1.1
Data-matching methods have been used by Centrelink since the 1990s as a tool to identify discrepancies and errors in social security payments. In 2015 Centrelink established a new ‘Income Compliance Program’ which used averaged income data from the Australian Taxation Office (ATO) and income reported to Centrelink to identify overpayments. In 2016, this program, followed by subsequent iterations, moved online and became known as the ‘Robodebt’ system.
1.2
The program was expected to save the government $2 billion in the federal budget but due to serious deficiencies of the program the government announced in November 2019 that they would no longer solely rely on income averaged data to raise debts. In May 2020 the government announced that over 470 000 debts made under the scheme were 'insufficient under law' and that these debts would be repaid or reduced to zero.
1.3
In total, an estimated $1.73 billion in debts were raised against approximately 433 0000 Australians. Within this group, approximately 381 000 individuals were pursued, often through private debt collection agencies, to repay almost $752 million to the Commonwealth.
1.4
Around 519 000 debts, to the value of $740 million, have been refunded. This figure represents 97.8 per cent of all debts to be repaid.
1.5
On 11 June 2020, the Prime Minister, the Hon Scott Morrison MP, issued an apology for the conduct of the program and stated that he deeply regretted any hardship that had been caused to people from income compliance activities.
1.6
On 19 November 2019 a class action lawsuit (Prygodicz v Commonwealth of Australia) was filed in the Federal Court of Australia. On 11 June 2021 a settlement was approved at a value of $112 million, which the Commonwealth will pay to eligible members of the class action.
1.7
It is positive that the settlement has provided some resolution to affected Australians who have disputed their debts for years. It is also encouraging that Services Australia has put in place mechanisms, such as Single Touch Payroll, to ensure that a similar situation cannot happen again.
1.8
However, more than 18 months after the government's announcement that debts under the scheme would be refunded, as of 28 October 2021, 9 200 individuals continue to wait for a refund. Moreover, eligible applicants of the class action will need to wait another 10 months before receiving their share of the settlement sum. It is also noted that the settlement does not provide compensation for the psychological and financial hardship incurred by affected individuals.
1.9
More broadly, questions remain concerning what the Australian Government knew about the legality of the debt recovery system. Despite persistent questions from the committee, the government has refused to provide key documents central to this inquiry.
1.10
At the forefront of the committee's mind has been the individuals and their families who have been affected by Centrelink's income compliance program. The committee remains committed to holding the government to account and resolving unanswered questions on behalf of the hundreds of thousands of Australians affected by this scheme.
Reasons for this interim report
1.11
This report is the fifth interim report for the committee’s inquiry into Centrelink’s compliance program. The committee has issued several interim reports (see paragraph 1.18) during the course of this inquiry and many issues relating to matters discussed in the interim reports remain unresolved.
1.12
The committee issued its second interim report in September 2020 which was a substantive report on the operations and impact of the Income Compliance Program. At the time of tabling the second interim report, the class action lawsuit had yet to be resolved. Since this time, a settlement for the class action has been approved by the Federal Court of Australia.
1.13
As a result of the settlement the committee re-submitted questions to Services Australia and the responsible minister which were subject to claims of public interest immunity.
1.14
The distribution of the settlement sum is being managed by Services Australia and is not expected to be completed until late September 2022. The committee will continue to play a crucial role in overseeing the management of the settlement distribution process by Services Australia.
1.15
The committee will also seek answers to key questions in relation to the extent of the government's knowledge of the legality of the Income Compliance Program.
Report outline
1.16
Following this introductory chapter, the report consists of two subsequent chapters:
Chapter 2 provides an overview of the settlement of the class action; and
Chapter 3 discusses the public interest immunity claims raised by the government throughout the course of this inquiry.
Conduct of inquiry
Referral and reporting
1.17
On 31 July 2019, the Senate referred a broad inquiry into Centrelink’s compliance program to the Senate Community Affairs References Committee (committee) for report by 4 December 2019. The committee was granted several extensions to its reporting date, which was amended to 25 March 2020, 19 August 2020, 2 December 2020, 12 May 2021 and 24 November 2021.
1.18
During the course of the inquiry, the committee has tabled the following interim reports:
First interim report (February 2020): examined a public interest immunity claim made by Services Australia in December 2019;
Second interim report (September 2020): a substantive report into the operation of income compliance programs and its impact on affected individuals;
Third interim report (September 2020): further examined public interest immunity claims in relation to responses received to the first interim report and additional claims received; and
Fourth interim report (August 2021): reiterated the committee's position in relation to public interest immunity claims following the completion of the class action lawsuit.
1.19
This fifth interim report considers the evidence received to date and announcements about changes to the program up to the end of October 2021.
Notes on terminology and references
1.20
As noted in the committee’s second interim report, the committee has chosen to reference certain names and terminology which may not match those used in evidence. The committee has chosen to use the official terminology of ‘Income Compliance Program’ rather than the colloquial ‘Robodebt’.
1.21
The committee has also chosen to reference Services Australia as the responsible agency throughout this report given changes that occurred in 2019 and 2020 to the Administrative Arrangements Orders.
1.22
In this report, references to Committee Hansard are to proof transcripts. Page numbers may vary between proof and official transcripts.
Acknowledgements
1.23
The committee would like to thank all of the individuals and organisations who have participated in this inquiry. The experiences shared with the committee have shone a light on the government’s poor administration of its debt recovery scheme and the toll it has taken on the lives of everyday Australians.