Morrison forced to apologise for robodebt, forges ahead with mutual obligation

June 23, 2020
Queuing at Centrelink.

Penalising welfare recipients is standard operating procedure for the federal government. Despite the “robodebt” scandal, this practice is set to continue under the pandemic recession, providing a convenient scapegoat for government policy failures.

On June 1, the government announced it would refund 470,000 debts, totalling between $721 million and $1.5 billion, that had been issued using Australian Taxation Office and Centrelink data to fleece “overpaid” welfare payments. The automated data matching scheme is now considered unlawful.

According to an article in the June 10 The Guardian, since 2015, an estimated $2.1 billion was raised through the “income compliance” (robodebt) program, including 200,000 debts the government still considers legal and which it says it will not refund.

The Australian Council of Social Service said if it were not for those who had spoken out over almost four years, the government may not have backpedalled. It specifically mentioned campaign groups Not My Debt, Australian Unemployed Workers Union, Victoria Legal Aid and Economic Justice Australia for pushing to end the unlawful robodebt scheme.

It wants the repayments to be expedited, and has also called on the government to increase funding to Centrelink, which is trying to cope with the “dramatic increase in demand for financial assistance” arising from the pandemic.

The fact that the repayments have yet to be made is another sign of failure. The federal government is resisting including in the repayments the interest earned on the money it illegally collected. Government lawyer Michael Hodge QC told AAP on June 17 that to repay the debt plus interest would be tantamount to admitting there had been unjust enrichment.

Justice Bernard Murphy replied to Hodge that the federal government would be “obligated to provide interest”. “You’re being sued for the debt plus interest. You’re acknowledging the debt’s raised illegally … how do you avoid interest?”

A class action against the government, due to be heard in September, is being adjusted in light of the government’s confession to include the question of misfeasance in public office, alongside arguments for damages.

Despite Attorney-General Christian Porter’s refusal to apologise, Prime Minister Scott Morrison and Minister for Government Services Stuart Robert decided it would be tactically correct to do something, and they apologised in parliament. It reveals the government is aware of the potential political cost it could wear from its punitive scheme, especially when so many more thousands of people are on the bread line.

From February, the government knew its scheme was illegal. A Senate inquiry examined emails from November, when the system was scaled back. One email from a senior bureaucrat read: “They [the Department of Social Services] have received legal advice that debts based solely upon DSS own income averaging of ATO annual tax data [robodebts] are not lawful debts.”

The Federal Court then ruled against the robodebt program in a case in November brought by Deanna Amato that her $2,500 debt was not lawful because it relied on “income averaging”. It ordered the Commonwealth to pay back Amato’s costs as well as $92 interest.

Labor is now supporting the Australian Greens’ calls for a royal commission into the robodebt scheme, despite having established its own in 2011, albeit with each case individually reviewed. The Coalition moved to a fully-automated system in 2016.

Greens WA Senator Rachel Siewert said that, given the government had denied wrongdoing for years, a formal judicial review is needed. “Even after #robodebt was deemed illegal the Gov had the audacity to suggest they may change the laws & haven’t ruled out taxing the refunds of illegal robodebts! It's so important to have a RC, we need to understand what happened & ensure it NEVER EVER happens again,” she tweeted on June 23.

Morrison responded as he did when the calls for a banking royal commission were first raised: no need, its already being fixed. Now, as then, the calls for such judicial oversight are growing stronger.

As the recession deepens under the pandemic shut-down, with unemployment reaching into sections of the middle class, it will be harder for the federal government to blame welfare recipients for their economic difficulties.

But that won’t stop it trying.

It appears that the federal government’s mutual obligation requirements — which require people aged between 18 and 59 who have received welfare for more than 12 months to work in a job placement for 25 hours a week for at least six months of the year — are to remain.

A report by Simone Casey from the progressive think tank PerCapita, Mutual Obligation After Covid-19: the Work for the Dole Time Bomb, estimated that in a year’s time, about 250,000 people will be required to undertake Work for the Dole under the mutual obligation system, which is being phased in from June 9. It will cost about $22 million, not taking into account the administration fees that job agencies receive for the estimated 1 million unemployed people on their books.

It argues the “benefit” of this expenditure is “doubtful” because “Work for the Dole reduces work availability and causes harm to people who are already suffering from unemployment related poverty and financial stress”. Many studies have shown that Work for the Dole does not significantly improve a person's chance of getting a job. And when there are fewer jobs due to an economic recession, it makes even less sense.

PerCapita recommends that Work for the Dole be replaced with a new personalised Job Plan system that reflect a person’s “life trajectory and vocational goals”. Its six other recommendations include: job search requirements that are proportionate to labour market conditions; funding genuine job creation and skills development activities, especially in areas worst affected by COVID-19; and a “Youth Guarantee” to young unemployed people and similar measures to support older unemployed people who are at risk of long-term unemployment.

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