Labor has called for an immediate halt to the debt recovery system until the current problems are fixed. (AAP)

The Centrelink welfare debt crisis engulfing the Department of Human Services has been affecting Aboriginal Australians, with NITV receiving more than one hundred claims from people saying they have received of demands for repayment despite correctly reporting their income.

Indigenous Australians have fallen victim to the growing Centrelink debt notice scandal, in which hundreds of thousands of people have received official letters demanding welfare money be repaid; only many of the alleged ‘debts’ have turned out to be wrong. NITV News has been inundated by stories from more than 100 people claiming they were erroneously told they owed Centrelink money.

Since July 2016, a total of 170,000 debt recovery notices have been sent out to Centrelink recipients informing them they had committed fraud for underreporting their income and demanding they pay back thousands of dollars or face debt collectors. In some cases, the alleged outstanding balances exceeded $20,000.

Rachel Singe’s husband Travis received a letter demanding $23,000 from Centrelink in 2016, claiming the couple had not reported their income correctly.

“We went through all our tax reports and payslips and were told that he had not reported properly when he was working casually, even though we both reported every fortnight and usually reported that we had earned more than we actually did,” she told NITV News.

“It's so frustrating when you do everything by the rules and get a higher paying job so you no longer need Centrelink payments, and then get stung with a fine like this.”

The demands for non-existent debts come as a result of a new information sharing agreement between Centrelink and the Australian Tax Office (ATO), which is averaging people’s annual income across a whole year. Periods where people reported no income have now been incorrectly recorded against them by Centrelink as income earning periods.

The algorithm used is unable to differentiate between fortnightly reported income and the total income earned in a financial year. It’s been reported that no one at Centrelink foresaw the problems this would create.

School teacher Nicholas Kuilder received Newstart payments for 6 months in 2012 while looking for new work after relocating to a new city. Once he obtained work he cancelled Centrelink and thought nothing more of it.

“I then receive a letter claiming I owe Centrelink over $3800 from that financial year,” he told NITV News.

“This didn't seem right as I always reported my income correctly and was pretty diligent with my paperwork.

“Once I was able to get a hold of someone, I spoke with a person who seemed to have the ‘guilty until proven innocent’ stance, they were incredibly hostile over the phone.”

Centrelink debt claim under the new automated system.

Nicholas had to wait another two weeks before he could get someone on the phone.

“We then found that the fault in the problem was that their system did not recognise that the schools I was reporting as having worked at all fell under the banner of the Department of Education, and were not separate ABN's from my Payslips. So essentially, they had doubled all of my reported earnings from the time I was on Centrelink,” he said.

“They also did not take into account that I was only on Centrelink for 6 months and that the previous 6 months were where a majority of my earnings from the financial year took place.”

Department of Human Services General Manager Hank Jongen told NITV News the letters were not debt demands.

"When data differences are detected, the system generates a letter (this is not a debt letter) advising people of the difference and asking them to either confirm or update their details online using myGov," he said in a written statement.

"If the employment income was earned before they began receiving or after they stopped receiving income support payments, then they will not incur a debt."

He also said that a majority of claims had been able to successfully resolved through Centrelink, but did not say in how many cases Centrelink had wrongly calculated a discrepancy using ATO data.

"Over 70 per cent (72 per cent) of people who received an online compliance letter since September this year have completely resolved the matter," he said.

Many people said they had repaid debts they did not owe because the challenge of going back over many years of tax returns and pay slips was either too much or they found the Centrelink process for challenging the debt extremely difficult.

Daniel Hayes told NITV News he was halfway through repaying the debt when he started seeing news articles about the debt scandal. He has since stopped paying Centrelink.

“I’m in the middle of repaying them $3350 for apparently not declaring correctly in periods where I didn’t even have a job. When I asked for proof, they told me I had to go through my bank records, so I’ve paid it for a year down to $

Centrelink is threatening dozens of Australians with bad credit ratings and legal action if they refuse to sign up to payment plans to repay thousands of dollars in questionable debt.

‘If I don't set up a payment scheme it will go to debt collectors’

The government agency has been under fire in recent days amid claims hundreds of Australians have been issued sizable debt notices they dispute.

More than 60 people contacted nine.com.au today claiming they were being hounded by Centrelink. Many shared horror stories of being "pressured" and left "scared" after receiving letters and SMSs demanding money.

Amounts of “debt” sought by Centrelink ranged from $800 to upwards of $25,000 – a combined total of more than $200,000 among those who contacted nine.com.au.

Many who queried the repayment demands were told by Centrelink they would have to sign up to a payment plan even if their claim was under review, in the hope of a refund at a later time.

One individual who said he contacted Centrelink to ask for a review of his claim alleges he was threatened with a "black mark against his name" if he didn't pay up.

"I was advised by the Centrelink debt recovery team that if I don't set up a payment scheme it will go to debt collectors … and I won't be able to get a home loan because of it," he said.

"This has forced me to set up a debt recovery payment to Centrelink as that is the last thing I need. I have been told that they are so inundated that it could be up to a month or more until someone qualified is able to look at my case through the review process."

A single mum, who was sent a debt letter for more than $2000 in mid-December and told she has to pay the amount in full by mid-January, has signed up for the payment plan as she feels she has no other choice.

A former TAFE student who is challenging his claim said debt collecting company The Probe Group pressed him on whether he would pay. Probe gave him two weeks before they would send his case back to Centrelink.

He claims he was told if this was to happen, Centrelink "may take me to court for the debt, or garnish my wages until it is paid off".

“I agreed to nothing until the debt was proven. So I have two weeks to respond before they send it back to Centrelink who may take me to court for the debt.”

A mother of a young son, who was slugged with owing $5400 from Youth Allowance he claimed back in 2014, claims she was told she could appeal if she provided the evidence of her son's previous work group certificates by January 7.

In response to direct questions on the allegations levelled against Centrelink, representatives of the government agency provided nine.com.au with a written statement.

It said Centrelink was "confident in the online compliance system, and associated checking process that we go through with recipients".

"The online compliance intervention system doesn’t automate debt recovery – it is a system which automates part of the standard compliance review process. While the new online compliance system automates part of this process, it does not change how income is assessed or how debts are calculated - it is an easy way to confirm details and resolve any outstanding matters.

"When data differences are detected, the system generates a letter (this is not a debt letter) advising people of the difference and asking them to either confirm or update their details online using myGov. These are not debt letters and at this stage of the process no debt has been raised."

The statement continued by saying 72 percent of people who received an online compliance letter since September 2016 have completely resolved the matter.

"Only 2.2 per cent of customers were requested to supply supporting documentation, which means 97.8 per cent of customers did not need to supply supporting documentation," the statement said.

"The department is determined to ensure that people get what they are entitled to, nothing more, nothing less."

In the lead-up to Christmas, tens of thousands of Australians started receiving threatening debt collection notices from Centrelink and its agents. Coming from a government that couldn’t run an online census, you can probably guess what happened. Ben Eltham explains just in case you can’t.

The worried emails and social media posts starting piling up in my inbox in December.

The problem? Centrelink. The government’s monolithic welfare agency is sending nasty letters to people out of the blue.

The government is calling it a “new online compliance system.” I prefer the catchy phrase “robo-debt.”

In the week before Christmas, thousands of Australians received letters or communications from Centrelink, or its appointed debt collectors.

Some received scary letters, informing them of debts in the thousands of dollars. Some logged into MyGov, the government’s creaking online information portal, to try and make a Medicare claim, only to discover a message that they owed thousands.

For others, the news came in a more threatening form: dozens of missed phone calls, culminating in threatening answering machine messages from debt collectors. Once again, the message was terrifying: they owed Centrelink thousands for an over-payment they knew nothing about.

For many, the debts that they owed to Centrelink were utterly mysterious. They had reported their income correctly at the time. There was simply no evidence that they had ever been over-paid.

The robo-debt dragnet began back in September. It has already generated considerable community anguish and concern. 169,000 robo-debt notices have already been sent.

We’ll call one Centrelink client we spoke to ‘Sally’. Her experience is indicative of what some people are going through.

“For about two weeks, I was struggling with some pretty serious anxiety as a result of daily automated phone messages and texts telling me I owed a debt. Some did not even identify themselves.

After a while, I typed the debt collectors’ name into a Google search, assuming it was some sort of phishing scam and found others saying it was on behalf of Centrelink. I called Centrelink, who confirmed that I had a debt and needed to pay the collectors directly as it was now out of their hands.

They had already taken my last tax return to help pay the debt.”

We spoke to another client, who we’ll call ‘Luke.’

“I have received a debt recovery notice from Dun and Bradstreet on behalf of the Department of Human Services, asking to be paid immediately! This is very distressing as I received this notice on Friday 22nd December, just before Christmas.

The issue is still unresolved as I spoke with a Centrelink staff person (after an hour wait). This person asked me to hold (again) while she spoke with somebody from Debt Recovery, but I was not able to speak with them, as they were ‘extremely busy’. They took my mobile number and told me they will be calling in the next 14 days. I was told there was nothing else I could do!

I have all my statements and Centrelink correspondence. The dates do not correlate and the amount is ridiculous.

Luke is in remission from an aggressive cancer. He was briefly on sickness allowance several years ago.

One of the most insidious aspects of the Centrelink dragnet is that people who have been issued with false robo-debt notices are no longer allowed to leave the country.

New Matilda spoke to one client, who we’ll call ‘Angus.’

They used the usual crude calculation without regard for casual work: annual income from the ATO averaged over a whole year. I corrected that, but am still awaiting new assessment.

My stress concerns the travel ban: I’m due to leave for Germany on January 10.

Angus is travelling to Germany on a one-way ticket to take up a job at a university there. “I can’t get any information,” he told us. “It’s very stressful.”

In the past week, New Matilda has spoken to more than 30 Centrelink clients who claim that they have been issued a debt notice in error.

The most common issues for Centrelink clients that we spoke to were simple and glaring errors of data, like incorrect names for employers, or mismatched annual and fortnightly earnings.

One Centrelink client, ‘Julie’, told us that “they simply took my annual income for that year and averaged it over all fortnights (which would have made me ineligible) instead of the actual dates of payment/employment.”

Many others echoed her complaint:

“They averaged out my annual income over the full 52 weeks, meaning I was ‘overpaid’ some weeks. I called and spent two hours on the phone, the guy prefaced our chat by saying ‘Centrelink is never wrong, you’re going to have to pay’.

Once I emerged from the chaos of the first four weeks, I discovered that the debt had already been escalated to a collection agency. They are consistently hassling me and have informed me they can ‘garnish’ my wages and take the money from my bank account.”

Like the government’s last data debacle, the 2016 Census, it’s clear that there are massive IT failur

A Medicare and Centrelink office sign is seen at Bondi Junction on March 21, 2016 in Sydney, Australia. (Source: Getty)

Centrelink staff will not be able to cope in an expected “perfect storm” of customer enquiries arising out of the debt data-matching scandal, the union representing public service workers has warned.

The Community & Public Sector Union has demanded the federal government immediately suspend the automated big data system, which in the past week has been hammered for its lack of accuracy in determining debts.

“This scheme is an absolute nightmare for thousands of Centrelink customers who’ve done absolutely nothing wrong, and the staff who are bearing the brunt of this mess,” said CPSU assistant national secretary Michael Tull.

“We hold very serious concerns about Centrelink’s ability to cope in coming months. There’s a perfect storm of work coming, with this debt recovery scheme likely to be just part of the problem.”

The Commonwealth ombudsman has started investigating the Centrelink data-matching system, which has reportedly sent out more than 170,000 letters to customers accusing them of owing money or questioning their welfare eligibility. Many recipients have disagreed with the letters, with the notices allegedly sending some to the brink of suicide.

Tull said that in “almost every case”, supposed debtors ended up owing no money or “just a fraction” of the stated amount after manual review by Centrelink staff.

“In at least one case, an initial debt for $9,000 ended up being $90. That’s not a minor discrepancy but a clear sign of a failed system,” he said.

The government and the department of human services has defended the system — which combines Centrelink data with Australian Taxation Office records — citing that 80% of letter recipients have paid the debts.

The union called for the data-matching processing to be halted, with Tull citing that to start the year, staff would already have to deal with student benefit applications, work arising from the government’s old age pension cuts and “problems” with Medicare processing.

“The serious problems with this debt recovery program are piling on even more pressure, and feeding more aggression from understandably frustrated customers,” he said.

“Centrelink absolutely doesn’t have enough staff to deal with so many cases. Taking staff from other areas to try to deal with this situation will only cause massive problems elsewhere as well.”

Tull accused the coalition government of causing “real damage” to the department of human services with its refusal to back down from the automated debt letters. The union is recommending that, as short term relief, casual staff at Centrelink be upgraded to permanent roles to accommodate the expected workload.

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Medical researcher Janet Hammill, who works voluntarily, struggling to contact anyone at Centrelink after she was incorrectly told she owes $7,600

This article is more than 2 years old

This article is more than 2 years old

A leading fetal alcohol syndrome researcher and Queensland Australian of the Year finalist has been caught up in the Centrelink debt recovery scandal, after the system wrongly deemed she owed $7,600.

Medical ethnographer Janet Hammill, 76, has spent decades researching the foetal origins of health and disease, and remains with the University of Queensland, where she works voluntarily and lives off the age pension.

The government’s horrific start to the year is fully deserved and completely appropriate | Greg Jericho Read more

Hammill received a $26,000 research grant between July 2011 and April 2012, which she fully reported to Centrelink at the time.

But Centrelink’s automated debt recovery system appears to have averaged the grant across all 26 fortnights of 2012, before deeming her to have been significantly overpaid.

