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From Schwartz Media, I’m Ange McCormack, this is 7am.

After the axing of the illegal Robo-debt scheme, there were promises of reform in the welfare system to make it fair, lawful and transparent.

It’s now been revealed that the same type of bad maths that led to Robo-debt has been used elsewhere at Centrelink.

More than 100,000 welfare recipients have been affected, with some even facing prosecution for inaccurate debts.

The revelations point to systemic problems in the administration of our welfare system, years before Robo-debt was even an idea.

So - who was responsible, and what damage has it caused?

Today, senior reporter for The Saturday Paper Rick Morton on why Services Australia can’t get welfare right.

It’s Thursday, August 17.

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ANGE:

Rick, you probably thought you were done with stories about dodgy debts at Centrelink for a while after you did all that reporting on the Robo-debt Royal Commission. And then without a lot of fanfare, this report is released. Can you tell me how you came across it and what your reaction was?

RICK:

Yeah, so I was working on a completely unrelated story and this joint statement between Amanda Rishworth and Bill Shorten, the two ministers in charge of Social Security and government services was lobbed in my inbox and it was a response to the Ombudsman and I had no idea what was going on. I didn't even know the Ombudsman was working on anything. And then all of a sudden, quietly on a Wednesday, this report just slipped out. And really what it was saying was that Centrelink was using a type of income averaging but not the same kind I guess used under Robo-debt but for a different reason. And it was using it to assess payment rates for people on Centrelink and it was doing that to raise debts from people and those debts may be inaccurate. So I guess if you've spent even half a second looking at Robodebt, a few klaxons start to sound, and I knew that there was obviously more going on behind the scenes there.

ANGE:

And can you give me an idea of just how significant this is, like, how many people are caught up in this practice?

RICK:

I'm being very conservative here, but we are talking at least hundreds of millions of dollars worth of debt. So the Department of Social Services and Services Australia says maybe 100,000 people so far that we suspect have been subjected to this, but we don't actually know the full number. And when I was talking to other experts subsequent to this report, it seems likely that we're talking about hundreds of thousands of people, not just 100,000. And more importantly, there are people actually facing prosecution by the Commonwealth right now on charges related to this kind of dodgy calculation method that Centrelink used on the debts.

ANGE:

And before we get to those prosecutions, it is to me sounding very much like deja vu here, cause you're saying it's sort of like robo-debt, but not quite the same. Can you explain to me in a bit more detail why or how it's different from robo-debt? What were the mechanics of this?

RICK:

So just to be clear, the phrase you need to remember is income apportionment.

Robo-debt was a discreet program that began in 2015. It was devised to literally hunt for debts, and it used this dodgy mathematical concept of income averaging to guess a debt. Income apportionment uses the same mathematical concept. Where someone earned money in an odd way that didn't align perfectly with each Centrelink fortnight, Centrelink officers and debt review officers, etc. had to basically figure out when you earned that money down to what day you earned it on and so they would just divide these payslips by whatever number of days were in the pay cycle and evenly split it out over these fortnights. Unfortunately, what happened was that they would often do that over more than one fortnight and the law did not allow for that.

So mathematically, it's exactly the same. It's income averaging. Beyond that, it gets very technical, but all you really need to know is that Centrelink was trying to fix the problem with what the law told them they had to do, and they did that with inappropriate data.

Archival tape -- Speaker:

“Senator Patrick..”

Archival tape – Rex Patrick:

“Thank you, just to follow on from that questioning…”

RICK:

This issue was first raised, I guess, publicly in Senate Estimates at the end of 2020 by the then independent Senator Rex Patrick.

Archival tape – Rex Patrick:

“How is the debt calculated if the best available information on a person provided is only pay slips and those pay slips don't specify the exact dates they worked during the pay slip period and the person's pay slips don't match the reporting period?..”

RICK:

And of course, we've got the same people in charge of Social Services and Services Australia at this point in time that were involved in Robo-debt. And so ever since the senator raised these issues, both departments, Social Services, Services Australia have been running around behind the scenes very quietly trying to figure out what is happening, how do we fix this? Is this a legal problem? And it has taken them a very long time to come to any sort of consensus and a very long time, I might add, to actually tell someone external to themselves, hey, we might have a problem here.

ANGE:

Right. And you've spoken, Rick, to people from Services Australia about this. And I guess a really crucial question is did staff at the time know that this was going on, that they were raising debts using flawed calculations? Because I think that was one of the most shameful parts of robo-debt, that there was knowledge by management that the scheme was wrong, but they told staff to carry it out anyway. Is that what happened here too? Or is that not as clear?

RICK:

It's not as clear in this case. I mean, what we do know is that there was a fetish for using inappropriate data to solve a problem. Now, the problem in this particular case was, well, how do we fit these unaligned or misaligned pay fortnights or pay months with the Centrelink fortnights, how do we smooth that out? And so they interpreted part of the legislation without looking at the section which said, you can't do this out past the fortnight. What I heard when I talked to former debt review officers is that people were on boarded, people with not a lot of speciality skills and they were deliberately told don't go to the legislation to double check what you're meant to do with good reason, because a lot of people at that level wouldn't know how to interpret the legislation. It is like arcane. However, they were told to look at the operational blueprint, which is kind of the guidelines for how to interpret the legislation so they could do their jobs. And those guidelines were being written and informed, apparently by policy experts within the department. Any kind of update that might need to be fed through to those guidelines was being done by this really smart team in Centrelink. Now, unfortunately, what we know is that that wasn't happening. And Robo-debt taught us that that not only wasn't happening, but they were taking deliberate steps to ignore legal opinion.

