Robodebt prosecutions loom after “gross betrayal”

SENIOR personnel behind the unlawful robodebt scheme will be referred for civil and criminal prosecution as a royal commissioner lashes the “dishonesty and collusion” behind the program.

Former Queensland chief justice Catherine Holmes today (Friday, July 7) handed a 990-page report containing 57 recommendations to Governor-General David Hurley.

The report also included a sealed chapter that is not part of the bound report.

“It recommends the referral of individuals for civil action or criminal prosecution,” Ms Holmes said in the report, adding that she did not want to prejudice any future proceedings.

The commissioner has also referred parts of her report to the Australian Public Service Commission, the National Anti-Corruption Commission, the president of the Law Society of the ACT and the Australian Federal Police.

“It is remarkable how little interest there seems to have been in ensuring the scheme’s legality, how rushed its implementation was, how little thought was given to how it would affect welfare recipients and the lengths to which public servants were prepared to go to oblige ministers on a quest for savings,” she wrote.

“Truly dismaying was the revelation of dishonesty and collusion to prevent the scheme’s lack of legal foundation coming to light.”

The report said it was at the beginning of 2017 when robodebt’s “unfairness, probable illegality and cruelty became apparent”.

“It should then have been abandoned or revised drastically and an enormous amount of hardship and misery … would have been averted,” it said.

Prime Minister Anthony Albanese said the government would carefully consider all 57 recommendations laid out in the final report.

“The robodebt scheme was a gross betrayal and a human tragedy … it was wrong, it was illegal, it should never have happened and it should never happen again,” he told reporters.

“This tragedy caused stress, anxiety, financial destitution and sadly had a very real human toll.”

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

“They betrayed the trust of the nation and its citizens for four and a half years with an unlawful scheme which the Federal Court has called the worst chapter of public administration,” he said.

“The royal commission has highlighted a broken system under the previous government.”

The former coalition government launched the scheme to “detect, investigate and deter suspected welfare fraud and non-compliance” in mid-2015 in an effort to save billions of dollars.

The scheme – which became known as robodebt – issued debt notices to people identified through a process called income averaging, which compared reported incomes with tax office data.

More than $750 million was wrongfully recovered from 381,000 people and victims told the royal commission of their trauma and fear as they received notices and debt collectors made contact.

The inquiry also heard evidence of bureaucrats ignoring serious questions and advice about the legality of the scheme.

The scheme was ruled unlawful by the Federal Court in 2019.

A settlement of $1.2 billion was reached between robodebt victims and the then-government in 2020.

The report said the robodebt scheme was set up to deliver budget savings of $4.7 billion, but only delivered $406 million in savings, with the scheme costing $971 million.

Opposition Leader Peter Dutton earlier said he would wait and see what findings were made in the report.

“There is no question about why it’s being dropped today,” he said, pointing to the upcoming Fadden by-election.

The final reporting date was set a week before Fadden MP and former minister Stuart Robert resigned from parliament, triggering the vote.

Key bureaucrats identified in robodebt report:

• Kathryn Campbell, former secretary of human services and social services departments

Ms Campbell was involved in a new policy proposal to federal cabinet which “was likely to mislead because it contained no reference to income averaging or the need for legislative change”, the report said.

She described this as an “oversight”, but the commission found that would have been extraordinary for someone of her seniority and experience.

It said the weight of the evidence instead led to the conclusion that Ms Campbell knew of the misleading effect of the policy proposal but chose to stay silent knowing that then-minister Scott Morrison wanted to pursue the plan and the government wouldn’t achieve its desired savings without income-averaging.

• Serena Wilson, former social services department deputy secretary

Ms Wilson told the inquiry she was only made aware in January 2017 that income averaging was part of the scheme, but the report said the commission did not accept she was unaware the system was being used before that date.

• Annette Musolino, former human services department chief counsel and senior executive

The commission found Ms Musolino was made aware in a March 2017 email that “in 2014 DSS had obtained internal legal advice to the effect that income averaging was unlawful”.

The email “could only have reinforced in Ms Musolino’s mind what she had already learned … that the legal arguments in support of income averaging were weak and unconvincing and involved substantial legal risk”, the report said.

Despite this, Ms Musolino took no steps to provide legal advice to departmental executives about the extent of that risk and the need to obtain independent, external advice.

“She did not do so because she knew that such advice was unwanted by them,” the report said.

• Renée Leon, former human services secretary

The commission found some of her actions in regard to the Masterton litigation – the key test case which exposed problems with robodebt – were “designed to avoid public and political scrutiny of the scheme”.

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 – WITH AAP