She has struggled to get on to anyone at Centrelink to explain, including using their overloaded phone system and confusing online system.

“You feel so helpless, I mean for heaven’s sakes, you can look through my CV and see that I’m not helpless,” Hammill said.

Janet Hammill. Photograph: australianoftheyear.org.au

“But this puts you into another category of disempowerment. I can just imagine somebody who is not computer literate or is just managing to get by day to day, it’s just been so terribly frustrating,” she said.

“They made me feel as though I’m some sort of cheat, and I haven’t had an income since April 2012.”

Her case comes as the federal government implements changes to attempt to address criticism of its controversial automated debt recovery system.

The human services minister, Alan Tudge, who last week said the system was working as it should, has directed the department to begin including Centrelink’s dedicated 1800 phone number for the compliance team in letters to welfare recipients.

The language in the letters will also be simplified and made clearer, he said.

In cases where Centrelink has sent letters to the wrong address, the government will allow them to have an internal review before they are asked to begin paying back money.

The government will also use other records, such as the electoral roll, to ensure Centrelink’s letters are going to the right address, and will begin using registered mail to ensure the correspondence is received.

In a small number of cases, Centrelink will also call customers to ensure they have received the letters.

“One of the issues has been that on some occasions the address which Centrelink has on file hasn’t been an up-to-date one, and so the first that a person might hear about their debt notice is when there’s a debt collector on their doorstep,” Tudge said on 2GB radio in Sydney on Monday.

Internal Centrelink records reveal flaws behind debt recovery system Read more

“Now we’re fixing that problem by ensuring that we’re going to be using multiple different addresses including a person’s electoral roll address and other addresses to ensure they do get that letter and do get the opportunity to update their record if they do believe, honestly, that they have a valid explanation for why there’s a discrepancy.”

Labor’s Linda Burney has described the changes as a backflip, made after weeks of claiming there was nothing wrong with the system.

Burney issued a statement on Monday questioning whether the next batch of Centrelink’s letters, due to go out this week, will incorporate the changes, and how they would apply to those already affected.

“After weeks of denial the minster has finally admitted what everyone else already knows: there are serious problems with the robo-debt program,” Burney said. “Admitting the stuff-up is only the first step, now he needs to apologise and take action to help those who have been tormented by false debt claims.”

Independent MP Andrew Wilkie said he had been told by several Centrelink staff that the government is failing to properly deal with those left feeling suicidal by the system.

Wilkie said Centrelink staff are supposed to refer those feeling suicidal to social workers, but the level of demand for help has made that near impossible.

He said such cases were instead being referred back to casual Centrelink employees on the agency’s general phone line, who have no training in suicide prevention. Wilkie, who says he has spoken to several Centrelink whistleblowers, has written to the Commonwealth ombudsman detailing the allegations.

He said staff are being given a quota for the retrieval of debts (six to 10 debt notices a day) and discouraged from looking “too closely” at complex cases.

He said he had been told that Centrelink staff are being discouraged from pausing debt repayments in cases of financial hardship.

“The system’s a complete dud and must be fixed or binned,” Wilkie said.

“By knowi

Centrelink debt recovery program to undergo changes following public criticism

Updated

The Federal Government will introduce changes to Centrelink's controversial debt recovery program, despite insisting it is working and dismissing calls for its suspension.

Key points: Thousands of Australians are incorrectly told they have outstanding debts

"I have had to borrow money off my parents," a disability pensioner says

Welfare recipients can launch internal review of payments before debt proceedings are launched

The automated program — which compares Centrelink and Australian Taxation Office records — has issued 170,000 notifications since July with thousands of Australians incorrectly told they have outstanding debts.

After weeks of public criticism, Human Services Minister Alan Tudge has told his department to ensure welfare recipients can launch an internal review of their payments before debt proceedings are launched.

Disability pensioner Justin Burns last week told the ABC he disputed his debt and requested a review, but was still being forced to pay $40 a fortnight from his pension to repay the debt while the review was underway.

"I have had to borrow money off my parents, I have had to borrow money off my friends," he said.

"I thought, 'Holy, you know what, I don't believe I owe this money at all'."

Mr Tudge will also ensure Centrelink clients are informed of discrepancies in their accounts before being contacted by debt collectors.

"One of the issues has been that on some occasions, the address that Centrelink has on file hasn't been updated, so the first a person might hear about this is when there is a debt collector on their doorstop," Mr Tudge told 2GB radio on Monday.

"We are fixing that problem by ensuring that we use multiple different addresses, including a person's electoral roll address, to ensure they do get that letter and do get that opportunity to update their records."

Letters will now be sent by registered mail so Centrelink can track whether they have been received.

In some cases, the letter will be followed up with a phone call.

One client told the ABC they were contacted by debt collector Dun and Bradsheet about a $3,836 discrepancy, despite never being contacted by Centrelink.

Mr Tudge has also called on his department to simplify its language and ensure a contact number is printed on all notification letters, rather than being listed online.

Changes 'a stunning admission': Burney

Mr Tudge told the ABC last week the Government would retain the program and rejected reports it was flawed.

"The system is working and we will continue with that system," he said.

"I'm not aware of individuals who are completely convinced that they don't owe money but have been given a debt notice."

Coalition ministers and the Department of Human Services have said the program has identified close to $300 million in overpayments to welfare recipients.

Labor's shadow human services minister Linda Burney said the changes were a "stunning admission" given Mr Tudge's earlier claim the system was working.

"The system must be suspended until changes to make it fair are applied to everyone — that means those currently paying disputed debts should have the review completed before they are forced to pay," she said.

"After weeks of denial, the Minster has finally admitted what everyone else already knows — there are serious problems with the robo-debt program."

'There's been little to no training': Wilkie

The Commonwealth Ombudsman has launched an investigation into the Centrelink program and the National Audit Office is considering its own investigation.

Independent MP Andrew Wilkie wrote to the Ombudsman on Monday, claiming Centrelink staff had told him that clients were feeling suicidal and let down by the system.

"There has been little to no training regarding the debt recovery program," he said.

"Officers have been discouraged from looking too closely at complex cases and have been managed out of the debt recovery if too many questions are asked."

In a statement, Human Services spokesman Hank Jongen said an increase in referrals to social workers was related to family and domestic violence, rather than the debt recovery program.

"There have been no procedural issues with social workers being available," he said.

Mr Wilkie said there was a high demand for social workers and Centrelink staff were encouraged to focus on quantity rather than quality in public interaction.

"Officers are given a quota of six to 10 debt notices a day and encouraged by senior departmental staff to compete with each other for the highest quota," he said.

Mr Jongen said staff undertaking debt reviews had been given extra training and dismissed Mr Wilkie's claim there were quotas.

"Staff have not been instructed to raise six to 10 debt notices per day as part of this measure," he said.

"However, as part of our normal practice we do have service standard targets for dealing with debts as quickly as possible, which may include overtime.

"It w

Government is using false figures to defend its robo-debt system

Although the Government asserts that it has reclaimed $300 million in debts owed by welfare recipients, it refuses to disclose exactly how much money it has recovered.

Launched in July 2016, the automated debt compliance system has been the subject of much scrutiny from its inception. Since human oversight has been removed from the recovery process it has been plagued by errors, which have resulted in thousands of Australians receiving incorrect debt notices for money they don’t owe.

The Government has repeatedly stuck by its flawed system, claiming that it has recovered $300 million worth of Centrelink overpayments. When the Department of Human Services (DHS) was asked exactly how much debt has been reclaimed, it was unable to provide an estimate.

The $300 million said to have been reclaimed is the amount of debt that has been identified by the Government – not the amount actually recovered.

Typically, amounts recovered add up to roughly half of that which is identified. For example, in the last financial year, the Government identified $2.8 billion in money owed, but only $1.54 billion was recovered.

Human Services Minister Alan Tudge is still defending the system, despite his admission that the program has some flaws. Labor has called for the system to be suspended while an investigation into its efficacy and accuracy continues, to which Mr Tudge replied: “… frankly, I don’t think many taxpayers would support that call”.

Thousands of Australians have been wrongly assigned debt notices and, subsequently, harassed by debt collectors and threatened with jail time for not resolving the issue within 28 days. This is despite the DHS admitting that the dispute process takes around three weeks longer than the time assigned to repay any debts owed.

“The time taken to finalise a formal review depends on the complexity of the individual case. For the financial year to date, the average time to finalise a review in relation [to] debt decision was 49 days,” stated Department of Human Services General Manager, Hank Jongen.

Amid these complaints and errors, do you think the Government should declare how much money it has actually recovered? Do you think the Government is right to defend its debt-recovery system by using false figures? Is it time the Government admitted defeat and cleaned up the robo-debt system?

This article is more than 2 years old

This article is more than 2 years old

Department of Human Services staff will strike over pay, budget cuts and the Centrelink “robo debt” scandal, which together form an “ideological attack” by the Turnbull government, according to the Community and Public Sector union.

The CPSU announced the planned strike action on Monday, saying problems in the department went “far deeper” than Centrelink’s controversial automated debt recovery system, which has been criticised for its inaccuracy and unfairness.

“The Turnbull government has rightly been condemned over the Centrelink automated debt debacle but the problems go far deeper in the Department of Human Services because of years of budget cuts and the government’s harsh and illogical public-sector bargaining policy,” the union’s national secretary, Nadine Flood, said.

Centrelink unable to track how many overpayments caused by error Read more

The union will strike and take other forms of industrial action at various locations across six days from mid to late February. Staff who provide critical services, including those helping victims of the debt recovery system, will not go on strike.

The department said the strike action had the potential to affect Centrelink, Medicare and child support services across the country.

The department’s general manager, Hank Jongen, said any disruptions would likely hit telephone and face-to-face services on Monday, Wednesday, and Friday next week.

“We’re asking customers to use the self-service options available through myGov and the Centrelink, Medicare and child support mobile apps,” Jongen said.

“Of course, anyone who needs to speak to us can phone or visit, they just need to know that this may take longer due to the industrial action,” he said. Jongen said customer payments would not be affected.

Flood said the department’s 34,000 staff had gone without a pay rise for three years, while trying to cope with 5,000 job losses and significant budget cuts.

“Our members hope this action will highlight the damage being caused to DHS and their plight through enterprise bargaining,” Flood said. “Hundreds of them made personal submissions last year to the Senate inquiry into public-sector bargaining, telling their personal stories of financial hardship and their worries about the enterprise agreement being pushed by their bosses.”

The strike action will put more pressure on the government to give the department more resources, following a period of intense pressure over the automated debt recovery scheme. From July, the government significantly reduced the level of human oversight over the debt recovery system, relying on an automated data matching process to detect discrepancies in income reported to Centrelink and income reported to the tax office.

That process has been criticised as flawed, because the system can double count the same employer, or crudely average out a yearly income over Centrelink’s 26 fortnightly reporting periods. Both problems can result in individuals wrongly being deemed ineligible to have claimed welfare. Where a discrepancy is detected, the system automatically sends a letter demanding an explanation from welfare recipients. If none is given, or if the letter is not received or responded to, the debt is raised and people are told to begin paying.

Flood said the industrial action was designed to highlight the Turnbull government’s ideological attacks on the department and the actions of senior management, who had “blindly followed” the Coalition’s agenda.

Centrelink: social services body urges Turnbull to halt robo-debt system Read more

“Our members are doing this because they care about the quality of the services they provide, which is why workers dealing with sensitive clients such as those being dragged through the robo-debt crisis will not be taking industrial action,” Flood said.

“These workers are among the lowest paid in the commonwealth public sector and stand to lose the most under the government’s harsh public-sector bargaining policy.

“Their pay has been frozen as the government’s bullied them, trying to strip essential rights, such as the family friendly conditions that allow a call centre worker to balance shift work with raising a family.”

Industrial action will take place on 13, 15, 17, 20, 22 and 24 February.

We're all talking about the Centrelink debt controversy, but what is 'robodebt' anyway?

Posted

It's been making headlines since summer, when thousands of Australians suddenly found out they owed money to Centrelink.

Critics call it "robodebt", but how does the controversial system actually work?

What is it?

The official name is the Online Compliance Intervention.

It's a newly automated debt recovery system that the Federal Government hopes will recover $4.5 million in welfare debt every day.

How does it work?

The Department of Human Services, which looks after Centrelink, has a computer program that gathers data from other government agencies like the Australian Tax Office and then compares it with data that people have reported to Centrelink.

The system is designed to quickly check whether the income that you reported to Centrelink — used to calculate what benefits you're entitled to — is the same as what your employer has told the tax office.

Centrelink has used data matching for a long time and as Human Services Minister Alan Tudge has pointed out, this particular algorithm was used by the previous Labor government.

OK, so what's changed?

The main change is what happens after the computer detects a discrepancy.

In the past a Centrelink officer would do a basic investigation before deciding whether to send out a letter. But since July 2016, the computer prints out and sends the letter on its own.

The letter asks people to log on to myGov and explain why the income they've reported to the welfare agency is different to what their employer has reported to the tax office.

Before the system was automated, only 20,000 interventions were made a year. Now the amped up system is running at 20,000 a week.

The Government says it's wrong to characterise these as "debt letters" — Centrelink is just trying to get more information about what's behind the discrepancy.

If these are just requests for more information, why are people getting debts?

Many people report that they never got those initial letters, and the first they heard of a problem with Centrelink was when they started getting calls from private debt collectors contracted by the department.

This is likely because the initial letters had been sent to old addresses, or messages to myGov accounts people didn't check anymore.

You have 21 days to log on and correct the record. You may be asked to submit payslips or other proof of income from up to six years ago.

