‘She failed to act’: Damning findings for robo-debt public servant now in new $900k job

Former top public servant Kathryn Campbell’s $900,000 a year Defence Department role is in doubt after the robo-debt royal commission blasted her for repeatedly failing to act when the scheme’s flaws and dubious legality became apparent.

Campbell served as Secretary of the Department of Human Services (DHS) from March 2011 to September 2017, the period in which the illegal income averaging scheme was introduced.

Former Department of Human Services secretary Kathryn Campbell has been singled out for criticism in the report.Credit: Monique Westermann

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 had become widely known.

The royal commission report found that Campbell kept the true nature of the income-averaging scheme secret when advising cabinet on its design because she knew then-social services minister Scott Morrison wanted to pursue the program to achieve budget savings.

It also found she failed to get to the bottom of the issue when flaws were consistently pointed out by welfare advocates, Centrelink workers and legal experts.

Campbell was removed from her DFAT post after the election of the Albanese government and 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.

“Ms Campbell had been responsible for a department that had established, implemented and maintained an unlawful program,” the royal commission report states in one of several scathing passages.

“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.”

Government Services Minister Bill Shorten said the report showed “the previous government and senior public servants gaslighted the nation and its citizens for 4.5 years”.

“This is a report that shows how the previous government and senior public servants hurt, not helped, citizens,” he said.

Greens Senator David Shoebridge said Defence Secretary Greg Moriarty had created a special position for Campbell from the “enormous buckets of money” the government has provided for AUKUS.

“Now he needs to urgently reflect on these damning findings from the royal commission and decide if that was ever even close to a reasonable use of public resources.”

The Department of Defence did not respond to questions about whether the findings would affect Campbell’s employment. Campbell did not respond to a request for comment sent via the department.

While appearing before the royal commission in March, Campbell conceded she had submitted a potentially misleading document to the expenditure review committee of cabinet in March 2015 when the scheme was being devised.

The document falsely said there would be “no change” to how debts would be assessed under the robo-debt scheme and removed suggestions that legislative change was required to implement the proposal.

The report disputed Campbell’s claim that the admissions were an accidental oversight, saying: “That would be an extraordinary oversight for someone of Ms Campbell’s seniority and experience.

“The weight of the evidence instead leads to the conclusion that Ms Campbell knew of the misleading effect of the NPP [new policy proposal] but chose to stay silent, knowing that Mr Morrison wanted to pursue the proposal and that the government could not achieve the savings which the NPP promised without income averaging.”

When Australian Council of Social Service chief executive Cassandra Goldie gave an interview in January 2017 warning that the scheme was raising inaccurate debts and should be terminated, the report finds Campbell was not interested in these substantive issues but rather the possibility of obtaining a “good line for us to use in the future” in the media.

The report finds a reference by Campbell about ensuring the scheme was in accordance with the law “seems to have been solely concerned with its use for rhetorical purposes, not any intention to that effect; because there is no evidence that Ms Campbell did anything to ensure the scheme’s lawfulness”.

It finds Campbell again failed to act in February 2017 when Centrelink worker Colleen Taylor sent her a desperate email saying she had been “misled about robo-debt” and alleging that Centrelink was effectively “stealing” from its customers.

“[Campbell’s] response to staff concerns, including those about income averaging and debt accuracy, was not to seek external assurance or even make inquiries about the matter with her chief counsel or other departmental lawyers,” the report says.

It then finds that Campbell decided to shelve a damning $1 million audit by PwC into the scheme just as it was about to finish because she feared its contents would be damaging.

“The rational inference is that although the report was contracted for and all but finalised, Ms Campbell formed the view that its detail as to the deficiencies of the scheme was damaging and that it would be better for the department’s reputation, and her own, if it were not produced,” the report states.

It also finds Campbell failed to take action in July 2017 when administrative law expert Peter Hanks presented a paper arguing that the manner in which income averaging was used to calculate debts in the scheme was unlawful.

“The obvious and appropriate response for a person in Ms Campbell’s position would be alarm
upon being told about Mr Hanks’ arguments; arguments that a scheme for which Ms Campbell was responsible was, in effect, unlawful,” the report states.

“However, Ms Campbell made no request for advice, nor did she make any attempt to ensure that DHS was acting upon the criticisms.

“Ms Campbell’s conduct is inexplicable except on the basis that she had an expectation that Mr Hanks’ arguments were properly made and that further work would have exposed the unlawfulness of the scheme.”

The report finds that problems with the scheme were apparent during a pilot phase, but there was a reluctance to deliver bad news to Campbell and other senior officers in the human services department.

“The failure to confront fundamental flaws in the operation of the scheme appears to have been a product of the culture within DHS at the time,” the report states.

Data from the pilot scheme showed that if replicated at full scale, it could be expected that 60 per cent of the interventions would probably involve inaccurate debts because they were based on income averaging.

A written brief of these findings was never presented to Campbell.

“One possible explanation for this is that Ms Campbell was informed of the results orally, preferring not to receive them in writing,” the report states.

“The other possibility is that the results were not given to her because of the same fear of delivering “bad news” that [former DHS official Scott] Britton described in his evidence.

“It is difficult to conceive of any explanations other than those. Neither reflects well on Ms Campbell’s management of the department.”

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