Two Coalition senators have claimed that welfare recipients caught up in the botched Centrelink robodebt program may have had their heads in the sand.
The failed program – which has seen the government forced to pay back $721m to 373,000 people it wrongly accused of being overpaid benefits – demanded victims provide financial information to disprove at-best speculative calculations asserted by Centrelink.
Many were unable to obtain pay slips or bank statements dating back seven years, while others, including people with mental health concerns, ignored Centrelink’s debt letters entirely.
In comments likely to anger victims of the program, Wendy Askew and Hollie Hughes, members of the Senate’s community affairs reference committee, argue this may have reflected what, they claim, academic research refers to as “information avoidance”.
“One form of this approach is the Ostrich Effect, where individuals ‘bury their head in the sand’ or ignore negative or unpleasant information due to a Fear Of Finding Out (FOFO),” they wrote in dissenting comments of an interim Senate report into the program released last week.
“Government senators note that information avoidance may have influenced decisions by significant numbers of individuals who had discrepancies identified as part of the Program and their subsequent non or part engagement with the compliance process.”
They underline this concern by raising the complaint that the Senate inquiry’s highly critical report did not explore “the impact … of the decision by significant numbers of people to simply not engage in the processes or not even open letters sent to them by Centrelink”.
In May, the government agreed to repay 470,000 of the debts issued because they were not legally enforceable. It is likely that, in total, more than $1bn in debts has now been written off as unlawful.
The senators’ comments also highlight an irony of the robodebt scheme that some debt recipients hope a class action brought by Gordon Legal will address.
Those who did not respond to the letters, or could not find the information, are now being offered a refund by the government because it concedes it never had enough evidence to issue them debts.
People who did provide old pay information in effect substantiated debts for Centrelink that were otherwise unlawful.
Gordon Legal argues that all debts under the program are “tainted”, even those later substantiated with evidence provided by welfare recipients. The federal court will hear its case, which seeks interest and compensation for about 600,000 people, this month.
The Coalition senators’ dissenting report argues “shortfalls” occurred in “early iterations of the program” and related to “communications with customers”, though these were “comprehensively addressed”.
Yet despite these changes, the government has been forced to issue refunds to people throughout the life of the scheme – from July 2015 to November 2019 when it was suspended.
The senators’ claim the program was hampered by the people it targeted refusing to provide information to Centrelink also does not address an argument made by the commonwealth in the ongoing court action.
It argues that people who provided their pay slips in response to “discrepancy letters”, which requested “information” but did not yet assert a debt, did so on a voluntary basis.
Although the government is arguing in court the letters did not compel people to hand over information, a version sent in 2017 stated: “You must confirm or update the information within 28 days of receiving this letter.”
What is clearer is that issuing debts, “discrepancy letters”, or garnisheeing people’s tax returns, provided a trigger that prompted people to provide this information, even if they were not legally required to do so.
The bureaucrats who created the scheme viewed this approach as a benefit because it saved Centrelink staff from having to get this information themselves, allowing for more debts to be raised and more budget savings. Another benefit, according to documents seen by the Guardian, was that it reduced red tape for employers.
The senators note “there have been apologies from both the government and senior officials for any hurt or harm caused by income compliance”, though they reject links between the program and suicide. In separate cases, two mothers wrote to the Senate last month to claim their sons had taken their own lives after receiving Centrelink debts.
The senators’ dissenting comments only briefly touch on what is known as “income averaging”, the unlawful use of annual ATO pay data to issue debts alleging a welfare recipient had underreported their fortnightly employment income.
The method was used by Centrelink as a last resort until 2015, when it became a central plank of the robodebt program.
“Whilst it is now widely understood that it is insufficient to rely on the averaging of ATO income data as the sole basis for raising a debt, this does not mean the program overall is either ‘illegal’ or ‘unlawful’,” the senators wrote.
In fact, data provided to the committee shows more than 300,000 debts that are now being refunded were raised this way.
The Labor-Greens majority interim report called for the scheme to be immediately scrapped and for the creation of an independent review into the debacle.
Chaired by the senator Rachel Siewert, it notes that the prime minister and responsible agencies, the Department of Social Services and Services Australia, have apologised for the scheme.
“However, the massive scale of the program’s impact cannot be ignored and there remain many questions about how income averaging was able to be established and operate for so long before it was found to be unlawful.”
