Mystery at the heart of robo-debt crackdown

Former top mandarin Renee Leon spoke earlier this year about courage. The woman who headed the department overseeing robo-debt when its operation became a public scandal reflected on her time in the bureaucracy at an event hosted by the Institute of Public Administration Australia.

“Senior public servants have had to really draw on their reserves of courage in order to give frank and fearless advice,” Professor Leon, now the vice chancellor of Charles Sturt University, told the event in June, adding her sacking – along with others – in late 2019 was “intended to send a message” about the limits of that advice.

Former prime minister Scott Morrison appearing at the royal commission into the robo-debt scheme.

“And so I think there has been some risk of damage to the willingness of senior public servants and the extent to which they’re prepared to die on any particular hill.”

Leon did not head the department when robo-debt was conceived or approved of by cabinet. She was one of five agency heads shown the door when the Coalition took a razor to the public service by merging several departments. But the brutal ease with which department heads are removed is just one illustration of how in the 21st century the public service is left in no uncertain terms as to who holds the whip hand in the relationship between it and its political masters.

Fast-forward a few months to Wednesday, December 14, when former prime minister Scott Morrison was nearing the end of a laborious grilling before a royal commission about how he had become so clueless as to the illegality of robo-debt, a large-scale welfare crackdown conceived under his stewardship.

Morrison, who was social services minister during the scheme’s inception, and was responsible for bringing the plan to cabinet, received a proposition from counsel assisting the commission Justin Greggery KC.

Greggery issued a number of assertions: that Morrison did not ask questions when he should have; that Morrison wanted a tough “welfare cop” on the beat; that more than a $1 billion in projected budget savings was far too attractive to ignore.

According to Greggery’s theory, the culmination of those factors – and then some – came to this: “Members of your department may have felt constrained in whether they could freely and frankly raise with you the fact that this measure, if introduced, would not be lawful.”

Morrison disagreed, telling the commission over and over that it would be “inconceivable” the public servants beneath him would have kept such an egregious issue from him. “And yet it happened,” Greggery responded, to which Morrison said: “Yes.”

Had he known, Morrison said, “I doubt we’d be sitting here today”.

Renee Leon said it took courage for Canberra bureaucrats to give frank and fearless advice.Credit: Alex Ellinghausen

The royal commission into robo-debt has just finished its second round of hearings into just how the federal government ended up wrongly issuing debts to 400,000 welfare recipients, which saw it pay $1.2 billion in compensation following a 2020 court settlement.

The method the government deployed in the crackdown was called income averaging, which used Tax Office annual income data and smoothed it over 26 fortnights, presuming income was the same across each, and put the onus on welfare recipients to prove they didn’t owe the money.

From late 2014 the responsible bureaucracy, the now-defunct Department of Human Services, was receiving advice the method was legally unsound. Morrison was shown, and signed, a brief in February 2015 that legislative change was needed for the scheme to go ahead.

But the following month Morrison submitted the policy to cabinet with that critical advice erased. Witnesses have since told the Royal Commission they do not know how it was altered.

What has become clear throughout the hearings so far, is that several bureaucrats knew the scheme was illegal. The mystery is how it then came to be implemented.

Michael Keating, who headed up the Department of Finance in the late 1980s, and the Department of Prime Minister and Cabinet in the early 1990s, told the Herald and The Age on Thursday it should have been obvious to anyone involved that robo-debt was going to produce inaccurate results.

Michael Keating is a former high-ranking public servant who says robo-debt was obviously going to be inaccurate.Credit: Sean Davey

“Everyone would know that. Unless you’re living in some sort of asylum where you’ve stopped thinking,” he said, adding the saga was a “damning indictment” on the capability of the public service.

Former DHS secretary Kathryn Campbell who headed up the department responsible for drafting the robo-debt cabinet submission, told the commission last week she didn’t know how the advice regarding the illegality of the program had disappeared.

“I have found no evidence, and I was not involved with it. I think ... at some point in time, a decision was taken that that didn’t require policy and legislative change. I am not sure where that decision was taken before it was agreed,” she said, conceding she never personally made sure it was legally sound.

In the first tranche of commission hearings, former Department of Social Services deputy secretary Serena Wilson said she felt ashamed to have not ensured the explicit legal issues were made known to Morrison, and said she “lacked courage” in 2017 to raise the alarm when she’d learned income average had made it into the program.

In an April 10, 2019, when Morrison was prime minister, a document compiled for the Department of Prime Minister and Cabinet by the DHS’s former general manager of customer compliance, Craig Storen, raised the prospect of introducing legislation to legalise robo-debt’s income averaging.

Liberal senator Marise Payne gave evidence to the robo-debt royal commission on Tuesday.

Storen, who appeared before the royal commission last week, said he didn’t recall whether the document had been provided to the prime minister’s department.

Liberal senator Marise Payne, who was human services minister at the time the program was being devised, said she didn’t know why the advice had later fallen “off the radar”.

“I don’t know the answer to that question, and I say that in all transparency,” she said. Asked whether it simply amounted to a shortcoming of bureaucratic advice, Payne replied, “that is a question I have asked myself”.

Annica Schoo, a former senior policy officer in the Department of Environment, told the Herald and The Age she found the evidence “shocking”.

“The most striking thing was how many people from the very inception thought this was a horrible idea, as well as illegal,” Schoo said.

Leon declined to comment to this masthead given she may face upcoming hearings in the royal commission.

In a Senate estimates hearing in October 2019, Leon said no “specific legislation” was required to administer robo-debt, and denied there was a reverse onus of proof on welfare recipients to dispute debts.

In an August 2021 interview with this masthead, Leon said robo-debt “was a policy of the government of the day”.

“The department was faithfully implementing it as is our job. Once it became apparent that those debts weren’t validly raised, the program ceased, which was good,” she said.

This masthead asked Government Services Minister Bill Shorten, who announced the royal commission earlier this year, whether there was a demonstrable lack of courage within the public service.

“Yeah,” he responded, before qualifying that hadn’t been his experience as a minister, “but obviously something wasn’t working in that [prime ministers Tony] Abbott, [Malcolm] Turnbull era, when the public service felt cowed.”

Morrison told the commission that the failure of the advice to be brought to him in its final form represented a “critical failure in the system”, adding it was “distressing” that he didn’t know why that didn’t occur.

Keating points to Morrison’s own failure to adopt what the former believes were valuable recommendations from businessman David Thodey’s review of the Commonwealth public service, released in December 2019.

The review noted the “stifling” hierarchy limiting the capabilities of the public service, and found the authority of the public service had diminished in the face of a wider network of advice given to ministers by their own staff, consultants, and the media.

“APS must respond by embracing contestability and redefining its role as the principal adviser to government,” the review said.

Schoo said the public service had been structured in a way that was “conducive to reducing the moral agency of its staff”.

“I think hierarchy plays a big role,” she said.

Paddy Gourley, a former senior officer in the Department of Defence, said one potential outcome of the royal commission should be the abandonment of fixed tenures for departmental heads.

He said time limits, combined with the ability for agency heads to be sacked without cause, combined to create an environment in which senior public servants became overly preoccupied with keeping their jobs.

“Cultural change really requires changes in systems and procedure, and law. If you say to people, let’s do this without having some change to the system and procedure and law, then you’re pushing it up hill,” he said.

Continuing her exchange at the Institute of Public Administration Australia forum in June, Leon assured that, “in the end, yes, we do give frank and fearless advice, but I think people choose their moments carefully for that”.

“And probably there are times where the judgment has been made that perhaps this is not the hill I’m prepared to die on,” she said.

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