Centrelink sends in the debt collectors.....

 

Forget establishing that an actual debt exists – this is 2018 and come hell or high water the Turnbull Government wants to use Centrelink to prop up its financial bottom line in time for the May 2018 budget papers.

To that end Centrelink management has increased the number of alleged debts referred to contracted private debt collectors working on commission.

On 12 April 2017 The Guardian reported that: Centrelink has used private debt collectors to pursue 43% of the debts raised by its controversial “robo-debt” system, a rate vastly higher than normal.

By the end of the 2016-17 financial year Services Australia/Centrelink had raised 2,384,91 welfare recipient debts with a calculated worth of $2.8 billion, of which $1.64 billion is said to have been recovered - an est. $126,100,000 to $126,280,000 by private debt collectors.

BACKGROUND

The Canberra Times, 9 June 2017:

Centrelink's controversial robo-debt program has been blamed for a huge surge in legal challenges by people facing the welfare agency's demands for money.

Centrelink debt cases at the federal appeals tribunal have soared by more than 50 per cent since mid-2016 and The Greens have laid the blame for the surge, which might take years to work its way through the system, squarely at the feet of robo-debt.

My office has worked tirelessly to assist scores of people who received incorrect Centrelink debt notices. In one case someone received a notice demanding $12,377.93 before we challenged the debt on their behalf & Centrelink conceded that they didn’t owe a single cent (1/2)

— Peter Khalil MP (@PeterKhalilMP) February 20, 2018

My daughter got a debt FBT debt, she had no idea about until ATO took it out of her tax
She contacted her local MP for help
She got her money back plus an extra 1k due to same errors #robodebt @AustralianLabor please reinstate Social Security where we help not hinder vunerable

— DameJenntheAmazing Research Fellow of Smartarsery (@Jenn1964Hussey) February 21, 2018

After a surprise call from @Centrelink alleging 10k of decade old debt and requesting bank statements dating back to 2008, @Centrelink have the gall to say I’m asking for “too much information” to see written proof of said debt. #notmydebt @not_my_debt Sorry WHAT?!

— cam (@cam06056055) April 19, 2018

Update for 10yr old 10k robodebt. Have received NOTHING in writing @Centrelink. Got multiple calls requesting bank info from 10 yrs ago that ANZ can’t provide. 2day I was threatened with final call asking for these unattainable docs before the “algorithm” is applied @not_my_debt

— cam (@cam06056055) April 20, 2018

For more examples go to  
https://twitter.com/not_my_debt 
or 
https://www.notmydebt.com.au/stories/notmydebt-stories

There were more income averaging schemes than just Robodebt robbing welfare recipients and the rot appears to have started under Prime Minister John Howard, Minister Amanda Vanstone & Department Secretary Mark Sullivan

 

In March 1996, by virtue of being Parliamentary Leader of the Liberal Party, John Winston Howard became Prime Minister of Australia. In January 2021 Howard made Senator Amanda Vanstone Minster for Family and Community Services, while he appointed Mark Sullivan as Secretary of the Family and Community Services in January 2002.

It would appear that sometime in the seven years between the start of1996 and the end of 2002, a virulent political, policy and bureaucratic rot began to to grow…..

In July 2002 the Department of Family and Community Services (FaCS) had introduced changes to quality control and quality assurance processes and had in place

comprehensive Centrelink processes to ensure

Quality control, service profiling, national validations.

• Awareness: newsletter, regular reviews, debt prevention strategy, life events products

• Deterrence measures: regular reviews, prosecutions, warning letters, raising and recovering debts

• Compliance initiatives: Accelerated Claimant Matching (ACM), ACM Rent Assistance, ATO tip-offs, Data-Matching Program [ATO, Australian Valuation Office (AVO) & Centrelink], Corrective Services Matching, DIMIA matching, Registrar-General’s Office death matching, Defence Housing matching, Com Super matching, ATO investment property matching, TDF matching, Tip-offs, T&Cs (ATO & ASIC matching), ID fraud detection, Optical surveillance, outposted Australian Federal Police agents, inter-agency Cash Economy Field Teams.

The Department of Family and Community Services, Annual Report 2002–03 Volume I & 2, (pp.14,16, 77, 216) revealed how this rot began to be seen as healthy:

[my yellow highlights throughout this post]

“There was a $162.1 million decrease in the write down of assets, primarily the result of a decrease in the provision for doubtful debts for the Student Financial Supplement Scheme ($386.6 million). This was offset by an increase in the provision for doubtful debts for other personal benefits ($224.5 million) due to a change in methodology for calculating the provision for doubtful debts.”…..

“To tackle the upward debt trend, we developed a national collection strategy that is already making an impact on collections and stemming debt growth. This ensures more parents support their children according to their capacity to do so. The strategy also provides a basis for implementing the 2003-04 Budget measures to target recalcitrant debt.”….

“Service profiling was introduced gradually in 2002–03.”

“Other methods to identify possible incorrect payments include:….

