Image by untitled exhibitions CC 2.0 via Flickr

Raising debts without legal authority is wrong – and illegal. Centrelink’s Online Compliance Intervention System, colloquially known as robo-debt, raises social security debts without adequate legal proof or authority.

There has been a lot of media attention, as well as the Ombudsman report, Parliamentary inquiry and many Tribunal decisions, about robo-debt since it was introduced in 2016. The government denies this, but fails to put any counter argument. Administrative Appeals Tribunal (AAT) decisions have found such lack of legal authority. The government has not appealed these decisions, but continues the Centrelink robo-debt system for people of working age (while apparently delaying its extension to pensioners until perhaps as late as 2021).

What is robo-debt?

Robo-debt is the colloquial name for the Online Compliance Intervention System introduced by Centrelink in mid-2016. This system matches Australian Taxation Office data about reported earnings of social security recipients over the whole employment period, against fortnightly earnings declared by the recipient each and every fortnight during which she or he received Newstart (unemployment) or Youth allowance.

Under social security law, payments such as Newstart or Youth allowance must be reassessed in each and every fortnight as income changes. There is an earnings bank ‘offset’ if income in a previous fortnight fell below or within a disregard range, designed to encourage casual or part-time work. This adjusts for any overpayment, or underpayment, in each fortnight.

Robo-debt uses a different method to determine if there is an overpayment of Newstart or Youth Allowance. It calculates and applies a fortnightly average of gross earnings in the whole employment period as the basis for raising a debt because of overpayment. The data used goes as far back as 2010. However, the average calculated does not tell anything about each of the fortnights which comprise it. As a result, the so-called ‘debts’ raised in this fashion are nearly always entirely false (in fact, there is zero debt) or greatly inflated in size. To rely on the average where casual employment is the norm is as risible as saying that the same amount of rain falls every fortnight based on yearly averages.

The Commonwealth Ombudsman’s report confirmed that this is the consequence of the robo-debt calculation method. It found that in the sample assessed, the alleged ‘debts’ dropped from original amounts of a few thousands of dollars to nothing or to a few hundred dollars once fortnightly pay was verified.

Prior to robo-debt, Centrelink obtained payslips from clients who had kept them, or used its statutory powers to obtain fortnightly pay records from employers. It did this in seven percent of all data matches—unlike robo-debt, which seeks to capture all matches. That original practice was consistent with the obligation of Centrelink to correctly find and prove any debt.

Why must government prove a social security debt?

Robo-debt lacks legal authority. It is Centrelink’s legal obligation to prove up debts for three reasons.

  1. Social security legislation states that there is a debt ‘if and only if’ a provision makes it such.
  2. The Full Federal Court in McDonald (1984) 1 FCR 354) explained that Centrelink bears the practical onus of proving a debt; and
  3. An allegation of ‘debt’ raises the bar in terms of that proof, under the long-standing High Court ‘Briginshaw principle’ which dates back to 1938.

The robo-debt process fails to discharge this obligation of Centrelink to prove the debt. The method of calculating an average can only ever be correct if the person concerned had only one job and their rate of pay never varied over time. This is extremely rare. In many robo-debt cases, the recipient of Newstart or Youth Allowance may have up to a dozen different jobs, all of which were casual or episodic. That fluctuation and diversity of jobs and earnings is why debts disappear or are drastically reduced on proper investigation and calculation.

Shifting the onus: You must disprove your debt

Robo-debt shifts the onus to alleged debtors to ‘disprove’ what Centrelink itself is legally obliged to establish. Until late 2016, Centrelink’s own website only advised keeping payslips for six months. Few citizens will have kept records from seven or eight years ago, yet the Online Compliance Intervention puts the onus on debtors to load such information into the Centrelink system, or obtain it afresh from employers.

