Robodebt 2.0: Labor moves to hit the unemployed for debts caused by system failures

July 4, 2022
Campaigners outside Tony Burke's office on July 1. Photo: Antipoverty Centre/Facebook

The ultimate issue with Robodebt, the former Coalition government’s illegal automated debt collecting scheme, was the human cost: the harming of so many struggling to survive on the pittance that is doled out as social security benefits and, in some cases, people committed suicide.

Robodebt was launched by former social services minister Christian Porter in July 2016. The Online Compliance Intervention replaced manual debt collecting with an automatic computer program that matched the Australian Taxation Organisation and Centrelink databases in an effort to detect payment discrepancies.

This system raised what was previously 20,000 debt notices a year to 20,000 a week. It soon became clear it was producing false debts and, although it is unknown how many can be attributed to the scheme, more than 2,000 Robodebt notice recipients died over 28 months to October 2018.

This is the context in which new social services minister Amanda Rishworth announced on June 16 that the department will go ahead with a new debt-collecting system because, due to Coalition mismanagement, 17% of JobSeeker payments over the last two to three years were, apparently, incorrect.

Despite Prime Minister Anthony Albanese highlighting his understanding of what it’s like to live on social security, government services minister Bill Shorten said the government has “a responsibility to take steps to recover debts owing, and therefore, efforts to recover existing debts will need to recommence”.

Antipoverty Centre spokesperson Kristin O’Connell said: “This looks an awful lot like Robodebt 2.0, because the problem with Robodebt was not ... that they messed up the calculations, the problem was with how it affects people’s lives when they are living below the poverty line.

“On a very low income, they received a debt that they could not afford to pay,” she told Sydney Criminal Lawyers. “That has consequences, like people skipping meals. We know from experience that sometimes they feel they had no option other than suicide.”

O'Connell said successive governments have for decades used “aggressive debt collecting tactics in order to make budget savings off the poor”. The fallout from Robodebt heightened the awareness around the harms of this practice.

Through no fault of their own, some recipients, surviving on below poverty line payments and trying to find a job, have been overpaid. Yet they are to be hit up for this debt, some of which has been accumulating over three years.

Unemployment by design

In its budget forecasting, the Australian government uses the non-accelerating inflation rate of unemployment, the NAIRU, a level of unemployment that’s necessary to avoid inflation. The Reserve Bank factors the NAIRU into its monetary policy settings.

A certain amount of unemployment is, according to this theory, desirable to keep the economy buoyant.

Yet, despite factoring in a necessary level of out-of-work constituents, successive federal governments have continued to keep the unemployment rate at a pitiful level — currently it sits at $321.35 a week. By contrast, the poverty line is $609 a week for a single adult.

“Governments design unemployment into the system. They use unemployed people as economic fodder to keep down wages and ensure that they’re managing inflation,” O’Connell said.

“However, it doesn’t actually reflect the reality of what drives inflation. So we have people being punished for something that’s not their fault, but is actually by design.”

Debilitating obligations

The Labor government is overseeing a new points-based mutual obligation scheme for those on JobSeeker, crafted by the previous Scott Morrison government.

Workforce Australia involves a system of job-seeking activities a welfare recipient must do to accumulate 100 points a month to ensure their payments are not docked or cut off. This is despite the fact that such schemes are known to hinder finding work.

Advocates have called for the system to be scrapped or paused. But employment minister Tony Burke said that as $7 billion worth of contracts were finalised by the previous government, it had to start on July 1.

O’Connell said the minister misrepresented what had been asked: a suspension of sanctions for at least three, if not six, months. This is because the evidence shows it takes time for people to understand new systems.

Burke is only willing to allow a one-month grace period.

“Labor supports programs that force unemployed people to do activities that don’t help them,” O’Connell said. “But what [Burke] can do is something extremely simple: he can make sure that as a result of people having to learn a new system, they will not be penalised.”

‘Dole bludger’ bashing

Rishworth said the government has found out how badly the Coalition mismanaged the welfare system. A large number of the more than 805,000 people on JobSeeker have been overpaid and, despite this being no fault of their own, they must pay it back.

The obvious question is why it continues to hound these people, who are currently living way below the poverty line, for relatively small amounts of overpaid money when many of the richest citizens and one-third of big businesses avoid paying any tax at all.

O’Connell set out an alternative path the government could take, rather than shackle the unemployed with immediate debts. It would involve them not having to pay back any debts until after they are employed in a similar way to student loans. It could also correct its system to avoid overpaying people.

O'Connell said the legacy of Robodebt is that many recipients have still not received justice, despite a prominent class action. This is because it was settled out of court, meaning that the case against the scheme was never made.

“We will see more of the same. We will see more people hurt by debt collection practices,” O’Connell said.

“But there is something that will be different about this … we will not be able to find out at a later date exactly who was hurt, as these debts will presumably not be deemed unlawful.”

[Reprinted with permission from Sydney Criminal Lawyers.]

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