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Victory over robo-debt seems a little closer as a leaked email from the Department of Human Services has illuminated the problems within.
According to leaked Department of Human Services email, the Morrison government has ordered an immediate halt of the maligned robo-debt scheme and will apparently freeze some outstanding debts.
In the email, the general manager of the debt appeal division wrote: “…the department has made the decision to require additional proof when using income averaging to identity over payments…this means the department will no longer raise a debt where the only information we are relying on is our own averaging of Australia Taxation Office income data.”
The email also sets out that the department would undertake a sweeping review of all debts where averaging was used.
“Customer compliance division will methodically work through previous debts identified as part of the online compliance program and respond to their requests for clarification,” it said.
The department will also be noting this to affected customers in writing.
“For customers who are affected, the department will freeze debt recovery action as CCD identifies them and looks at each debt. The department will also write to affected customers to let them know,” the email said.
Back in September, Bill Shorten announced a class action lawsuit against the government’s robo-debt program, citing the 150,000 people it has targeted in error. Peter Gordon, the senior partner at the law firm bringing the claim said that he’ll “allege that to simply collect money from hundreds of thousands of people by the simplistic application of an imperfect computer algorithm is wrong. We think that before the Government docked the pensions or took the tax refunds of widows and carers and aged pensioners it needed to have better evidence, it needed to consider each case individually.”
According to Gordon, 160,000 fatuous debt claims can be tied to the system, and the case will seek compensation for those affected.
Combine this with the fact that Victoria’s Legal Aid service has already brought a test case to court, representing the first blow against the maligned robo-debt system, and the 500,000 it has targeted.
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.