Government to repay 470,000 unlawful robodebts in what might be Australia’s biggest-ever financial backdown


Terry Carney, University of Sydney

In a near-complete capitulation, the government will refund every alleged overpayment it has collected from welfare recipients under the discredited “robodebt” system of income averaging.

Unveiling the automated system in mid-2016 then treasurer Scott Morrison and social services minister Christian Porter promised more “accurate and appropriate income testing”.

They were going to work with the prime minister’s Digital Transformation Office to “cut red tape and ensure that mistakes are minimised”.

The man who headed Digital Transformation Office at the time later described what happened as “cataclysmic”.

Three quarters of a billion to be paid back

Almost half a million Australians received letters from Centrelink telling them they had been overpaid because the income their employer had reported to the Tax Office was more than the income they had reported to Centrelink.

Unless they explained why within 21 days, they would have an assessment made against them and be hit by a 10% recovery fee.

Many paid up, in part because the alleged overpayments went back six years or more, and the Centrelink website had only asked them to keep payslips for six months.

Hundreds of thousands of these assessments appear to have been wrong.

Rather than using the recipients’ actual income in the fortnights for which benefits had been paid, Centrelink calculated an average fortnightly income over a longer period which often included fortnights they were in paid employment and not receiving Centrelink benefits.

November backdown

In November 2019 a week before it was due to defend a test case brought by a 33-year-old local government worker, and after press reports that its own lawyers had told it such collections were unlawful, the government conceded all points and abandoned income averaging.

A court order declared that the debt notice was not validly issued because the decision-maker could not have been satisfied that the debt was owed.




Read more:
Robodebt failed its day in court, what now?


At the time the minister for government services Stuart Robert described the decision not to proceed with income averaging as “a refinement” that would affect a “small cohort”.

On Friday, ahead of the hearing of a larger class action, Mr Robert announced that the government would refund everything collected under the scheme, whether it was calculated using partial or whole income averaging.

The refunds will be paid to all 470,000 Australians who have had debts calculated using income averaging, whether they had paid up voluntarily or not.

Now the half a million repayments

Included in the refunds will be interest charged and collection fees charged, at an estimated total cost of A$721 million.

What the Government has not agreed to is damages for harm and suffering of supposed debtors, which were sought by the class action. Although liability for damages is more difficult to establish, the class action is unlikely to abandon the attempt to obtain compensation.

The harm suffered by many of those caught up by the Government’s illegal and immoral robodebt scheme is an injustice still to be rectified.




Read more:
Danger! Election 2016 delivered us Robodebt. Promises can have consequences


The Conversation


Terry Carney, Emeritus Professor of Law, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Christian Forced to Sell Kidney to Pay Debt to Boss in Pakistan


Employer charges non-Muslims at least 400 percent interest.

LAHORE, Pakistan, May 14 (CDN) — A low-wage Pakistani Christian said his Muslim employer last week forced him to sell his kidney in an effort to pay off a loan his boss made at exorbitant interest rates charged only to non-Muslims.

John Gill, a molding machine operator at Shah Plastic Manufacturers in the Youhanabad area of Lahore, said he took a loan of 150,000 rupees (US$1,766) – at 400 percent interest – from employer Ghulam Mustafa in 2007 in order to send his 17-year-old daughter to college. 

“I kept paying the installments every month from my salary, but after three years I got tired of paying the huge interest on the loan,” Gill told Compass.

The employer denied that he had received payment installments from his Christian worker, although Gill said he had receipts for monthly payments.

Mustafa confirmed that he took over Gill’s home last week after giving the Christian two weeks to pay off the outstanding interest on the loan. Then, on May 6, Mustafa came to Gill’s home with “about five armed men” and transported him to Ganga Ram hospital, where they forced him to sell his kidney against his will, the Christian said.

“They sold my kidney and said that they will come next month for the rest of the money,” Gill said.

The value of the kidney was estimated at around 200,000 rupees (US$2,380), leaving Gill with outstanding debt of about 250,000 rupees (US$2,976), he said. Recovering at home, Gill said he did not know he would repay the rest of the debt.

Mustafa told Compass that Gill owed him 400 percent interest on the loan.

“I only offer 50 percent interest to Muslim employees,” he said, adding that he refused to take less than 400 percent interest from any non-Muslim.

‘Kidney Bazaar’

There was no immediate confirmation from Ganga Ram hospital. Rights groups, however, have complained that hundreds of rich foreigners come to Pakistan every year to buy kidneys from live, impoverished donors.

Kidney failure is increasingly common in rich countries, often because of obesity or hypertension, but a growing shortage of transplant organs has fueled a black market that exploits needy donors such as Gill and risks undermining voluntary donation schemes, according to Pakistan’s Kidney Foundation.

Pakistani legislation aimed at curbing trafficking in human kidneys has not ended a business that has turned the country into the world’s “kidney bazaar,” critics say.

Gill said he is trying to contact local Christian advocacy groups to help him recover and overcome his financial and spiritual difficulties. Christians are a minority in heavily Islamic Pakistan, where rights groups have lamented discrimination against Christian workers.

Report from Compass Direct News