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Australia Hundreds of thousands still stuck in robodebt limbo

05:52  30 june  2020
05:52  30 june  2020 Source:   9news.com.au

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In an embarrassing backflip, the government says it will be refunding the robodebts of 373,000 of those class action members. © AAP Image/David Mariuz In an embarrassing backflip, the government says it will be refunding the robodebts of 373,000 of those class action members. Law firm Gordon Legal has called on the government to pause the robodebts of all of its class action members, rather than just those Centrelink has identified as being eligible for a refund.

Last month, Centrelink sent a letter to 617,000 former welfare recipients who had been hit with a robodebt since 2015, notifying them they were able to take part in a massive lawsuit being brought against the government.

In an embarrassing backflip, the government says it will be refunding the robodebts of 373,000 of those class action members.

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The debts – which have been put on pause and are to be refunded from next month - are those which were calculated using an ATO income averaging system that was found to be unlawful.

However, the government insists that the remaining hundreds of thousands robodebts it issued under the scheme were lawful and correct, leaving many in limbo and waiting on the results of the Federal Court case - due to go to trial in September – to find out what will happen with their debt.

Nine.com.au understands that as well as those already in line for Centrelink refunds, there are two other broad groups of robodebt class action members.

Around 70,000 people were given a robodebt but ignored it completely and did not pay off any of it. Those members are seeking to have their debt quashed through the class action.

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The remaining 170,000 class action members have paid off all or some of their robodebt. Despite Centrelink claiming the debts are legitimate, Gordon Legal says it believes a substantial proportion of this group may also be eligible for refunds and compensation.

However, many of the 170,000 are still paying off their robodebt, because the government has not put it on pause.

One of those people is Dimity Rumley, from Adelaide, who was given a $4500 robodebt back in 2018.

Despite not believing the debt was accurate, Ms Rumley said she agreed to go on a repayment plan of $100 a fortnight back in 2018 after being threatened with debt collectors.

Ms Rumley told nine.com.au that she was relieved when she got a letter from Centrelink last month identifying her as part of the robodebt class action and expected her deductions from Centrelink to stop.

However, Ms Rumley said she was shocked to see that Centrelink was still taking money out of her account.

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"I'm so confused. Why is Centrelink still taking money to pay off the debt if it's a robodebt and I'm part of the class action?" she said.

Ms Rumley said that when she contacted Centrelink, she was told that she was not one of the 373,000 receiving a refund.

"He said that my debt was not averaged because I had uploaded a document but I can't remember uploading any documents," Ms Rumley said.

"I don't think it's right, I feel like something is off and I don't think what they are doing is fair," she said.

Ms Rumley said Centrelink had agreed to put her debt on pause after a request from her.

Services Australia General Manager Hank Jongen confirmed Centrelink had only paused debts which were calculated through income averaging. However, other debts could be paused on request as part of Centrelink's response to COVID-19, he said.

"When Services Australia identified a debt that relied solely or partially on income averaging, we also paused agency deductions for that debt," he said.

"Under the current national debt pause in response to the coronavirus pandemic, if a customer has an existing repayment arrangement with the agency for other debts, these will continue unless they contact us to amend or pause the arrangement."

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Gordon Legal lawyer Andrew Grech said his firm was still being contacted by people being chased for robodebt payments, including by debt collectors.

Mr Grech said the government needed at the very least to stop collecting money from all class action members until the case was decided by the courts.

"Given that they have already made very substantial admissions about the problems with the whole program, we think that the sensible thing to do would be to pause," Mr Grech said.

"Let the case be heard so that the court has the opportunity to decide what the rights of those affected are and to ensure that they are dealt with in a comprehensive way.

"At the moment all Commonwealth is doing is adding to the uncertainty faced by group members who through no fault of their own have been caught up in its unlawful robodebt scheme".

Mr Grech said Gordon Legal planned to make several claims in court on behalf of the group who had paid money to Centrelink but were currently being denied refunds.

"We think there is a substantial proportion of these people, who may still be entitled to refunds, interest and in some cases compensation for distress and inconvenience," he said.

The claims would be based on the fact that the debt was issued with a notice based on unlawful ATO averaging data, he said.

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Gordon Legal is currently considering adding further claims to its lawsuit, including exemplary damages and misfeasance in public office

Whether it adds these claims will depend on what may be revealed in government documents Gordon Legal is fighting to get hold of, relating to what the government, ministers and bureaucrats knew about the scheme's unlawfulness and when.

"Claims in exemplary damages are not made lightly as they are intended to punish a wrongdoer for their conduct," Mr Grech said.

"Many group members have told us that they are very concerned to ensure that a clear message is sent to the Commonwealth through the class action that they are entitled to expect their government to act within the law, at all times.

"Unfortunately, the Commonwealth's ongoing refusal to recognise their claims for interest and in cases where there is clear evidence of hardship, compensation for the distress caused, has only exacerbated their feeling that the Commonwealth has not learned from the errors it has made in the creation and implementation of the robodebt Scheme."

Mr Jongen said he was unable to comment on matters related to the court case.

Contact reporter Emily McPherson at emcpherson@nine.com.au.

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