Australia markets closed

    +36.90 (+0.50%)
  • ASX 200

    +37.70 (+0.53%)

    +0.0028 (+0.42%)
  • OIL

    +0.34 (+0.48%)
  • GOLD

    +14.50 (+0.80%)

    +180.24 (+0.72%)
  • CMC Crypto 200

    -1.68 (-0.41%)

    +0.0047 (+0.73%)

    -0.0023 (-0.22%)
  • NZX 50

    -21.11 (-0.18%)

    +49.48 (+0.43%)
  • FTSE

    +4.46 (+0.06%)
  • Dow Jones

    -24.49 (-0.07%)
  • DAX

    +106.16 (+0.74%)
  • Hang Seng

    +450.64 (+2.32%)
  • NIKKEI 225

    +326.58 (+1.18%)

Melbourne nurse takes on Centrelink’s ‘robo-debt’ in landmark case

Image: Getty
Image: Getty

A Melbourne nurse will challenge Centrelink’s controversial automated debt recovery system in the Federal Court, after contracting an alleged debt of $4,000.

Madeleine Masterton accrued the debt while receiving the Youth Allowance as she studied her nursing degree.

According to Centrelink, she was overpaid.

However, Masterton says she was given no information about how the debt was calculated, and is now taking her case to the Federal Court to see if Centrelink’s calculation process is lawful.

She is represented by Victoria Legal Aid.

“It’s clear robo-debt is deeply flawed and continues to cause people distress and hardship,” the executive director of Civil Justice Access and Equity at Victoria Legal Aid, Rowan McRae said.

“We want this case to pave the way for a fairer, smarter and more accurate system which works for government, but also for the many people who access social security at some point in their life.”

An ‘elaborate sham’

The program, introduced in 2016, has previously been described as an unlawful exercise by former administrative appeals tribunal member, Terry Carney.

Another QC, Gavin Silbert described it as an “elaborate sham” in December last year after engaging with Centrelink on behalf of someone he knew who was issued a demand to repay a debt of $10,230.97.

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

“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.”

Continuing, she said Australian workers and studiers can be stung by the calculations if they’re seasonal workers and former uni students who can’t work out how the debt was calculated.

“We’ve seen single parents unable to make back-to-school purchases, because they’d been penalised by Centrelink when they hadn’t chased up old bank statements or payslips,” added McRae.

Victoria Legal Aid will argue the calculations are not accurate and as such, the debts can’t be legally imposed.

McRae said the aim is not to help people escape debts, but for Centrelink to create a system that “encourages accurate reporting” and which fairly investigates suspected overpayments.

“What we can’t accept is a system that is so clearly not working, that has been proven to be causing overwhelming hardship, and that a Senate Committee has recommended be suspended.”

‘I have a social conscience’

Masterton said she hopes her case will help other people in similar situations, especially those who don’t speak English well or others who may panic and simply pay the debt.

“If I can prevent other people going through that, I should, I have a duty to do that,” she said.

“If my case proves the whole robo-debt system is wrong under the law, then I hope that the system is wiped and that everyone else who has a debt is freed from it until a better system is in place that calculates transparently and correctly.

“This case isn’t just about me and if I can make life easier for other people then that would be a successful outcome.”

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.

Now read: Banking Royal Commission: How Hayne failed remote Australia

Now read: 3 ways to make money in the Year of the Pig

Now read: How the disastrous Fyre Festival defrauded investors out of US$27.4m