Robo-debt royal commission live updates: Commissioner Holmes recommends criminal, civil prosecution for individuals involved in unlawful scheme

The robo-debt royal commission made 57 recommendations for systemic reform, including that peak advocacy bodies should be consulted before changes are made to the social security system.

It also said Services Australia, which oversees Centrelink, “should put in place processes for genuine and receptive consultation with frontline staff when new programs are being designed and implemented”.

Former prime minister Scott Morrison, right, and former ministers Alan Tudge, centre, and Christian Porter, back left.Credit: Alex Ellinghausen

Sealed section
The royal commission said a sealed section of the report, which is subject to a non-publication order, “recommends the referral of individuals for civil action or criminal prosecution”.

It is important to note that the identity of those individuals is not known. Two former ministers, Alan Tudge and Stuart Robert, have said they are not named in the section but it is unclear who is.

“I am also submitting relevant parts of the additional chapter of the report to heads of various Commonwealth agencies; the Australian Public Service Commissioner, the National Anti-Corruption Commissioner, the President of the Law Society of the Australian Capital Territory and the Australian Federal Police,” Commissioner Catherine Holmes, SC, said.

What was robo-debt?
The robo-debt scheme, which ran between July 2015 and November 2019, was aimed at identifying people who had been overpaid Centrelink benefits by using an automated system to identify alleged discrepancies between their reported income and income data held by the Tax Office. But the scheme was flawed and resulted in debts being calculated based on incorrect data. In some cases, people had debts seized from their bank accounts and tax returns without warning.

In 2019, the Commonwealth government settled a test case about the lawfulness of the scheme and conceded key aspects of it were unlawful.

Critical findings about former ministers and bureaucrats

1. Scott Morrison

The commission concluded that Morrison, who was the social services minister behind the robo-debt scheme rollout in 2015, “allowed cabinet to be misled” about the scheme. He rejected all adverse findings against him.

“He failed to meet his ministerial responsibility to ensure that Cabinet was properly informed about what the proposal actually entailed and to ensure that it was lawful,” the report said.

The royal commission heard the Department of Human Services advised Morrison in February 2015 that the robo-debt scheme would require legislative change. However, the policy proposal submitted to cabinet later that year did not say this was required. Morrison said he believed the legal issues had been resolved and his department “did come to a view in their formal advice that legislation was not required”.

Morrison “allowed cabinet to be misled because he did not make that obvious inquiry” about why bureaucrats’ advice had changed, the report said. “Only a few weeks previously he had been told of that caveat; nothing had changed in the proposal; and he had done nothing to ascertain why the caveat no longer applied.”

The commission also said it “rejects as untrue Mr Morrison’s evidence that he was told that income averaging ... was an established practice and a ‘foundational way’ in which DHS [the Department of Human Services] worked”.

Income averaging referred to a process, subsequently found to be unlawful, under which Centrelink used data from the Australian Taxation Office to estimate the income of recipients of social security payments. This was a key plank of the robo-debt scheme.

This automatic calculation created errors in some cases because it averaged out income into fortnightly periods, which may not have reflected the actual income received by recipients in that period. Centrelink then raised debts on the basis of that incorrect information.

2. Alan Tudge

The commission referred in detail to steps taken by Alan Tudge, who was human services minister between February 2016 to December 2017, to respond to criticisms of the robo-debt scheme in the media.

“Mr Tudge’s use of information about social security recipients in the media to distract from and discourage commentary about the scheme’s problems represented an abuse of that power,” the report said.

“It was all the more reprehensible in view of the power imbalance between the minister and the cohort of people upon whom it would reasonably be expected to have the most impact, many of whom were vulnerable and dependent on the department, and its minister, for their livelihood.”

Tudge responded: “I strongly reject the commission’s comments of the way I used the media and that I had abused my power in doing so. I reject that finding in the strongest terms. At no stage did I seek to engage in a media strategy that would discourage legitimate criticism of this scheme.”

He said the information released was “generally de-identified” and was released to “correct the public record”.

