RUBY:

From Schwartz Media, I’m Ruby Jones. This is 7am.

The government has finally ended its controversial robo-debt welfare scheme, with a $1.2 billion settlement to victims. But the warning signs were there from the beginning. As far back as 2011, the High Court was sounding alarms about the system that would become robo-debt. Today - senior reporter for The Saturday Paper Rick Morton on who knew what and when.

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RUBY:

Rick, I feel almost guilty for asking this as a first question, but what is this story actually about?

RICK:

Well, that's a great question to start off with. I mean, it is about two court cases in the High Court of Australia - and two massive legal precedents affecting the federal government.
But really, this is a question about the legality of robo-debt and how much the government and government departments should have known about the legal tightrope they were walking when it came to welfare compliance, because these two court cases went directly to that question.

RUBY:

So it's kind of an origin story, The Origins of Robo-debt?

RICK:

Yeah, I guess it's kind of like a Marvel comic book, Origins of the Supervillain. In a way, it's kind of like how we got to this point and it's actually very telling on a number of levels. It tells us quite a lot about the origins of robo-debt when the coalition came to power.

RUBY:

OK, so it sounds like it starts with these two court cases, can you tell me the details? Why did the High Court rule in the way that it did?

RICK:

So the real brief overview is that there are two cases, there's a case called Poniatowska in the High Court in 2011. This is the original case.

Archival Tape -- Newsreader 1

“Adelaide woman, Malgorzata Poniatowska, had her convictions for Centrelink fraud overturned earlier this month on appeal.”

RICK:

Essentially what was happening at the time and it had been happening since the Howard government days. But under the Labour government, it had actually ramped up. So what they were doing was going through, as they typically do with all of this data, finding out people who had been overpaid welfare. And in these cases, it was because allegedly they hadn't been updating their income or extra income with Centrelink and so it resulted in an overpayment.

Archival Tape -- Tanya Plibersek

“Successive Australian governments have recognised that some people will attempt to receive payments to which they are not entitled.”

RICK:

Centrelink had always been clear that you are required to update your information. But when it comes to criminal prosecutions and the convictions that followed, it turns out and this is what the High Court found, that there wasn't actually a law explicitly requiring people to inform Centrelink that their income had changed.

Archival Tape -- Tanya Plibersek

“It is necessary, therefore, that there are robust measures in place to ensure the integrity of the social security system.”

RICK:

And the government was caught out and as they were doing this, Tanya Plibersek, who was the relevant minister at the time, introduced legislation, an amendment into the parliament which got bipartisan support, which would retrospectively change the legislation to give the government the power to compel this information and to turn it into an offence if you omit this information.

Archival Tape -- Tanya Plibersek

“15, 000 convictions, may now be open to question as a consequence of the decision in Poniatowska. To ensure the past convictions cannot be called into question, this bill amends the Administration Act to insert a standalone obligation for a person to inform the Department, of events or changes of circumstances that might affect the payment of a social security payment.”

RICK:

This comes to the High Court in 2013 and the court says, get out of here, you can't do it.

Archival Tape -- Newsreader 1

“In 2011, the federal government legislated to close a loophole in welfare fraud law and backdated the law to the year 2000. The High Court has now decided that prosecutors can’t use the legislation retrospectively.”

RICK:

And so the government lost. Twice. And the reason they were so worried was because they had 15,000 convictions already over the last decade that were now unsound. And that's an embarrassing place for the government to find themselves in.

RUBY:

And so Rick, the link here, the relevance to robo-debt, that's about these cases being raised by an automatic system.

RICK:

Well, it's actually more about a broader legal point - the question about robo-debt then is did they have the legal basis to do what they did in terms of automating the debt notices and the income averaging without all of the details about someone's employment income, which resulted in false debts.

RUBY:

And do you mind just refreshing me on what robo-debt actually is and what it meant functionally for how debts were raised and collected?

RICK:

Yeah, I mean, the key driving force of robo-debt, it was that they had all of this data from people that they just didn't have the administrative capacity to go through. What robo-debt did was completely outsource the administrative burden of chasing that information to the people that they alleged had debts and told them, we think you've got a debt, it's now up to you to go and find out whether it is true or not. And if you can't go back seven years and find your employment records, we're going to average it. And that's why we now find ourselves in a position where 470,000 people potentially had debts raised that were never real.

RUBY:

And for those people who were caught up in the system, the impact was huge.

RICK:

I mean, you're talking about a population that is already up against, particularly for the people who are still on welfare when these debts were levied. They don't have any money. In most cases, they had no idea whether they actually had a debt or not, and they couldn't tell you. But their experience with Centrelink, and I know this unfortunately from my own experience and watching my mom, the experience with Centrelink, is that you cannot win. Right. And so when they tell you that you have a debt, you kind of believe them, even if you think or feel that you know that you surely couldn't have. What they say goes. And I was talking to Darren O’Donovan, he's a senior lecturer in law at La Trobe University and a specialist in administrative law, and he was saying that the kind of engine room of robo-debt was fear. That's what drove the efficiency - because people were so afraid of being forced into even more penury, the mental health effects that come with that stress, that in many cases they just paid up and entered into payment plans which essentially garnish their wages or their income support payments. And they lived in even tougher conditions because they were so afraid of the system. And the trauma and hurt that came off the back of that is so great and it's so hard to measure. And I suspect it's far greater than we will ever know.

