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RUBY:

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

Not long ago - the Australian Government was forced to abandon a scheme it was using to pursue welfare recipients for money.

The Robo-debt scheme was binned in 2019 after the Government finally asked the Solicitor-General for legal advice.
He told them what many had long suspected: it was probably unlawful.

So, who else knew about the potential illegality of robodebt? How early did they know? And why did it go ahead at all?
Today, senior reporter for The Saturday Paper, Rick Morton on the Robo-debt royal commission and how years of suffering could have been averted.

It’s Wednesday, November 9.

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Archival tape – Minister

“The Royal Commission is now in session, please be seated”

RUBY:

Rick, you've spent the last week listening to the evidence that's been presented to the inquiry into the Robo-debt scheme, so to begin with. Can you just tell me what it is that this inquiry is trying to uncover? What questions is it seeking to answer?

RICK:

Yeah, it's a Royal Commission. It's as high as you get. And they're essentially wanting to find out who was responsible for the scheme, who knew what and when and what was the damage caused by this scheme. We can quantify some of it, but for a lot of these questions we have had no answers for many, many years now.

But the Robo-debt scheme just really quickly was this kind of automated debt-recovery programme that was cooked up within Government that ran for five years, which was found to be incorrect in many instances, and they essentially just made up debts because they were using taxation data to average their income into fortnightly blocks, which is when Social Security payments are assessed. But people earn lumpy incomes. So if you're in the gig economy or casual. You don't earn a neat amount of money every fortnight, and therefore those debts could never have been correct.

So what we're talking about here is this automated process with the income averaging. And that's really crucial, because that forms the basis of Robo-debt. Right?

But people who earnt lumpy income like they do in the gig economy, or casual. You don’t earn an even amount of money every fortnight, and therefore, those debts could never have been correct. And we know the outcome of some of these is that it traumatised people, it caused financial ruin and in at least seven cases there are families of people who committed suicide who believe that Robo-debt was directly linked to those suicides.

RUBY:

So, on the question then of who knew what, and when they knew it, can you tell me what has come to light? Because it sounds like, even at the pilot stage of the program, so before it was implemented, there were warnings from within about the legality of the scheme…

RICK:

Yeah, well, even further back before this thing was even in pilot stage, basically…

We've been hearing from public servants so far. We've mostly exclusively heard from Department of Social Services, public servants. And essentially there was early alarm. This idea for Robo-debt was cooked up within the Department of Human Services, which is now Services Australia. And what's the distinction? They're essentially settling. They do the payments, Social Services does the policy.

What we can gather is that DHS, someone in DHS said, Hey, we've got this idea that might save the money. What do you reckon to their colleagues in the Department of Social Services? And DFS was told about this and the idea was floated around a few people. And there was one man in particular called David Mason, who was the acting director of the debt policy team at the time, who was asked to give the very first advice on it, essentially from a policy point of view, not from a legal point of view.

And he called it for what it was. He said that this is a scheme with no defensible legal basis. We could not ever allow a debt that was raised using income averaging to reach a tribunal or a court because we could not defend it equally. You know, if we were to proceed with this, it would cause reputational harm to both the Department of Human Services and Social Services.

So David Mason is sort of like the Nostradamus of Robo-debt because that is almost to a t exactly what the Solicitor General would tell them five years later.

RUBY:

Right, and Rick, just to be clear the reason Robo-debt is illegal goes to the very basis of the scheme. Which is this idea that you can guess a person’s income essentially through the process of income averaging and that process is illegal and it was understood that it was, right from the very beginning?

RICK:

Correct.

RUBY:

And so at that moment then when this initial advice is given, when the Government is told that income averaging is likely illegal, what does it do?

RICK:

So they say, All right, well, thanks, David Mason. You're a policy guy. We'll get some internal legal advice because that's essentially the next step. Remember, this is not even a policy at this point. It's a brain bubble, a brain fart. So they go to their internal lawyers and they go to Anne Pulford who co-authors some legal advice with Simon Jordan and this is in October-November, well, the request is made October-November, 2014. The legal advice is given, I think, on the 18th of December 2014. So again, we are talking well before this becomes a policy, and that advice says, in our view, a debt amount derived from annual smoothing or smoothing over a defined period of time, this is another word for income averaging, by the way, may not be derived consistently with the legislative framework.

