Calls To Suspend 'Crude' Centrelink Robo-Debt In Landmark Court Challenge

A Centrelink client is taking the government to court over the controversial 'robo-debt' system, with the government facing calls to suspend the framework during the process.

Victoria Legal Aid filed papers in the Federal Court this week, arguing Centrelink's automated debt-recovery system is unlawful.

"It's clear robo-debt is deeply flawed and continues to cause people distress and hardship," said VLA's executive director of Civil Justice, Access and Equity Rowan McRae.

"We want this case to pave the way for a fairer, smarter and more accurate system which works for government, but also for the many people who access social security at some point in their life."

Centrelink's automated debt-recovery system has come under sustained criticism from advocates since it launched in July 2016.

(AAP Image/Mick Tsikas)

Previously, compliance teams would check for social security overpayments by manually examining differences in tax and Centrelink records. The newer, automated system calculates a person's fortnightly pay, averages it out for the year, and then sends letters to welfare recipients if it detects an imbalance.

It puts the onus of proof on the individual, and when people can't or don't provide detailed evidence about their previous income, the system assumes a debt exists -- and sends in the debt collectors.

The "crude calculations" used by Centrelink to ascertain debt falls short of what the law requires, VLA will argue in court, and do not provide a basis for assessing what a person actually earned or whether they were overpaid.

READ MORE: People On Centrelink Can Afford Literally Zero Percent Of Rental Properties In Australia

More than 44,000 of 409,000 debts raised by Centrelink in a 15-month period since July 2016 were reduced or cleared when challenged, a Senate committee found.

"We’ve seen single parents unable to make back-to-school purchases, because they’d been penalised by Centrelink when they hadn’t chased up old bank statements or payslips," McRae said.

Rowan McRae, executive director of Civil Justice, Access and Equity at Victoria Legal Aid. Photo: Supplied.

The legal challenge is focused on the case of Melbourne nurse Madeleine Masterton, who received a letter alleging a debt of $4000 incurred when she was receiving Youth Allowance as a student.

"At the time, I was given no information about how my debt was calculated," she said.

"I feel a social responsibility to push forward, especially if that means that people who are less equipped or less able, do not have to deal with this as well."

Greens Senator Rachel Siewert. (AAP Image/Richard Wainwright)

Greens Senator Rachel Siewert, who chaired the committee, is calling on the government to suspend the robo-debt program during legal proceedings.

"We should not be subjecting people on income support to a system which has such a huge rate of error," Siewert said.

She said robo-debt was "devastating" for many people, and claimed the government had failed to address problems in the system.

READ MORE: 'Serious Failure': Ombudsman To Investigate Robo-Debt Scandal

"This has always been about demonising people on income support. It is harassment and intimidation and it has to stop," she said.

"People are still being harassed for money they do not owe and cannot pay."

The Australian Council of Social Services welcomed VLA's legal challenge, describing the ongoing robo-debt system as a "devastating abuse of government power" that causes extensive harm to those most vulnerable.

“Robodebt has unleashed thousands of debt notices in error to parents, people with disabilities, carers, students and people seeking paid work, resulting in people slapped with Centrelink debts they do not owe or debts higher than they owe," said ACOSS CEO Dr Cassandra Goldie.

An initial hearing in VLA's legal case is expected to take place in weeks.

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