• risk-based review selections generated from statistical analysis of client characteristics

• duration reviews that examine client entitlements at specific intervals from payment commencement”

“Centrelink has contracted mercantile agents to recover some client debts when the debtor’s whereabouts are unknown or when pursuit of the debts through standard debt recovery processes is not cost effective.”

By February 2023 it had become clear that Services Australia and the Department of Social Services had been withholding information from the Commonwealth Ombudsman and possibly from the Royal Commission into the Robodebt Scheme.

According to Rick Morton writing in The Saturday Paper on 12 August 2023:

Centrelink used the same bad mathematics as the illegal robo-debt scheme to raise debts estimated in the hundreds of millions of dollars from more than 100,000 welfare recipients – some of whom have faced prosecution.

The revelation shatters any illusion that defective administration was contained to a single program. If all inaccurate debts are ever found, the cost to fix the mess could top $1 billion…..

Services Australia chose not to tell the Commonwealth ombudsman in early 2021, when the ombudsman raised individual cases of inaccurate debts with the department. The integrity agency was only briefed on the issue in February this year, at which time it launched an own motion investigation into the matter.

At the start of this month, the Commonwealth ombudsman published a report titled “Lessons in Lawfulness” about this debt calculation technique, known as “income apportionment”, which Centrelink used for almost two decades until December 7, 2020, to effectively fit the reported income of welfare recipients into the rigid eligibility fortnights defined under the legislation.

“The agencies are still determining how much the known and potential debts are affected – that is, how much payment rates went up or down because of unlawful or inaccurate income apportionment calculations,” the report says.

“It is unknown how many other customers may have been impacted by unlawful or inaccurate debts or underpayments.”

The Commonwealth Director of Public Prosecutions told The Saturday Paper that Services Australia had “identified prosecutions before the courts affected by income apportionment which may affect the amount of financial advantage alleged”.

“At this stage, the CDPP is considering the circumstances of each prosecution with a view to allowing the income apportionment issue to be addressed,” a spokesperson said in a statement. “The CDPP has taken or is taking steps in relation to these matters to ensure these defendants/courts are advised. As a result a number of matters have been adjourned.”

What will happen to the historic cases dating back to 2003 is unclear.

Prosecutions are just the pointy end of the compliance system, however. The vast majority of Centrelink clients affected were simply slapped with a debt.

Scholars such as the University of Sydney’s health and welfare law lecturer, Dr Chris Rudge, as well as insiders who have spoken with The Saturday Paper, suggest the number of people affected could be higher than 500,000.

The bureaucrats “never worked out how to make a mathematical… a lawful mathematical approach”, Rudge says.

Centrelink could have changed the legislation to allow its accounting practice, he says, but this did not happen. “If the law had said you can just do it across different periods, then this wouldn’t have happened.”

At issue is an obscure provision of the Social Security Act, section 1073B, which purports to give officials the power to take the self-reported earnings of a benefit recipient and squeeze it into a Centrelink fortnight by dividing the lump sum income by 14 days. The practice is called “income apportioning”. It was considered necessary because the reporting periods did not neatly match the Centrelink assessment fortnights, and often overlapped. However, the section of the social security law immediately following is clear that this method can only be used within a single fortnight.

“In training they actively told us to never ever go to the legislation. Because they thought – and frankly they would be right – that the level of staff member that did that sort of work would not be able to accurately interpret it.”

The use of income apportioning to assess eligibility for welfare payments is discrete from robo-debt, which was a specific program of debt-hunting using annual tax office data, and created illegally in 2015 when it received cabinet approval. Under this administrative practice, bureaucrats used payment amounts accumulated over, for example, several months’ work, and attempted to fit them into fortnightly blocks. However, it is the same mathematical concept – averaging – that was deployed under the robo-debt scheme. Neither had a legislative basis. The earnings apportionment tool used by Centrelink employees actually did this averaging automatically. Robo-debt used the same tool, but with annual data, and with a deliberate strategy to raise debt.

Centrelink public servants were using the dodgy mathematics to uniformly populate successive assessment fortnights which, had a person been receiving benefit payments, could have retrospectively rendered them ineligible for those payments, creating a debt.

“It’s so artificial,” Rudge says. “If it goes beyond one entitlement period, it’s unlawful.”

As a former debt team worker tells this newspaper, cultural problems at the agencies meant these assumptions were never tested.

“In training they actively told us to never ever go to the legislation,” the source says. “Because they thought – and frankly they would be right – that the level of staff member that did that sort of work would not be able to accurately interpret it.

“Their view was go to the operational blueprint because we’ve got this wonderful team of people that are always reviewing the legislation and AAT [Administrative Appeals Tribunal] decisions and making sure it’s adjusted so it’s always right.

“In hindsight, that wasn’t correct.”

The robo-debt royal commission uncovered a political and administrative conspiracy spanning six years in which the debt-raising scheme was conceived, delivered and continued despite legal advice from the beginning that stated it was against the law.

