Robodebt: Government admits it will be forced to repay $ 550 million under botched program | Centrelink debt collection

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The federal government has privately admitted it would be forced to repay over 400,000 social debts worth around $ 550 million that were wrongly issued to hundreds of thousands of Australians under the scheme from sloppy robodebt.

Confidential government advice seen by the Guardian reveals for the first time the scope, size and impact on vulnerable people of the robodebt debacle that has lasted for years, including the fact that the government expects to lose one class action to come against the revenue compliance program and intends to settle.

It can also be revealed that despite government assurances that all of Centrelink’s resources have been diverted to processing a growing backlog of new benefit claims Thanks to the coronavirus crisis, Services Australia staff continue to hunt Australians for payslips and bank statements in an attempt to validate potentially illegal social debts.

Faced with a class action lawsuit from Gordon Legal and calls from Labor and the Greens to immediately repay the calculated debts using the illegal method of “income averaging”, the government has publicly declined to detail its next course of action, saying only that it has refined the program in response to “feedback.”

But a leaked ministerial submission to the cabinet of government ministers Stuart Robert, Anne Ruston and Christian Porter, prepared last month, reveals the Commonwealth expects to repay more than 400,000 debts over the next 12 months.

“Services Australia estimates that it will administer 449,500 repayments identified under the program, and their associated repaid debts would be repaid starting in July 2020 and ending within 12 months,” he said.

The submission states that Services Australia estimates that “$ 555.6 million in cash payments have been received from beneficiaries to date for these in-scope debts.”

About 80,000 debts would be reassessed before “repaying or reaffirming the debt,” the submission said.

Guardian graphic Photograph: Guardian graphic

It is understood that the cabinet’s expenditure review committee agreed last month to order the Commonwealth’s legal representatives to begin settlement negotiations on the basis that it is prepared to repay the invalidated debts.

But they were also instructed to oppose the payment of interest on debt repayments first, demand that Gordon Legal withdraw his negligence claims and reconsider whether the proposal fails.

Before the start of the Covid-19 pandemic, the parties were heading for mediation ahead of a hearing scheduled for July. It’s unclear what impact the coronavirus crisis will have on this, or the government’s plans.

A spokesperson for Robert told The Guardian: “Aspects of the revenue compliance program are currently before Federal Court.

“As such, it would be inappropriate to comment while these matters are under consideration.”

The the government overhauled the social protection system and doubled unemployment benefits to support around 1 million additional recipients of jobseeker payments following job losses caused by the coronavirus shutdown.

Robert, the Minister of Government Services, and Ruston, the Minister of Social Services, have come under pressure to address capacity issues at the Centrelink after the agency failed to keep up with unprecedented demand on Monday.

Monday evening, Ruston told the Senate “Over the past few days, all available resources within Centrelink and all external resources we were able to access have been transferred to processing new payments.”

Corn two people told the Guardian they faced requests from Centrelink’s compliance division last week to obtain financial information in order to finalize the old alleged overpayments.

A third person told The Guardian on Thursday that they had been contacted by Services Australia staff on Tuesday to ask for old pay stubs or bank statements to finalize a debt review.

The Melbourne woman, who did not want to be named to avoid prejudicing her welfare claim made this month, said she received a text saying she would get a call from Centrelink on a number private.

“I thought it was my pending Austudy claim or my partner’s pending Newstart claim,” she said.

Instead, he was asked to provide 2014 bank statements on a potential overpayment of $ 12,000.

“I was so surprised that they are bothering to chase after this now, with their system literally collapsing because of the number of people who need help,” the woman said.

“And I challenged the person on the phone so [they] said they are doing a complete system overhaul and fixing these outstanding issues.

Although the leaked ministerial submission from Robert, Ruston and Porter indicates that the government should abandon the robodebt program, it is understood that last month the decision was postponed until the federal budget, which has now been pushed back to October.

The two options offered were to either continue the program through legislation to ensure its legality, or to end it, which would cost the budget $ 700 million by 2023-24.

As part of the robodette regime, social assistance debts sometimes exceeding $ 10,000 were incurred against the unemployed and students, as well as particularly vulnerable groups such as disabled retirees, while tens of thousands of people have also had their tax refunds seized.

The government has not launched any new debt review for revenue compliance since December after conceding a federal challenge to the regime in November.

Labor government services spokesman Bill Shorten said the government should “be upfront with the public.”

Noting Robert’s claim that the changes to the program were just a “refinement,” Shorten added: “And now we know he privately admits that over 400,000 debts worth $ 550 million will have to be repaid. “

“The government must reimburse robodette victims for the interest owed to them as well as the money that has been unfairly taken from them.”

Greens Senator Rachel Siewert said: “This program has literally claimed the lives of people, ruined many others and caused so much pain and anguish.

“I am happy that it looks like the government will have to compensate the victims of Robodebt’s illegal program, but nothing can really compensate people for the distress this has caused.”

In its class action defense, the Commonwealth rejected Gordon Legal’s negligence arguments and the assertion that the government owes a common law duty of care to social security recipients.

It is understood that the government’s legal opinion is that the negligence class action claim is unlikely to succeed, but the plaintiffs are likely to succeed in their claims for unjust enrichment and for interest on refunds. .

About 18,000 beneficiaries who have consented to the use of “income averaging” to calculate their debt are also offered to receive repayments “on the basis of legal advice,” the leaked ministerial submission said.

As part of the process favored by the government, potential victims of robodettes should identify themselves.

Ministerial submission says government will prevent future debt by setting up its Single Touch pay plan, which was passed by parliament earlier this year.

But that plan won’t start in July as planned, due to the coronavirus pandemic.

Ruston was also approached for comment.

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