RUBY:

So that's where we ended up at the end of the robo-debt saga. But I think the big question when it comes to these high court cases is who knew that collecting these debts was illegal? And when did they know that it was?

RICK:

Precisely. And somebody, somewhere should have said something. And what matters now and what people need to know so that this never happens again is if they did say something, why was it ignored? And if they didn't, was it deliberate?

RUBY:

We’ll be back after this

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RUBY:

Rick, there have been warnings throughout about the legal issues with robo-debt and I wanted to pick up on one figure you've written about Terry Carney - Can you tell me about him?

RICK:

Yes. So, Terry Carney's been what is essentially a lifetime member of the Administrative Appeals Tribunal, and he's covered more Social Security cases in that tribunal than most people alive in Australia today. He was one of the members who was sitting, as he normally does in the tribunal when a robo-debt case came before him in 2017. And he was one of the first, if not the first voice to look through the Social Security law in massive detail as it pertains to this particular person in this case. And he said to me on the phone that I actually thought I was wrong,

Archival Tape -- Terry Carney

“I thought, you know, I must have been overlooking something.”

RICK:

like I was looking through all of this. And this is illegal. In fact, the term he used was unlawful in the decision. But he thought that he must have been missing something because it was so blatant.

Archival Tape -- Terry Carney

“And I thought that there must have been something, you know, but could somehow give them a leg to stand on. And of course, they didn't have it.”

RICK:

He read the legislation, he read all of the guidebooks in the handbook, and he realised that he wasn't missing anything.

RUBY:

And so what happened to him after that decision?

RICK:

So he makes that decision in the middle of 2017. Five months later, after serving for years and years and years on the Administrative Tribunal, his contract is not renewed and it's sort of with a wink and a nod. It's because of that decision. And that was certainly the suggestion that he was given.

Archival Tape -- Terry Carney

“It turns out I wasn't alone. I didn't know that in Victoria at around the same time, there were, you know, similar rulings by Trebil. Another member that wasn't re-appointed you know. A mere coincidence.”

RUBY:

Mm hmm. And so what did Carney say to you about these two High Court decisions that you've been looking into Rick - the cases from before robo-debt, that found the way the government was prosecuting welfare debts was illegal?

RICK:

So he's a smart guy right and he's saying the legal principles involved are not the same in terms of the actual sections of the law. But what it does illustrate, and this is kind of the point I'm trying to make, is that there has been an erosion of administrative oversight in what is now Services Australia, formerly the Department of Human Services, within the federal government at large and within the Department of Social Services over many years.

Archival Tape -- Terry Carney

“The real issue is this steady degradation of, you know, adherence by public servants who you know, I have a lot of sympathy for the position they are now in, it doesn't mean that you shouldn't still be doing the right thing…”

RICK:

And for people within that system to not recognise that those High Court cases ought to have been flagged as a warning sign that any further tinkering with welfare compliance, unless you're really sure that what you're doing is legal, is a massive abrogation of their duty and it's a complete failure of governance.

Archival Tape -- Terry Carney

“But, you know, it's they and more so ministers who now just skate around and don't ever accept any consequences or responsibility, you know, for anything.”

RUBY:

Rick you’ve been reporting on the problems within this system for a long time now, and I’m wondering if you know what this scheme was about? whether robo-debt was about efficiency, as the government says, or was it about punishing people - especially poor people?

RICK:

Well, I actually asked Terry Carney that exact question and he said it was both. What we do know about this thing is that was incredibly cruel and it hurt people. It hurt poor people, people that the government has a duty of care to protect. And that is a fact. And that is evidence in the public domain. And it was an incredibly cruel scheme

RUBY:

And as well as cruel, I mean, we know now, but it was illegal, but should the government have known that much earlier? Should it have known for at least a decade back when these first High Court cases were ruled on, that the whole thing could be illegal?

RICK:

I'm going to let you in on a little secret. They knew. They knew it was illegal. The question is precisely what did they know and when. But they knew in their bones that what they were doing was wrong because the old system told them it was wrong. It said that you can't do this unless you can be sure the debt is true. If the debt doesn't exist, then you are acting unlawfully. When the deliberations came for robo-debt they had risk assessments. They had evidence within their own operational guidebooks that you had to check that that debts were lawful. And you had the bruising experience from these two High Court cases that told them you need to know one hundred percent that what you were doing has a legal basis and they didn't follow any of these things. And I’ve looked at it all. And there is no case that can be made, no case that people...important people, decision makers within the department...did not know about the legal shonkiness of what they were doing with no case to be made at all.

RUBY:

Rick, thanks so much for your time today.

RICK:

Thanks Ruby.

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RUBY:

Also in the news today - Australia’s Covid-19 vaccination program began ahead of schedule yesterday, with the Prime Minister, aged care residents and frontline staff among the first to be vaccinated.

And the Victorian government has announced a $143 million support package to assist businesses impacted by the state’s five-day lockdown. The government said a total of 50,000 businesses would be assisted, in industries including events, the arts, tourism and hospitality.

I’m Ruby Jones, this is 7am, see you tomorrow.