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The Robodebt Royal Commission is hearing damning evidence of public sector dysfunction

Christian Porter’s robodebt evidence offers rare glimpse into how politicians use talking points

The Robodebt Royal Commission is hearing damning evidence of public sector dysfunction. Now it must probe the question of culture

Laura Tingle 7.30’s chief political correspondent writes.

The commission was also shown minutes from a meeting between the DHS and PwC in March 2017, in which department officials suggested that “political criticism [of Robodebt] has lost steam” and the ombudsman’s report “will say aspects of the systems are good”, a month before it was released.

The commission heard that former senior DHS executive, Jason McNamara, told PwC that the government “only cares about the money” and “doesn’t care what they do with compliance to achieve it [budget savings]”.

“Other than the department doing something politically silly, they don’t care,” the minutes show Mr McNamara saying.

‘We’ve got advice that it’s not legal’

Former deputy secretary of social security at the Department of Social Services (DSS), Nathan Williamson, has also given evidence.

The inquiry has previously heard a DSS official requested external legal advice from law firm Clayton Utz on the scheme in 2018, which found the use of “income averaging” to raise welfare debts was unlawful, but it was left in draft form and never acted on.

The scheme continued until November 2019, accusing hundreds of thousands of welfare recipients of owing money to Centrelink.

Former branch manager at DSS, Allyson Essex, told the commission last week that she briefed her boss, Mr Williamson, on the advice in August 2018 and raised concerns, saying “I told him … we’ve gotten advice that it’s not legal”.

She told the commission, he replied: “It is legal, it’s really clear that it’s legal.”

Mr Williamson told Friday’s hearing he does not recall that conversation with Ms Essex or being briefed on the advice at the time.

“That sort of response does not sound like … the response I would give. That’s not my style,” he said.

He agreed with counsel assisting Angus Scott that “once the Clayton Utz advice was received, it was incumbent upon the department to indicate that it was no longer satisfied [that the scheme was lawful]”.

He said he was aware of several Administrative Appeals Tribunal (AAT) findings in 2017 that also ruled the scheme was unlawful.

“My own personal reflection is that more questions [about its legality] should have been asked, including by me,” he said.

The commission also heard from former DHS chief in-house lawyer, Maris Stipnieks, who said he never had a “high degree of confidence” about whether “income averaging” was lawful.

Taxpayer-funded review that found ‘flaws’ in Robodebt scheme was discontinued by Department of Human Services, royal commission told

A taxpayer-funded external review of the failed Robodebt scheme found “a lot of flaws” but a full report was never completed after the government said it was not required, a royal commission has heard.

Shane West, a partner at consulting giant PricewaterhouseCoopers (PwC), said in early 2017 then Department of Human Services (DHS) secretary Kathryn Campbell engaged the firm to review the Coalition-era budget-savings program that became known as Robodebt.

Around that time, the Commonwealth ombudsman was investigating the Centrelink debt recovery scheme after questions were raised about the legality of its central method, “income averaging”.

The PwC contract was worth almost $1 million.

Mr West told the hearing the firm “put considerable time” into developing a 70-page detailed draft report but mid-year, the DHS said it was no longer “required” and a “visual presentation” given to then-human services minister Alan Tudge would suffice.

He said he does not recall how PwC was informed the department no longer needed the report or any reasoning provided.

“We weren’t able to find any [texts] or email correspondence to that effect,” Mr West said.

After receiving that direction from the department, he said PwC ditched its investigation into the scheme entirely.

