Emboldened by their initial success, Legal Aid Victoria is taking the fight to Centrelink’s maligned robo-debt recovery scheme.
The lawyers of Victoria’s Legal Aid service has ratcheted up the pressure on Centrelink’s much-maligned robo-debt recovery scheme, launching a second case against it.
The action (which is a test case in the Federal Court) aims to test the legal foundations of the government program, one that has purportedly affected 500,000 people, asking them to pay back amounts that were either incorrect or completely fatuous.
The Department of Human Services (DHS) quashed Legal Aid’s first test case when it suddenly wiped the $4,000 debt that a nurse apparently owed. Social service advocates believe this action to be motivated by the fact that the DHS would like to avoid a legal spotlight shined upon the scheme.
The subject of the second case, 33-year-old Deanna Amat, will take on the DHS over $2754 Austudy allowance debt. “My tax return was $1709.87 and they took every cent … It actually felt like I was being told I was guilty before I could prove my innocence. I couldn’t believe they could find out my personal ATO information and take away my tax return, but could not find my new address or contact details…It just adds to anxiety about money and the future. You’re trying to improve yourself and use that education and get a better job, and you have that debt looming over you,” Ms Amat told The Age and The Sydney Morning Herald.
In conversation with Fairfax, the DHS spokesman said it “would be inappropriate to discuss the details of a matter that is presently before the court…the Commonwealth Ombudsman, in reviewing our processes, found that it is reasonable and appropriate to ask people to explain discrepancies in data.”
The executive director of civil justice access and equity at Victoria Legal Aid, Rowan McRae, said the robo-debt system, was “opaque and unfair”, believing that the system causes significant mental and financial strain on the nation’s most vulnerable people.
“We’re committed to testing the lawfulness of this flawed scheme. For this to have a benefit for hundreds of thousands of other people, it needs to be done through the court,” McRae said.
How the system works
The automated system relies on an average (usually over a fortnight) to estimate former welfare recipient’s debt, rather than individually locating the details of each case. All correspondence from the DHS to the individual does not provide any explanation of how the debt was calculated, instead prodding the recipient to disprove the amount.
The department has also been criticised for how it has handled outstanding debts, including threats of wage garnishing, seizure of money from accounts and promises of building interest.
Earlier this year, the DHS disclosed to a Senate enquiry that $500 million had been clawed back, against a setup cost of $400 million.