Ombudsman failed to check legality of robo-debt, former tribunal member says

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The commonwealth ombudsman failed to check the legality of robo-debts when it audited the Centrelink initiative in 2017, a former member of the Administrative Appeals Tribunal has said.

Terry Carney – a former member of the social services division – has blown the whistle on the program after his term expired in September, using his experience judging robo-debt cases to accuse Centrelink of failing to prove the debts had a legal basis.

Despite at least 20,000 debts being wiped or revised down, the ombudsman has defended the legality of robo-debts saying they are accurate “based on the information which is available to [the department of human services] at the time”.

At the centre of the disagreement is the way Centrelink estimates debts owed by welfare recipients when they do not provide historical records of fortnightly income.

In an academic paper for the University of New South Wales law journal, Carney said the robo-debt program averaged income over fortnightly periods rather than discovering welfare recipients’ actual income for each period which, he wrote, was the proper basis for calculating the debt.

Carney told Guardian Australia that in his time on the tribunal, he had heard between half a dozen and a dozen robo-debt cases and he had set aside the debt in all but one, because Centrelink could not produce evidence they were correctly calculated.

In addition to warning that the “illegality” of the program has continued unabated for 18 months, Carney has now accused the ombudsman of doing “no more than ask[ing]” Centrelink if there was a legal foundation for raising the debts in the first place.

In April 2017, the commonwealth ombudsman’s report on robo-debt stated that the Department of Human Services’ own guidelines identified “the risks involved in averaging income data and shows DHS was aware that averaging ATO earnings may result in incorrect debts”.

DHS told the ombudsman no modelling was done on how many debts were likely to be inflated. The report said the risk “should be the subject of more thorough research and analysis”.

Carney said the ombudsman “did not ask what the basis of it was, the legal foundation of the debts, or ask to see a legal opinion”.

“Some have said the ombudsman – in not asking those two questions – is guilty of a gross failing of the institution.”

A spokeswoman for the commonwealth ombudsman said it considered advice on the legality of the online compliance intervention (OCI) system from DHS “but to suggest that we simply accepted this advice on face value and did no more is not correct”.

“Rather we brought independent analysis to the question of whether the arrangement was reasonably open to DHS with regard to the social security law,” she said.

The ombudsman said the audit focused on the “broader administration” of the system, including its procedural fairness, because the legality of individual debts could be tested in the Administrative Appeals Tribunal.

The ombudsman’s spokeswoman said it was “satisfied the debts raised by the OCI are accurate, based on the information which is available to DHS at the time the decision is made”.

“We were also satisfied that debts will be reassessed whenever new information becomes available.”

The DHS general manager, Hank Jongen, said he “strongly refutes any claims that it has conducted its compliance activities in a manner which is inconsistent with the legislation”.

Carney said he was unsure what the purported denial meant or it was “certainly wrong if it is seeking to refute my proposition that [Centrelink] lacks legal authority to raise the debt in the way that it is”.

He said there was “nothing unlawful in the early stage when they send the letters out” with estimates of debt and a request for further information.

“It’s when they – in the absence of any evidence from the applicant – then say the average debt is going to be recovered, that is unlawful.”

Labor’s Linda Burney said the human services minister, Michael Keenan, “needs to clarify immediately the legality of debt notices issued to thousands of innocent Australians under the disastrous robo-debt debacle”.

“Many vulnerable people who receive these notices were too afraid to challenge the legality of the debts and ended up paying them anyway,” the opposition spokeswoman for human services said.

“This is a scathing indictment from the longest serving member of AAT’s social services division, someone who witnessed firsthand the stress and pain experienced by many vulnerable Australians who received these debt notices.”

Keenan’s office referred questions to DHS.

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