Yahoo Finance Is robo-debt legal? We asked some experts to find out
The government’s controversial robo-debt scheme has again come under fire, after Labor’s Bill Shorten questioned the legal foundations of the scheme.
Experts and Centrelink recipients alike have taken aim at robo-debt after thousands of recipients received debt notices, based on an algorithm, that turned out to be erroneous or unjustified.
This morning, Shadow Minister for Government Services Bill Shorten slammed officials from the Department of Human Services for failing to “identify the legal foundations of the controversial scheme”and described it as “a stain on the civic life of this great nation”.
Also read: ATO fines dead man $5,000 for failing to lodge tax return
Also read: Centrelink seizes tax returns of Aussies appealing robo-debts
Also read: ‘Robodebt is very likely illegal’: Bill Shorten launches class action into Centrelink
“Under questioning by Labor senators in Senate Estimates late last night, the head of the Department of Human Services and other senior bureaucrats were at a loss to identify the legal basis for the reverse onus scheme and took a series of questions on notice,” Shorten said.
This followed a series of complaints about the scheme’s “unfairness” and “likely illegality” that has been raised by former tribunal members, legal experts, the UN, and those affected by the scheme.
In September this year, law firm Gordon Legal launched a class action to investigate whether more than 400,000 debt notices issued by Centrelink were lawful.
“It is increasingly clear when it comes to issuing debt notices, the Australians Stuart Robert’s Department shoots first and asks questions later,” Shorten said. “It is harsh and inaccurate and has been wrong nearly a quarter of a million times.”
“It is not just immoral but almost certainly illegal. The Department’s silence on this point speaks volumes,” Shorten said, calling for the scheme to be scrapped “immediately”.
While Labor was not opposed to data collection or data matching, “robo-debt lacks proper human oversight and accountability.”
So is robo-debt legal or not? Experts respond
The scheme has been slammed for being “faulty”, “immoral” and even “verging on extortion”, among other things – but several Australian legal experts are suspecting that the Centrelink scheme is also actually unlawful.
Here’s what they said:
Recipients paid Centrelink money they didn’t lawfully owe: Gordon Legal
Gordon Legal principal lawyer James Naughton told Yahoo Finance that the law firm’s investigations found the Commonwealth government had “unlawfully taken money from thousands of Centrelink recipients” through the robo-debt scheme.
“For thousands of Australians, The Robo-debt Scheme has resulted in Centrelink demanding money from social security recipients based on a calculation of their earnings by “averaging” how much these recipients earn fortnightly using ATO information only.
“Instead, they should be calculating their actual fortnightly earnings as Centrelink is normally required to do.
“This means that thousands of Centrelink recipients are likely to have paid back money to Centrelink which they were not lawfully required to do – sometimes including collection fees and interest charges as well.
“This has been a harsh and unfair experience for an enormous cross-section of everyday Australians, with many in very vulnerable positions suffering a great deal of hardship because of this.
“So far, more than 3000 people from all over Australia, all of them issued with a Robo-debt Notice after mid 2016 and who have paid money back to Centrelink as a social security recipient, have registered their interest in joining a class action case with Gordon Legal.”
James Naughton, Principal Lawyer at Gordon Legal
Robo-debt is unfair, inaccurate, unlawful: Victoria Legal Aid
According to the Victoria-based free legal service, there are four areas of concern regarding the legality of robo-debt:
Averaging: Robo-debt’s averaging method of comparing fortnightly Centrelink data with yearly Australian Tax Office data is not a lawful way to conclude that a debt exists or to calculate an accurate amount.
The reverse onus: Shifting the onus on to individuals to show that they do not owe a debt is not a lawful way for Centrelink to proceed to raise a debt. If the calculation is inaccurate to start with somebody’s failure to engage does not provide a basis for raising a debt.
Penalty fees: Additional penalty fees are being imposed on people who are disputing an alleged debt or don’t know that the debt exists. Under the Act, a penalty fee should only be imposed where Centrelink is satisfied a person knowingly provided misleading information.
Tax garnishing: Centrelink took our client Deanna Amato’s full tax refund of $1700. This is how she learned about her robo-debt of over $2700. After we launched a Federal Court test case, Centrelink recalculated her debt and said she only ever owed $1 and 48 cents. Garnishing a tax return should only occur after an accurate debt has been established and in compliance with the conditions in social security legislation.”
Joel Townsend, Victoria Legal Aid program manager of economic and social rights, accredited specialist in administrative law, Law Institute of Victoria
‘No legal basis at all’ for robo-debt’s reverse onus of proof: USyd Emeritus Professor of Law
According to University of Sydney Emeritus Professor of Law Terry Carney, the way that the robo-debt scheme asks for welfare recipients to prove they don’t owe money is unlawful.
In his submission to the Senate Community Affairs References Committee about Centrelink’s compliance program, Carney wrote:
“An ATO data-match can raise sufficient doubt about the correctness of past payments as to warrant Centrelink inquiry, either by asking for any payslip records still held by the person or by exercising the formal powers to require employers or banks to supply information.
“Where the supposed robo-debt debtor is unable to provide such records, however, there is no legal basis at all for the supposed debt amount to be raised as a debt. This is because Centrelink, not the supposed debtor, bears the legal onus of establishing any such debt.”
He said “there is not a shred of support” for claims that there is a legal obligation to raise the purported debts.
Speaking to Yahoo Finance, he added: “The answer of course is that it is not legal, they do not have a leg to stand on legally speaking.
“And this lack of such authority for their position is why the government never contests overrulings (finding of no debt due to its illegality) in any public forum”.
Terry Carney AO, University of Sydney Emeritus Professor of Law
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