Now, what happened between 2014, when that departmental advice cast near total doubt over the legality of Robo-debt in 2019, when the Solicitor General's advice was finally sought and delivered and led to the scheme, the ultimate end is this kind of collective act of unlearning all of this information because they knew from the beginning that this was wrong and possibly completely illegal.

In fact, one of the senior DFS public servants who took the stand on Thursday said that it was the most black and white legal evidence he'd ever seen back in 2014. So they knew it was illegal, or at least they should have known it, and yet they continued it anyway.

RUBY:

So if that is the case then Rick, why did Robo-debt go ahead? Why was the scheme implemented?

RICK:

This is the $1.8 billion question because the idea comes from the Department of Human Services. We know that someone in that department or some team in that department cooked up a plan to meet what has always been a broad Government goal, which is reduce fraud and reduce debt if you can, and pursue debt where it has arisen, particularly in the payments system. Now, the government has never stipulated how you should do that. It's just that come up with ideas within the rules of the law that allow us to do that. So someone in DHS has cooked that up and then it's to DSS and DSS has, as we now know, has said no, no, absolutely not, can't be done. And for whatever reason, DHS decides to brief it anyway.

Now, the moment that it reaches their bosses, i.e. their political masters, the Minister's offices, who in this case is Marise Payne and Scott Morrison, the moment those two forces combine, it's like oxygen and wind in a bushfire.

Suddenly something that started as a thought bubble that could be killed relatively easily if you wanted it to be, becomes almost a fait accompli. And we see that in the communications where one in particular where it says, you know, Minister Morrison has been briefed, he knows about these proposals, they've got to save some money, one of which is what will become Robo-debt. And this email says Minister Morrison has requested that the Department of Human Services bring forward proposals for strengthening the integrity of the welfare system. And later on it’s identified that he particularly likes what is known then as the pay as you go cleansing option, which is income averaging - Robo-debt. And so that's kind of the point of no return in this piece.

And now we've got a scheme that the public service knew was not legal, and now it involves the knowledge of politicians, the same bosses that, you know, the public servants wanted to impress and the pressure to deliver this is now many orders of magnitude higher than it ever was before.

RUBY:

We’ll be back in a moment.

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RUBY:

Rick, the Robo-debt scheme makes it out of these brainstorming sessions and it becomes policy. So what happens when this scheme starts affecting members of the public, and they start noticing what’s going on – because the people who were targeted realised pretty quickly that this wasn’t a proper way of pursuing debts, didn’t they?

RICK:

Yeah, no, exactly. And and the really difficult thing about those early periods, particularly in 2016 and into 2017, when we started to see an enormous kind of wave of public pressure, is that they were being gaslit the entire time by the people who designed this scheme. Including eventually, as we now know, by the Ombudsman, the Commonwealth Ombudsman, because they got involved. Now of course at this point the Department of Social Services has the 2014 advice which says, no, don't do it, and they don't want to show that to the Ombudsman and they actively discuss never giving that to the Ombudsman. But what they do do is they ask another question of the same internal lawyer, the principal lawyer Anne Pulford, and that question is delivered to her by Emma Kate McGurk, who's a group manager within the Department of Social Services and says, Hey, I need some advice. You know, if we wanted to use income averaging as a last resort with, you know, as essentially as a, you know, where everything else has failed, can we use income averaging?

And that new legal advice from 2017 is very, very, very narrowly asked. And the question says, yeah, probably you could. Even though Anne Pulford was the co-author of the 2014 advice that says you definitely can't. And she was questioned at length about this on the stand and eventually conceded that there was an inconsistency between her co-authored co-counsel to 2014 advice in her 2017 advice. But she believes that she was answering a general question about a technical hypothetical, that wasn't about Robo-debt. She claims to not recall any external context about Robo-debt being in the news, about the Ombudsman enquiry, about all of this political pressure, because this scheme started on the 1st of July 2016 and at this point has been running for at least four months without legal authority. So people are starting to panic internally.

