The robo-debt pile-on

Bill Shorten also announced that Gordon Legal would launch a class action on behalf of robo-debt victims, which may end up costing the Government several hundred million dollars more. Attorney General Christian Porter said debts raised before 2015 based on income averaging could be unlawful, and that there would be a statute of limitation on those cases.

The pile-on surrounding robo-bebt, which largely portrays identified debtors as victims, involves an incomplete narrative. A stark reality is that, for any welfare recipient on social security for a full financial year, the total of the 26 fortnightly incomes they declared should match the annual figure available from ATO. My guess is that most of the $721 million about to repaid to welfare recipients probably represents genuine (albeit inadequately proven) overpayments.

Stuart Robert, Minister for Government Services in July 2019 confirmed in Parliament that as many as one in five of the debt recovery notices issued might be incorrect. He further stated that "of the 800,000 income compliance reviews since 1 July 2016 that have been finalised, 80 per cent have resulted in a debt being collected. To give some focus to that, right now across Australia, as at 30 June 2019, there are 1.54 million outstanding social welfare debts with a value of just shy of $5 billion".

Repaying $721 million will not be the end of the story because recent developments suggest that the government is getting ready to have a second crack at recovering some of this money.

Single Touch Payroll (STP) began from 1 July 2018 for employers with 20 or more employees. It is now mandatory from 1 July 2019 for Australian businesses of all sizes. With STP employees' payroll information is reported to ATO each time employers pay them through STP-enabled software. All this means that ATO data can now be matched to Centrelink data in real time rather than estimated later.

It is not clear how much of Centrelink overpayments will be targeted under a revised recovery scheme. We already know that the government won't pursue overpayments dating prior to 2015. My guess is that the government will target overpayments that can be identified under STP, which means that only payments made in 2018-19 and 2019-20 will be reviewed.

Overall, up to a billion dollars may shortly be refunded to Robodebt victims. A high proportion of this will have been for genuine debts dating before July 2018. Whatever about more recent overpayments, these older debts may never be recovered and the government/taxpayer will be permanently out-of-pocket.