Despite robo-debt’s effective end, in late 2019, and the use of income apportionment to determine payment rates being aborted in December the following year, it is clear sections of the vast social security bureaucracy either did not know what they were permitted to do, did not seek to find out or, worse, knew and continued anyway.

In the course of normal business, Centrelink has raised almost $12 billion in debts from mid-2018 to March this year, and waived $180 million of that due to “administrative error”. Income apportionment, which goes beyond simple error, dates back “at least” to 2003, according to the ombudsman…..

When Senator Patrick first raised individual cases related to the use of income apportionment, he spoke with two key figures found to have been intimately involved in robo-debt: Kathryn Campbell and former DHS chief counsel and chief operating officer Annette Musolino.

Campbell, then secretary of Social Services, said there had been “challenges” in administering the social security system because of a timing issue: whether income was assessed at the time it was earned or at the time it was received. She flagged the December legislation change as a way to end this impasse.

The cases Patrick’s staffers had been chaperoning through internal review, the AAT, senate estimates and finally put in writing to the then Social Services minister Anne Ruston in the Coalition government were all significant. There were 15 cases with an average debt of $3853.

Campbell’s explanation – that there were challenges in administering the scheme – failed to take account of the fact it was a policy choice made by bureaucrats to use the date income was earned as the trigger for benefit assessment, rather than when it was paid or received. They believed other approaches would create an inequity: some people could defer payments, rendering them eligible for social security benefits in fortnights where they would otherwise have been ineligible.

In doing so, senior bureaucrats read the law wrongly, for two decades.

When the legislation was changed in December 2020, the bills digest gave a hint of the scale of “overpayments” that would otherwise go on to become debts.

“The changes … are expected to provide savings of $2.1 billion over five years from 2018-19. The savings will be derived from reduced overpayments arising from inaccurate income reporting.”….

Although the Commonwealth ombudsman notes there is “an unresolved and significant difference of opinion between some of the legal advices”, its investigation statement leaves no room for interpretation.

“Our investigation found Services Australia and its predecessor the Department of Human Services had been spreading employment income evenly over two or more Centrelink instalment periods (Centrelink fortnights), in circumstances where this was not permitted by social security law,” the ombudsman says.

“This approach, known as ‘income apportionment’, could result in customers’ employment income being assessed in the wrong Centrelink fortnight, which could in turn result in their fortnightly Centrelink payment being over- or under-paid.”

A former Centrelink employee says the ombudsman’s certainty on unlawfulness and the competing legal interpretations of the departmental advice suggests the disagreement is not over the legality of using income apportionment but how to remedy a roughly two-decade overreach…..

“Once the legal issues are resolved, the Secretary of DSS will finalise a remediation strategy for historic cases and the General Instructions will be refreshed, as required, to reflect this strategy. We acknowledge this has taken longer than we would have wanted but we are determined to get it right.”

These general instructions were created by DSS to guide Services Australia in “how to process and review potential debts … which were potentially miscalculated due to unlawful application of income apportionment provisions”.

The ombudsman says they contain a glaring omission.

“General Instructions represent the policy position for how to calculate income apportionment debt-raising processes,” it says. “Currently, they do not cover any potential underpayments which may have been caused by income apportionment practices.”

These same instructions suggest the DSS secretary will only review historical decisions where a person requests a review and it is “not expected that the Secretary will initiate administrative reviews of historical debt decisions”.

The ombudsman disagrees.

“We consider the position adopted by DSS and Services Australia in the General Instructions is not appropriate,” the report says. “This is inconsistent with the principle of discretionary power and may lead to unfair outcomes for customers.”…..

Centrelink public servants were using the dodgy mathematics to uniformly populate successive assessment fortnights which, had a person been receiving benefit payments, could have retrospectively rendered them ineligible for those payments, creating a debt.

“It’s so artificial,” Rudge says. “If it goes beyond one entitlement period, it’s unlawful.”

As a former debt team worker tells this newspaper, cultural problems at the agencies meant these assumptions were never tested.

“In training they actively told us to never ever go to the legislation,” the source says. “Because they thought – and frankly they would be right – that the level of staff member that did that sort of work would not be able to accurately interpret it.

“Their view was go to the operational blueprint because we’ve got this wonderful team of people that are always reviewing the legislation and AAT [Administrative Appeals Tribunal] decisions and making sure it’s adjusted so it’s always right.

“In hindsight, that wasn’t correct.”….

BACKGROUND

Lessons in lawfulness: Own motion investigation into Services Australia’s and the Department of Social Services’ response to the question of the lawfulness of income apportionment before 7 December 2020, 1 August 2023, excerpts.

Highlights, p.1:

[my yellow highlights throughout this post]

WHY DID WE INVESTIGATE?

In February 2023, Services Australia and the Department of Social Services (DSS) told our Office

there was an issue with how Services Australia had been apportioning income to calculate social

security payment rates before 7 December 2020, when the law changed.

• ‘Income apportionment’ is different to ‘income averaging’ that was at the heart of Robodebt.

• The Administrative Appeals Tribunal (AAT) sent some debts back to Services Australia to be

recalculated. This raised concerns about whether income had been lawfully calculated.