3. Christian Porter

The royal commission says Christian Porter, the social services minister between September 2015 and December 2017, “could not rationally have been satisfied of the legality” of the robo-debt scheme on the basis of his general knowledge of the policy process.

“Mr Porter could not rationally have been satisfied of the legality of the scheme on the basis of his general knowledge of the [policy proposal] process, when he did not have actual knowledge of the content of the [proposal], and had no idea whether it had said anything about the practice of income averaging,” the report said.

“As minister for Social Services, Mr Porter should at least have directed his department to produce to him any legal advice it possessed in respect of the legislative basis of the Scheme.”

4. Stuart Robert

Stuart Robert was briefly responsible for robo-debt in mid to late 2019. The scheme was shut down in November 2019 after the Commonwealth settled a test case and agreed to orders declaring that key parts of the scheme were unlawful.

The royal commission said it “rejects Mr Robert’s claim to have acted to end the Robodebt Scheme quite as promptly as he professes” and former Department of Human Services secretary Renee Leon took the first steps to end the scheme.

“There is no reason to suppose, however, that had Ms Leon not taken the step she did, the government’s announcement of the cessation of the practice would have been far behind,” the report said.

Robert had defended making public comments supportive of the scheme when privately he had misgivings.

“It can be accepted that the principles of Cabinet solidarity required Mr Robert to publicly support Cabinet
decisions, whether he agreed with them or not,” the report said. “But Mr Robert was not expounding any legal position, and he was going well beyond supporting government policy.

“He was making statements of fact as to the accuracy of debts, citing statistics which he knew could not be right.”

5. Kathryn Campbell

Department of Human Services secretary Kathryn Campbell was criticised by the robo-debt royal commission for failing to act when confronted with information pointing to the unlawfulness of the debt recovery scheme.

“Ms Campbell had been responsible for a department that had established, implemented and maintained an unlawful program,” the report said. “When exposed to information that brought to light the illegality of income averaging, she did nothing of substance.

“When presented with opportunities to obtain advice on the lawfulness of that practice, she failed to act.”

Campbell served as secretary of the Department of Human Services from March 2011 to September 2017, which covered the period in which the automated debt assessment and recovery scheme was introduced.

This is Michaela Whitbourn signing off on the blog for today. Thank you for reading.

Colleen Taylor, the former Centrelink worker who raised the alarm over robo-debt, said it was as if those who ran the unlawful scheme were missing an “empathy gene”.

Taylor was a witness at the royal commission and was singled out by Government Services Minister Bill Shorten for standing up against the scheme while a frontline worker at the agency.

“This only thing that stopped this in the end was that it was illegal,” Taylor said this afternoon as she pored over the royal commission report from her home.

“Why wasn’t it stopped long before because of all the other reasons: immoral, unjust, unfair, cruel?”

Taylor said she hoped people were identified who should no longer be working in the public service. “That will all come out when the sealed section [of the report] is implemented, but there are people who quite clearly, it’s like they have an empathy gene that’s been removed,” she said.

Alan Tudge, who was human services minister between February 2016 to December 2017, has also responded to the robo-debt royal commission report.

He said in a statement that he was examining the report with his lawyers but noted that the royal commission “made no finding that I had knowledge that the scheme was unlawful”.

Former prime minister Scott Morrison and former minister Alan Tudge.Credit: Alex Ellinghausen

“I note that the Labor Party never questioned its lawfulness until 2019,” Tudge said.

He said people who had been referred to in a sealed section of the report related to potential civil and criminal action had “received prior notification”, and he had received no such notification.

He said income averaging, the key feature of the robo-debt scheme that the Commonwealth accepted in 2019 was unlawful, “had been a feature of welfare compliance for decades”.

Income averaging involved Centrelink using data from the Australian Taxation Office to estimate the income of recipients of social security payments in an attempt to identify people who had been overpaid.

This automatic calculation created errors in many cases because it averaged out income into fortnightly periods, which may not have reflected the actual income received by recipients in that period.