 

Counsel assisting Justin Greggery KC said: “Surely, you must, as the lead on the project, have gone back to Kathryn Campbell and said: ‘You’ve paid for the report, we’ve done the work, why don’t you want it?'”“No, we didn’t,” Mr West said.Commissioner Catherine Holmes asked: “You didn’t do anything to confirm with them [the department] that it did not need to be delivered, you just waited for them to pay the bill and took that as confirmation?”“No … my assumption, but I can’t recall … is there must have been a conversation between the department and us,” he said.“It seems a very laissez-faire approach to carrying out a contract. Does PwC usually just rely on a word that’s not documented anywhere?” Commissioner Holmes asked.Mr West replied: “I can’t speak for the firm at large, but…”“Do you?” she asked.“Sometimes,” Mr West said.Commissioner Holmes said: “One possible view is that there’s been a … nod and a wink, a ‘don’t give us it, thanks’ [from DHS] somewhere along the line, Mr West, you can see how a cynic might wonder about that?”Mr West said: “I can, yes … but I cannot recall ever being provided such a nod and a wink.”

Commissioner Holmes said it was “really remarkable” and “challenges credulity” that nobody in the DHS ever “got wind of the existence” of the report, and, that PwC abandoned it “without any documentation” of how it happened.

“That’s my recollection,” Mr West said.
Review found ‘room for improvement’

The inquiry was shown an interim summary of the audit and Mr West agreed with Mr Greggery that PwC’s assessment of the scheme was “a very poor report card” for the department.

“It was woeful, wasn’t it?” Mr Greggery asked.

“I think our view was that there were things [in the scheme] that should have been considered but weren’t,” Mr West said.

“[We found] room for improvement.”

Mr West later conceded PwC’s review found the system had “a lot of flaws” and there was “clear evidence … savings weren’t going to be achieved”.

Politicians relied heavily on robodebt talking points that turned out to be untrue, it has been revealed.

In mid-November last year, the former head of the Department of Human Services, Kathryn Campbell, was asked by senior counsel assisting the Royal Commission into the so-called Robodebt scheme if she would describe the system, implemented under her watch, as “a massive failure of public administration”.

“I consider it was a failure of public administration on a significant scale,” Ms Campbell said.

“Can you think of a bigger one?” she was asked by Justin Greggery.

“I have been involved with other significant failures and there have been other significant failures, but I don’t think that it’s useful to talk about those,” she said.

The difference between a “massive” failure and one on a “significant scale” is not entirely clear, though further evidence to the commission in the last couple of weeks about this absolutely disgraceful implementation of public policy — in our collective names — might lead most people to use “massive” as a description, rather than just “on a significant scale”.

Campbell’s suggestion that she’s been involved in “other significant failures” is also not exactly reassuring.

For her efforts in the Human Services portfolio, she was promoted by the Morrison Government first to run the Department of Social Services and then to the Department of Foreign Affairs and Trade.

While subsequently removed from that job with the change of government, she was given a new role in defence as a “roving adviser” on the AUKUS deal, retaining her salary package of nearly $900,000 a year.

The only minister to emerge with credibility

This royal commission has something for everyone who has railed about the way public administration has deteriorated in Australia in recent decades.

There’s been a lot of focus this week on the actions of individual ministers in the former Coalition government in relation to Robodebt, with the appearance in the witness box of both former Human Services Minister Alan Tudge, and former Social Services Minister Christian Porter.

And it is striking how quite a few of the names you have heard attached to various debacles and embarrassing moments in the former Coalition government are embroiled at the centre of this scandal: Scott Morrison, Tudge, Porter and Stuart Robert.

At this point, the only one of those to emerge with any real credibility is Porter, simply because this week he actually accepted responsibility for his part in the failed scheme and regretted he had not pushed harder with questions about its legality (and at least there is a record that he asked about its legality).

By contrast, the minister who oversaw the ramping up of the system of data-matching tax and social security records to an industrial scale, Alan Tudge, revealed a staggering lack of familiarity with the idea of ministerial responsibility in the witness box this week.

“Do you understand the concept of ministerial responsibility?” Justin Greggery asked him.

“I accept and understand deeply the Westminster concept of ministerial responsibility,” Tudge replied.

But he said he did not accept responsibility for the choices of individuals in his department to not raise a matter.

“I was responsible for the implementation of the scheme,” he added.

“Surely that means the lawful implementation of the scheme,” Greggery replied.