This makes sense if recipients have kept payslips or can readily obtain them. Yet many employers are likely to have ceased business after a period of years, or may be uncooperative. Casual work is notorious for under-payment and other scams. Centrelink rarely provides assistance to obtain the correct information, meanwhile it maintains that these debts exist before the Administrative Appeals Tribunal.

What does government say about robo-debt?

Centrelink states that nothing about the Online Compliance Intervention scheme is ‘inconsistent with the legislation’ (quoted in Karp & Knaus 2018). While it is true that there is no provision outlawing robo-debts, as explained in this article, there is a provision stating that only legislated debts may be raised. It is the common law that brings a robo-debt undone due to lack of any relevant proof of it.

More recently, the government has stated that robo-debt ‘did not automate debt recovery, nor change how income was assessed or how debts were calculated’.

It is true that there remains (or should remain) a human act by a person in Centrelink, of endorsing the result of the data match and any new information provided by the alleged debtor. However, in practice it is the averaging that applies in the vast majority of cases.

And while robo-debt does not ‘change’ the law about how income is assessed and debts calculated— no amendments having been made to the legislation —it is simply not accurate to imply that the current law is being correctly applied, when an average is substituted for the legally required precise and variable specific fortnightly amounts.

Is the government legally correct about robo-debt?

The government claim to have a legal foundation for the robo-debt approach has never been tested. Neither the Ombudsman inquiry nor the Parliamentary inquiry into robo-debt properly addressed the ‘law question’. Nor has Centrelink ever taken the many invalidations of robo-debts in the first level of AAT review (AAT1) for testing at the second level of AAT review (AAT2).

The only case decided at the second review (AAT2) level to date was taken by an applicant after Centrelink accepted the AAT1 ruling that it must obtain actual fortnightly figures, which the applicant still thought too high (Re: Gosse 2018). An AAT1 pre-hearing direction in early 2017, which sought written argument on the precise elements of the argument for lawfulness of robo-debt also failed to elicit any such basis for sustaining the government claim. Since AAT1 decisions remain unpublished, the lack of any proper legal testing of the government claim for a legal basis for its scheme remains most worrying.

Social security clients are among the most vulnerable members of the community. That is why we have a system of social security. But the rate calculations for payments such as Newstart are very complex. Faced with a ‘claim’ of a debt, based on the wrong information, most recipients of payments especially from past years may simply assume that Centrelink must be correct (‘it was so long ago’). They will be frightened and embarrassed into paying money they do not owe.

A better way forward

How has this situation come about? Was robo-debt simply a rushed savings measure, given MYEFO estimates it will yield $2.1 billion over the forward estimates? Ombudsman inquiry data finding a high proportion of sample debts to be totally false, and others grossly inflated, suggests that a large proportion of the MYEFO estimate of $2.1 billion of ‘savings’ is actually an unlawful, and immoral (or even ‘extortionate’), ‘tax’ on the vulnerable.

This is a shamefully regressive outcome. It also tarnishes the image of new approaches such as ‘machine learning’, which otherwise hold great promise of sounder, fairer and more efficient benefit administration. That could be achieved if such technological innovations were rolled out in a sensible and fair way, as the government’s own Administrative Review Council proposed in 2004.


Further reading

This article is based on Carney, T 2018, ‘The new digital future for welfare: Debts without legal proofs or moral authority’, UNSW Law Journal Forum, March, pp. 1-16.

This article has 3 comments

  1. Our problem has not been with Robodebt but with debts raised because Centrelink has either wrongly coded the correct information we provided or has failed to code the information at all. The really frustrating thing about all this is they always blame us. They never have a legitimate reason to blame us because we deliberately leave a paper trail a mile wide as proof we did the right thing. But that never stops them. We have been blamed for ridiculous reasons like being married to each-other and in the same profession. The latest stunt is to blame us because we both earn part of our income as sole traders and part as employees. This apparently made it too hard to code in the information from the tax assessments and profit and loss statements we provided. Never an apology and never any credit given for getting as much work as we can in this world of casualization and subcontracting and scrupulously reporting our income and every change of circumstance plus finding and correcting their mistakes, just blame blame blame. Mutual obligation is a joke.

