts.

Robodebt victims have spoken about the financial and mental distress the unlawful debts caused. Many had their wages and tax refunds garnisheed to pay off the debts or were chased by debt collectors. 

Jarrad was Ms Madgwick's only child.
Jarrad was Ms Madgwick’s only child. (Supplied)

Robodebt was described by Justice Bernard Murphy – the presiding judge over the class action – as “a shameful chapter” and “massive failure in public administration”.

“One thing … that stands out … is the financial hardship, anxiety and distress, including suicidal ideation and in some cases suicide, that people or their loved ones say was suffered as a result of the Robodebt system, and that many say they felt shame and hurt at being wrongly branded ‘welfare cheats’,” he said.

The royal commission will examine the impact on vulnerable victims and whether they should receive compensation.

Gordon Legal partner, Gordon Grech, told 9news.com.au last month the issue of compensation should form an important part of a royal commission.

“Not all of the 400,000 people who had money effectively stolen from them by the government suffered in the same ways, but there are certainly some cases where the harm caused to them was quite egregious,” Grech said. 

“We think those people are very deserving of being compensated.” 

Who has been held accountable?

So far, no heads had rolled over Robodebt, which Grech said was extraordinary given Justice Murphy’s damning condemnation of the scheme. 

“Not a single politician has been called to account, not a single senior public servant has lost their job over it,” he said.

The coalition government fought and won a battle during the class action not to release the legal advice it received over Robodebt. 

Which government ministers knew what and when, as well as what legal advice they received, is expected to form a key part of the planned royal commission.

“The royal commission may be a good opportunity to ask, particularly of the politicians involved, what they knew about the unlawfulness of this process, when they knew it was unlawful and why it took court proceedings to bring them to heel,” Grech said.

“The government should not be allowed to hide behind legal professional privilege or parliamentary privilege in the way that it has in this case.”

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