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Centrelink lambasted for collecting robodebts unlawfully

SYDNEY, AUSTRALIA - MARCH 21:  A man walks into a Medicare and Centrelink office at Bondi Junction on March 21, 2016 in Sydney, Australia. Federal public sector workers are expected to strike around Australia over a long-running pay dispute.  (Photo by Matt King/Getty Images)
Services Australia has been blasted for collecting debts after they were deemed unlawful. (Photo by Matt King/Getty Images) (Matt King via Getty Images)

Services Australia continued to collect debts from some Australians even after the debts were found to be legally unlawful, a new report has revealed.

A new report from the Commonwealth Ombudsman has found that Services Australia failed to respond appropriately after it was determined in November last year that debts raised through computer algorithms with little or no human oversight were “legally insufficient” to raise a debt.

“We are concerned that Services Australia nevertheless continued to recover income averaged debts despite a high risk that many of those debts were ‘legally insufficient’,” said the report, released on Tuesday.


The income averaging process is arguably the most controversial part of the robodebt scheme, as it led to debts being raised by matching income reported to Centrelink with income data from the ATO. Critics of the method have said that this is an inaccurate measure of income and grounds for raising debt.

WATCH BELOW: Centrelink's welfare debt mistake

While Services Australia did “act as quickly as it was able” to identify debts that were raised through the income averaging method, there was still “a period of some months during which debt recovery action was continuing” that had been raised on “‘legally insufficient’ grounds”.

“We consider this created a high degree of risk for Services Australia and unnecessary hardship for individuals affected, which was compounded by Services Australia’s knowledge that the identification process would be largely manual and therefore take some time to complete.”

Instead, Services Australia should have paused debt recovery on all debts, and only recommenced it after it was confirmed that the debt was not wholly or partially raised on the basis of income averaging, the Ombudsman found.

But Services Australia said that it was unable to freeze debts “en masse” due to the way the debt management system was set up.

In response, the Ombudsman said the system ought to be changed.

“If Services Australia wishes to maintain the ability to pause some debts and not others, we consider its systems should be designed to facilitate this approach,” the report said.

“In our view, not being able to pause debt recovery action on all debts of a particular type, without slow and resource-intensive manual intervention, creates significant risk of inappropriate debt recovery action.”

In mid-November last year, the Federal Government reached a $1.2 billion settlement over a major robodebt class action brought by Gordon Legal.

The sum encompasses $721 million in repaid money to more than 370,000 people who were incorrectly chased, $112 million in compensation, and a decision to drop an additional $398 million in wrongfully raised debts.

At the time, Labor shadow minister for government services Bill Shorten called for a Royal Commission into the robodebt scheme.

"Why should people have to go to lawyers, put together a class action just to get the government to obey the law?" he said.

In late October last year, Centrelink announced that it was resuming debt recovery, which had been paused during the recession.

In December, ABC revealed that debt collection had been outsourced to three different agencies, with collection tied to performance targets.

Centrelink's Compensation Recovery line is 1800 777 653, while the Debt Recovery Line is available through 1800 076 072. Individuals can report their employment income or inform Centrelink about meeting mutual obligation requirements via its Reporting Line at 133 276.

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