All Centrelink debts raised using income averaging unlawful, Christian Porter concedes
Australia’s attorney general, Christian Porter, has conceded that all Centrelink debts raised using the “income averaging” method were unlawful, opening the door to an influx of further claims for refunds from victims who were hit with debts before 2015.
In an interview on Sunday in which he refused to apologise, citing an ongoing class action, Porter told the ABC’s Insiders program that all debts raised under the method – which dates back decades – could no longer be legally substantiated.
But he confirmed that the government’s plans to refund victims – now 460,000 debts at at cost of $720m – would only include those targeted after 2015.
Porter also did not rule out compensation for those hit by debts after 2015 as part of the Gordon Legal class action, which is headed for mediation next week, saying the government had not finalised its position.
“That’s something we’ll deal with in mediation and no doubt that’s a position put by the class action,” he said.
The acknowledgement that any debt raised using “income averaging” was unlawful confirms reports by Guardian Australia that there may be more victims than the 330,000 people identified by the government for refunds on Friday.
That is because the use of Australian Taxation Office income averaging to enforce welfare debts was a “longstanding” practice dating back decades, although it was only used as a last resort until 2015.
Asked if the Coalition’s decision to remove human intervention in 2015 was the problem with the botched program, Porter replied: “That’s not what made it legally insufficient. It was the fact of the averaging of the data.”
He said there would be a “a statute of limitation” on compensation for unlawful debts raised before 2015 but added: “That system was also not a sufficient basis for raising debts, even before the automation.”
Compensation claims would be separate to claims for refunds, which the government has privately said it will consider on a “case-to-case” basis.
Porter, who was social services minister when the scheme erupted in scandal in 2017, also said the government had received advice that the scheme was lawful at the time.
“We received advice at the time the program was lawful, and many governments have used ATO averaging data over many years – Labor and Liberal,” he said. “We had proceeded on the basis it was lawful.”
Unlawful debts raised after 2015 under the income compliance – or robodebt – scheme – are the subject of a class action from Gordon Legal, which is demanding compensation and interest on top of refunds.
Porter described the whole saga as an “unfortunate outcome” but said he could not apologise because the government did not concede its handling of the program was negligent.
“I’m not going to use that word because there’s litigation ongoing and, as attorney general, I can’t use that sort of language in the context of the litigation,” he said.
Defending the now ill-fated decision to ramp up the program in 2015, Porter argued that all governments had to deal with the “large amounts of money paid out in the welfare system that exceed what the person should have received”.
“That’s often a mistake on the part of the person who nominates their income,” he said.
“Sometimes it’s other matters. But every government has to try and work out a way to recoup overpayments. In this instance, we used a method that had been used for many years. It later became clear that was an insufficient basis and we’re refunding the money.”
The shadow minister for government services, Bill Shorten, demanded an apology for those who had suffered “untold hardship and distress”.
“This government has not fully realised the error of their ways,” he said.
Shorten said those impacted also deserved an ironclad guarantee the ordeal was over.
“The government needs to rule out today the people they are refunding, they are not going to try and get again,” he said. “After all, the government spent $63m on debt collectors over the last few years, chasing debts they were never the owed, using taxpayer money.”
On Sunday Guardian Australia reported that confidential government advice warned that the commonwealth was potentially liable for debts raised many years earlier.
In 2017 the Department of Human Services told the commonwealth ombudsman it had used the practice since the early 1980s.
Despite this, the government has refused to identify or offer refunds to people hit with unlawful debts before 2015, noting in confidential advice that the unlawful debts raised before that date would be too hard to find.
It also noted that the Gordon Legal class action had not identified them as a target for court action.
The La Trobe University academic Darren O’Donovan, an expert on robodebt, on Sunday called for a judicial review and full audit of all Centrelink debt files.
The income averaging method was found to be unlawful by the federal court in November. The system involved Centrelink staff using ATO pay information to calculate a debt by dividing a yearly income summary into 26 fortnights and data-matching the results against what a welfare recipient reported to the agency.
It had been done manually until 2011 when it was automated on a smaller scale by the former Labor government, and was only used as a “last resort” until 2015 when the Coalition turbocharged the income compliance program.