But apparently not. Tudge argued that he had no reason to doubt the legality of the scheme since it had gone through Cabinet. But he seemed remarkably incurious even when the media started to be flooded with questions about the scheme.

‘No one wanted to give her bad news’

While the minister was presuming his department would raise matters, lawyers in the Department of Social Services had already told the commission that in 2018 they “feared” giving their then boss, Kathryn Campbell, news she would not have liked of legal advice about the unlawfulness of the scheme.

“After she came to the department … there came to be a culture even at the higher levels of reticence or fear to raise issues,” one officer told the royal commission. “Colloquially there was a commentary no one wanted to give her bad news.”

Whatever the failings of ministers, the royal commission has revealed the most staggering and blatant picture of how the public service has been debased over the past 30 or 40 years into an institution driven by a “can do” culture determined to deliver to the demands of government, even to the point where it is delivering things that aren’t actually legal.

What’s more, it has revealed departments engaging in an industrial-scale cover up of unlawful revenue raising, including a deliberate policy of not challenging adverse tribunal rulings in order to keep the Robodebt scheme out of courts where its legality might be challenged.

It is a culture where in a massive government department, a secretary and deputy secretary can insist on a process in which any statement released by the department has to be signed off at the most senior levels, yet can attend a conference where a speaker asserts that a multi-billion dollar program they are running is unlawful, and don’t bother to chase up the details.

It is a culture where government departments run huge media divisions which work hand in glove with ministers’ offices to deliver false information and “counter narratives” about government programs.

The government’s media management of the story

The dysfunction in the public sector was assisted by the use of external consultants generating separate streams of advice for senior bureaucrats – at considerable taxpayer expense, and often keeping other senior officials in the dark.

There was damning evidence from executives from PricewaterhouseCoopers on Friday about the firm’s role in reviewing Robodebt but, like so much evidence already heard, apparently not necessarily delivering the advice that people might not want to hear.

Royal Commissioner Catherine Holmes said the evidence of one PwC partner “challenges credulity”, and that a “nod and a wink” may have been given to bury the firm’s report that had been commissioned by Tudge, on a contract worth almost $1 million.

Topping off all this, however, was the evidence of Tudge’s then media adviser Rachelle Miller about the government’s media management of this story.

It was Miller’s positively clinical retelling of how she ran a strategy to run down the credibility of people who had come forward, and to use the story to try to deliver a “political hit” on Labor as being soft on welfare fraud.

She reflected how the then government divided its view of the media between “left wing” and “right wing/more friendly” media in a way that is something to behold.

She recounted how the government dismissed the growing avalanche of stories of people receiving extraordinary assessments of what they owed — often tens of thousands of dollars — because they were being run in the “left-wing” media.

Tudge had “requested the file of every single person who appeared in the media … you could see the exact transactions that they’d had with Centrelink” and recounted how the government then released personal information of Robodebt “case studies” to “more friendly” tabloid media — information which Tudge personally oversaw — to deter more people from speaking out, a strategy Commissioner Holmes has described as designed to “intimidate people who complained about Robodebt”.

Like the bureaucracy, it seemed Tudge and his office spent a huge investment of time studying what the media was saying, and trying to control what information it received.

ut apparently it never had the time or even the curiosity to actually ask whether there might be a legitimate problem.

The government involved in this dreadful episode may be gone. How you change the bureaucratic culture that allowed it to happen must be one of the biggest questions arising from the royal commission.

Laura Tingle is 7.30’s chief political correspondent.

This article was originally published in ABC News

Personal information of Robodebt victims was released to journalists in an effort to deter them from speaking out, a former media adviser to ex-human services minister Alan Tudge has told a royal commission.

Rachelle Miller was Mr Tudge’s senior media adviser while he was in charge of the illegal debt recovery program as the human services minister in the Turnbull government from 2016 to 2017.

She handled media inquiries when concerns over the scheme’s central method, income averaging, were first raised in the media in late 2016.

The Coalition government repeatedly defended the program, which continued to operate until 2019, falsely accusing hundreds of thousands of welfare recipients of owing money to Centrelink.