• Services Australia advised it paused approximately 13,000 debt reviews while the agencies sought

legal advice. Another 87,000 files which may become debts were also potentially affected by

unlawful or incorrect income apportionment calculations.

• Given the scale, significance and potential impact, the Ombudsman decided to conduct two

investigations into income apportionment:

Investigation 1 – lawfulness of the    agencies approach to income apportionment.

Investigation 2 – examining the agencies’  administration of income apportionment  decisions, communication with customers, and  handling of complaints, internal reviews and AAT  or Federal Court appeals.

• This statement relates to Investigation 1. Investigation 2 is ongoing.

WHAT DID WE FIND?

• Since at least 2003, Services Australia (and its precursor the Department of Human Services), was

unlawfully apportioning customers’ income across two or more Centrelink instalment periods. This

in turn likely affected social security payment rates and may have lead to unfair debts against

customers.

• Since becoming aware of the issue in October 2020, the agencies took steps to seek legal advice,

but could have acted quicker to finalise advice.

• There is an unresolved and significant difference of opinion between some of the legal advices.

• The General Instructions that DSS developed to guide how decision-makers should recalculate the

approximately 100,000 actual and potential debts need further development.

• The agencies could have acted quicker to inform us of this issue, particularly since Services

Australia knew our Office had investigated some of the affected complaints.

• The agencies are still determining how much the known and potential debts are affected – that is,

how much payment rates went up or down because of unlawful or inaccurate income

apportionment calculations. It is unknown how many other customers may have been impacted

by unlawful or inaccurate debts or underpayments.

Background to the investigation, p.2:

On 29 October 2020, at Senate Estimates, then-Senator Rex Patrick raised concerns with Services

Australia about the lawfulness of its approach to apportioning income when calculating Centrelink

payment rates. The Guardian Australia reported on the Senator’s questions and AAT reviews of

debts in November 20201 and March 20212, respectively.

In February 2021, the AAT made two decisions requiring Services Australia to recalculate debts that

related to income apportionment. The AAT identified issues in how Services Australia was applying

section 1073B of the Social Security Act 1991 (the Social Security Act) to apportion income. Section

1073B was in force between 2003 and 7 December 2020.

Around March 2021, the Office began receiving complaints about delays in Services Australia

reviews. Between then and January 2023, we investigated or made preliminary inquiries about these

individual complaints. Services Australia did not inform us, as part of these investigations, that these

review delays were affected by this underlying legal issue.

In January 2023, Services Australia approached the Office to offer a briefing on income apportionment. At that briefing, on 17 February 2023, Services Australia and DSS told us that, in the period between becoming aware of the issue and advising our Office, they:

• obtained several draft and final advices from multiple legal providers

• identified approximately 13,000 requests for reviews of debts that may be impacted by

income apportionment – they placed these reviews on hold while the agencies considered

how best to approach them, and

• identified another approximately 87,000 potential debts which may be affected by income

apportionment.

Due to the scale of the issue and the significant number of potentially affected customers, on 14 March 2023 the Ombudsman initiated this investigation using his own motion powers. The Ombudsman used section 9 of the Ombudsman Act 1976 (Ombudsman Act) to require information from Services Australia and DSS about income apportionment. Under the Ombudsman Act, it is an offence to fail or refuse to respond to a section 9 notice without a reasonable excuse.

The Royal Commission into the Robodebt Scheme peels back layers of a six year old onion

 

A SINGLE MOTHER HITS OUT AT THE ROBODEBT SCHEME IN EARLY 2017

The Sydney Morning Herald, 6 February 2017:

It all started when I began receiving calls from a debt collector, which I initially ignored. I knew I had no debt and that any request for personal details from a stranger was cause for suspicion. But after some time I gave in to the harassment – my curiosity got the better of me, and by then the calls were interrupting everything from work meetings to putting the children to bed.

And that was how I discovered I had a Centrelink debt…..

Terrorised by Centrelink, I began to behave as the bureaucracy saw me: angry, emotional, confused, dependent and idiotic. It does not matter that I am a full-time employed economist with several degrees, published books and articles, and security clearance for giving economic policy advice on secret government documents. Now, I was a welfare cheat….

The debt recovery operation currently being run by Centrelink using data matching has the extraordinarily high error rate of one in five. I doubt any private enterprise would be allowed to get away with these error rates for debt collection.

You would like to think that my story means at least the one in five errors are all being identified and eventually resolved, but it doesn't. Many of my fellow Centrelink "clients" will lack the assertiveness, confidence, energy and literacy I used to fight for my case. The errors in their debt will not be found. Money will be taken, wrongfully, from some of the very poorest people in this country. I guarantee you they are terrified.

And anyway, my case isn't over.

Days before publication of this piece I was contacted by Centrelink with a new notification of debt. I have been instructed to pay back the Family Tax Benefit we received in the year my ex didn't file his tax return. And so, it begins again.

