Australia markets open in 3 hours 18 minutes
  • ALL ORDS

    6,357.30
    -16.40 (-0.26%)
     
  • AUD/USD

    0.7131
    -0.0009 (-0.13%)
     
  • ASX 200

    6,155.60
    -11.40 (-0.18%)
     
  • OIL

    38.53
    -1.32 (-3.31%)
     
  • GOLD

    1,904.60
    -0.60 (-0.03%)
     
  • BTC-AUD

    18,195.84
    -243.90 (-1.32%)
     
  • CMC Crypto 200

    258.71
    -4.70 (-1.78%)
     

Centrelink facing mounting criticism for ‘unfair’ robo-debt system

Lucy Dean
Pictured: Exterior of a Centrelink office in Adelaide. Image: AAP
Centrelink has come under more fire. Image: AAP

A local government employee has mounted a fresh legal challenge against Centrelink’s robo-debt program, claiming the social security service slapped her with an incorrect $2,754 debt.

Deanna Amato said she discovered the alleged debt when her entire tax return was claimed by Centrelink in January this year.

Centrelink claimed the $2,574 debt was accrued while she was paid an Austudy allowance while studying in 2012.

However, Amato said she didn’t know the debt existed until she lost her $1,709.87 tax refund.

“They took every cent. It was shocking that they could take the money without me even knowing that a debt existed and without actual proof. It felt like guilty until proven innocent.”

Amato said she had done her tax and was hoping to use the tax return to pay off her credit card.

Victoria Legal Aid is mounting the case with Amato, claiming Centrelink triggered hundreds of thousands of robo-debts in a way that was “opaque and unfair”.

The executive director of civil justice access and equity at Victoria Legal Aid, Rowan McRae, said the court needs to examine the process Centrelink uses to charge robo-debts.

The debts are calculated by using a fortnightly average, rather than investigating the exact amount claimed.

Victoria Legal Aid is also representing Melbourne nurse Madeleine Masterton in her fight against Centrelink’s controversial system.


Masterton contracted an alleged debt of $4,000 after receiving the Youth Allowance while completing her nursing degree. Masterton said she was also given no details about how the debt was calculated.

However, Masterton’s debt was wiped in May before the case was due to appear in the federal court. The Department of Human Services claimed there is now no case for it to answer, but Masterton’s lawyer said the trial should proceed to examine the debt calculation process.

“In this case and the case of our other client Madeleine, we think it’s critical for a court to look at the process Centrelink relies on to decide that people owe them money,” McRae said.

“These two women are asking the court to decide whether that process complies with the law.”

Centrelink’s robo-debt an ‘elaborate sham’

The robo-debt scheme was introduced in 2016 and has since been branded an “elaborate sham” by QC Gavin Silbert. He had engaged with Centrelink on behalf of a person who received a debt notice of $10,230.97.

“The way robo-debt averages people’s income assumes that they work neat, regular hours throughout a year,” McRae said earlier this year.

“In reality, we know people work part time or sporadically throughout the year, because they’re studying, can’t get regular work, have multiple jobs or are unwell. This means the calculation of alleged ‘overpayments’ is often inaccurate.”

Amato said she felt the process “isn’t lawful” and has concerns for other Australians issued debt notices without the means to pay for them.

“‘I think it’s awful that people who couldn’t survive without this help are being targeted. They’re people who don’t have enough money to live on, who are trying to live with self-respect and work or study and have asked for assistance. And then a few years down the track you hit them with these big amounts of money owing,” she said.

“It seems to have affected the mental health of a lot of people who were told they have these robo-debts. It’s been going on a really long time now and it just hasn’t changed, and it should.”

Masterton’s case will be heard again in August, with a date not yet set for Amato’s case.

Green’s senator Rachel Siewert said in late May this year that the government needs to suspend the system until process issues are addressed, taking issue with “income averaging” process.

She had previously chaired a senate inquiry into robo-debt which recommended the system be suspended.

“We will go back to Parliament in a couple of weeks to rush through tax cuts for high income earners while those living below the poverty line are being harassed by their own Government to pay back debts they don’t even owe,” Siewert said.

“It’s shameful to be putting people on the lowest income through the stress and anxiety of the robo-debt scheme which is fundamentally flawed.

“It’s also far too convenient that the person at the centre of a Federal Court challenge to robo-debt had their debt wiped.

“It is well documented that this program impacts on the mental health of the most vulnerable in our community. It’s time to stop targeting people on income support for savings.”

An investigation by The Age and The Sydney Morning Herald in March found Centrelink had threatened to add daily compounding interest or take funds from bank accounts to those who didn’t repay the debt within 28 days.

Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.