If you don't, the discrepancy is assumed to be evidence of an overpayment and a debt is raised.

How is that allowed?

For anyone but the Government, it's not. But Simon Rice, a professor of law at the Australian National University, explains that there's an exception for the welfare agency.

"The Government has an entitlement, a right, that ordinary people don't. It can convert an overpayment into a debt. The Social Security Act does that."

But that privilege, he says, should come with an expectation that they "have absolutely impeccable systems in place so that when they exercise these privileges they do so fairly".

How many of the debts are real?

Mr Tudge says that "on 20 per cent of occasions, the recipient is able to validly explain the discrepancy in the data. In the other 80 per cent of occasions, a debt notice is subsequently issued."

Critics say this is evidence of a 20 per cent error rate, though the Government disputes this.

It may in fact be higher.

That figure doesn't include the number of people who are still trying to prove that their debts have been miscalculated, a process which can take months.

How do miscalculations happen?

There are two main ways:

Many people receive Centrelink payments for short periods of unemployment or illness. The automated program uses annual income data from the tax office and averages it out. If your boss has given the wrong dates to the tax office, or if you earned more some weeks that others, then averaging creates a false impression that you were earning undeclared income while you were getting Centrelink. If the information you have given Centrelink about your employer is slightly different to that recorded by the tax office, it appears you have two jobs and didn't declare one of them to Centrelink. This can be as simple as a typo in the name.

So are some people paying debts they don't think they owe?

Yes, some people have had to go on a payment plan for their debt, even if they are in the process of contesting them.

That doesn't seem fair...

Over the past few months the Government has made a number of changes to how the system operates.

One major change is that people won't have to start paying back their debts if they are under review.

Another is that the letters are now being sent out by registered post, to make sure they're going to the right addresses and people don't have debts raised against them without their knowledge.

But the changes are not retrospective.

How many people are trying to prove they don't owe these debts?

Background Briefing filed a fre

The head of the Department of Human Services has blamed the “robo debt” scandal largely on welfare recipients’ failure to engage with Centrelink.

The Senate inquiry into Centrelink’s “robo-debt” system began on Wednesday, hearing from the community sector, the community and public sector union, tax office officials and the secretary of the Department of Human Services, Kathryn Campbell.

Critics of the system say its many flaws have combined to create a debt recovery process that is unfair, inaccurate and inhumane.

The inquiry heard that the system has only recovered $24m so far, although it has raised, or identified, $300m. It sent 217,403 letters between July and December demanding explanations from welfare recipients, 36,305 of which did not result in a debt.

The system raised 133,282 debts, 12,733 of which were either reduced to zero, reduced, or written off or waived.

The system, which began last year, places a greater reliance on data matching to detect discrepancies between income reported to Centrelink and the Australian Taxation Office.

It removes human oversight over that data-matching process and allows it to automatically generate letters demanding an explanation from welfare recipients.

If no response is received, the debt is automatically imposed, often using a crude calculation that averages an individual’s annual income over Centrelink’s 26 fortnightly reporting periods. More than 6,500 of the initial letters were sent to wrong addresses.

Centrelink was relying on addresses it held on its own records, not the electoral roll, to target people who had stopped receiving benefits years ago.

Campbell blamed the problems with the system on a failure of welfare recipients to engage with those letters or other communications from the department.

“I think what we underestimated was how many people would not clarify, and would not engage, and so I think if I was to sum up what the problem has been it is that, when we wrote those initial letters, that recipients and former recipients didn’t engage,” Campbell said.

“Now a small part of that, 6,600, was because they didn’t know anything about it. But there was a large proportion of people who didn’t engage with us through those initial letters.”

Campbell said a pilot of the program conducted early last year did not suggest that was likely to be a problem.

Centrelink, in changes announced last month, now uses registered post to ensure the letters are being received.

Campbell also said media reporting of the “robo debt” system in the lead-up to Christmas had caused distress to individuals and led them to believe they had been wrongly targeted.

Earlier, tax office officials said they were not approached by the Department of Human Services over the new system before it was launched.

The tax office asked the department whether it could help with the system in December, when problems began to publicly emerge, but was rebuffed. It later met with the department in February.

It sought to distance itself from the robo debt program, saying it only supplied the data to Centrelink and helped to match it.

The tax office’s deputy commissioner for debt, Robert Ravanello, said it was not the agency’s place to comment on how Centrelink then uses its data.

“We are required to provide the data, which we’ve done, how DHS uses that data and matches it and converts annual to fortnightly … I think is really better asked of DHS.”

Coalition's 'laser-like focus' only sees what it wants to see | Lenore Taylor Read more

Earlier, the Australian Council of Social Service (Acoss) said it feared the system’s treatment of welfare recipients was scaring individuals away from exercising their right to claim income support.

Acoss described the system as an abuse of government power that was undermining confidence in public administration.

The director of the ACT Council of Social Service, Susan Helyar, said cynics believed that may have been the government’s intent.

“All of these things compromise the public’s confidence in systems, and some of our members have wondered whether partly what individuals are being encouraged to do is stay out of the welfare system,” Helyar said. “They are being discouraged from exercising their entitlements in the income support system by this poor public administration.

“Some people cynically suggest that might be the point of the process.”

“I just think it’s really dangerous for the government to implement programs in a way that is so flawed because it has long term impacts on the public’s confidence.”

Those comments were echoed by the chief executive of Acoss, Cassandra Goldie, who said public confidence in the social security system had been undermined.

Goldie said Centrelink should be creating an environment of support and help for the nation’s most vulnerable.

“It is really important to understand the power dynamic here,” Goldie said. “The Department of Human Services plays such a

Centrelink: Tax office says it cannot be blamed for automated debt recovery system's failings

Updated

The Australian Tax Office (ATO) has sought to distance itself from Centrelink's controversial debt recovery program, telling a Senate inquiry it cannot be held accountable for how its data is used.

ATO officials claim there were no detailed conversations about how the Department of Human Services (DHS) would compare the ATO's annual income records of welfare recipients with its own periodic records.

This data matching process formed the basis of Centrelink's controversial debt recovery program, which was automated in mid-2016 in a bid to unlock savings.

The automated scheme has produced nearly 170,000 notices of potential overpayments since July, with many Australians incorrectly told they have outstanding debts.

ATO officials made it clear they could not be blamed for the program's failings, given they were only responsible for providing data to DHS, rather than interpreting it.

Deputy commissioner Greg Williams said he did not anticipate problems with the program because DHS had been using ATO data for more than 20 years.

"Other than what we knew in the public arena, we had no direct conversations with them about the ramp up," Mr Williams said.

Mr Williams said the ATO contacted the DHS in December due to widespread public criticism of the program, but claimed it was told there was no need for assistance.

He said the ATO raised concerns to "maintain a level of integrity in the role the ATO played in this exercise".

"It was the volume of what was playing out and given, in our opinion, the ATO's involvement in the program was something we didn't think was technically correct," he said.

"We would say that we are involved in the identity matching and the provision of data, but we are not involved in the data matching that occurs on the DHS side."

People believe they don't owe money

DHS secretary Kathryn Campbell defended the program and dismissed calls for it to be immediately suspended.

"This is a complex payment system and often people don't understand the obligations that go with the payments and that they are required to update various pieces of information," she said.

"I do acknowledge that there will be people distressed."

Ms Campbell said media coverage of the system led many people to believe they did not owe money despite DHS records showing they did.

"I think in the lead-up to Christmas and into January, people became even more distressed because of the significant media attention around these issues," she said.

Ms Campbell said she would seek permission from her minister Alan Tudge before meeting with a key stakeholder amid accusations they briefed journalists after a previous meeting.

The secretary would not say whether she would meet with the Australian Council of Social Services (ACOSS) that represents welfare recipients and vulnerable Australians.

"When it gets to a heightened level of media attention I think it is always wise to talk to my Minister," she said.

"My experience is sometimes they operate in a heightened political environment ... and maybe sometimes, when it gets very partisan, it is very important talk with my Minister."

DHS officials told the inquiry they did not check whether people who agreed to repay debts actually did owe money, and whether it was the department who made the mistake.

Government accused of cultivating a 'climate of fear'

Earlier on Wednesday, ACOSS chief executive Cassandra Goldie said the Centrelink program had worried many Australians "sick", and accused the Government of cultivating a "climate of fear".

"We also know that because of the communications from the responsible minister in the lead-up to this program being unleashed, that there was a perception created that if you do not comply you may go to jail," she said.

"This has been completely unacceptable in terms of the tone associated with this exercise.

"We believe the actions of the Government has culminated in creating a serious climate of fear around this program."

ACOSS representative Susan Heylar said the program had undermined public confidence in the Government and left many welfare recipients worried about retribution.

"Some of our members have wondered whether partly what people are being encouraged to do is to stay out of the Centrelink system and discouraged from exercising their entitlements in the income support system," Ms Heylar said.

Union claims agency in crisis

Community and Public Sector Union (CPSU) secretary Nadine Flood said Centrelink was "an agency in crisis", with staff becoming expert in bandaid solutions to systemic policy failures.

"It is important we note there has been a disturbing cultural shift imposed on staff in Centrelink and the Department of Human Services," she said.

"It has increasingly gone from an agency focused on treating people like people, to one that focuses on treating people like numbers in a data set."

The union also claimed the department had been monit

Centrelink failed to communicate properly with welfare recipients, their staff lacked training and its so-called 'robo-debt' program placed "unreasonable" expectations on claimants and should have been more rigorously tested.

Those are the findings of the Commonwealth Ombudsman's investigation into the Centrelink debt recovery scandal which saw thousands of people "terrified" over debt notices often totalling many thousands of dollars.

Since Centrelink's debt recovery system was automated in July last year, thousands of clients have spent many hours and days disputing debts they did not actually owe -- like this man, who spent 30 hours disputing his daughter's Centrelink debt, which was consequently amended from $5,500 to $0.

Now, the Ombudsman wants a "comprehensive evaluation" of the automated program before it is rolled out any further.

#Centrelink's debt recovery system lacks transparency and too difficult to use, ombudsman finds https://t.co/deaVKY4boK — ABC News (@abcnews) April 10, 2017

"We found there were issues with the usability and transparency of the system," Acting Commonwealth Ombudsman Richard Glenn said.

Since the investigation began in January, the Department of Human Services has made many positive changes to make the system clearer and easier to use, but "more improvements are needed to ensure the system reflects good public administration," the Ombudsman said.

But the overall accuracy of the debt assessment program was the same and the widely reported "error" rate of debt notices being sent incorrectly was a misrepresentation, the 113-page report found.

The number of times no debts were found following an initial "request for information" letter was 20 percent before the system was automated and did not increase following the automation, the Ombudsman found.

The time frame to respond to the request (21 days), on the other hand, was "not reasonable or fair" in many cases, "given the complexity of collecting historical employment information or the possibility that the customer may not have received the initial letter".

This is not reasonable or fair in situations where customers have to collect evidence from several years ago"

In February, the deadline was extended to 28 days, with options to apply for extensions, following recommendations from the investigation and complaints from welfare recipients.

The short time frame meant that people were forced to repay debt they didn't believe they owed, because they couldn't successfully dispute the debt before the three week deadline.

"The most harrowing part was being told that even though I've got only three weeks left to pay back the debt, the review takes six weeks and that I need to start paying it back in the meantime," Sydney man Brett told The Huffington Post Australia.

The federal watchdog also slammed the Department of Human Services (DHS) for putting too much onus on people to verify their earnings -- sometimes for up to six or seven years.

"This is not reasonable or fair in situations where customers have to collect evidence from several years ago, or where the customer does not have the capacity to obtain the evidence," the report reads.

"Customers do not have the same information gathering powers as DHS."

ANDREW MEARES/FAIRFAX Kathryn Campbell Secretary Department of Human Services before a Senate Committee hearing into the Centrelink robo-debt collection in Canberra.

The DHS should use its powers to collect information directly from employers to verify the customer's earnings, the report stated.

Centrelink should also consider paying back the ten per cent "debt recovery fee" which was automatically applied to debts when the automated system was introduced -- and which the Human Services Minister Alan Tudge was reportedly himself unaware of when questioned by journalists in December.

The report criticised the initial debt letters sent to customers as "unclear", blaming a failure to include the correct phone number (and the difficulty locating the phone number on the Department's website) on the long wait times Centrelink's main phone line experienced.

This resulted in 28 million calls to Centrelink getting a busy signal in the past year, with some customers calling hundreds of times before getting through.

The dedicated 1800 compliance helpline number has since been added to the initial contact letters, the report noted.

But the review has further recommended that the letters mention the possibility of debt earlier, clearly explain how to log earnings so the correct debt will be calculated, and explain to clients that they are able to apply for an extension for their debts.

The Department of Human Services has agreed to implement all of the federal watchdog's recommendations. The Ombudsman Richard Glenn said he would "continue to work closely" with the Department to monitor their implementation of the recommendations.

ALSO ON HUFFPOST AUSTRALIA

This article is more than 2 years old

This article is more than 2 years old

An ombudsman’s report on the roll out of Centrelink’s automated debt recovery service has identified multiple failures that placed unreasonable burdens on welfare recipients and staff.

The self-initiated investigation was announced in January after months of complaints that the problem-riddled system was sending incorrect debt notices to people.

“The [Online Compliance Intervention] project effectively shifted complex fact finding and data entry functions from the department to the individual and its success relied on its usability,” said the report by acting commonwealth ombudsman, Richard Glenn.

Community legal centres warn cuts will leave Centrelink’s robo-debt targets helpless Read more

In July 2016 the Department of Human Services switched to an automated system of data-matching to identify welfare fraud.

