Robodebt: A government program gone wrong

By Divya Rawat

Robodebt was an informal name given to an automated debt recovery program, introduced by the Liberal Federal Government, in 2015. The program used a set of rules, an algorithm, to see whether Centrelink and welfare recipients had any debts based on the process of income averaging – a method of calculating a person’s income by averaging their earnings over a multiple-year period. 

The scheme’s major shortcoming was that it automatically calculated what welfare recipients had been overpaid and the debt they owed, based on its set of rules only: i.e. without any manual or any other automated checks and balances to verify the calculations.

The program incorrectly accused people of owing money to the government and issued notices to welfare recipients. Robodebt claimed almost:

  • $2 billion in payments from 433,000 people.
  • A total of $751 million was wrongful recovered from 381,000 people personally.

This caused severe distress, anxiety and sorrow to people and affected them at a time in their lives when they were already facing financial distress.

The following aspects of the program were shocking, surprising and disappointing:

  • The basis used for calculating income and debt was unsound
  • Robodebt continued two years after a Centrelink whistle-blower first said “the very basis for the debt collection was fake”
  • A class action had to be taken by welfare recipients to stop the program; an action they won in June, 2019.
  • It took another 12 months, in May 2020, for the recovery program to be terminated.

The Robodebt program was declared illegal by the Federal Court in 2019, four years after it was established, because the debt calculations were deemed to be highly unreliable and all debt was wiped out. Justice Brendan Murphy, who described the program as a “shameful chapter” in Australia’s social security scheme, ordered a final settlement of $1.8 billion in June 2021.

The Robodebt program’s impact on individuals and families has been devastating. Photo: paramir/unsplash

However, significant damage has been done by the program to the welfare recipients who the program pursued relentlessly, seizing large amounts of money directly from their bank accounts.

The new Labor government, however, has now established a Royal Commission to look into the failures and shortcomings of the program. It is a step in the right direction to protect the most vulnerable in society from harassment from the government in the future. The terms of reference will cover the consequences of the programs, including:

  • the harm caused to vulnerable individuals
  • the total financial cost to government
  • measures needed to prevent similar failures.

Former Queensland Supreme Court Justice, Catherine Holmes, has been named as to head the Royal Commission which will deliver its final report to the Governor-General by April 18, 2023.

Feature image: Robodebt caused distress and anxiety. Photo: Tim Gouw/CC/Unsplash

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