What is Robodebt? – 6 Key Features from the Royal Commission

Are you an Australian who is or has ever been involved with debt owed to the Commonwealth or was involved with Robodebt?

Chances are that you probably have! If you have been following Australian current affairs, you may have been made aware of something called Robodebt and the problems and controversy that have come from it.

It is quite a complicated and complex issue, and some Australians have yet to form a complete understanding of what it means and how it may be affecting them.

Furthermore, the Australian Royal Commission released a report on the 7th of July 2023 detailing their findings about Robodebt.

In this article our debt collectors will provide you with an understanding of Robodebt and the controversy surrounding it and will provide you with a basic insight into what to look out for in the Royal Commission Report.

What is Robodebt?

The first question that is likely on many minds is what Robodebt is and what it does.

Robodebt is a program, first introduced by the Liberal-National Coalition government in 2015, introduced to help to decrease fiscal deficit, or where a government spends more than it takes in tax.

It relied on a process referred to as income averaging, where employer income data was averaged over a year to estimate a person's fortnightly income and automated data-matching between income tax and social welfare.

The program required welfare recipients to pay debts to the Commonwealth by assuming their fortnightly income through calculations of the annual income. 

What is the Issue with Robodebt?

Although this may already be setting off some red flags, there doesn’t seem to be any direct issue with this, right? Well, there were some serious problems with Robodebt that affected many welfare recipients across Australia.

You see, the debt notices were initially formed and automated at a scale from 2015, it was brought forward that the system was not fair and reversed the onus of proof onto the welfare recipients to prove that they did not owe a debt, rather than on the Commonwealth to prove that they did.

In 2018, a former senior member of the administrative appeals tribunal, Prof Terry Carney, came forward to state that the income averaging process did not have a lawful basis to establish debt.

The government admitted this to be true in 2019 in front of the federal court and wiped and refunded Robodebt that were found from this scheme.

Robodebt and the Royal Commission

So, what is the Royal Commission and what does it have to do with Robodebt?

The opposition, Labour, proposed that a Royal Commission into Robodebt be established, which was done after they won office in May of 2022.

The Royal Commissioner, Catherine Holmes, was appointed to examine Robodebt and its design and implementation in Australia, due to the damage it caused.

The terms of reference outlined in the Letters Patent require the commissioner to examine the following:

• The establishment, design, and implementation of the Robodebt scheme
• The legality of the scheme
• The impact of the scheme on individuals and the community
• The adequacy of the government's response to concerns raised about the scheme
• Any other matters that the commissioner considers relevant

The Report

Now that you have a basic understanding of what Robodebt is and what the Royal Commission is, you may choose to have a read of the report they formed.

If you do choose to read it, here are some key elements that you may want to look for to read a little more about.

Referrals

Royal commissions are often encouraged to make referrals to other bodies of Australian regulation and law enforcement, including parties such as the police, prosecutors, professional accreditation bodies, and the National Anti-Corruption Commission.

The commission pushed back the date of the report from the 30th of June to the 7th of July, a one-week extension which allowed them to make referrals to the National Anti-Corruption Commission, which was established on the 1st of July.

When reading the report, it may be interesting to read about the referrals they made and the reasons behind them.

The report did indeed make several referrals regarding both civil and criminal charges and was highly critical of several key figures involved in the Robodebt scheme, which you may be interested to read about.

Robodebt Adverse Findings

The Royal Commissioner is entitled to make adverse findings regarding the conduct and the Robodebt scheme itself.

If you are interested in these findings and what they entail, it is a key feature that you should be looking out for. There were many adverse findings, including:

1. The Robodebt scheme was "neither fair nor legal"
2. The scheme was a "costly failure of public administration"
3. The scheme was "crude and cruel"

The scheme had "disastrous effects" including "families struggling to make ends meet receiving a debt notice at Christmas, young people being driven to despair by demands for payment, and, horribly, an account of a young man’s suicide"

What did Scott Morrison and Other Ministers Know/Do?

Another subject of interest is the knowledge and actions of the Prime Minister at the time, Scott Morrison, and other key ministers involved in the scheme.

When reading the report, a key feature that you may wish to look into is the actions and intentions of the key figures involved in the scheme.

The scheme has indeed been shown to have had disastrous effects, but whether or not this was known or anticipated is a topic of debate.

According to the report, former Australian Prime Minister Scott Morrison and other ministers were found to have known about and contributed to the Robodebt scheme.

What Did This Mean for Victims?

The Robodebt scheme had many victims, with many families barely affording to eat and a young man even committing suicide due to the stress and financial insecurity.

What did this report mean for these victims at the time?

The report suggested that the government should compensate those who were victims of the Robodebt scheme and provide justice for those who suffered due to the scheme!

