The independent senator Rex Patrick has questioned how Services Australia calculates welfare debts and called on the government to fund a federal court test case to examine the agency’s methods.
Patrick’s claim that the debts might be being calculated incorrectly could, if proved, affect some of the thousands of people who are being denied refunds under the robodebt program because the agency says their debts have been substantiated by historical payslips or bank statements.
His call comes after the Administrative Appeals Tribunal (AAT) found a $1,600 debt issued to one of Patrick’s constituents had “not been proved”.
A second debt was recently waived by Services Australia, which declined to defend the case at the tribunal, while a third is being reviewed, according to Patrick.
The federal government is facing a class action over the robodebt program, which averaged out annual tax office pay information to allege welfare recipients had been overpaid on a fortnightly basis.
After admitting the practice was unlawful, the government agreed to repay $721m and said it would issue debts only after it had gathered sufficient “proof points” to substantiate the overpayment.
However, the agency has not clarified which “additional proof points” – such as payslips or bank statements – could justify a debt, including the more than 180,000 debts it has declined to refund.
Citing cases dealt with by his office, Patrick questioned Service Australia’s methods of calculating debts using historical payslips.
As a “model litigant”, the government should fund a test case of one of his constituents to clarify the law, he said.
“The government must fix this, and I’ll fight for these people until they do,” Patrick said.
“At the very least, they should take one of my cases to the federal court as a test case to decide if their debt calculation process is legal.”
Services Australia declined to provide a statement, referring Guardian Australia to comments made by officials at a Senate estimates hearing late last month.
In those comments, officials noted the “circumstances of AAT cases really do fall down to the individual circumstances”.
It is unclear how many debts might be affected by Patrick’s argument, if proven, though it is unlikely to be on the scale of the 378,00 robodebts, worth more than $1bn, which have been repaid or written off.
However, it may affect some people who provided payslips or bank statements after being accused of an overpayment, and who subsequently had their debts upheld.
About 183,000 debts are not being refunded for this reason.
Under social security rules, welfare recipients are required to report their employment income on a fortnightly basis to ensure they are not overpaid benefits.
At issue is that in some cases the payslips relied on by Services Australia to subsequently calculate debts do not align with the agency’s fortnightly income reporting periods.
Further, beneficiaries are required to report their income when it is “earned”, rather than paid to them.
In some cases, it is said the agency will use an average to match the income on the person’s payslips to Centrelink reporting periods.
It is argued this process could lead to inaccurate or unproven debts, if averaged income was attributed to the wrong fortnight.
It would be most likely to affect casual workers with very “lumpy” income and particularly those engaged as contractors and paid irregularly or belatedly for past work.
“In principle, the idea is, you can’t just raise a debt, you have to be able to prove the debt,” Patrick told Senate estimates last month.
Services Australia officials did not concede the point at the hearing, but said they were “very happy” to work with Patrick on the issue.
Asked what the agency did in cases where payslips did not match Centrelink’s reporting periods, one official, Chris Birrer, said: “One of the options that we have there is to approach the employer and to seek additional information from the employer.”
Critics, such as former AAT tribunal member Prof Terry Carney, have argued the agency routinely failed to seek any or enough further clarifying information from employers during the administration of the robodebt scheme.
Instead, debt recipients were asked to obtain payslips or bank statements dating back as far as six years. This evidence was then used to calculate the potential debt.
In response to Patrick’s call for a test case, the secretary of the Department of Social Services, Kathryn Campbell, pointed to the Single Touch Payroll changes that will come into effect next month.
Under those changes, welfare recipients will be able to report employment income from their payslip, rather than when it is “earned”.
“We have known that ‘earned’ versus ‘received’ has been a challenge, which is why we recommended to government the changes,” Campbell told estimates.
Those changes would not apply to debts raised under the previous system.
Patrick said his preference was to “look at this little cluster” and work out whether “a test case is required or another declaration by the minister” to waive debts raised in these circumstances.
“I suspect there are lots of people, just as there were in the class action, who might fall within the circumstances described in this particular case,” he said.
Separately, Gordon Legal’s class action argues all debts raised under the program should be paid back, including those later substantiated with payslips or bank statements.
It argues the debts are “tainted” in what has been described as a“reversal of the onus of proof”.
The trial is set to begin next week.