Ms Miller said there was a “proliferation” of negative media coverage in late 2016 that was “growing and growing and growing” but it was “predominantly in the left-wing media”.

“We weren’t too concerned because it wasn’t unusual that the left-wing media were attacking us regarding social policy,” she said.

Ms Miller told the commission in response to growing criticism, the government adopted a counter-narrative strategy in the “more friendly media” such as the tabloids.

Counsel assisting Justin Greggery KC asked Ms Miller: “You said the media demand was very high … the media was generally adverse … it was heavily critical. Would you say that… the media situation was in crisis mode?”

“Yes, but I didn’t think it was not able to be shut down,” she replied.

“The prime minister [Malcom Turnbull] was unhappy with the escalating media issue around this [Robodebt] … we were trying to contain it,” she said.

“I developed a crisis media strategy at the request of the minister – he was very firm with me that I needed to shut this story down.

“That involved … placing stories with the more friendly media, the right-wing media, about how the Coalition was actually catching people who were cheating the welfare system.”

She said she received feedback from the then prime minister’s office that the narrative of “cracking down on welfare cheats” was playing well in marginal “key” seats, like Western Sydney.

“But we had a continued crisis in the left-wing media that wasn’t seeming to die down,” she said.

Personal details released to media

Ms Miller said the government released personal information of Robodebt “case studies” to the media to deter more people from speaking out.

“The minister requested the file of every single person who appeared in the media … you could see the exact transactions that they’d had with Centrelink.

“This would send a clear message … that maybe consider it [going to the media] twice.

“There were less people speaking out in the media which was our intention.”

The commission heard Ms Miller’s crisis strategy also included tracking down debts from when Labor was in office that were “not detected because they did not take the integrity of the welfare system seriously”.

“The minister was really, really very forceful about obtaining these case studies. He was very adamant with me that I needed to hunt as many case studies as I could,” Ms Miller said.

“That was to throw back to Labor that: ‘You would let these guys go’.”

Last year, Ms Miller received a $650,000 settlement from the Commonwealth after she alleged abuse by Mr Tudge during her employment under him and former government minister Michaelia Cash.

‘That’s exactly how the system is supposed to be working’

Ms Miller also told the commission a young staffer in then-minister Darren Chester’s office approached her for help after receiving a Robodebt notice from her days as a student.

“That alarmed me a little bit because I thought if a ministerial adviser has only been able to work out her debt from having kept very accurate records, I did start to wonder how the bulk of people who received welfare payments were going to manage that.”

Ms Miller referred the staffer’s matter onto Mr Tudge’s office and her debt was wiped once she provided pay-slip information.

She said she raised the matter with Mr Tudge and his response was: “That’s exactly how the system is supposed to be working.”

Ms Miller said there was a “distinct lack of empathy” from the government to “a person who was receiving a Centrelink notice”.

“It didn’t happen because that was the culture of the place,” she said.

“You would think that working in human services, social services, that the first person you think about is the recipient but that was not the case throughout the Coalition government.”

She said she reached out to the royal commission to make a submission.

“We must ensure we learn from this significant failure of public policy,” she said in her written statement.

‘It’s a disgrace’

Former acting national manager of customer and media engagement at the Department of Human Services (DHS), Bevan Hannan, gave evidence late Tuesday afternoon.

He said he became “quite upset” watching earlier public hearings because “it became apparent that people [at the department] knew that aspects of the Robodebt scheme were unlawful”.

“There was an opportunity in January 2017 to put a stop to it,” Mr Hannan said.

“It was a time for the department to put the cards on the table and that didn’t happen.

“As a public servant, I’m livid that there was an opportunity … to say there was a problem and it wasn’t said. It’s a disgrace.”

This article originally published by ABC News

The ombudsman came back again, revealing its hand, and requested all notes, memos and documents relating to the policy and legal advice provided by DSS, all the way back to 2014. Faced with this, officials came up with an emergency strategy that was to cut the 2014 advice away from its context – the question that lawyers were asked to answer about whether income averaging could be used – and to send the 2017 advice for a second time in a desperate bid to obscure the true impact of that early opinion.

