Shock claim on debt bungle

‘Lame as you can get’

THERE were no reasonable arguments in support of the income averaging process that formed the centrepiece of the former federal government’s robodebt scheme, a royal commission has been told.

The shock claim emerged on Monday as the royal commission into the multimilliondollar debt recovery bungle entered its final stretch.

Mark Gladman, the former deputy general counsel in the Department of Human Services’ (DHS) program advice and privacy branch, told the inquiry he received an email about developing a paper on the department’s practice of averaging income.

Mr Gladman said he knew of media coverage about “letters going out”, telling the commission he was asked to draft a document that could be shared with ombudsmen and other stakeholders. “I was thinking of it in the first instance as being legal advice,” he said.

Mr Gladman said he did not have a “detailed understanding” of the program at first, but said he later felt there was no argument supporting the conclusion the income averaging process could be relied upon.

The robodebt scheme ran from 2015 to 2019 under the former coalition government.

It was set up to recover alleged Centrelink debts from hundreds of thousands of Australians using an automated system to match people’s tax and Centrelink data. But $751m was wrongfully collected from more than 380,000 people.

Taxpayers forked out more than $1.8bn in compensation after the former federal government settled a class-action lawsuit with victims.

The commission was shown an email dated January 10, 2017, in which Mr Gladman asked for urgent legal advice on the DHS process used to identify potential overpayments. He gave evidence that he got to a point where he felt the arguments “didn’t support” a conclusion that there was a reasonable basis for income averaging.

“I felt I was in a fact-finding role,” Mr Gladman said. “I didn’t understand what the legal argument was that allowed averaging even in a last resort. I wanted to look at previous AAT (Administrative Appeals Tribunal) decisions, if they’d considered it; if there was previous legal advice.

“I thought if it was a longstanding practice, someone must have considered it.”

The commission also heard evidence from Lisa Carmody, the former general counsel in the DHS’ commercial law branch, who said the draft legal advice wasn’t seen as “something that should stand alone” in the context of other events at the time.

Commissioner Catherine Holmes said there was “not a single section” in the Social Security Act, which allows for income averaging. “This is about as lame as an advice as you could get, isn’t it?” Ms Holmes asked Ms Carmody.

“I agree; it’s unconvincing,” Ms Carmody replied.

The royal commission will conclude on March 10.