Glenn found the switch did not see an increase in the 20% rate of people who were sent debt notices but then found not to owe a debt, and it was “entirely reasonable and appropriate” for the department to ask customers to explain discrepancies.

However, this was only as long as the system had complete and accurate information, it said, and the department’s processes placed a greater emphasis on the customer’s responsibility, which was “not reasonable or fair” in many situations.

The department’s requirement for people to keep records for six or seven years was not reasonable, the report found, “particularly when they have not been forewarned about this requirement”.

“Customers do not have the same information gathering powers as DHS.”

The report also highlighted a litany of other issues related to planning, implementation, consultation, expectations of welfare recipients and staff, and a lack of understanding and communication about the new system’s complicated nature.

While it was inevitable there would be issues when rolling out “a large scale, complex automated system in a short timeframe”, the department failed to properly mitigate risks during transition or consult adequately in the planning processes.

“DHS did not clearly communicate aspects of the system to its customers and staff, which led to confusion and misunderstanding.”

The ombudsman acknowledged improvements already made by the department but said there was more needed.

The report identified key issues including:

The accuracy of debts raised, in particular those that were calculated using “averaged” income data.

The 10% recovery fee.

The transparency and usability of the OCI system.

The problems faced by customers when gathering evidence and presenting their case.

The adequacy of the department’s assistance and communication with customers.

The adequacy of staff training and communication to support customers using the system.

The department’s approach to complaints.

The adequacy of the department’s project planning and governance mechanisms.

Among its findings, the report said the department’s initial letters to welfare recipients were “unclear and deficient in many respects” and left out crucial information, including that their income would be averaged out if they didn’t enter it each fortnight.

The letters were also missing contact numbers for the compliance team, which led people to call the general line and face long wait times and unprepared staff who often did not know how the system worked.

Centrelink inquiry told 'income averaging' creating incorrect welfare debts Read more

The 21-day timeframe to respond to the initial letter was also not reasonable or fair in all circumstances.

The ombudsman’s reports concluded the implementation problems could have been mitigated with better planning and risk management, including user testing, a more incremental roll out and better communication with staff and stakeholders.

The federal government has stridently defended the debt recovery system, including going so far as to release personal details about a welfare recipient to media in order to publicly rebut complaints.

The human services minister, Alan Tudge, said the government welcomed the report and accepted all recommendations.

In a statement, Tudge repeatedly noted the parts of the report that defended the automated system and said the government was already making improvements that, in some cases, went further than what was suggested by the ombudsman.

“The unfortunate reality is that while most welfare recipients do the right thing, some deliberately defraud the system while others inadvertently fail to accurately declare their income and consequently receive an overpayment,” he said.

“We want to be fair and reasonable to welfare recipient but also fair to the taxpayer who pays for the welfare payments.”

The shadow human services minister, Linda Burney, said the report raised “serious questions about Alan Tudge’s oversight of his department”.

“While some changes have been made to Tudge’s robo-debt system, the ombudsman is clear they don’t go far enough,” sh

Centrelink's debt recovery system lacks transparency and treated some customers unfairly, ombudsman finds

Updated

Centrelink's controversial debt recovery system lacks transparency and has treated some customers unfairly, the Commonwealth Ombudsman has found.

The Department of Human Services was swamped with complaints after it began sending automatically generated debt notices to welfare recipients after checking their tax records.

Acting Commonwealth Ombudsman Richard Glenn said he was satisfied the debts raised by the Department of Human Services department were largely accurate.

One in five people sent debt notices did not owe any money, but Mr Glenn said he agreed with the Department that these were not "errors" and the number of mistakes did not increase under the new system.

However, he listed a large number of problems plaguing the system and said improvements were needed to meet "minimum administrative law requirements".

"There were deficiencies in (the department's) service delivery and communication to customers and staff when implementing the system," he said.

"These issues affected the quality of decisions made by the [automated system].

"Many of these problems could have been reduced through better project planning, system testing and risk management."

The Government has used data matching to identify welfare fraud for decades but automated the process in mid-2016 in a bid to save money, greatly reducing human oversight.

In a statement, Human Services Minister Alan Tudge welcomed the report and said the Government would improve its communication with the public.

"The unfortunate reality is that while most welfare recipients do the right thing, some deliberately defraud the system while others inadvertently fail to accurately declare their income and consequently receive an overpayment," he said.

"We want to be fair and reasonable to welfare recipients but also fair to the taxpayer who pays for the welfare payments."

The Opposition's spokeswoman for human services Linda Burney said the Government's approach was failing.

"All of this could have been avoided if there'd been better planning and better testing of the system before minister Tudge and the Government launched into sending tens of thousands of letters out to people," she said.

The Ombudsman said the department had improved many aspects of the program in January, when it allowed welfare recipients to instigate an internal review before debt proceedings are launched.

Centrelink's communication criticised

Mr Glenn said some clients may have received debt notices for money they did not owe because they did not provide complete information to the department, but there were several barriers to them doing that.

Many Centrelink clients reacted angrily when they received debt letters asking them to repay money.

The Ombudsman said the letters were unclear and did not include crucial information, such as the right contact phone number for Centrelink.

The report also said many people did not realise that they had to enter their income more regularly under the new system, and that "in some cases this was a more favourable outcome for the customer, and in others, the debt was overstated".

Under the new system welfare recipients are expected to provide more information about their employment record.

But the Ombudsman said many clients struggled to collect proof of their earnings from several years ago, and the department needed to do more to help them get the information they needed.

"When the (new) system was first rolled out, customers had 21 days to respond to the initial letter … given the complexity of collecting historical employment information or the possibility that the customer may not have received the initial letter, we consider the 21-day timeframe was not reasonable or fair in all circumstances", the report said.

The ombudsman was scathing about the way the department dealt with the complaints, saying people struggled to understand why they had been issued debts and what had changed.

"Poor service delivery was a recurring theme in many complaints received by our office," the report said.

"Customers had problems getting a clear explanation about the debt decision and the reasoning behind it."

Centrelink to provide more help to vulnerable

The report found many welfare clients didn't know they had to call the compliance helpline and so flooded Centrelink's general customer service line instead.

But Centrelink staff did not fully understand how the new system worked because they had not been trained properly.

The ombudsman said the department had agreed "vulnerable" customers would not have to deal with the automated system for now, and they would be given extra help in the future.

"Many of the OCI's implementation problems could have been mitigated through better project planning and risk management at the outset," the report said.

"This includes more rigorous user testing with customers and service delivery staff, a more incremental rollo

Scathing assessment comes as system again put under the microscope, this time by external auditors PwC Australia

This article is more than 2 years old

This article is more than 2 years old

Victoria Legal Aid has described Centrelink’s robo-debt system as an “abject failure” which is an arguably unlawful response to the government’s self-inflicted budget problems.

The scathing assessment came as the system is again put under the microscope, this time by the external auditing firm PwC Australia, which has been engaged by the Department of Human Services.

The Senate inquiry into the automated debt recovery system continued on Tuesday in Melbourne, hearing evidence from Victoria Legal Aid and the state’s community legal centres.

Centrelink inquiry told debt retrieval system should be abolished due to flaws Read more

Legal Aid’s managing director, Bevan Warner, said the system should serve as a lesson of what not to do in public administration.

“In our view the initiative is an abject failure, it’s hurting people,” Warner said. “It is arguably unlawful, and even if it is lawful, it shouldn’t be. The minor improvements that have been announced do not go far enough.”

Warner said the legality of the system was questionable because the creation of the debts did not involve a critical evaluation by a Centrelink officer.

The system is expected to begin to target 783,000 people for possible debts in 2016-17, compared with 20,000 in the years earlier.

“This is an unjustified and staggering 3,900% increase,” Warner said. “The initiative was a blunt solution to a self-inflicted problem.”

Warner called on the government to release the terms of reference of the PwC audit, and involve community-sector stakeholders in the process to rebuild confidence in Centrelink’s debt recovery process.

The truth about Centrelink's telephone wait times Read more

Earlier, the Department of Human Services was questioned about whether it had audited debts it had already raised through the error-prone process of income averaging, to make sure they were accurate.

The department’s whole of government division general manager, Marc Mowbray-d’Arbela, could not answer.

But he said the accuracy of the debts was taken at “face value” once a recipient began paying them back.

“The information we have and the discrepancy that arose from the information of the ATO has led to an interaction [with the customer], and if the customer has accepted that and started paying it back, we take that at face value,” Mowbray-d’Arbela said.

The inquiry also heard from the Melbourne-based Consumer Action Law and Western Community Legal centres. They argued that Centrelink should be bound by the same stringent guidelines that govern private external debt collectors.

Those guidelines – produced by the Australian Competition and Consumer Commission and the Australian Securities and Investment Commission – prevent undue harassment, intimidation or unscrupulous practices, and requires private debt collectors to have evidence that a debt exists before they attempt to recover money.

The guidelines now apply to the third-party debt collectors engaged by Centrelink but not Centrelink itself.

Consumer Action Law Centre’s chief executive, Gerard Brodie, called on Centrelink to voluntarily ask the ACCC/Asic to hold it to the guidelines.

Brodie said that would force the agency to provide evidence to back up its allegation that a debt existswhen it is disputed by the welfare recipient.

“We think the guidelines, as they stand, are very strong,” Brodie said. “If they applied to Centrelink as well as private enterprise, that would be a significant step forward,” he said.

Western Community Legal Centre’s chief executive, Denis Nelthorpe, said the level of legal assistance available to welfare recipients was extremely limited. Only a handful of lawyers in the country had specialised knowledge in the area,” he said.

“If you receive one of these letters, your chances of seeing someone and getting advice is somewhere between limited and non-existent,” Nelthorpe said.

On Monday Australia’s ombudsman released the results of a three-month investigation of the system.

The acting commonwealth ombudsman, Richard Glenn, found the system was capable of accurately calculating debts if provided with accurate information, and said it was reasonable to use data-matching to identify discrepancies in reported income.

But he also found a litany of flaws in the system’s design, saying it placed an often unreasonable burden on welfare recipients to provide the information needed to disprove debts.

Glenn found no modelling had been done to determine how many debts would be over-calculated. He found initial letters sent to welfare recipients failed to include crucial information, and that the online portal was unusable and confusing for some.

He recommended that the 10% debt recovery fee, which has been indiscriminately applied until recently, should be reconsidered. And he said vulnerable recipients should ge

Australian Privacy Foundation tells Senate inquiry into ‘robo debt’ scandal there is no evidence guidelines were followed

This article is more than 1 year old

This article is more than 1 year old

Privacy campaigners say Centrelink’s use of data-matching to detect potential welfare debts has failed to meet the government’s own privacy guidelines.

The Senate inquiry into the “robo debt” debacle continued on Wednesday, hearing from privacy advocates and New South Wales-based welfare advocacy groups.

The Australian Privacy Foundation used its evidence to raise a series of concerns about the way Centrelink is now using automated data-matching.

Almost half of all Centrelink robo-debt cases sent to private debt collectors Read more

Centrelink has for many years automatically matched its data with that held by the Australian Taxation Office to detect discrepancies in reported income.

Typically, such data-matching programs are required to comply with onerous requirements under the federal privacy and data-matching acts.

But, because Centrelink is no longer using tax file numbers to match data with the ATO, it only has to follow a less onerous voluntary set of guidelines, issued by the office of the Australian information commissioner.

Those guidelines require the government to publicly release a protocol for how the data-matching will work and what information will be used.

They also require the government to provide proper notice to the public of its data-matching activity and give individuals a chance to respond.

The Australian Privacy Foundation chairwoman, Kat Lane, said there was no evidence that Centrelink had complied with obligations of those guidelines.

“I can’t see any evidence that Centrelink did any of it, not one bit,” Lane said. “I can only come to the conclusion that they just simply decided, because [the guidelines] were voluntary, that somehow they didn’t apply to them, even though they were issued by a government regulator.

“To get to a situation where you have voluntary guidelines issued by a regulator that the government simply chooses to ignore is extremely disturbing.”

The evidence came after the Nick Xenophon Team senator Skye Kakoschke-Moore wrote to the information commissioner, Timothy Pilgrim, to voice her concerns about the same apparent privacy breaches.

Pilgrim is still considering whether to launch an investigation into the privacy implications of the robo debt system.

Kakoschke-Moore said the evidence made it clear an overhaul of Australia’s privacy laws was needed.

“The privacy landscape the Department of Human Services is operating in with this debt recovery process can only be described as the wild west where the rules are voluntary and the sheriff is armed with a wet newspaper,” Kakoschke-Moore said.

Centrelink robo-debt 'abject failure' and arguably unlawful, Victoria Legal Aid says Read more

“By not using a person’s TFN in the debt calculation process, the DHS has effectively removed themselves from the protections and requirements provided by the data-matching act.

“Not only that but they haven’t even seen fit to comply with the watered down provisions of the government’s own voluntary data-matching guidelines.”

One of the external debt collectors contracted by Centrelink, the Probe Group, also gave evidence on Wednesday. Probe’s chief operations officer, Jarrod Kagan, confirmed the department was paying it on a commission basis.

That differs from other agencies, like the Australian Taxation Office, which use a flat fee to pay external debt collectors. Kagan would not specify the exact commissions his company was paid to collect Centrelink debts.

He denied allegations that his staff had harassed welfare recipients, or threatened to confiscate their property.

Later on Wednesday, the acting Commonwealth Ombudsman, Richard Glenn, told the inquiry that the system wasn’t working well when he began his investigation.

