Robodebt: What do I do now if I have a debt?

"Robodebt" is a colloquial term given by activists to a government program officially called the online compliance initiative. Under the program, which started in 2015 and ramped up in 2016, Centrelink used annual income data provided by the Australian Tax Office to determine whether someone had been overpaid by the agency.

The program involved data-matching, using the tax office data against previously reported income information and raising a debt if there was a discrepancy. The program has had three versions since it first started, and all have reversed the onus of proof onto current and former Centrelink recipients to prove they didn't have a debt, instead of the government to prove they did.

Debts were raised for payments made up to seven years ago, increasing the difficulty for people to prove they hadn't been overpaid, if they couldn't find old pay slips or bank statements.

Friday's announcement by Government Services Minister Stuart Robert was the latest step in a retreat from the program in the face of multiple legal battles.

Specifically we learnt that the government will pay back 373,000 people $271 million for 470,000 debts it has found were raised unlawfully using the income averaging method. The number of debts is higher than the number of people because some people received debt notices under the scheme more than once.

Mr Robert said the government will start contacting 190,000 people that it already has contact details for from July 1, and will try and contact the remaining people to make sure their details are correct as well.

"Australians don't need to do anything in terms of getting a refund," he said.

"From 1 July, we will be actively contacting those Australians impacted. We'll be paying some 190,000 from the 1 July whose details we have, and the remainder, we'll be contacting to update their details to ensure we have their details, and will be proactively rectifying the record we have with them."

A spokesman for the minister expected most of the refunds to be paid by November. While hundreds of thousands of people have been contacted to alert them they may be part of the group covered by the class action which covers all debts under the income compliance program, the 373,000 people is a smaller subset of that group that used income averaging.

"People do not need to do anything now. Services Australia will provide more advice about the refund process over the coming weeks," the spokesman said.

If you have paid a debt to Centrelink after 2015 and you believe that income averaging was used to determine that debt, you should keep a close eye on your MyGov account, but also have the option of registering with the class action to receive further information.

Centrelink has always had measures in place to both prevent over-payments and to recoup payments that the agency believes were made in error, whether that be through fraud, or through mistakes.

This program started as a revenue measure to bolster the budget's bottom line, and was expected to generate 20,000 notices for welfare recipients to explain discrepancies in their incomes each week. It was expected to add $4 billion to government coffers, but is now set to cost the government money, through the cost of implementing the program, and paying the money back.

The main issue is that an annual income figure is somewhat of a blunt instrument, it doesn't allow for a retail worker who has the best fortnight of the year over the Christmas break with many extra shifts, when they would receive no income from Centrelink, but would also have a week or a month with no shifts, when they get higher Centrelink payments. It also doesn't account for people who received Centrelink payments on-and-off, or only for part of the year.

In the earliest version of the system, people who hadn't responded to letters to explain their income were automatically issued debt notices, even if the first letter had gone to an old address.

People also struggled to find their old payslips to prove their earnings each fortnight, but it wasn't until a later version of the system that people could use their bank statements to prove their income.

There has been opposition and outcry about this system for years mainly from grassroots campaigners and Greens and crossbench MPs, but in the last 12 months, the case against it has gained momentum. The government first announced it would pause the robodebt system in November last year, the day before it lost a test case in the Federal Court brought by Victoria Legal Aid. That case found there was no reason to raise debts on the tax office data. More recently, the government has faced a class action brought by Gordon Legal, with high profile backing from Labor's Bill Shorten.

Yes. On Friday Gordon Legal issued a statement saying the announcement by the government didn't address the claim in its entirety, which asked not only for the false debts to be repaid, but for damages to be paid for the emotional distress and financial hardship caused by the program.

The first hearing is set down for July, but the parties are expected in mediation before then.

READ MORE:

Not quite. Firstly, this is by no means the end of the government raising debts against people receiving Centrelink payments.

"The government will continue its income compliance framework going forward but with further proof points," Mr Robert said on Friday.

On Monday the prime minister continued on that theme on Monday.

"Over the course of dealing with this issue, that principle [income averaging] was not something that could be relied upon. That doesn't mean those debts don't exist, it just means that they cannot be raised solely on the basis of using income averaging," Mr Morrison said.

It is also far from the end of the road for the robodebt scandal. The class action is yet to be finalised, and Greens senator Rachel Siewert has pledged to scrutinise the process for repaying people.

There are also calls for various types of inquiries into what ministers and public servants knew about the legality of the program and when they knew what.