The commission heard evidence that part of the government’s defence of the scheme, executed by Tudge’s office, included the release of personal information about some Centrelink customers to correct what were said to be inaccuracies in the media.

The royal commission said: “As a minister, Mr Tudge was invested with a significant amount of public power. Mr Tudge’s use of information about social security recipients in the media to distract from and discourage commentary about the scheme’s problems represented an abuse of that power.

“It was all the more reprehensible in view of the power imbalance between the minister and the cohort of people upon whom it would reasonably be expected to have the most impact, many of whom were vulnerable and dependent on the department, and its minister, for their livelihood.”

But Tudge responded: “I strongly reject the commission’s comments of the way I used the media and that I had abused my power in doing so. I reject that finding in the strongest terms.

“At no stage did I seek to engage in a media strategy that would discourage legitimate criticism of this scheme.”

He said the information released was “generally de-identified” and was released to “correct the public record”.

Former prime minister Scott Morrison also said in his statement there was no evidence before the commission that established he was responsible for government departments overseeing the robo-debt scheme “ceasing in their duties to ... [give] frank or candid advice to me regarding the need for legislative change”.

He said the Department of Human Services was “simply authorised” to conduct further work on the policy before bringing back a final proposal that resolved any issues.

Former prime minister Scott Morrison. with then-minister for home affairs Peter Dutton and then-minister for cities, urban infrastructure and population Alan Tudge.Credit: Dominic Lorrimer

“This is normal policy and cabinet process. Policy proposals go through numerous stages of development, where issues are addressed before departments bring a final proposal to their minister for authorisation and submission to cabinet,” he said, adding officials must complete a due diligence checklist.

He said the executive minute from bureaucrats in 2015 which highlighted the need for legislative change to implement the robo-debt scheme had been mischaracterised by the royal commission.

“The executive minute did not have the significance which the commission seeks to attribute to it. The executive minute did not contain settled policy proposals, it contained options to pursue the development of incomplete proposals which had yet to be subjected to the rigorous cabinet processes and departmental due diligence assessment,” he said.

“The findings which are adverse to me are based upon a fundamental misunderstanding of how government operates. The commission has suggested, contrary to decisions of the High Court and long-standing practice, that a minister cannot rely upon the advice of their own department. Such a proposition would make executive government completely unworkable.”

Former prime minister Scott Morrison also said it was an “offensive and baseless” suggestion that he applied pressure to government officials to advance to robo-debt proposal.

“There is also no evidence before the commission to the effect that I applied pressure to any person to push the [proposal] into the budget process either in a way that its implementation did not require legislation, or at all.

“This is an offensive and baseless assertion.”

Former prime minister Scott Morrison.Credit: Rhett Wyman

He also said the proposal wasn’t initiated by the government but the public service.

“It was initiated by departments before I became the minister for social services,” he said.“It was initiated against a background of an entirely understandable and therefore unextraordinary government policy, to identify possible savings within the Commonwealth’s largest portfolio in terms of expenditure and to prevent billions of dollars in overpayment of welfare benefits, in the interests of taxpayers.”

Morrison also said he was given no departmental advice that identified risks about the hardships the scheme could cause people.

“In my evidence to the commission I also noted that no concerns were raised by the Labor opposition or social services advocates regarding potential harmful impacts at the time the measure was approved and announced in the subsequent budget,” he said.

Addressing the pressure royal commissioner Catherine Holmes, SC, said public servants were under to follow through on Morrison’s wishes, Morrison said: “I enjoyed a positive, respectful and professional relationship with public service officials at all times, and there is no evidence before the commission to the contrary.”

‘Strong welfare cop on the beat’
Morrison, then social services minister, had warned in January 2015 that “there does need to be a strong welfare cop on the beat” and “I will be doing that because I want to make sure this system helps the people who most need it”.

This was the backdrop against which the robo-debt automated debt assessment and recovery system was rolled out later that year on Morrison’s watch.

The royal commission notes the importance of this language in its final report.

“By 22 January 2015, Mr Morrison had clearly communicated to the public, the secretaries of DSS [Department of Social Services] and DHS [Department of Human Services], and deputy secretaries ... his intention to achieve budget savings through his portfolio,” the report said.

