Public Sector Informant: Public service must learn from robodebt fiasco

- "The proceeding has exposed a shameful chapter in the administration of the Commonwealth social security system and a massive failure of public administration."

- "It should have been obvious to the senior public servants and to the responsible minister(s) at different points who designed and were charged with overseeing the robodebt system that many social security recipients do not earn a stable or constant income, and any employment they obtain may be casual, part-time, sessional, or intermittent and may not continue throughout the year."

- "It should have been plain that ... the automated robodebt system may indicate an overpayment of social security benefits when that was not in fact the case."

- "The group of Australians who, from time to time, find themselves in need of support through the provision of social security benefits is broad and includes many who are marginalised or vulnerable and ill-equipped to properly understand or to challenge the basis of the asserted debts so as to protect their own legal rights. Having regard to that, and the profound asymmetry in resources, capacity and information that existed between them and the Commonwealth, it is self-evident that before the Commonwealth raised, demanded and recovered asserted social security debts, it ought to have ensured that it had a proper basis to do so."

- "The proceeding revealed that the Commonwealth completely failed in fulfilling that obligation."

- "On top of the financial hardship, distress and anxiety caused to so many vulnerable people and the costs to the public purse of a huge Commonwealth program to identify the debts to be withdrawn and to refund the Commonwealth-recovered amounts, the Commonwealth has now agreed to pay a further $112 million; to meet the substantial costs of the settlement distribution scheme...; and to meet its own significant legal costs. That has resulted in a huge waste of public money."

Peter Whiteford in his forensic examination published earlier this year in the Australian Journal of Public Administration, describes it as "a social policy fiasco". Importantly, it is not just a case of wrong-headed government policy: senior public servants as well as ministers must accept responsibility.

While the Australian Public Service is still basking in the success of its (early) COVID-19 efforts, it should also look to learn from its failures, as Peter Shergold advocated after the pink batts case. What culture allowed this fiasco to occur and not be corrected for so long?

In our Public Sector Informant article last year, Peter Whiteford, David Stanton and I strongly supported the call for a royal commission into robodebt. In doing so we noted that, given its technical nature, the idea was almost certainly developed by public servants, not ministers or their advisers.

But, as J Murphy said, "Ministers and senior public servants should have known that income averaging based on Australian Taxation Office data was an unreliable basis upon which to raise and recover debts". He doubted, however, that "they actually knew", preferring the likelihood of "a stuff-up (even a massive one)" than a conspiracy.

So what scrutiny was given to the proposal?

It seems likely that it originated from some enterprising person within the Department of Human Services as the body responsible for administering social security, but surely it would have been scrutinised by legal people in DHS and also by policy experts in the Department of Social Services before it went to the two ministers concerned.

The proposal would in all likelihood then have been included in a cabinet submission from one or both ministers and subject to "coordination comments" from Finance, Treasury and Prime Minister and Cabinet, and possibly Attorney-General's, before going to Expenditure Review Committee and cabinet. The calculated impact on the budget and forward estimates would have likely been subject to Finance examination and agreement. The submission should also have included an assessment of the risks.

Only a royal commission will reveal whether ministers were informed that the automatic calculation was, at best, an indicator of a possible overpayment and whether a submission outlined the legal and other risks involved (both in the automatic processes - increasing the number of notices from 20,000 a year to 20,000 a week - and in the reversal of the onus of proof).

The massive stuff-up at the beginning was exacerbated by the failure to acknowledge the quickly growing evidence of serious problems following implementation in July 2016.

Media reports appeared in 2016 of former students contesting the accuracy of debts. Whiteford identified problems with the formula in an article in January 2017. Peter Hanks QC gave a lecture in July 2017 to the Australian Institute of Administrative Law criticising the Commonwealth's method of raising and recovering "debts".

Between April and September 2017, Administrative Appeals Tribunal member, Professor Terry Carney, made five judgments that there was no debt where Centrelink used averaging of annual incomes. Gordon Legal has revealed that there had in fact been 76 unfavourable AAT decisions that Centrelink did not appeal, avoiding Federal Court review and public disclosure. In May 2019 DHS dropped a disputed "debt" rather than let the Federal Court decide whether the procedures were lawful (Masterton case). In November 2019 the Federal Court decided that income averaging and penalty fines were unlawful (the Amato case): that case had continued despite DHS dropping the "debt" because DHS refused to pay interest.

Only as the Amato case was coming to judgment did the government concede.

Again, only a royal commission could identify who knew what as the program unfolded, who made the decisions about the AAT cases and with what advice.

What culture allowed all this to occur? Perhaps the processes of secretary and other appointments and terminations are a factor, shaping the behaviours of both secretaries and senior executives. Or maybe "frank and fearless" advising is a reflection of character, not tenure, as Peter Shergold has argued in the past. Maybe also the evident decline in policy advising capacity in social security is a factor.

Between 2014 when the proposal was first being developed and late 2019, a number of departmental secretaries have been involved. Those most closely involved were Kathryn Campbell in DHS until late 2017, then Renée Leon; and Finn Pratt in DSS until late 2017 then Kathryn Campbell.

Other bureaucrats who, given they led central agencies during the relevant period, could shed light on what they knew about the program include David Tune in Finance until June 2014, then Jane Halton until December 2016, then Rosemary Huxtable; Ian Watt in PM&C until November 2014, then Martin Parkinson until September 2019; Dr Parkinson in Treasury until December 2014 then John Fraser until July 2018, then Phil Gaetjens until September 2019.

It is perhaps noteworthy that, while Terry Carney's AAT appointment was not extended back in September 2017, none of the secretaries left involuntarily (other than Ms Leon who was among those affected by the restructuring in January 2020 and lavishly thanked by the PM for their service, and Dr Parkinson from Treasury in 2014).

Whether or not a royal commission is eventually established, I hope those most responsible for public service professionalism review the case and the lessons for the APS.

The APS Commission would need to do so confidentially but the Commissioner could identify some lessons in his State of the Service Report, including the behaviour he believes is required by the APS Values of "impartiality", "commitment to service" and "accountability". He might also like to indicate that, while appointments and terminations of secretaries are made by the Prime Minister, his particular role in providing advice is to focus on merit and in doing so to take explicit account of evidence of individuals' upholding and promoting (or otherwise) APS Values.

The Institute of Public Administration Australia has in recent years become too close to secretaries. It could demonstrate its professional independence by initiating its own study of the case, perhaps hosting a Chatham House Rule workshop and publishing the findings and lessons.

One likely lesson is the need to revisit the Thodey Review recommendations that were rejected by the government, particularly in regard to secretary and other senior appointments and terminations, and the role of the APS Commissioner.