The Royal Commission Recommendations

The Royal Commission highlighted several key recommendations in response to the findings on the Robodebt scheme. Here's a summary of the types of recommendations mentioned:

1. Establishment of a Monitoring Body: A recommendation for the creation of a body to monitor automatic decision-making processes within government services.
2. Debt-Recovery Management Policy: Services Australia should establish a comprehensive policy for managing debt recovery, focusing on fairness and transparency.
3. Review of Social Services Portfolio: A suggestion to review the structure of the social services portfolio and the status of Services Australia to ensure they align with principles of fairness and legal compliance.
4. Changes to the Freedom of Information Act: Recommended changes to ensure that the confidentiality of cabinet documents does not impede transparency and accountability.
5. Policy Design Emphasis: Services Australia is advised to design policies with a focus on the recipients, ensuring they do not reinforce stigma associated with government support.
6. Consideration for Vulnerabilities: Policies should take into account the vulnerabilities of recipients who could be affected by compliance programs, ensuring they are not unduly harmed.
7. Legal Framework for Automation Use: The Commission calls for a new legal framework governing the use of automation in government services, ensuring there is a clear path for individuals affected by automated decisions to seek review.

Robodebt FAQ with Answers

The Royal Commission's investigation into the Robodebt scheme unveiled critical insights into its flawed implementation and the significant distress it caused among Australian welfare recipients.

This FAQ section encapsulates the essence of the scheme, the Commission's damning findings, and the implications for those involved.

What was Robodebt?

Robodebt was a federal government scheme initiated to recover supposed welfare overpayments from recipients. It utilised a method known as "income averaging" to estimate a person’s income and determine their eligibility for benefits. This process was found to be unfair, as it often inaccurately assumed income at times when recipients had not actually received any.

What prompted the Royal Commission into Robodebt?

The Royal Commission was established to investigate the creation, design, and implementation of the Robodebt scheme, including who was responsible, how risks and concerns were addressed, the management of complaints and challenges, the use of third-party debt collectors, and the scheme's human and economic impacts.

How extensive was the Royal Commission’s investigation?

The investigation was thorough, involving 3,030 hours of hearings, 115 witnesses, over 5,050 pages of transcripts, and more than 10,000 exhibits.

What did the Royal Commission find?

The Commission found the Robodebt scheme to be "cruel and crude", devised without regard to social security law, and using an averaging process that was fundamentally unfair. It treated many welfare recipients unjustly by assuming income at times when they had not received any.

Who has been implicated by the Royal Commission?

Key figures implicated include former Prime Minister Scott Morrison, former Government Services Minister Stuart Robert, and former Department of Human Services Secretary Kathryn Campbell. The Commission criticised their roles and decisions related to the scheme.

What were the effects of Robodebt according to the Commission?

Robodebt had disastrous effects on many Australians, including financial strain, emotional distress, and, in some tragic cases, suicide. The scheme caused undue hardship during sensitive times, like Christmas, driving some to despair.

What recommendations did the Royal Commission make?

The Commission made 57 recommendations, including establishing a body to monitor automatic decision-making processes, reviewing the social services portfolio, and changing the Freedom of Information Act to reduce confidentiality of cabinet documents.

What happens next after the Royal Commission’s findings?

Some individuals criticised in the report may face civil and criminal charges, although specific names and details are in a sealed chapter. The report's recommendations may lead to significant policy and legislative changes to prevent similar issues in the future.

Did the Royal Commission suggest any compensation for victims?

While the Commission did not detail specific compensation mechanisms, it noted the existence of a "Scheme for Compensation for Detriment caused by Defective Administration", suggesting potential avenues for victims to claim against the government.

What was the government’s response to the findings?

Former Prime Minister Scott Morrison rejected the findings, stating he acted in good faith based on department advice. Stuart Robert and Alan Tudge also disputed the findings related to them. The current government's responses may include implementing the Commission's recommendations.

How did the scheme affect welfare recipients?

Many recipients faced undue stress and financial hardship due to inaccurate debt notices, leading to struggles in meeting basic living expenses and, in severe cases, contributing to mental health crises.

Why was income averaging considered unfair?

Income averaging was deemed unfair because it assumed a consistent income over a period, not accounting for the irregular earnings of many welfare recipients. This led to inaccurately calculated debts.

What legal issues did the Royal Commission identify with Robodebt?

The scheme was found to be unlawful, as it was devised without proper legal foundation and relied on income averaging, which did not comply with social security law.

How will the Royal Commission’s recommendations impact future government policies?

The recommendations aim to improve transparency, fairness, and legality in government decision-making processes, especially regarding welfare and automated systems, potentially leading to significant policy reforms.

What is the significance of the sealed chapter of the report?

The sealed chapter contains names of individuals referred for civil and criminal charges, indicating ongoing legal implications and potential future prosecutions related to the scheme.

How did public officials respond to concerns about the scheme?

According to the Commission, some officials displayed a disregard or indifference to the scheme's legality and the hardships it caused, failing to act upon critical information that highlighted its flaws.

What role did third-party debt collectors play in Robodebt?

The scheme involved the use of third-party debt collectors to recover supposed debts, a practice scrutinised for its impact on affected individuals and its alignment with the scheme's flawed methodology.

How did the scheme violate social security law?

By using income averaging to estimate debts without individual assessment, the scheme operated outside the bounds of established social security law, leading to unlawful debt recovery actions.

What measures are recommended to prevent similar issues in the future?

Recommendations include better oversight of automated decision-making, a review of social services structures, and legal reforms to ensure government actions are fair, transparent, and accountable.

Can victims of Robodebt seek further compensation or redress?

While the Commission hints at potential avenues for compensation, affected individuals may need to explore specific legal or administrative options based on the scheme's detrimental impact on their lives.