Glenn said his office had received 377 complaints about the robo debt system since November. He had received 877 complaints about debt or letters involving Centrelink more generally.

He said the recommendations contained in his report, if implemented properly, would improve the system.

“The proof of these things is always in the actual implementation. One can make a recommendation and you need to test it in real life, and that’s obviously something we’ll keep a close eye on going forward,” Glenn said.

The ombudsman’s office said there was a lack of consultation with the digital transformation agency, welfare groups, and other government departments. He said the department should have been “better prepared” to help people work out whether they had a debt or not when rolling out the system.

The inquiry heard that, following ombudsman’s advice, the government was now reassessing cases in which a 10% debt recovery fee had been imposed. Welfare rights groups have previously expressed concern that the fee was being imposed indiscriminately and potentially unlawfully.

The inqui

More than one third of Centrelink welfare debt recovery cases that are appealed to the independent tribunal are overturned.

The Administrative Appeals Tribunal has set aside 960 Centrelink debt decisions out of 2,699 appeals lodged between March 2016 and March 2017, while a further 132 were “varied”.

The majority of the decisions are likely too early to relate to the government’s controversial “robo debt” measure but Guardian Australia understands tribunal members are concerned about the looming workload caused by the government’s use of the automated system.

“There’s a lag time there with the robo debts specifically … you’re looking at a minimum of six to eight months [until they appear in the tribunal],” one tribunal source said. “We’re all suspecting that there is going to be some kind surge but it hasn’t come through yet.”

The automated debt recovery system has drawn criticism from welfare organisations and is subject to an ongoing Senate inquiry.

The figures were obtained under freedom-of-information laws from the AAT. A decision by Centrelink can be “set aside” for a number of different reasons. An analysis of published AAT decisions shows that this can include incorrectly calculating debts, as well as waiving debts on the grounds that they would cause the Centrelink recipient serious financial hardship.

A “varied” decision can also mean that part of the debt was waived, set aside or incorrectly calculated. The data shows a steady rise in decisions from January 2017.

In 2015-16, the number of all Centrelink matters – not just debt decisions – set aside or varied by the tribunal was 22%.

The National Social Security Rights Network said the high rate at which the tribunal was setting aside or varying debt decisions was surprising.

The network’s executive officer, Matthew Butt, said the complexity of the welfare system meant errors were to be expected but said Centrelink must do more to ensure people understood debt decisions and were given the information needed to quickly assess their accuracy and fairness.

“More generally the data shows the importance of free, accessible appeal rights,” Butt said. “Although a majority of Centrelink decisions are affirmed on appeal, a significant proportion are changed or set aside entirely. In many cases this is to the benefit of the individual.”

New privacy code for public servants after Centrelink 'robo-debt' debacle Read more

The Australian Council of Social Service’s chief executive, Cassandra Goldie, said the figures further underlined the need for human involvement in debt decisions.

“We do not know how many of these were robo debt cases but our firm view is that, without human involvement in the detection and calculation of debts, mistakes will be made and there is a high risk that people will pay debts they do not owe,” Goldie said.

“The government must only issue a debt notice if it has solid proof that a debt exists and that it is accurate. This is not the case under the robo debt program and is why it must be stopped immediately.”

Figures cited by the Department of Human Services during the Senate inquiry suggest only a small amount of tribunal cases so far relate to the automated debt notices. For the 2016-17 financial year, as at 28 February 2017, 106 people have lodged an application at the Administrative Appeals Tribunal for a review of an Online Compliance Intervention decision.

Under social security law, a welfare recipient who receives a debt notice has 13 weeks to seek a review of the decision internally. If they are still unhappy with this decision they are then able to challenge it in the first tier of the AAT’s social security division.

These hearings are held confidentially and are often informal in order to expedite cases. Some hearings can be public in the event they are appealed to the second tier of the AAT review system.

Senate inquiry report recommends all debts calculated under flawed model be re-assessed and system be redesigned

This article is more than 1 year old

This article is more than 1 year old

A Senate inquiry has called for Centrelink’s controversial automated debt recovery system to be suspended until its many flaws can be resolved.

The inquiry released its report on Wednesday night, which made 21 recommendations for fixing the robo-debt system.

The inquiry has urged all debts calculated using the error-prone “income averaging” process to be reassessed. It also called for a redesign of the system with a robust risk assessment process.

Horror stories have continued to emerge about false debts imposed by the system, despite the government announcing a series of changes earlier this year.

One man, who asked to remain anonymous, said he fought for months to force Centrelink to concede it had issued him a $4,000 debt in error. He said he suffers depression and became suicidal during the ordeal.

Centrelink phone overload: 42m calls get busy signal in 10 months Read more

The department agreed he owed nothing in December, but sent him another debt letter in early April, again demanding payment of the debt.

That meant he had to begin the dispute all over again. His second fight against Centrelink ended in mid-May, after the department again conceded that he owed them nothing.

“This time hasn’t been quite as bad, it’s just sort of made me angry,” he told Guardian Australia. “The first time around it was just making me suicidal, I have depression, and I’ve worked through that with my therapist.”

“I’m working on a PhD. As you can probably imagine, doing that I don’t have much money.”

Correspondence between the man and Centrelink supports this version of events.

The inquiry began hearings in March, and its chair, Greens senator Rachel Siewert, said it had exposed serious flaws in the system.

“The evidence presented to the committee as it travelled across the country was compelling, consistent, and showed a program that was putting huge pressure on some of the most vulnerable members of our community,” Siewert said after the report’s release.

“Procedural fairness is lacking in every stage of the robo-debt program; whether it be the forcing of people to reach back through their paperwork from six years ago, sending debt letters to the wrong address and/or not engaging with concerned recipients, or averaging out of income data, often producing incorrect results.”

The Department of Human Services used the inquiry to highlight the changes it had made to the system, which it said had largely resolved the problems. But others say the changes don’t go far enough.

The Australian Council of Social Service chief executive, Cassandra Goldie, said on Wednesday said the system is unworkable and must be abolished.

“Since its adoption 12 months ago, robo-debt has issued thousands of debt notices in error to parents, people with disabilities, carers and those seeking paid work, resulting in people slapped with Centrelink debts they do not owe or debts higher than what they owe,” Goldie said. “It has been a devastating abuse of government power that has caused extensive harm, particularly among people who are the most vulnerable in our community,” she said.

Anglicare Australia released a similar statement on Wednesday, saying the system has unfairly shifted the onus of disproving debts onto vulnerable Australians.

New privacy code for public servants after Centrelink 'robo-debt' debacle Read more

Its executive director, Kasy Chambers, urged the government to pay heed to the significant evidence the inquiry heard about the hardship caused by the system.

“The shift in the onus of proof onto recipients, the barriers to people trying to fix these problems through the Centrelink system, and the growing stigmatisation of welfare, is a step towards the criminalisation of poverty and disadvantage,” Chambers said.

“Let’s suspend this failing system and work together to design one that works for people – not just the government,” she said.

The system was introduced in July but began in earnest in September, and issued about 220,000 letters in the five months to February.

Almost half of the debts raised between July and March were referred to private debt collectors.

The system was quickly beset by complaints from vulnerable Australians, who said they were lumped with inaccurate debts, but struggled to get help through Centrelink’s overloaded phone system or its new online portal.

The system removed a key layer of human oversight and placed greater reliance on a process of data matching, which automatically compared Centrelink and tax office records to detect discrepancies in reported income.

Where a discrepancy in the two income records was detected, letters are automatically generated and sent demanding explanations from welfare recipients.

If no reply was received, the department used an error-prone process of “income averaging” that crudely divided

Expansion of data-matching program aimed at scrutinising whether person’s earnings from trusts or family daycare make them ineligible for welfare, government says

This article is more than 1 year old

This article is more than 1 year old

Centrelink has insisted it has no plans to use the automated debt recovery system to target aged pensioners from next week, despite concerns from Labor and some community groups.

From Saturday, Centrelink will expand its data-matching program, which it uses to compare an individual’s reported income to records held by the tax office.

Centrelink will now begin using data-matching to consider whether a person’s earnings from trusts or family daycare make them ineligible for welfare.

Plan to restrict pension for older migrants 'unprecedented' in Australia Read more

It will also continue to use data-matching to scrutinise a person’s earnings from assets and investments, a measure it hopes will save $980m over three years. But crucially, the department says it will still use humans to manually review discrepancies involving non-employment income.

That sets it apart from the robo-debt system, which automatically begins a debt retrieval process whenever a discrepancy in income is detected through data-matching.

The lack of human oversight was the cause of a significant amount of the criticism of robo-debt.

The departmental spokesman, general manager Hank Jongen, said individuals targeted for non-employment income types would liaise with the department on a specialised 1800 number.

They would not use Centrelink’s online compliance portal, he said.

“The Department of Human Services will not be expanding the current online compliance system from 1 July to include older Australians who have earned income from their assets or investments,” Jongen said.

“The current online system only checks salary and wage income and will continue to be available for salary and wage earners who find this channel the most convenient to complete a review,” he said.

An inquiry into the robo-debt system had raised concerns that it would be expanded to target aged pensioners. Those concerns had been echoed by Labor and others.

Jongen said the expansion of the compliance system from July 1 was aimed at scrutinising earnings from family daycare and trusts. He said few aged pensioners were expected to be earning from those income streams.

“From early July, the department will expand its compliance reviews of income from family daycare and trusts,” she said.

“The department does not expect many pensioners to initially be subject to these expanded measures, due to the nature of the income being reviewed.

“Departmental compliance officers manually review these other forms of income earned.”

The expansion of data-matching was one of a suite of measures announced in last year’s midyear economic and fiscal outlook, which collectively are designed to save $2.1bn over the forward estimates.

Meanwhile, there are conflicting reports about a significant change in staffing at Centrelink, which the union has claimed as a victory.

The Community and Public Sector Union said the department was planning to turn casual roles into 2,000 permanent jobs, mainly in the agency’s troubled call centres.

The national secretary, Nadine Flood, said it would help relieve pressure on an agency that has sustained repeated cuts in recent years – and help end unacceptable waiting times for phone calls to Centrelink.

“People employed casually by DHS already make a valuable contribution, but giving them permanent jobs will mean they receive the comprehensive training that is required to fully help customers through sensitive issues and often complex processes,” Flood said.

“The department deserves congratulations for taking this first step to turn around what has been an unacceptable slide in service standards.”

Senate inquiry calls for Centrelink robo-debt system to be suspended until fixed Read more

But the department has offered a different recruitment figure.

It says it is only recruiting for about 107 roles. A spokeswoman said that was part of “normal business processes”.

The department said it was also looking to “rebalance its staffing profile including ongoing employment”.

“Based on our current staffing levels, and forecast turnover, the department is currently in the process of conducting recruitment of some 107 roles,” she said.

“Further advertising of positions will be dependent on staff turnover and business needs.”

The news comes as the auditor general, Grant Hehir, rejected calls for a specific audit of the debt recovery system. The independent MP Andrew Wilkie made the request last month, but Hehir said the Commonwealth Ombudsman had already considered the system comprehensively.

But he said the issues raised with the debt recovery system may be considered as part of a broader audit of welfare compliance measures in the coming year.

Labor and the CPSU have both sought to characterise Centrelink as an agency in crisis, particularly

CENTRELINK’S “threatening” debt recovery letters have reached the next level and Australians are terrified, according to a radio host who angrily confronted the government.

The notes sent to people in selected locations now feature the Australian Federal Police logo at the top and warn recipients they could face losing their payments, a criminal record or a jail sentence.

“These letters are being received by people who have done nothing wrong,” Tasmanian radio host Brian Carlton told Human Services Minister Alan Tudge in an explosive interview last week. “They are being monstered by their own government. You are scaring the willies out of them. Please stop it.”

Mr Tudge said he did not agree the letter would “scare the bejesus out of people”, insisting it was “a straightforward letter which says ‘are your details up to date?’” But Mr Carlton said he had heard from multiple listeners who did not see it that way.

The full Centrelink/AFP logo scare letter, complete with invitation to dob in your fellow Australians. pic.twitter.com/W3Euhsift2 — Jen (@juniperlilacs) August 4, 2017

“This is about targeting particular areas which we know are likely to have high incidences of welfare fraud and welfare ... based on detailed analysis from the AFP and from data analysis,” Mr Tudge said. “We know that while the vast majority of people do the right thing when they receive welfare — they are constantly updating their details, be it their income or their relationship status — the unfortunate reality is, Brian, that some people do not do the right thing and either deliberately or inadvertently fail to update their details.

“This work, Taskforce Integrity, has already uncovered about $30 million of overpayments, including one instance where it was a person who owed more than $100,000.”

Mr Carlton, however, said it was one thing to remind people to update their details but “overkill” to “target them by postcode” and threaten them with prison sentences.

The LAFM host also linked the penalisation of ordinary people updating their details to the errors made by politicians engulfed in the citizenship scandal, including Deputy Prime Minister Barnaby Joyce. “All of these senators who have had to leave the Parliament under a cloud of citizenship they will be paying back the money they took from the taxpayer, will they?” he asked. “The double standard is extraordinary.”

Mr Tudge insisted there was “no allegation in the letter” and said it deliberately thanked people who had updated their details accurately, but Mr Carlton was having none of it.

“It is threatening. It is threatening. I am sorry I have got a copy of it in front of me, Minister. It is threatening ... The second final paragraph; committing welfare fraud can result in a loss of payment; a debt to be repaid; attending court; a criminal record; or a prison sentence. Pretty clear.

“These are Australian citizens, elderly, vulnerable Australians that you are scaring the crap out of.