PUBLIC PUSH BACK BY THE THEN MORRISON COALITION GOVERNMENT BEGINS

Excerpt from The Canberra Times columnist Paul Malone’s article in The Sydney Morning Herald on 24 February 2017:

“But Centrelink has a different story.

The agency says Ms Fox's debt is a Family Tax Benefit (FTB) debt for the 2011-12 financial year which arose after she received more FTB than she was entitled to because she under-estimated her family income for that year.

The original debt was raised because she and her ex-partner did not lodge a tax return or confirm their income information for 2011-12.

Centrelink says that after Ms Fox notified the department that she had separated from her partner, the debt due to her partner's non-lodgement was cancelled.

In a later article on 5 March 2017 Malone admitted his 24 February article was based on information supplied by both Centrelink and the office of the Minister for Human Services “To my surprise I got answers to my questions in a series of emails from Centrelink and the office of the Minister for Human Services, Alan Tudge.

They said Ms Fox's case was not a robo-debt matter.

Her current debt was a Family Tax Benefit debt for the 2011-12 financial year which arose after she received more FTB than she was entitled to because she under-estimated her family income for that year”.

POLITICAL EXCUSES APPEAR IN MAINSTREAM MEDIA

The Guardian, 2 March 2017:

The office of human services minister, Alan Tudge, mistakenly sent a journalist internal departmental briefings about a welfare recipient’s personal circumstances, which included additional detail on her relationship and tax history.

Senior departmental figures were grilled at Senate estimates on Thursday about the release of welfare recipient Andie Fox’s personal information last month.

Fox had written an opinion piece critical of Centrelink and its handling of her debt, which ran in Fairfax Media in February. The government released her personal details to Fairfax journalist Paul Malone, who subsequently published a piece attacking Fox and questioning the veracity of her claims.

Two responses were given to the journalist, one from the department of human services and the other from Tudge.

The department said its response – three dot points containing only minimal detail on Fox’s personal history – was cleared by lawyers and was lawful. The minister’s office then added two quotes from Tudge and sent its own response to Malone.

Guardian Australia can now reveal that the minister’s office also accidentally sent the journalist two internal briefing documents, marked “for official use only”, which had been prepared by the department…..

SIX YEARS LATER THOSE POLITICALLY MOTIVATED LIES ARE REVEALED 

Excerpts from Twitter threads by journalist Rick Morton @SquigglyRick as he live tweeted from the Royal Commission into the Robodebt Scheme public hearing on 31 January 2023:

Greggery: "You said the media demand was very high while the Minister was on leave, the media was generally adverse, heavily critical. Would you say that by January 2017... the media situation was in crisis mode?"

Miller "Yes, but I didn't think it was not able to be shut down."

1:22 PM · Jan 31, 2023

Miller: "He [the Minister, Tudge] was very firm with me that I needed to shut this story down. The Minister became very quickly aware that the Prime Minister was unhappy. At the time, we were trying to decline as many media opportunities as we could."

1:23 PM · Jan 31, 2023

Miller: "That media strategy that I developed was very comprehensive and that involved placing stories in more friendly media about how the Coalition was actually catching people who were cheating the welfare system."

1:24 PM · Jan 31, 2023

Miller: "We were getting feedback from the Prime Minister's office that this was playing quite well in the marginal seats, Western Sydney, that sort of thing."

1:25 PM · Jan 31, 2023

This "counter-narrative" in the crisis strategy that Miller developed included pushing the message that they were "tracking down debts from the period when Labor was in Government that were not detected because they did not take the integrity of the welfare system seriously."

1:27 PM · Jan 31, 2023

Greggery asks about using "real life examples."

Miller: "The Minister was very adamant with me that I needed to hunt down as many case studies as I could, he was really very forceful about obtaining these."

He wanted to dismiss the stories that he thought were gussied up.

1:30 PM · Jan 31, 2023

Miller: "He wanted to put the attention back on the Labor Party and say 'what, you would let these guys go, you would happily give them taxpayer money that they were not entitled to'."

Miller spoke to Bevan Hannan, head of media at DHS etc

1:31 PM · Jan 31, 2023

Greggery: "What do you recall of the topic of releasing personal information from persons with whom Centrelink dealt to media?"

Miller: "So we didn't think of doing that at all ever."

This is early on. But then the author of an SMH/Age piece gets in touch.

1:38 PM · Jan 31, 2023

This journo sees this case in the media and says the case is "disgraceful" and "how is it the Minister can let this happen on your watch and he said I am going to write another piece about this." But he asks: can you assure me that what the author has written is correct?

1:41 PM · Jan 31, 2023

Miller talks to the DHS, they say well actually you CAN release very limited details about a person to "correct the record."

"The Minister requested the file of every single person who had appeared in the media."

The file was already in the MO

1:42 PM · Jan 31, 2023

Miller recalls Tudge being adamant they wanted people to think twice about going to the media with "false" information because if it's not true "we will correct the record."

"I wasn't too worried about [the criticism from the leftwing media]. That didn't surprise me at all."

1:44 PM · Jan 31, 2023

But she was worried, she says, that what they were doing was legal.

