Centrelink’s robodebt facing landmark legal challenge over its ‘deeply flawed’ system

Stock image.
Stock image.

A CENTRELINK client is taking the government to court over its controversial robodebt system, with the government facing calls to suspend the program during the process.

Victoria Legal Aid filed papers in the Federal Court and it is expected an initial hearing will take place in weeks.

In the landmark case young Melbourne woman, Madeleine Masterton is challenging Centrelink’s automated debt-recovery system to see whether the process that calculated an alleged robodebt of around $4000, is lawful.

Ms Masterton’s alleged debt arose when she was studying and receiving Youth Allowance.

She said she was surprised at the lack of transparency from Centrelink.

“At the time I was given no information about how my debt was calculated,” she said.

Ms Masterton, who works as a nurse in a Melbourne hospital, said she hoped the case would help other people.

“I feel a social responsibility to push forward, especially if that means that people who are less equipped or less able, do not have to deal with this as well,’ she said.

‘If my case proves the whole robodebt system is wrong under the law, then I hope that the system is wiped and that everyone else who has debt is freed from it until a better system is in place that calculates transparently and correctly.”

As of October 2018, Centrelink has sent close to one million letters to welfare recipients since the system was launched in July 2016.

Robodebt has raised 409,500 debts with an average debt of $2184.

Following reviews, the government has waived or written off 26,104 debts in cases when it was not cost effective to pursue the amount, an administrative error occurred, or when the recipient had died or was declared bankrupt.

Victoria Legal Aid executive director of civil justice, Rowan McRae, said, it was clear robodebt was deeply flawed and continued to cause people distress and hardship.

“’The way robodebt averages people’s income assumes that they work neat, regular hours throughout a year,” she said.

“In reality, we know people work part time or sporadically throughout the year, because they’re studying, can’t get regular work, have multiple jobs or are unwell.

“This means the calculation of alleged ‘overpayments’ is often inaccurate.

“Our clients have included seasonal workers with thousands of dollars of incorrect robodebts raised during the off-season, as well as former uni students who can’t work out how their alleged robodebt was calculated.

“We’ve seen single parents unable to make back-to-school purchases because they’d been penalised by Centrelink when they hadn’t chased up old bank statements or payslips.”

Previously, compliance teams would manually check differences in tax and Centrelink records.

The new system automatically sends letters to the welfare recipient asking them to provide financial information. Where people can’t or don’t provide detailed evidence about their previous income, a debt is assumed to exist, and they are pursued by Centrelink and debt collectors.

Australian Greens Senator Rachel Siewert said the Government should suspend the program during the court case.

“Two years ago I chaired the senate inquiry into the robodebt debacle and the evidence we heard was both devastating because of the human consequences of robodebt and gobsmacking in the brazen way the Government threw out fairness to pick on some of the most vulnerable people in Australia,” she said.

“Since that senate inquiry the Government has tweaked around the edges, but it has not addressed the underlining unfairness of the program and people are still being harassed for money they do not owe and cannot pay.

“We should not be subjecting people on income support to a system which has such a huge rate of error.

“In many cases, people on income support just don’t have the means to question their debt notices.

“This has always been about demonising people on income support.

“It is harassment and intimidation and it has to stop.”

Ms Rowan said the case was not about letting people avoid paying back lawfully established debts.

“Centrelink should create a system that encourages accurate reporting and fairly investigates overpayments,” she said.

“What we can’t accept is a system that is so clearly not working, that has been proven to be causing overwhelming hardship, and that a Senate Committee has recommended be suspended.’

“’The government should embrace technology, but it has to do it smartly.

“We hope the court will ultimately find that robodebt is unlawful and that a system with integrity will follow.”