Govt to pay back $721m wrongly raised through robodebt

Finally bites the bullet.

The federal government will refund $721 million extracted from welfare recipients under the guise of 'debts' that were created and collected under the reviled robodebt program that was subsequently found not to be legal.

In a statement on Friday, Government Services Minister Stuart Robert said “470,000 debts raised wholly or partially using income averaging of Australian Taxation Office data” would be repaid.

“Refunding of eligible debts will commence in July and will continue through the 2020-21 financial year,” he said.

“The total value of refunds including fees and charges is estimated at $721 million.”

Robodebt, officially known as the income compliance program, was introduced by the then Department of Human Services in 2016 to replace parts of a formally manual debt-raising process.

The system automatically matched earnings reported to Centrelink against employer-reported income data held by the ATO, with individuals asked to explain any discrepancies.

But last November, the government was forced to change the way debts are raised after a Federal Court ruling found the way so-called debts were raised failed the evidence test at the first hurdle.

A class action has also been brought against the government by Gordon Legal over the OCI program, with a potential trial slated for July.

More than 30,000 people are reported to have registered with the law firm and thousands more have been sent letters by Services Australia in recent weeks. 

Robert on Friday said “Services Australia will now put in place the mechanisms to start making refunds, including how affected customers are advised of next steps,” he said.

“Consultation will occur with stakeholders, including the Commonwealth Ombudsman, and clear communication is a priority, so people understand what it means for them.

“It is important to note all other income compliance debts will continue to be subject to recovery, ensuring the integrity of Australia’s welfare system.”

“Services Australia makes $180 billion in payments a year. Australians rightly expect the government to be resolute custodians of these taxpayer funds and to work diligently to prevent and recover overpayments,” the Government Services minister said.