Miller says of the one case, where they released details "and the publicity that it got" sent the message that the Govt would push back.

1:45 PM · Jan 31, 2023

In the case of the person whose name they released, but in other cases too, Miller says there was "formal, signed legal advice." The Minister "requested that specifically."

1:46 PM · Jan 31, 2023

Miller: "It wasn't usual practice at that stage for Ministers in that portfolio to do that. It was a risk. There weren't, to my knowledge, previous cases of people using that particular loophole."

In retrospect, Miller says it is "not something I would do again."

1:48 PM · Jan 31, 2023

Miller says it was unethical that some leftwing journalists were not even going to them for comment.

"The usual relationships I would have with journalists were not working, and this particular group were being quite vindictive, being very biased and unbalanced."

1:49 PM · Jan 31, 2023

Of the name they did release, Miller says: "I did trust the reporter who was going to write that up, that rebuttal of ours, he was reputable, very reputable."

1:51 PM · Jan 31, 2023

Miller: "I did try to seek assurances from the policy issue but he was very firm that 'hey, this isn't your job'."

Policy adviser was Mark Wood.

1:56 PM · Jan 31, 2023

Miller: "Kathryn Campbell was there on a regular basis [in January 2017 at the Minister's office]. She was set up in the boardroom, almost permanently, I think. Malisa Golightly, I can't recall other specific people... Craig Storen."

1:57 PM · Jan 31, 2023

Prime Minister (Turnbull) asked Tudge to return from leave immediately to deal with the Robodebt "crisis."

Miller is asked about what she recalls about people committing suicide after receiving debt letters.

1:59 PM · Jan 31, 2023

The Saturday Paper, 4 February 2023, excerpts:

Alan Tudge, Rachelle Miller and Christian Porter appear at the robo-debt royal commission this week.  CREDIT: ROYAL COMMISSION INTO THE ROBODEBT SCHEME

An ugly “strategy” of demonising welfare recipients extended to almost all elements of the official response to the developing media storm. 

In the Rhys Cauzzo matter, in the week following publication of The Saturday Paper story in February 2017, the minister’s office debated the merits of releasing a dead man’s personal information in order to strike back at what they perceived to be unfair coverage. 

Tudge’s chief-of-staff, Andrew Asten, appeared to draw a line in the sand. 

“I would advise against going through these details in public because I think it is a bad look to be discussing the wrongdoing of a person who committed suicide.” 

He was overruled, presumably by Tudge himself, who micromanaged every aspect of his office’s media strategy, down to dictating the formatting of documents. Journalists were duly briefed about the “facts” as the government saw them. 

What is particularly telling about this specific episode – one in a catalogue of grotesque and deliberate acts designed to save robo-debt from “unethical” journalists, as Miller described them, and their good-for-nothing welfare complainants – is that Tudge ordered an investigation into the department’s handling of Cauzzo’s matter, but only to make them look good. 

A month after briefing journalists with Cauzzo’s protected Centrelink record, a departmental liaison officer working in Tudge’s office emailed her colleagues in the DHS with a “specific request” from the minister. The department and minister’s office had been drafting a letter to send to Rhys Cauzzo’s mother, Jennifer Miller. 

“The Minister has a specific request to open an investigation into Rhys’ circumstances,” the officer wrote on March 31, 2017. “He would like a brief on the investigation. The intent is to be able to update the letter to include a line similar to [redacted] letter, stating that he has investigated the matter and is confident the Department has done everything correctly (etc).” 

Within days, Tudge got the pre-determined outcome he was looking for: a ministerial brief from his department that noted “all interactions were appropriate and undertaken within the parameters of departmental processes”. 

What Tudge didn’t do, however, was investigate the use of income averaging in the creation of debts attributed to Rhys Cauzzo. Part of the fury about The Saturday Paper story at the time was that it was “not a robo-debt case” – even though this newspaper did not suggest that it was. The royal commission heard on Wednesday that Cauzzo’s matter was part of the manual PAYG intervention, which still included the use of income averaging and is now considered to be the very first iteration of the illegal robo-debt scheme. 

Greggery said that this matter was “the first point in time when the potential adverse consequences have gone beyond a matter of mere finance”. 

Addressing Tudge, he said: “Did you ask for an investigation into whether the role of averaging led to the death of Mr Cauzzo, a factor relevant to the suicide?” 

Tudge said what had been written in the piece “concerned him” and he “did want to … directly understand what had occurred”. Tudge’s inquiry deliberately avoided the two key criticisms of the debt recovery system, aired at length by this time in early 2017 and now accepted by Tudge. They were that debts being raised under the system were inaccurate and that Centrelink recipients were being swamped by the sudden reversal of the onus of proof. 

Now, people were killing themselves. 

The conflagration had ruined Tudge’s summer. There were many of these negative stories, beginning in December 2016, before Tudge went to Britain on a family holiday. Over Christmas, however, the situation was so obviously bad that then prime minister Malcolm Turnbull demanded Tudge cut short his holiday and return to deal with the crisis. 