  2. Tracey Hoolachan

    Robodebt victim with an AAT – democracydemon1 twitter. I am very grateful to Prof. Carney for being brave enough to speak out as there seems to have been a legal desert before the Prof. I too made that decision & am now standing firm against the potential govt privacy threat (thanks to the OIAC ruling).

    I long arrived at the conclusion that it is time that the people’s Tribunal AAT was returned to the people. With ever dwindling legal aid budgets, if people not legally trained cannot fight oppressive govts inside a Tribunal set up for them then the Tribunal’s purpose is irrelevant.

    My intention is to fight my AAT on all fronts using part of the Prof’s first review. As an ordinary person I find it atrocious that in what should be a peoples Tribunal, we don’t face the Manager of the DHS dept or even the ARO who made the decision. We have to fight a govt solicitor with at best if we’re lucky an underfunded Legal Aid assistance. I’ve had to prepare my own AAT application, my own legal defence & will be fighting it myself. All done while I’m supposedly recovering from a leg amputation. Fortunately, I was a legal secretary, Dip Acc with currency & TAFE Computer Prog 1983 (age Centrelink’s old computer).

    I’ve already been told they don’t want my case as below. Not because I’m guilty of so called “welfare fraud”, but because, instead of saying, “I’ll be right Jack”, I said, “but what about all those without a voice. Why can’t we ask for them too?”

    It seems despite having proved I was an enrolled student 2016 of an education deliverer de-registered Ivy College (AAT Annual Report 2013) in partnership with SGA in ASQA audit after complaints with findings against it for data & having received a Special Circumstance HES Act2003 review in my favour & ARO that could not find any Special Circumstances applied -my case is too much work for my local Legal Aid. The Prof’s first review will of course be invaluable, but as an ordinary person my chance of debating a solicitor with multiple AAT robodebt experience will of course be slim. I say better to lose with honour, than to win with the shame of leaving other innocents behind.

    I ask, why has the legitimacy not been questioned until the Prof when in common law for centuries under blueprintism, variations to plan are still at the onus of the plans creator?

    I ask, how it is “just” (Powers V Constitution Castle clause-cash is legally defined as property) that ATO’s Alex tells me I only have two years to review my tax form when debts can be from decades ago. I ask, how it is “just” that victims are even further victimised by double taxation?

    I ask, how the government can be determined to be “good” (Powers V Constitution) when robodebts encourage trade chaos? Anyone with a legitimate trade debt can create a bodgy account contra and say prove my account is not bodgy – until then there is no payment liability.

    I ask, why when so many cases have gone to AAT hasn’t it become a standard request to seek a Tribunal ruling for others that Centrelink must abide by? I say AAT’s annual report 2013 Ivy case shows AAT can rule for people (students) other than the direct Respondent & Applicant when it allowed a month’s grace for relocation by students that wasn’t queried. I asked and to date it hasn’t been took out. I say, if the Centrelink computer could not even data match a College’s approved status within the govt as part of the Austudy approval process, how can it possibly be deemed fit to data match to any computers in the private domain?

    I ask, when AAT’s are defined in SSAct as being reviews, why Centrelink has been able to auto-deduct debt monies for pre 1/1/17

  3. Years ago I was hit by a robodebt type situation. I had been separated from my husband, and claimed single parent benefits. When we reconciled and moved back together (not long after the infamous September 11 disaster) I immediately told them and asked them to cancel my single parents benefits from that day forward, and was immediately presented with a debt of thousands of dollars. I didn’t understand how the heck I could have ended up with a debt but paid it. Now I realise they probably did exactly the same thing to me back then as they are doing to everybody now. Bearing in mind it’s been more than a decade since our reconciliation, I wonder if it’s still possible to dispute now and get those thousands of dollars back.

Leave a comment