Now this becomes more apparent when you consider that this practice goes back to at least 2003 and we've got people in Centrelink who start interpreting the law in this way and then it just doesn't get questioned. It just wasn't checked. They just did not check for 20 years. And that is the most generous assessment that we can give them.

ANGE:

After the break, how do you solve a problem that’s already affected so many?

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ANGE:

So, Rick, we've been talking about this new unlawful debt recovery practice. The scale of it is huge and it also has a huge amount of complexity to it. For people listening to this who may have had a debt in the last 20 years. Do we know who was affected and what happens to them now? Or is it even possible that people might be affected and not even know it?

RICK:

Oh, yeah. We're talking about maybe a half a million people, maybe even more. We don't know. We just don't know. Now, no one, no one would have known that this practice was unlawful. I doubt they would have known that income apportionment had been applied at all, if they were even told by Centrelink. Even if every single person asked for a review or even if the department decided, okay, we're going to go back and find every single debt, and then we're going to really calculate those debts without relying on income apportionment. I've talked to a few people and they were of the view that they don't think that's even possible. You'd have to hope that the payslip is still on file somewhere. But the payslips themselves, the reason they used income apportionment was because the payslips didn't go into what day income was earned, so you couldn't just reapply the income apportionment because that's unlawful. So what do you do? How do you solve that problem?

Now, that's where there seems to be disagreement within or between different legal providers who have given advice to both DSS and Services Australia. They all agree that, okay, you probably couldn't have done this, but how do you go backwards in time and make it okay retrospectively? Can you even do it retrospectively? What does that even look like? This is a big job. Not to put too fine a point on it. I mean, I was talking to the debt officer who used to work at Centrelink and they were saying that this has to be manual, that people have to do this. And it involves a significant amount of work for a single case or a single debt.

When I started looking into this, I went to the office of the Commonwealth Director of Public Prosecutions. I asked them specifically, “What are you doing about the historical cases where people have been convicted of welfare fraud?” And they said, “We're working with Services Australia on this”, which is another way of saying, you have no idea. We have no idea.

ANGE:

And Rick, I think when we saw Robo-debt unfold, we hoped, a lot of us that it was just an aberration, a one off. But seeing this practice be uncovered, it doesn't feel like a coincidence, right, that we've got these two things operating in parallel that are raising debts from vulnerable Australians in an illegal or at least unethical fashion. I wonder what this tells us about Centrelink more broadly or how Australia treats welfare recipients.

RICK:

This is really, I mean, this is the question, right? And this was the question raised by Robo-debt Royal Commissioner Catherine Holmes, who said that, you know, all of this happened not in a vacuum, but in an ecosystem that was deliberately populated by ideology, you know, welfare bludgers, people who are trying to rip off the taxpayer. And it's seeped in through almost everyone in Australia, even well-meaning people who were like, well, yes, of course, some people need welfare, but there are some people who do the wrong thing and people start getting chide-y and very patrician about it right, when really the cost of compliance on these programs is astronomical. I mean, the whole reason we're even talking about income apportionment right now is because Centrelink is required by law to chase down debts that are owed to the government, so we require people to jump through all these hoops and then we have to spend billions of dollars making sure they're jumping through all the hoops. I could think of an easier way to do it–take away the hoops. But in amongst all of that, we've got the attitude as well that because we built the hoops, now we have to build the cops to police the hoops and so people start getting mean.

Intriguingly, what Robodebt has done for us is that we now have an ombudsman which was shown throughout the Robodebt Royal Commission hearings to have been actively misled and allowed itself to be misled because it was embarrassingly incurious. And so now we've got departments who suddenly have lost a little bit of their influence to kind of hide things, to keep things out of the public light. And they don't like it. It upsets them. And to that I say, good, because now people know to ask, well, what are you doing about this situation? What are you doing about the culture within your agency? Can you even just assume that a person earned money when you feel it's convenient for you to assume that?

ANGE:

And Rick, we already knew that this Labor government had a huge challenge in unpicking the dysfunction inside our welfare system, but this story suggests that unlawfulness is more embedded in the system than we thought and I guess it's not unreasonable to think that we could learn that more is still going on today. How urgent is it that this Labor Government fix this?

RICK:

It's incredibly urgent. It's crucial and they need to take it very seriously. Now, to be fair, I think they are. What I worry about is what they're being told by their departments, because the one thing I've learned covering Robo-debt is that there is still, even after all the public inquiries, that there is this instinct to water down the seriousness of what is happening. And I think to an extent that extends to the ministers who are, you know, having to back up their departments while also go, what the hell is going on here?

People are well aware that Bill Shorten, who is now the Government Services Minister and previously the Opposition spokesman, has been really big on Robo-debt. And so a lot of these findings that have come out of the royal commission are now his problem to solve and I think he's doing part of that job and the rest of it now is, well, we've got income apportionment. This is a whole separate issue. In some respects, it's bigger than Robo-debt. What are you going to do about it? We need that same conviction to then be turned on to the department that now reports to him and to get those answers brought out into the public.

ANGE:

Rick, thanks so much for your time today.

RICK:

Thanks, Angela. I appreciate it.

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ANGE:

Also in the news today,

England has defeated the Matildas in the world cup semi-finals.

England will now face Spain on Sunday, in the final showdown to take out the world cup.

The Matildas still have one more game, they’ll be playing Sweden for third place in Brisbane on Saturday.

And

One Nation leader Pauline Hanson has successfully appealed the verdict of a defamation lawsuit, brought by former senator Brian Burston.

In 2022, Senator Hanson was ordered to pay Mr Burston $250,000 in damages, after alleging that he sexually abused a female staffer in his office.

The federal court has now ordered Mr Burston to pay costs.

From Schwartz Media, I’m Ange McCormack - we’ll be back again tomorrow.

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