“Get your many scouts out to find out those individuals [who are exploiting the system] and you prosecute them until the cows come home, Minister, and you would get no argument from me for doing so.

“But sending out spray letters to people who have done nothing with an AFP logo and threatening them with jail is inappropriate.

“Just remove the logo, remove the AFP, remove the threats. Ask the people to update their information and be done with it.

“If they choose not to, and they are in breach of the law then chase them down as individual. But spraying out stuff like this to innocent people is not something that a democratic government does. You do not deserve to be in power.”

Campaigner Asher Wolf told news.com.au: “The campaign against robodebts grew from a desire for procedural justice. We identified multiple flaws in DHS’ automated data matching system leading to people receiving letters for alleged debts they didn’t actually owe. And we thought that was outrageous and unacceptable and needed to be stopped. Particularly after Andy Fox’s DHS data was leaked to the media, we found people were scared of their government. And that’s worrying. People shouldn’t be scared of their governments, governments should be scared of their people.

“Welfare is meant to benefit people, and ensure a safety net for the most in need, not police and brutalise them. We heard story after story of people terrified and scared of the government after finding robodebt letters in the mail and were unsure how to proceed. We found that when people challenged robodebts their debt amounts were often downgraded or wiped completely.

“Lyndsey Jackson set up the Not My Debt website to collect stories of people’s tragic experiences of robodebts and together we networked organisations and individuals to work together to speak out and challenge false robodebts.

“Automated data matching systems governed by flawed algorithms are immensely problematic: the Coalition needs to take responsibility for the deeply flawed IT projects it unlea

The Turnbull government has admitted it issued robo-debt recovery notices to 20,000 welfare recipients who were later found to owe less or even nothing.

Documents presented to Parliament by Human Services Minister Alan Tudge showed the use of automated data matching processes by Centrelink and the Department of Human Services resulted in 19,980 debt notices being issued, all of which were either reduced or rescinded.

20,000 wrong debts: Human Services Minister Alan Tudge. Credit:Andrew Meares

Data to March 31 showed a total of 12,524 people had their robo-debt demands reduced to a smaller amount, while a further 7456 people were found to have no legitimate debt.

In a response to questions from Labor backbencher Steve Georganas, Mr Tudge said NSW had the most debts reduced to zero, with 2234, while another 3644 debts in the state were reduced.

Data shows 7,456 debts were reduced to zero and another 12,524 partially reduced between July last year and March

This article is more than 1 year old

This article is more than 1 year old

At least 20,000 Centrelink debts were either wiped or reduced in a nine-month period, newly released figures show.

The data, tabled in parliament this week, confirms what was already known about extent of problems with the so-called “robo debt” system.

It shows 7,456 debts were reduced to zero and another 12,524 were partially reduced but not wiped entirely, between July last year and March.

For the first time, the data gives a geographic understanding of where debts were issued. It shows high numbers of inaccurate debts in areas of western Sydney, Bundaberg, Mackay, Toowoomba, the New South Wales central coast and around Cranbourne in Melbourne’s south-eastern fringes.

Outer suburbs of the Gold Coast, Hervey Bay and Ipswich in Queensland were also listed in the top 20, as were Ballarat and Werribee in Victoria.

But lawyers have warned the statistics do not give a complete picture. The data only reflects debts where a review or appeal took place.

Victoria Legal Aid’s executive director of civil justice, Dan Nicholson, said the most vulnerable and disadvantaged groups were less likely to have appealed.

“I think on the face of it, it’s a shocking number of wrong debts to be alleged but in fact the most concerning thing is the very large number of people who would not have challenged their debts, and would now be paying back debts that were wrongly or unlawfully raised against them,” Nicholson said.

“We know those people are most likely to be the most disadvantaged in the community, and therefore the people that it may affect the most.”

The human services minister, Alan Tudge, has insisted the system is capable of calculating debts fairly. He pointed to to the ombudsman’s report earlier this year, which made a string of criticisms of the system but found it was able to accurately raise a debt, so long as it was provided with the proper information.

“Of course, if someone provides new accurate information, then a different debt figure is calculated. This has always been the case,” Tudge said. “The percentage of online compliance system debts subsequently reduced to zero after the welfare recipient has provided further information is almost identical to under the old manual system – about 3%.”

Criticism of the system began just before Christmas last year. From July last year, the government introduced a new way of clawing back debts from welfare recipients.

It removed a layer of human oversight from an automated data matching process, which compares an individual’s tax records with the earnings they have reported to Centrelink.

Where previously compliance teams would manually check discrepancies in tax and Centrelink records, the new system immediately sent a letter to the welfare recipient.

Centrelink sends welfare recipients fraud warning via text message Read more

That shifted the onus to disproving the debt on to vulnerable Australians. It also allowed the government to significantly ramp up the scale of its debt recovery program.

It shifted people to use a new online tool to prove their entitlement to welfare, often forcing people to find payslips that were up to six years old.

Thousands of letters were sent to the wrong address. Others were either ignored or not understood.

If no response was received, a debt was raised against the individual. A longer period of non-response would see the debt referred to an external debt collector.

“The [online compliance intervention] project effectively shifted complex fact-finding and data entry functions from the department to the individual and its success relied on its usability,” the ombudsman’s report found earlier this year.

The process also led to flaws in the calculation method.

If no response was received, Centrelink would use an “income averaging” method to calculate the debt.

The method takes an individual’s annual income and averages it over Centrelink’s 26 fortnightly reporting periods, thereby assuming an individual had worked for the entire year and was ineligible for welfare.

“The obligation on Centrelink is not to raise a debt unless it is satisfied it exists in the relevant amount,” Nicholson said. “Its job is to use its powers fairly and accurately, not to go on a fishing expedition and expect people to do hours work to correct Centrelink’s basic mistakes.

“We think there are real doubts about the lawfulness of the approach they have used.”

In a joint statement, the shadow human services minister, Linda Burney, and the Labor MP Steven Georganas called on Tudge to apologise to the 20,000 individuals.

“These are absolutely shocking results and reveal the extent to which Mr Tudge has fudged the management of the robo-debt debacle,” they said. “Minister Tudge made them feel frightened, anxious and like criminals, and he should apologise.”

This article is more than 1 year old

This article is more than 1 year old

The public sector union has condemned moves to privatise Centrelink’s much-criticised call centre, saying it would give Serco access to vast amounts of personal information.

The human services minister, Alan Tudge, announced that a subsidiary of multinational Serco – Serco Citizen Services – would be contracted to help operate Centrelink’s call centre.

Tudge said the move would add 250 staff in a significant boost to the capacity of the call centre. Serco staff would supplement existing workers in the three year pilot program.

Tudge said the Serco workers would comply with all Commonwealth privacy and security requirements.

The truth about Centrelink's telephone wait times Read more

The announcement is designed to address significant delays with the call centre, a source of constant frustration for social security recipients.

“This partnership will assist Australians who are accessing Centrelink services, and help reduce call wait times,” Tudge said.

The department of human services recorded 42 million “busy signals” between July 2016 and June, according to evidence in Senate estimates.

Average wait times were roughly 28 minutes for the disability, sickness, and carers line, 30 minutes for employment services and 16 minutes for families and parenting. The wait time was worst for the “participation” phone line, at 38 minutes.

In the financial year prior, about 42% of the 68 million calls made to Centrelink were blocked. Another 7.12 million calls were abandoned.

The Community and Public Sector Union quickly criticised the Serco decision as an “absolute disaster”.

The union’s national secretary, Nadine Flood, said it was an attack on public servants, a threat to the integrity of private information and a privatisation that would downgrade the quality of a critical public service.

“We are seeking an urgent meeting with the department seeking more information on this dubious arrangement,” Flood said.

“Clearly this deal has been kept secret for some time if Serco is planning to be hooked into Centrelink’s systems in just a few weeks. Providing Serco with even the most basic access to client records would be giving the company a frightening amount of personal information.”

The government will spend $51.7m over three years to fund Serco’s involvement with the call centre. Tudge said no services or data would go offshore.

Centrelink scandal: tens of thousands of welfare debts wiped or reduced Read more

Serco is due to begin working in the call centre in coming weeks.

The announcement comes after renewed criticism this week of the government’s response to the “robo debt” scandal, which itself exposed a lack of capacity in Centrelink’s call centre.

The government again stated it had no intention of suspending the automated debt recovery system, which issued at least 20,000 inaccurate debts to Australia’s most vulnerable.

It did so in a formal response to a scathing Senate inquiry report. Labor and the Greens both described the government’s response to the report as an insult.

“The Turnbull government’s refusal to act on the recommendations of the Senate inquiry to overhaul the Online Compliance Intervention program is an insult to the thousands of decent Australians who were caught up in the conservatives robo-debt disaster,” shadow human services minister, Linda Burney, said in a statement.

A Community Affairs References Committee released a report in June into Centrelink’s controversial robo-debt program, making 21 recommendations to fix the program that was rolled out in mid-2016.

The report said the system was “so flawed it was setup to fail” and contained a number of “procedural fairness flaws”.

The Centrelink Online Compliance Intervention (robo-debt) program uses government records – matching and averaging a person’s income records held by Centrelink and the Tax Office – to detect overpayments.

But the government admitted in September that it sent recovery notices to 20,000 welfare recipients who were later found to owe less money, and in some cases, none at all.

Despite this, the government rejected the committee’s recommendation that the system should be put on hold.

In a response issued on Tuesday, the government said it was committed “to maintaining a strong social welfare safety net”.

“This requires that there be integrity in the welfare system. Each person should receive exactly what they are entitled to, no more and no less. This principle has been in place under successive governments and has not changed,” the government said.

“The government along with the Commonwealth Ombudsman acknowledge that communication issues with the initial roll out of the online system gave rise to potential confusion on the part of some recipients [but] several changes have subsequently been made to improve the initial contact letters and messages within the online system.”

The government also said that the “input from some third parties [during the inquiry] was aimed solely at scoring political points”.

“The government notes that a significant proportion of the statements relied upon as evidence in the chair’s report are not accurate. Many of the conclusions drawn in the chair’s report fail to take account of the detailed review undertaken by the independent Commonwealth Ombudsman, or account for the detailed information provided by the Department of Human Services in its submissions to the inquiry,” it said.

“On this basis, the government rejects the central conclusions and recommendations of the chair’s report, especially the conclusion that the online system lacked procedural fairness.”

However this response has been slammed by Labor and the Greens, who have labelled it as “grossly inadequate”.

In a media release, Labor MP Linda Burney said human services minister Alan Tudge needed to take action on the program’s failures.

“The Senate inquiry produced 21 recommendations which effectively called for a radical overhaul of the system to make it workable,” Burney said.

“The Turnbull government’s refusal to act on the recommendations of the Senate inquiry to overhaul the Online Compliance Intervention program is an insult to the thousands of decent Australians who were caught up in the conservatives’ robo-debt disaster.”

Australian Greens Senator and Community Affairs References Committee chair Rachel Siewert, said the response showed contempt “for the thousands of Australians affected by this debacle”.

“It is frankly insulting to the people who gave evidence at the inquiry to be referred to in this response as third parties looking to score political points. The comments that the chair’s report relied on evidence that was inaccurate is insulting to those who gave evidence,” Siewert said.

“The people who gave evidence at the inquiry were vulnerable people, whose data had been automatically matched without oversight, people who had been harassed by debt collectors days before Christmas, people living below the poverty line wrongly told they only had a number of weeks to pay back thousands of dollars. This inquiry was about the lives of vulnerable Australians.

“We know that this debt collection process impacted on the mental health of many people. This government response shows a government deeply out of touch with people dependent on our social safety net.

“While the Australian Greens welcome the government addressing some issues by implementing the recommendations of the Commonwealth Ombudsman, these changes are not enough to improve an overburdened and understaffed system.”

When the report was originally handed down in June, ACOSS CEO Dr Cassandra Goldie said the government needed to consider the report carefully and not extend the program.

“Frankly, robo-debt must be abolished,” Goldie said.

“The fundamental flaw of robo-debt is the lack of human involvement in the detection and calculation of debts.

“We urge the federal government to finally sit down with stakeholders, including those representing people affected, to redesign Centrelink debt collection so that humans are involved and there is a fair, accurate and humane process undertaken.

“People needing help should be treated with dignity, not harassed into submission by automation.”

The latest government response comes as Tudge announced plans on Wednesday to privatise a Centrelink call centre.

Serco Citizen Services – a subsidiary of multinational Serco – would be contracted to address issues with Centrelink’s call wait times, after it was recently revealed 42 million calls to Centrelink had gone unanswered over the last year.

Department says surge in use of private contractors is temporary but union says government is ‘privatising our safety net’

Centrelink to use 1,000 labour-hire staff to help recover welfare debts

Centrelink will enlist up to 1,000 staff from labour-hire firms to help it recover debts and enforce the compliance of welfare recipients.

The move has prompted a furious response from the main public sector union, which labelled it yet another example of the government “privatising our safety net”.

But a spokesman for the Department of Human Services (DHS), Hank Jongen, has described it as simply a “temporary surge” in the use of private contractors, a practice that was neither new or unusual.

Our institutions go hard after welfare cheats, but they privilege the rich | Erin Lennox Read more

The large-scale outsourcing exercise comes a month after the government announced 250 staff from multinational outsourcing giant Serco would be used in Centrelink’s call centre, which has struggled to reduce excessive waiting times.

The department is yet to select the labour hire firms but Guardian Australia understands the new staff will begin work in early 2018 within Centrelink’s compliance area.

That area came under immense scrutiny earlier this year, after the “robo-debt” crisis caused the issuing of inaccurate debts to vulnerable and disadvantaged Australians.