In the royal commission this week, the former minister made a point of mentioning this holiday over and over again. It was a significant moment in a significant career because it was a media disaster and Tudge was a media performer. 

Miller had described her then boss as a “media tart” so obsessed with making a name for himself that he, a junior minister, sometimes did even more media appearances than his senior minister, Christian Porter, who held the Social Services portfolio at the time. 

Turnbull had forwarded to Tudge an article by the Fairfax economics editor Peter Martin, a former Treasury official and economist, in which Martin confidently – and presciently – declared the raising of Centrelink debts by use of income averaging could not be legal. 

Tudge flew back to Melbourne on January 9, 2017. From there he went immediately to Canberra, where “every second or third day” he held meetings in his parliamentary office, in committee meeting rooms or in the Department of Human Services, with the most senior leaders. 

“When I came back I very quickly had confirmed for me that this was a program that had been through the cabinet process,” he told the commission. “They are a rigorous process that always have a legal overlay through it so Social Services lawyers would have to have formed a view that it was lawful.” 

Later, Tudge claimed it was “unfathomable” to him that a secretary of his department would ever continue with a scheme that he or she knew to be illegal. That said, he didn’t expect them to bring their concerns to him, if there were any, without first “resolving” them within the department. 

 And so his self-described “laser-like” focus on fixing the scheme never went to the issue of lawfulness in this period. It apparently never went there at all during his time as minister. 

“I did not know the full context about the legalities,” he said. “It just had not crossed my mind until the [2019 federal] court case.” 

One of the “hurdles”, as Justin Greggery described it, was that Tudge knew how important these welfare compliance schemes were for the Coalition government because he had unwittingly, or otherwise, helped further them in the July 2016 election. 

Tudge was sworn into the ministry in February that year and told the royal commission that the then Finance minister, Mathias Cormann, had asked him if there was anything more they could get out of welfare compliance – that is, he was asked by one of the most senior members of the government if there were budget savings that could be made from welfare recipients. 

After this conversation, Tudge spoke with his department’s secretary, Kathryn Campbell, to pass on this request. Her department dutifully sent a raft of so-called “new policy proposals”, or NPPs, with attendant savings figures that could be pursued. 

The April 28 brief noted there were “five NPPs that will increase compliance and debt activity and deliver significant savings commencing July 2016”. 

That year was an election year. Tudge agreed that, once announced, there would be added political pressure making it more difficult to walk-back any money-saving measures if they were later deemed too hard to implement. He noted Cormann would “have absolutely been aware” of the figures. 

Tudge’s office had sent an email to then treasurer Scott Morrison or Cormann, or both, with the new policy proposals attached “for the purpose of announcing during the election campaign, literally a few days before the election”. 

According to estimates shared with the commission, robo-debt was expected to add $1.2 billion to the 2016-17 bottom line. If the debts were raised under the older, manual, lawful system, that number dropped to $150 million. 

One post-election measure was to extend the robo-debt scheme by two years. By early December 2016, Tudge had been given a brief from his department responding to questions about the fiscal savings robo-debt programs were expected to produce for the budget over the forward estimates. 

That figure was $4 billion. Tudge was quick in instructing his staff to drop this story with the “friendly” newspaper The Australian, where it ran on page one on December 5, 2016, with the headline: “Welfare debt squad hunts for $4bn.” 

The interview with A Current Affair followed on December 6, but, according to the national media manager for the Department of Human Services, Bevan Hannan, Tudge was so “bullish” in his approach that it put a big target on their backs. “It conflated welfare fraud with compliance activities,” Hannan told the inquiry on Tuesday. “The rest of the story had nothing to do with putting people in jail, but that – that grab seemed to galvanise everyone. “And so suddenly instead of being a story which would explain what we are doing, it put a big target on things, and the program and the minister became the hunted.”....

When problems began being reported in the press, Tudge fought back with the only weapon he had bothered to sharpen in his political career: a dependent and obsequious relationship with the right-wing media. 

In January, on his instruction, the Department of Human Services put together a dossier of all of the people with debts who had complained in the media. This information contained their protected Centrelink information, albeit anonymised, and special legal sign-off from DHS chief counsel Annette Musolino. It was sent to The Australian’s political editor, Simon Benson. He ran the story as the front-page splash in the next day’s edition: “Debt scare backfires on Labor.” 

This tactic of tying a neat bow around a story and handing it to a favoured journalist, Greggery said to Rachelle Miller, was to ensure the story was written “or at least presented in a way that the minister liked”. 

She agreed. “And Simon Benson,” she said, “was very good at doing that.” 

This preoccupation with establishing a “counternarrative”, as Miller described it, may have clouded the minister’s judgement. But there were at least three concurrent and damning threads running as Tudge faced the royal commission this week. Many of them involved the at times clandestine behaviour of his own department. 

