A former top lawyer at the Department of Human Services has told an inquiry it was a “known issue” robodebts were often wrong but the “income averaging” algorithm meant the government could target many more welfare recipients.
A royal commission investigating the unlawful Centrelink debt recovery scheme also heard new evidence the former government was warned about the prospect of a civil claim for misfeasance in public office if the scheme continued beyond November 2019.
Appearing in Brisbane on Monday, Annette Musolino, who was chief counsel at the Department of Human Services between 2016 and 2019, was repeatedly questioned about her knowledge of the scheme’s legality.
Musolino insisted she thought the scheme was legal, blaming her incorrect view on another department, the Department of Social Services, which was responsible for social security legislation.
The robodebt program used annual pay data from the tax office to assert welfare recipients had misreported their fortnightly income to Centrelink – a process known as income averaging.
Musolino was asked how she believed the debts raised this way could be lawful when the evidence was clearly insufficient.
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In an exchange with the commissioner, Catherine Holmes AC SC, Musolino accepted there was a “mathematical reality” but added that administrative decisions were “typically made on incomplete information”.
Holmes replied: “The trouble with averaging is it’s the luck of the draw whether it’ll give you the right answer … You just don’t know.”
Musolino, who earlier referred to the inaccuracy of income averaging as a “known issue”, said: “I genuinely think people understood [the debts could be inaccurate].”
Asked why the method was used if officials knew it was inaccurate, Musolino said: “Because I think it was understood it was ultimately lawful to make a decision. And that the only way we could end up doing 20,000 [debt review] interventions a week compared to 20,000 a year is to find a more efficient process.”
The inquiry has previously heard evidence that robodebt victims were emotionally and financially devastated by incorrect debts, which were in some cases wrong by tens of thousands of dollars.
Despite Musolino’s suggestion that she and other officials continued to believe the scheme was lawful while it operated, the inquiry heard fresh evidence about serious internal doubts throughout 2017, when the scheme exploded in controversy.
It was revealed the Department of Human Services seriously considered getting advice from the Australian Government Solicitor in January 2017, but officials opted against it.
Under questioning from the counsel assisting, Angus Scott KC, Musolino accepted she could think of no good reason against seeking an independent legal opinion on the scheme.
Musolino said she had advised in favour of getting the advice – which likely would have ended the scheme – but a more senior official, deputy secretary Malisa Golightly, had opted against it. Golightly has since died.
From then, Musolino relied on the Department of Social Services’ position that the scheme was lawful.
The Department of Social Services told the Commonwealth Ombudsman the scheme was lawful in March 2017, but it held conflicting internal legal advice: a 2014 document which said robodebt would be unlawful and a 2017 advice which backed the scheme, with caveats.
The government finally received advice from the solicitor general in September 2019 which said the scheme was unlawful.
It was also revealed that the then government services minister, Stuart Robert, was warned in November 2019 that the government could face a civil claim for misfeasance in public office if it continued to run the robodebt program after getting the solicitor general’s advice.
“This is because the continued administration of the program … would contribute to an argument that the department had been raising and recovering debts in bad faith,” it said.
The government settled a legal challenge and the income averaging method was abandoned.
A class action lawsuit run by Gordon Legal subsequently won a $1.8bn settlement for hundreds of thousands of victims, with the case settled before claims for damages could be considered by a court. The presiding judge, Bernard Murphy, had described the scandal as more likely to be a stuff-up than a conspiracy.
The brief to Robert described the elements of misfeasance in public office as including that defendant was “recklessly indifferent”.
The senior counsel assisting the commission, Justin Greggery KC, has previously raised the prospect the robodebt scandal may have been a result of reckless indifference.
That is because the scheme continued despite departmental officials getting internal legal advice in 2014 and a draft external opinion from a top private firm in 2018 that both said the scheme was unlawful.
Musolino, who is now chief operating officer at Services Australia, continues her evidence on Tuesday.