The labour-hire staff are designed to supplement DHS’s existing workforce of more than 34,000. It is understood they will be dispersed to offices across the country, and used to free up existing public servants for more complex cases.

The labour-hire staff are also expected to have access to Centrelink systems.

The Community and Public Sector Union (CPSU) national secretary, Nadine Flood, described the outsourcing as “new and scandalous”.

Flood said it would place labour-hire staff in sensitive roles that “should be done by well-trained public servants”.

Public sector union​ condemns Centrelink move to privatise call centre Read more

“Robo-debt was an absolute disaster for both DHS staff and the community – the Turnbull government is trying to abdicate their responsibility for this debacle by outsourcing the mop-up to a private company,” Flood told Guardian Australia.

“Labour hire has no place in public services – the Turnbull government needs to lift its arbitrary cap on public sector employment so that the community can have the services it needs,” she said.

The outsourcing is designed to help achieve recent Coalition budget measures, which sought to crack down on welfare fraud and non-compliance.

Jongen said the government had committed extra resources to help strengthen “the integrity of the welfare system”.

“To meet this commitment, the Department of Human Services has engaged additional workers on a contract basis to support the temporary surge in workload as these measures are implemented,” Jongen said.

“This is not new, the department has engaged contractors over many years for specialist services and to support day-to-day operations to help fill short-term requirements for finite periods.”

The robo-debt scandal, which emerged publicly in early December last year, caused a further deterioration of morale within Centrelink.

Flood warned moves to privatise the compliance area would only cause morale to plummet further.

“DHS staff have an important job that they take pride in and that the whole community relies on,” she said.

“These privatisation moves make these jobs precarious and unnecessarily stressful. Staff are saying that morale has reached rock-bottom and this has real implications for staff and the community.”

Retail worker Laura has had a $24,000 debt hanging over her head since October last year.

Laura, who’s asked Hack not to use her surname, works casually and had been getting income support payments through Centrelink from 2011 to 2014.

Late last year, Centrelink told her she owed them thousands of dollars.

She was one of the thousands of people caught up in what’s known as the robo-debt policy - that’s when Centrelink started using an automated system to send out letters when it detects discrepancies in payments.

The old non-automated system generated 20,000 letters a year. But in the early days of the new system, that jumped to 20,000 a week.

“It popped up with a debt amount of just over $24,000... That’s my year’s wage,” Laura said.

[I felt] physically sick and I lost my shit straight away.”

Over that three year period, Laura had received about $38,000 in welfare payments. To be told she owed $24,000 was a big shock.

“I’m logical, I know it’s a big system and that things can go wrong. If it was a small amount, that things were inconsistent, then I would understand that,” Laura said.

‘No one is listening’

Laura looked into it.

An initial review saw the debt drop - but only by a couple of grand.

In December last year, Laura said a Centrelink employee told her that her debt looked like an administrative error. But the debt still stood.

“They said straight away that I had to be on a payment plan and pay it back. They sent me to their debt recovery person. He told me that they wouldn’t take less than $100 a fortnight to pay back. And I said, well that’s impossible for me,” Laura said.

“Since last year I’ve been paying back $20 a fortnight.”

She’s had to cut corners in an already tight budget. Paying for the internet was what had to give - and it’s the very thing she needs to help find more work.

Laura has engaged the services of Legal Aid and is appealing the debt.

She said her file is full of inconsistencies and faults. Hack has not viewed the documents.

Hack has asked former Human Services Minister Alan Tudge, and the incoming minister, Michael Keenan, for comment on this story.

Laura said the whole process is taking its toll on her.

“I’ve suffered from depression for a very, very long time and especially at the end of last year when I first got this debt I was already not feeling well because of other things, so I ended up not being at work for a month,” she said.

“No one’s listening… I’m basically being called a fraud and a liar and that I don’t matter.”

“It straight away said I was guilty, and a year later [I’m still trying] to prove I’m not guilty,” Laura said.

“That’s a year’s worth of my life of stress and struggle that I shouldn’t have had to deal with… It’s a joke.”

‘I was panicked’

Joy* knows exactly what that feels like. When she spoke to Hack early this year, she was absolutely distraught.

Just before knocking off work for Christmas break in 2016, Joy got a letter from Centrelink saying she owed $26,000 - more than half her yearly wage.

“I was really panicked. I was finishing up for Christmas feeling really happy and excited. And then all of a sudden I was thrown into this awful panic. I didn’t know what I was supposed to do.”

She was told she’d have to pay, in full, by 9 January.

“No Legal Aid type places were open to give advice,” Joy said.

“I had to make repayments otherwise my Family Tax Benefits would have been cut off. I’m a single parent, I work part time - I kind of rely on that,” she said.

Debt recovery told her to pay $800 a week - a near impossible feat for someone in Joy’s financial situation.

Both Joy and her brother - who had incurred a much smaller debt of a few thousand dollars - went public with their stories. Suddenly, they had Centrelink’s attention.

“A couple of days later, miraculously, he had a call from a mysterious Centrelink big wig.”

Joy’s debt was reviewed and reduced to only a couple of thousand dollars - a ten-fold decrease in the original sum. Her brother had his debt reduced to just $50.

All of that happened within days.

“If my brother hadn’t gone public… I would still be sorting it out now and still be in stress about it,” Joy said.

I’d be paying it off for more than a decade. That’s a way to make a person feel like they can never get ahead.”

“This was great for me, but there are thousands and thousands of people who did not know, who were not able to advocate for themselves in the same way, didn’t have this luck,” she said.

Letters on hold over Christmas

One of the biggest criticisms of the handling of the robo-debt program is the timing of it all. Thousands of letters were sent out over Christmas last year, making it hard to get in touch with Centrelink and appeal the debt.

Greens senator Rachel Siewert was part of a Senate inquiry into Centrelink earlier this year.

“It was deeply distressing for people last year when they were receiving notices over Christmas and the summer break,” she told Hack.

This year, Centrelink paused the program at the end of November, a

The Turnbull government’s robo-debt program involves enforcement of “illegal” debts that in some cases are inflated or nonexistent, a former member of the Administrative Appeals Tribunal has said.

The scathing indictment of the program is contained in an academic paper by Prof Terry Carney that also accuses Centrelink of failing to defend the legality of debts in the AAT and suggests the tribunal should set aside debts until the agency has proved the amounts are correct.

The criticism has been echoed by the National Social Security Rights Network and the Welfare Rights Centre, which warned cases of false debts were being routinely challenged and reduced or completely wiped in the tribunal.

Centrelink forced to wipe or change one in six robo-debts Read more

Carney explained the robo-debt program calculates welfare recipients’ income and averages it over fortnightly periods rather than discovering their actual income for each and every fortnightly period which, he writes, is the proper basis for calculating the debt.

Carney said when Centrelink asks for payment of alleged debts or evidence to disprove them, “most vulnerable alleged debtors will simply throw up their hands, assume Centrelink knows that there really is a debt, and seek to pay it off as quickly as possible”.

He said the welfare agency did this even though a report by the commonwealth ombudsman in April 2017 “demonstrated that most debts calculated this way were greatly inflated, and that some were false (zero debts)”.

Carney was a member of the social services division of the AAT – its longest-serving member until his term concluded in September 2017 – and oversaw the writing of the Social Security Act.

Carney praises the parliamentary community affairs committee for recommending that “Centrelink resume responsibility for obtaining all information necessary for calculating working age payment debts”.

But, he argues, this worthy recommendation still “[fails] to correct the fundamental legal error” in alleging that a debt exists in the first place.

When welfare recipients challenge alleged debts in the AAT, based on his experience as a member of the first tier of the AAT, Carney said “in practice Centrelink fails to refer at all to the legal foundation for debts routinely defended” in hearings.

After the ‘robo-debt’ debacle, traumatised users find support in online communities | Jonno Revanche Read more

He accused Centrelink of being “elliptical at best” when asked for written submissions proving a debt and said the agency “appears to have elected not to challenge” adverse robodebt rulings by appealing to the second tier of the AAT.

The Welfare Rights Centre principal solicitor, Katherine Boyle, told Guardian Australia the issues raised in Carney’s article were seen on a daily basis by her organisation.

“We see many examples of the issues raised … in our daily work to assist people, many of whom cannot understand why they have Centrelink debts when they have been doing the right thing,” she said.

In one recent case, a young casual worker, Sarah, successfully challenged a $6,900 debt. Centrelink calculated the unlawful debt using the income-averaging method based on ATO data which overstated her earnings from casual employment over the financial year.

The Department of Human Services general manager, Hank Jongen, said the department “strongly refutes any claims that it has conducted its compliance activities in a manner which is inconsistent with the legislation”.

“The independent review by the commonwealth ombudsman found the online compliance system meets all legislative requirements, accurately calculates debts when the required information is entered, and debts raised are consistent with the previous investigation processes,” he said.

Carney said the “illegality” of the robodebt program has “continued unchecked for 18 months as at the date of writing, despite [first tier] decisions invalidating it” and that the normative effect of AAT decisions does not appear to be working.

Carney argued that Centrelink’s conduct using averages in internal reviews and AAT challenges “arguably breaches” the commonwealth’s model litigant policy, which requires fair play and for litigation not to oppress citizens.

He cited the recent full federal court case Shord v Commissioner of Taxation for the proposition that a breach – if established – may result in professional misconduct proceedings, contempt or criminal sanctions.

Carney suggested that “because there may or may not be a recoverable overpayment (usually in a different and lower amount)” the AAT should set aside debt assessments based on averaging, and send them back to be recalculated based on “precise information of earnings in relevant fortnights”.

He also suggested the AAT should use pre-hearing powers to demand Centrelink give more documents and set out the legal basis of the debt.

In a bid to recoup $800 million of debt, former welfare recipients who owe money to the federal government will face a travel ban until the funds are repaid.

So far 20 orders have been issued according to human services minister, Michael Keenan who says that over 150,000 people who no longer receive welfare owe money.

“If you received a payment you were not entitled to, you have an obligation to repay the money you owe and we will use every tool at our disposal to ensure it is recovered,” Mr Keenan said in a statement on Saturday 22 September.

Along with the travel ban, those who refuse to pay back their debt will also be charged interest. The rate at which they will have to make repayments will take into consideration each person’s circumstances, while those who are facing hardship have the chance to defer their returns.

The minister clarified that those who are currently receiving welfare, or who are making repayments towards their debt would not be impacted by the travel ban. Instead its focus is those with large debts consistently refusing to pay the money back.

“It’s very important people repay money to the Australian taxpayer,” said Mr Keenan.

“The money that funds the welfare system has been earned by hardworking Australians and they expect us to make sure that system operates with integrity, that people get the support that they need and that they’re not getting more out of the system than they’re entitled to.”

Labor’s shadow health spokesperson, Catherine King said more information was required on the matter. Referring to Centrelink’s robo-debt scandal, which saw some 20,000 people sent notices in 2017 falsely claiming they owed money to the government, she urged the government to tread very carefully.

“We had the robo-debt scandal where people in fact did not have debts at all and were absolutely hounded by this government,” said Ms King.

“The government would want to be very, very careful that it knows absolutely that these people do have debts, that this isn’t another debacle in the making.”

The federal government has settled a landmark challenge against its robodebt program – conceding a $2,500 debt raised against Deanna Amato was not lawful because it relied on income averaging.

In orders made by consent on Wednesday, the federal court declared the debt was “not validly made”, that an order to garnishee Amato’s tax return was also invalid and there was no basis to add a 10% penalty to the debt.

Rowan McRae, the executive director of civil justice access at Victorian Legal Aid, said the case has “helped to clarify the unlawfulness of the robodebt system for hundreds of thousands of Australians in the same situation, who received or paid off a robodebt based only on averaging”.

Last week the federal government abandoned sole reliance on income averaging to calculate debts, dismantling a central plank of the robodebt program’s automation which has seen tens of thousands of welfare recipients overcharged for alleged debts.

Welfare groups, legal centres, Senate inquiries and a former administrative appeals tribunal senior member, Terry Carney, have all warned that income averaging is not a proper basis to claim a debt.

The same argument is being pursued in a class action by Gordon Legal challenging the legality of the entire program.

Amato, a 34-year-old local government employee, found out Centrelink claimed she owed a debt in January after it sent repeated notices to an old address then garnished her $1,700 tax refund.

Amato disputed the debt in the federal court, prompting the commonwealth to reduce her debt to $1.48 in September, but the case continued even after the radical overhaul to the system announced by government services minister Stuart Robert.

In a statement explaining the consent orders, the court noted the initial debt of $2,900 was calculated based on Australian Taxation Office income data averaged across fortnightly periods as if this were Amato’s actual income in each period.

The court said the conclusion Amato had received social security benefits she was not entitled to was “not open on the material before the decision-maker” because there was “no probative material” that the average reflected Amato’s actual income.

“In the circumstances, there was no material before the decision-maker capable of supporting the conclusion that a debt had arisen … The conclusion that a debt had arisen was therefore irrational, in the requisite legal sense.”

The court ordered the commonwealth to pay Amato’s costs and $92 interest.

Amato said she was delighted at the “amazing” news. “You can feel so small and helpless next to the government, but I am so glad that the unfair and ultimately unlawful aspects of this system have been brought to light,” she said in a statement.

“I had my money refunded to me, but I hope that others who have paid dodgy debts will also have a way to get their money back.

“I feel a weight lifted off my shoulders. I’ve proven my innocence, but also proven that there are reasons why you need all the facts before you can demand debt payments from people.”

McRae said while last week’s changes are “significant” they came “too late for many people who have experienced distress and hardship, or who have already paid robodebts through tax garnishee action and debt collectors”.