One prominent figure in this is DHS chief counsel Annette Musolino, who herself spent nearly one-and-a-half days in the royal commission witness box this week. During Musolino’s own leave over the new year break in 2017, lawyers within her team at the Department of Human Services drew up draft instructions to seek advice from the Australian government solicitor that could have settled once and for all whether robo-debt was legal. The instructions were never sent.....

It is worth noting that these instructions were drawn up within a day of Alan Tudge arriving back in the country from his aborted overseas holiday to deal with the unfolding catastrophe. 

Did he know anything about them? 

“I’m asking you,” Greggery said on Thursday, “whether you can explain why, if you didn’t turn your mind to legality in the first couple of days when you came back, your legal department would be preparing instructions to the Australian government solicitor about the lawfulness of averaging?” 

Tudge said he couldn’t explain it. 

“It’s the first I’m even aware that that was occurring,” he said. 

Musolino was not in the dark about potential legal issues with the scheme. From at least late 2016 and then into 2017, her team was closely monitoring and providing reports on the outcomes of Administrative Appeals Tribunal decisions that were either rejecting the use of income averaging to raise debts or waving them through. 

In one particular matter, in a March 2017 decision by then AAT member Terry Carney, Musolino’s own lawyers agreed Carney had made no error of law in his reasoning. Despite this, and model litigant obligations placed on Commonwealth agencies, Musolino said DHS didn’t have to agree with the decision. It only had to implement it. If there was no appeal against the decision, it was very unlikely it would receive attention – and so the scheme could continue. 

“So how does the position get resolved where the AAT is making decisions that a significant program is being conducted on a basis which isn’t lawful?” Commissioner Holmes asked. 

“It just ticks along, and as long as nobody ever recommends an appeal, which they never need to because you can always implement the decision without regard to the program, it just goes on forever, does it?” 

Musolino said the AAT decisions “were cutting both ways”. Commissioner Holmes was unimpressed. “Okay,” she said. “I think you’re either missing my point wilfully or inadvertently.” 

The March 8, 2017, decision from Professor Carney did involve a general point of law that Musolino eventually accepted, after much circular argument. Essentially, it found a fundamental aspect of the scheme was unlawful. “That’s … yes,” Musolino finally said. 

This was a significant moment in the hearings, although it was dealt with carefully by Commissioner Holmes.

Musolino was shown a ministerial brief, prepared well over two years later, on November 6, 2019, for then minister for Government Services Stuart Robert, following the unequivocal receipt of legal advice from the solicitor-general, which declared robo-debt had no basis in law. 

Even though the solicitor-general’s opinion was “not a declaration of law” it was sufficiently alarming to DHS officials that they recommended robo-debt be terminated. 

“There is considerable legal and reputational risk should the Department continue to administer the program in its current form,” the document says. 

“[Then] Secretary of the Department, Ms [Renée] Leon, also carries personal risk associated with the continued administration of the program in its current form by reference to various obligations that she had as a public servant.” 

Crucially, the brief also put in writing a case that is being built brick by brick by the royal commission. “The continued administration of the program in its current form may amount to misfeasance in public office,” the Robert brief says. “This is because continued administration of the program after receipt of the opinion would contribute to an argument that the Department had been raising and recovering debts in bad faith.” 

Commissioner Holmes thought that the Carney decision might have put a concrete time line on when officials ought to have acted. A key element of the offence is acting with “reckless indifference” to the use of an official power that was reasonably expected to cause harm. 

“The fact is that the AAT was finding that averaging was not a legitimate procedure in cases – not all of them, but in some – and that proved to be perfectly correct as the solicitor-general’s opinion demonstrated,” Holmes said on Tuesday. 

“So that went on through 2017, 2018, to some time in 2019, when, around about March 2017, somebody could have been having a look at this. Is that a fair summary? You were getting decisions from the AAT pointing to a problem?” 

When then senior minister in the Social Services portfolio Christian Porter took the witness stand on Thursday afternoon he was asked about whether, while acting for the holidaying Tudge in late December and early January 2017, he formed the view that there was a “reticence” from DHS to publicise detail about how the online compliance system worked. 

“I recall … a sort of acceptance of the position and the talking points,” he said. 

“That then turned, at some point, into circumspection. Then I became sceptical and in the end I was extraordinarily frustrated with the level of information being provided.” 

There was another suicide after Rhys Cauzzo’s. It involved a woman who killed herself just five days after receiving a debt “discrepancy” reminder letter. The woman had previously sought social work support through the department but had no “vulnerability indicator” on her file. 

Despite the fact an employment separation certificate was already on the woman’s Centrelink file, which contained more detailed employment information, compliance officers were not permitted to consider this because, under the design of the scheme, it could never have allowed the government to recoup billions of dollars. 

This was an element of the scheme Tudge had promised to fix five months earlier, in January. He never did. 

Unlike with Cauzzo, whose case had been the subject of reporting, Tudge never ordered an investigation into this case. 

Greggery noted this difference and the reason for it. “I am suggesting,” he said, “the reason you didn’t order an investigation into this case, and you did for Mr Cauzzo, is because you were confident this wouldn’t reach the media.” 

 Tudge denied this.