“He had also conveyed the approach he intended to take to the portfolio generally, including through the language of a ‘crackdown’ on welfare cheats, ‘rorting’ the system, and the concept of himself as a ‘welfare cop’.

“In doing so, Mr Morrison contributed to a certain atmosphere in which any proposals responsive to his request would be developed. The context was apt to encourage the development of proposals which reflected the approach and tone of his powerful language.”

Former prime minister Scott Morrison has issued a lengthy statement defending his involvement in the robo-debt scheme and expressing regret for the “unintended consequences” the crackdown had on welfare recipients and their families.

“There are important lessons to be learned from the conduct of the scheme regarding harm minimisation and the use of digital technology to assist with the important task of welfare compliance,” he said in the statement issued this afternoon.

Former prime minister Scott Morrison.Credit: Alex Ellinghausen

However, he rejected the findings critical of his involvement as the former social services minister who submitted the proposal to cabinet in early 2015.

“They are wrong, unsubstantiated and contradicted by clear documentary evidence presented to the Commission,” he said.

“It is unfortunate that these findings fail to acknowledge the proper functioning of government and cabinet processes in the face of not only my evidence as a former prime minister, and cabinet minister for almost nine years, but also the evidence of other cabinet ministers.”

Commissioner Catherine Holmes, SC, found that Morrison had allowed cabinet to be misled over the legality of the scheme, and didn’t follow up an inconsistency in 2015 after a stated need for legislative change to implement the robo-debt scheme disappeared from a policy document prepared by bureaucrats that he took to cabinet.

“I acted in good faith and on clear and deliberate department advice that no legislation was required to introduce the scheme and presented comprehensive evidence to support this position,” he said.

“I note the evidence before the commission confirmed that the responsible departments maintained the position that the scheme was lawful in subsequent submissions prepared for cabinet, after I had left the social services portfolio.

“Any assertion to the contrary regarding the department’s position is completely wrong and without any evidentiary basis. I also note the evidence presented to and confirmed by departmental officials that the existence of departmental legal advice on this matter was inexplicably withheld from ministers.”

Former minister Stuart Robert has welcomed the robo-debt royal commission’s findings and says he is not caught up in the confidential sealed section of the royal commission’s report that makes criminal and civil referrals to Commonwealth authorities.

“As the minister that worked hard to get the legal advice and close down [the robo-debt scheme] I welcome the RC report and its sensible recommendations,” he said in a written statement.

Former minister Stuart Robert.Credit: Alex Ellinghausen

“I have NOT received a notice of inclusion in the ‘sealed section’ and I understand they have all gone out.”

The final report of robo-debt royal commissioner Catherine Holmes, SC, was published today. It contained a sealed chapter that was not viewable by the public and was sent to the authorities for further investigation.

Holmes recommended that an additional sealed chapter of the report relating to the referral of individuals for civil action or criminal prosecution not be tabled in parliament “so as not to prejudice the conduct of any future civil action or criminal prosecution”.

Robert was briefly responsible for robo-debt in mid to late 2019. The scheme was shut down in November 2019 after the Commonwealth settled a test case and agreed to orders declaring that key parts of the scheme were unlawful.

The report said former Department of Human Services secretary Renee Leon took the first steps to end the scheme.

“The commission rejects Mr Robert’s claim to have acted to end the Robodebt Scheme quite as promptly as he professes,” the report said.

“Ms Leon was in fact the first to take steps for that purpose. There is no reason to suppose, however, that had Ms Leon not taken the step she did, the government’s announcement of the cessation of the practice would have been far behind.”

Department of Human Services secretary Kathryn Campbell was criticised by the robo-debt royal commission for failing to act when confronted with information pointing to the unlawfulness of the debt recovery scheme.

“Ms Campbell had been responsible for a department that had established, implemented and maintained an unlawful program,” the report said.

Former department of human services secretary Kathryn Campbell.