So this 2017 advice is eventually apparently sent alongside, with the 2014 advice to the Ombudsman, with the instruction from somebody senior within the Department of Social Services that there be a bridging paragraph sent to the Ombudsman to explain why the advice has changed or why it apparently has changed. And so that's what they do and they essentially hoodwink the Commonwealth Ombudsman and they needed to do this because what they did when the Ombudsman, we now we know as a matter of history by the way, that the Ombudsman eventually delivered its report later that year, in 2017 and said there is a legal basis for Robo-debt. We've suggested some tweaks, but it’s not illegal which is, as we now know, wrong. And as soon as they did that, the Department of Social Services, according to senior counsel assisting Justin Gregory, at this commission, they started relying on publicly, externally that ombudsman report as the de facto exoneration of the entire Robodebt scheme.

So they were telling everyone, Oh, look, the ombudsman said it's fine, even though we tricked them into believing that it's fine, but now we're going to pretend that it is fine. And we've got the Ombudsman, the imprimatur of the Ombudsman to prove it. Therefore no further questions will be entered into and that's exactly what they did.

RUBY:

And we have spoken before about the damage that this scheme did to the people who received letters who were told they had to pay this money back that they often didn't have and actually didn't owe. I mean people died as a result of this scheme, Rick.

So how do we reconcile that with now knowing that the architects of this policy, they actually had advice that they were sitting on that said that this was probably unlawful.

RICK:

So this is where things get interesting. I mean, it's extremely… I can't imagine what it's like for people who were listening, who were affected. Because, I mean, it feels like, you know, as a journalist that me and my colleagues who've been covering this, like Luke Henriques-Gomes at the Guardian, Royce Kurmelovs, who's a freelancer, have done amazing work on this. I can't imagine. I mean, I felt like I was finally being vindicated. Right?

And it's just the thing that really sticks now is that this could have been handled through the class action, although that was called off early because it was settled and the class action lawyers decided to settle. And of course, now we're getting all of this vindication. But to what end? An interesting thing to look at is the use by Justin Greggery, the Senior Counsel assisting of the phrase reckless indifference in the very first day of the hearings on Monday, in his opening address, he just throws the phrase reckless indifference in there.

That is a very specific lawyerly phrase, and it applies to the act of public misfeasance in public office, which is a civil tort. It can have quite high penalties attached, very high penalties attached to it. It's hard to prove, but lawyers don't throw them around lightly, that phrase reckless indifference, and here we have Gregory trying it around.

And I want to be really clear, because oftentimes you think they were told they had a debt, but then they had the debt reduced. It's not that these people were told they had a debt and then got out of it on a technicality. The debt never existed. And anyone who had worked in Social Security law, i.e. people in the Department of Human Services and Department of Social Services, would have known that you couldn't on simple arithmetic, you could not average income into fortnightly blocks and get an accurate answer. Because they are used to assessing these claims in fortnightly blocks, that's how the legislation is written. It didn't take legal advice or even policy advice from David Mason, who sounds like a soothsayer. Right. But he was just reading the legislation, as everyone knew at the time, which was that you can't do this. It wasn't an Einstein, insight, but he so far stands out as one of the few people at any step of this torrid process who actually spoke the truth and was right for it.

RUBY:

Rick, thank you so much for your time.

RICK:

Thanks, Ruby.

RUBY:

At further Royal Commission hearings, it was revealed that some warnings about the Robo-debt scheme were seen by then-Social Services Minister Scott Morrison.

However, the warnings appeared to have been watered down before they reached him.

The hearings continue.

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RUBY:

Also in the news today…

Hackers are threatening to publish the data of up to five hundred thousand health claims stolen during the Medibank hack.

In a blogpost, a group claiming to be involved with the hack said they will publish within 24 hours if Medibank don’t pay a ransom.

And…

In senate estimate hearings for the ABC, Liberal senators have accused the ABC of quote “grooming children” for inviting performer Courtney Act to appear on Play School and accused it of allowing employees to “run rogue” on social media.

Greens Senator Sarah Hanson Young described the questions posed as quote: “deeply, deeply offensive”.

And said the term grooming should not be played with by conservative senators looking to make headlines.

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