“Today’s result shows the federal government has accepted what advocates have been saying for years – using only income averaging to raise debts is both inaccurate and inconsistent with the Social Security Act.”

The shadow attorney general Mark Dreyfus said the judgment “simply confirms that we have got a Commonwealth government that has been extorting money from Australian citizens with no basis for doing so”.

“It’s an extraordinary scandal, robodebt,” he told the ABC. “I just think that the prime minister owes the Australian people an apology for this extraordinary program.”

On Wednesday the Senate passed a motion ordering the government to produce legal advice explaining why it made the changes to the system, with Greens senator Rachel Siewert demanding to know “the legal status of this program”.

The problem with artificial intelligence is that it's artificial.

The problem with the intelligence of humans is that it's limited, variable and compromised by judgement and values.

Put both together and you get a good understanding of how and why the Federal Government muddled its way into, and out of, the expensive, stressful "Robodebt" debacle.

A computer algorithm couldn't tell the difference between real and artificially calculated money "owed" in 470,000 cases.

Humans, too driven by the desire for "integrity efficiency" and "budget repair", didn't stop to question strongly enough whether the automated means for gathering an estimated $2.1 billion could ever justify the agonising ends for welfare recipients.

Scott Morrison was one of those who enthusiastically promoted "faster and more targeted interventions" through "streamlining existing compliance activities".

Scott Morrison

Scott Morrison championed the program as social services minister and treasurer.(AAP: Lukas Coch)

As treasurer in 2016 and social services minister before then, Mr Morrison joined a long line of ministers, including Christian Porter, Alan Tudge and Stuart Robert, who believed in the promise of automated welfare debt recovery.

They believed because they wanted the money it saved, not because they had satisfied themselves of the system's reliability.

"A more targeted approach to managing people" is how the now Prime Minister had described it in mid-2016.

The story of how the data-matching scheme was invented with vim by a coterie of high-powered bureaucrats and sold to starry-eyed ministers is fabled in Canberra.

"Give our Department some extra money, and we'll get you an extra $2 billion" was the pitch.

Never mind that in their zeal, the Human Services Department would actually remove humans entirely from the process of identifying alleged debts and mailing what amounted to letters of demand to more than 370,000 people.

Nor had anyone evidently stopped to take rigorous legal advice on whether the brave new world of data-matched welfare recovery actually stood up to the laws of the land, which stand as the barrier between Government excess and the protection of the people.

Although it's almost never released, we now know that subsequent legal advice to the Government warned its chances of defending numerous court actions would be close to zero.

Viewed against such advice, the only surprise in Stuart Roberts' abject capitulation in a Gold Coast park late on a Friday afternoon is not that it came, but that it didn't come sooner.

Centrelink

The scheme sent out debt notices without human oversight.(AAP)

No apology either.

And the small matter of the outstanding $721m in refunds? People will have to wait for months throughout the new financial year until it's fully paid out.

Lawyers mounting a massive class action against the Government on behalf of those who felt wronged by the system — we may never know exactly how many were — are still mobilising, undeterred by the impending refunds.

Publicly, they're in it for the compensation now.

But every retreat the Government's made since late last year suggests this case is destined for negotiation in the settlement room, not in any courtroom, because the risks to the Commonwealth — and taxpayers — are immense if a judge ever gets to pick through the manifest failings of the income-averaging and data-matching scheme.

The Guardian Australia has reported on "leaked advice prepared for ministers Robert, Anne Ruston and Christian Porter" calling for Robodebts to be abandoned because the scheme was "no longer viable" or "cost effective" and would not rake in the money anticipated.

Mr Robert's subsequent surrender suggests he has heeded that advice, as well as the legal advice that data methods used by the department would not stand up in court.

20,000 letters a week were sent

Not that it took Mr Robert to discover these flaws since he moved into the Government Services role — they'd been obvious from the outset.

As early as 2017, the Senate had flushed out tell-tale statistics of a scheme that simultaneously failed to deliver the Government the money it had banked on, while inflicting grief on 200,000 people.

What is 'Robodebt'?

A woman walks past a Centrelink office in Marrickville.

It's been making headlines for a while now, but how does Centrelink's controversial debt-recovery system actually work?

Read more

Sticking to the clawback system's proper name — the Online Compliance Intervention program — the inquiry found that despite Human Services pumping out "please explain" letters to people at an awesome rate of 20,000 a week, the robotic computers were already falling short of their human creators' expectations.

Led by its then-secretary Kathryn Campbell, the department was aiming for $300 million in the first six months of 2016-17, but had only landed $24 million in repayments.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume.

WATCH

Duration: 1 minute 36 seconds1m 36s

Bill Shorten says 'Robodebt' scheme was illegal

An unknown portion of the cash handed back had come from people who may not have owed it, but paid anyway to avoid further harassment.

Leap forward to 2020, under cover of the COVID-19 crisis, the back-pedalling on Robodebt has been fast, furious and well-hidden from public scrutiny, as Australians might sadly come to expect these days with full-blown financial and administrative disasters (there've been a few of them).

The general idea of data matching to identify welfare overpayments, known as the Income Compliance Program, remains a cornerstone of government policy.

But with legal action afoot, 470,000 refunds coming and not so much as a "sorry" to those affected, the final reckoning on Robodebt's legacy is still outstanding.

No computer will do it.

A responsible human might have to.

A “shameful chapter” in public administration has led to the federal court approving a settlement worth $1.8bn between the commonwealth and victims of the Coalition’s robodebt scheme.

Justice Bernard Murphy in Friday’s judgment criticised the federal government’s “massive failure”, noting the court had heard “heart-wrenching” stories of pain and anguish from victims of the Centrelink debt recovery program.

The judge said it should have been “obvious” to government ministers and senior public servants that the debt-raising method central to the scheme was flawed. He said the evidence showed it was unlawful.

The robodebt scheme, which ran between 2015 and November 2019, saw the government unlawfully raise $1.76bn in debts against 443,000 people, the court heard.

Murphy said the government had pursued about 381,000 people, unlawfully recovering $751m, including through private debt collectors. He noted that one mother had linked her son’s suicide to the debt recovery program.

Gordon Legal brought a class action on behalf of all victims last year after a court ruling in 2019 in response to a Victoria Legal Aid challenge paved the way for a wider case.

In response to the class action, the government has agreed to repay at least 381,000 people $751m and wipe all debts – worth $1.76bn – that were raised using the unlawful method of “income averaging” tax office data to check welfare payments.

Friday’s settlement “gives legal effect” to this pledge and also adds $112m in interest, which will be shared between 394,000 victims, depending on the size of their debt and how long they were without their money.

“The proceeding has exposed a shameful chapter in the administration of the commonwealth social security system and a massive failure of public administration,” Murphy said.

But the judge did not think there was evidence that proved the government knew the scheme was “unlawful” when it was established.

“I am reminded of the aphorism that, given a choice between a stuff-up, even a massive one, and a conspiracy, one should usually choose a stuff-up,” Murphy said.

About 200,000 people originally included in the class action will not receive any benefit from the settlement.

Murphy said those people’s debts had eventually been substantiated using their own payslips or other evidence, meaning they were valid and they had owed the money.

He said they would have needed to show that their debts were “tainted with illegality” to be owed compensation, a claim he said had “weak prospects of success”.

In approving the settlement, Murphy also said a more serious negligence claim originally brought by Gordon Legal would have been unlikely to succeed. The government did not accept legal liability in settling the case.

Some 680 people who objected to the settlement will be allowed to opt-out. The court heard earlier this year that some believed the interest payments were insufficient and the government had not been held accountable for its mistakes.

Murphy said the objections showed cases of “financial hardship, anxiety and distress, including suicidal ideation and in some cases suicide” that they said they suffered from the scheme. They also felt shame from being branded “welfare cheats”.

“It is plain enough that many group members continue to feel a great deal of anguish, upset and anger at the way in which they or their loved ones were treated,” Murphy said.

The judge said the government “ought to have ensured that it had a proper legal basis” to raise debts, noting many welfare recipients were “marginalised or vulnerable and ill-equipped” to challenge an overpayment.

“The proceeding revealed that the commonwealth completely failed in fulfilling that obligation,” he said. “Its failure was particularly acute given that many people who faced demands for repayment of unlawfully asserted debts could ill afford to repay those amounts.”

Andrew Grech, a Gordon Legal partner, said the firm and its clients were delighted by the outcome.

“We hope that this outcome brings peace of mind and some certainty to all class action members and acts as a strong deterrent against similar callous welfare practices for both present and future governments,” he said.

Bill Shorten, who announced the Gordon Legal class action in 2019, said a robodebt royal commission was now “inevitable”.

“You can’t make a $2bn compliance fail, and no one’s lost their job, no one’s accountable,” he told Guardian Australia.

Shorten said the court’s suggestion the scheme was more likely a “stuff up” than “conspiracy” meant the government had been “shamefully stupid, not shamefully bad”.

“But when are you so recklessly stupid that it becomes bad?” he said.

Greens senator Rachel Siewert, who has long campaigned against the robodebt scheme, also called for a royal commission. “Robodebt cost lives, it has ruined many many more and has been the cause of immeasurable pain and anguish,” she said.

Guardian Australia revealed in March last year that the government was drawing up plans to repay victims of the scheme because legal advice showed it would otherwise lose in court.

Murphy approved $8.4m to be deducted from the settlement for Gordon Legal’s costs to date but wanted more evidence before agreeing to a further $4.2m for fees for distributing compensation.

Robodebt: government fights to keep secret documents that may show ‘what went wrong’

The Morrison government is fighting to keep under wraps documents that a former public servant says could show “what went wrong” with Centrelink’s botched robodebt program.

The man seeking the documents, IT expert Justin Warren, argues they should be released so the public could learn lessons from the scandal.

Lawyers for Warren, who has sought the documents under freedom of information laws, argued in the Administrative Appeals Tribunal on Wednesday that it was “difficult to conceive of a stronger case for the most robust accountability”.

But the government says cabinet confidentiality would be undermined if the documents were released, and its counsel, Andrew Berger QC, flagged this week the case may yet head to the federal court if government agency Services Australia loses the case.

The three-day sitting is the latest development in a four-year freedom of information battle between the government and Warren, who has requested the “business case” documents for what became the robodebt program.

Officially known as the income compliance program, robodebt led to 443,000 victims being issued unlawful welfare debts in what a federal court judge this month labelled a “shameful chapter” in public administration.

Labor and the Greens are among those who have called for a royal commission, pointing to the estimated $1.7bn in unlawful debts and the serious mental health and financial distress experienced by some victims.

The information commissioner granted Warren access to 10 of the 13 documents in 2019 but the government appealed to the AAT.

The tribunal this week heard the documents contained “detailed costings”, requests for these costings, and other financial data about the proposed Centrelink debt recovery system.

They include what are known as draft “new policy proposal” documents and purported attachments about what was a massive ramp-up of compliance against welfare recipients using increased automation.

At issue is whether the documents in question were prepared for the cabinet process or were simply being worked on internally by the Department of Human Services which later became Services Australia.

Under cross-examination from Warren’s lawyer Tom Brennan SC, a former human services official, Scott Britton, agreed some of the documents could help to ascertain “what went wrong” with the program.

That included knowing what particular ministers had been told about the proposal at the time.

Senior ministers between 2015-16 included the former social services ministers, Scott Morrison and Christian Porter, who were members of cabinet, and the former human services ministers, Marise Payne and Alan Tudge, who were not.

Despite the court case, ministers have so far escaped scrutiny about what they were told about the risks of the program.

Britton, a former manager of compliance at the Department of Human Services, was shown a risk management plan, previously reported by the Guardian, that said possible severe risks of the proposal included “national public outrage” and a “significant breach of legislation and/or judicial inquiry”.

Britton left the department in 2016, a year into the robodebt program’s operation, to join the National Disability Insurance Scheme.

He told the tribunal on Wednesday he was not the author of the documents sought by Warren, meaning he could not give evidence as to what happened to them up the chain.

Brennan said keeping the documents secret would create a risk that “we as a country fail to learn the lessons of robodebt”.

There was likely “granular detail” in the documents and there was “great public interest” in ensuring that “everybody is able to understand” what went wrong, he said.

Brennan pointed to the federal court judgment – which noted the government’s debt recovery method was “unlawful” – and said the public ought to be able to learn more about what led to the “disaster that occurred”.

He also questioned why the government had not called more senior officials, such as Kathryn Campbell, then boss of human services and now the secretary of the Department of Social Services, to give evidence showing a link between the documents and the cabinet process.

Berger told the tribunal there was “extremely strong public interest” in keeping the documents secret to avoid an “intrusion into … confidentiality”. He said releasing them could have a chilling effect on public servants who may be less frank in their advice to ministers due to the fear it could be made public.

Berger also played down the significance of the content of the documents, saying they would would “reveal little if anything” about the income compliance program.

The government also called Leonie McGregor, a top official of the Department of the Prime Minister and Cabinet, who gave evidence that she believed the documents had been prepared as part of the cabinet process.

Some were “well advanced” drafts of policy proposals, and others contained information that fed into that proposal, the tribunal heard. This meant they should be considered part of the cabinet process, McGregor said.

McGregor said her expert view was based on the appearance of the documents, her experience of the cabinet process, and searches of the cabinet portal. She did not work in either of the departments in question at the time.

Warren’s case is being run pro bono by Maurice Blackburn and the Grata Fund’s FOI Project.

The AAT deputy president, Peter Britten-Jones, will consider further written submissions from the parties before a possible final hearing at a later date.