“When exposed to information that brought to light the illegality of income averaging, she did nothing of substance.

“When presented with opportunities to obtain advice on the lawfulness of that practice, she failed to act.”

Campbell served as secretary of the Department of Human Services from March 2011 to September 2017, which covered the period in which the automated debt assessment and recovery scheme was introduced.

Campbell was subsequently promoted to head of the Department of Social Services and later the secretary of the Department of Foreign Affairs, even as the scheme’s flaws became widely known.

Campbell is currently serving as an adviser on the AUKUS pact in the Department of Defence, a role for which she is being paid an annual salary of $889,853.

Income averaging referred to a process, subsequently found to be unlawful, under which Centrelink used data from the Australian Taxation Office to estimate the income of recipients of social security payments. This was a key plank of the robo-debt scheme.

This automatic calculation created errors in some cases because it averaged out income into fortnightly periods, which may not have reflected the actual income received by recipients in that period. Centrelink then raised debts on the basis of that incorrect information.

Read the full story here.

Economics correspondent Rachel Clun has crunched the numbers on the robo-debt scheme and the royal commission. Here are the figures at a glance:

$1.7 billion: amount of debt the robo-debt scheme raised against 526,000 welfare recipients.
$971.4 million: how much the Commonwealth spent implementing, administering and winding back the scheme.
$565.2 million: the net cost of the scheme.
Nine weeks: the length of royal commission public hearings.
958,000: the number of documents the Commonwealth produced to the commission.
57,511: the peak of the viewing audience for the royal commission live stream.
1092: submissions made to the royal commission by individuals and organisations.
115: number of witnesses called.
990 pages: length of the royal commission’s report.
57: number of recommendations made.
9: number of former government ministers mentioned in the report.
1: number of sealed chapters in the report.

In an email to Centrelink staff, sent this afternoon, Government Services Minister Bill Shorten said they had been “let down” by the former government and praised those who had challenged the robo-debt scheme.

“I’m sorry you were treated with disrespect by some leaders who let you down and I acknowledge how difficult it was for ethical public servants,” Shorten said.

Former Centrelink compliance officer Colleen Taylor told the robo-debt royal commission her agency was “stealing from its customers”.

Former Centrelink compliance officer Colleen Taylor, who gave evidence at the royal commission, was singled out for praise.

“Colleen Taylor, like many other unnamed valiant staff, deserve recognition for their strength and character. It is never easy to give bad news up the food chain in an organisation. Colleen Taylor deserves recognition for her bravery,” Shorten said.

What was robo-debt?
At the heart of the robo-debt scheme, which ran between July 2015 and November 2019 under the former Coalition government, was a practice known as income averaging that was subsequently found to be unlawful.

It involved Centrelink using data from the Australian Taxation Office to estimate the income of recipients of social security payments.

This automatic calculation created errors in many cases because it averaged out income into fortnightly periods, which may not have reflected the actual income received by recipients in that period. On the basis of those flawed figures, Centrelink concluded recipients had been overpaid their entitlements.

Centrelink then sent a letter asking people to confirm or update their reported income, shifting the onus onto social security recipients to show they did not owe a debt. If the person did not respond within a specified time – perhaps because the letter was sent to an old address – robo-debt raised a debt against the person and imposed penalties if they were late in repaying it. In some cases, the Commonwealth seized funds from a person’s bank account or anticipated tax return to recover the debt.

How Taylor spoke up
The royal commission heard Taylor wrote to Department of Human Services secretary Kathryn Campbell in January 2017 following an all-staff email assuring workers there was no change to the way the department was calculating debts.

Taylor told Campbell there had been a “dramatic change” between the previous manual assessment of payment and income discrepancies, and the new system that relied heavily on income averaging.

Taylor said she told superiors “you just can’t do this to people” over the flawed debt calculation method she said effectively double-counted income.

She told the hearing one of her colleagues quit over the scheme while others discussed how they could stop it.

“There was a lot of discussion of just how unfair it was, and sympathy for the information that was out there in the media,” Taylor told the commission.

Read more about her evidence here.