Curious case of debt debacle
HE’S back. After four months in which he has more or less kept his head down, Bill Shorten was back in front of the cameras this week with a twinkle in his eye.
The occasion was the announcement at Parliament House by Western Bulldogs president Peter Gordon that his law firm Gordon Legal will be launching a class action on behalf of people who have been targeted by the government’s robodebt program.
Shorten’s presence at Gordon’s press conference mystified some of the press gallery. Was it a wise idea for Labor’s spokesman for government services to be associating himself with a lawsuit against the Commonwealth that might cost taxpayers who knows how much? Wasn’t Shorten one of the ministers responsible for introducing data matching between Centrelink and the Australian Taxation Office back in 2011?
Reasonable questions I suppose, but memories in politics are short and no doubt Shorten will argue that in his day it was a kinder and gentler robodebt, not the monstrous money-harvesting scheme that has operated these past few years.
Moreover, if the lawsuit flops, it’s no skin off his nose, whereas if Gordon Legal is successful in convincing the courts that the government has been guilty of “unjust enrichment” in attempting to gouge money from thousands of poor people it was not entitled to, his political judgment will have been vindicated. And in a sense the process will be the punishment for the government because unless it succeeds in getting the case knocked off quickly, it is likely to have to hand over tranches of Centrelink documents which, I suspect, will not make pleasant reading. This will not be the first case brought against Centrelink over robodebt. In February this year Victoria Legal Aid sued in the Federal Court to test whether the process Centrelink used to calculate a debt it claims was owed by a nurse was legal.
In May, in an attempt to make the case go away, Centrelink wiped the debt. Earlier this month it also wiped the debt of a second case that had been brought by VLA, although that trial is set to go ahead because the Commonwealth and the plaintiff are still arguing over the legality of the interest Centrelink was attempting to charge.
Whether it actually goes ahead will be very interesting to see. The Commonwealth’s willingness to proceed to trial represents a major turnaround. Until now it has been the case that it has backed down when anyone has challenged the legality of the debts that are being alleged. In hundreds of cases that have been taken to the AAT, the government has accepted it cannot prove the debt is owed.
Sadly, thousands of people who didn’t know any better have paid up. And if even a tenth of the stories that have emerged from this sorry saga are true, it is easy to see why.
It is difficult to overstate how much of a frolic Centrelink has here. The claims which will be considered in the Gordon Legal case date back to 2010 which, as Victoria’s former chief crown prosecutor Gavin Silbert wrote in the Herald Sun earlier this year, “it knows very well that it is unable to prove”. The reason is “Centrelink has destroyed its records and is entirely dependent on information obtained from the Australian Taxation Office”. Its practice was to take the gross annual income from the ATO and to divide it by 26 to calculate what is called an “apportioned actual income”.
It then matched this income with annual payments from Centrelink. The process was so crude as to be laughable. A student could have received payments from Centrelink in one half of a year while they were studying, then earned a good income in the second half after they graduated. In which case they’d owe nothing. To come back a decade later, without any evidence (because, remember, they have destroyed their records) and to bluff people into admitting they received overpayments is absurd, wrong and, as the court has now been asked to consider, possibly illegal.
And for the purposes of this lawsuit, it doesn’t matter that this iteration of robodebt — let’s call it robodebt V. 1 — is no longer in operation. The courts are going to be asked to consider everything going back to the beginning of this sordid episode.
Whichever way it goes, this case is going to be very interesting to watch. And if the Commonwealth goes down, it is potentially very expensive should the plaintiffs establish they are entitled to compensation for the pain and loss they have suffered.