It worked – and it is now a matter of public record that the ombudsman made somewhat minor recommendations but ultimately found the online compliance intervention was operating within the bounds of legislation. This was never true.

“So DSS hung its hat on the 2017 legal advice which was obtained after the ombudsman had begun its investigation,” Greggery said while addressing Hurman’s boss, Russell de Burgh, this week.

“The inference to be drawn from that is that it needed to justify the legality of the scheme to the ombudsman.”

De Burgh conceded this point. “Yeah, I mean, part of this is the premise that the 2017 legal advice was asked for because of the ombudsman question,” he said.

Greggery had sprung his trap.

“And I suggest to you that it was commonly understood between yourself, Mr Hurman, Cath Halbert and Serena Wilson that there was a need to justify the legality to the ombudsman,” he said.

Yes, de Burgh agreed.

“And that every step along the way,” Greggery said, “was done with that purpose in mind.”

The reality of the mendacity exposed by the commission this week is shown in the testimony of victims such as Rosemary Gay and Ricky Aik, who gave evidence on Monday.

Gay, a pensioner who could work only two days a week due to physical health problems, was tormented with a completely fictitious debt of $64,000.

A retired single mother in her 70s, who budgeted meticulously and was a professional record-keeper and legal clerk throughout her career, Gay worried she would lose everything.

“Everybody needs to understand how many thousands of people were affected so badly by a system that was put in by a government department who you have full trust in that they are doing things correctly, when obviously they are not,” she said.

“And it will continue to remain with me forever. It’s just something I will never get over, and it has had a huge impact on my physical and mental wellbeing.”

Aik, a member of the working underclass who lived alone in remote Victoria, was told the only way he could get the debt collectors off his back was to have 50 pages of bank statements printed, at $2 each, a cost he simply could not afford.

His work suffered. As the debt was pursued further, he thought about self-harm.

While people like Gay and Aik were being hunted, the scheme was beginning to unravel internally. Efforts by many public servants – and ministers who were either ignorant or who simply did not care – kept the conceit alive for another two years.

The key players – Alan Tudge, Christian Porter and former DHS chief counsel Annette Musolino – will give evidence next week.

Evidence heard during one of the most incendiary weeks at the robo-debt royal commission has revealed the extraordinary lengths two federal government departments went to in order to cover up a multibillion-dollar crime that spanned years.

By early 2017, two years after the Centrelink debt fabrication scheme had begun, there were two external agencies with prying eyes threatening to expose the legal fiction on which the entire program rested.

The Commonwealth Ombudsman was investigating, and damning decisions were also coming back in greater numbers from the Administrative Appeals Tribunal.

Both the Department of Social Services and the Department of Human Services adopted a “pattern of behaviour” that would deliberately mislead the ombudsman, ignore directions from the AAT and conspire to keep the government’s dodgy decisions in-house by refusing to ever challenge them past a first-round loss with the tribunal.

It was this latter strategy – according to Emeritus Professor Terry Carney, who sat on the AAT and a predecessor tribunal for decades until the former Coalition government suddenly ended his tenure in 2017 – that was the main reason robo-debt was “able to operate for so long and at such costs to applicants”.

His evidence and the other evidence given this week is the clearest account yet of the extraordinary efforts the government and its departments went to in the name of continuing a scheme that they knew was unlawful and was raising fake debts. Tens of thousands more people were dragged into the mess while this was known.

“Had there been a public ventilation of what the AAT was ruling, there wouldn’t have been an instant change to, or abandonment of, the scheme,” Carney told the hearing on Tuesday.

“But it would have been a lot quicker than the three or more years that nearly half a million people had to suffer the raising of unlawful debts against them.”

The fact the Commonwealth never appealed against a single decision was “unprecedented”, Carney said. This was even more startling a strategy when it became clear lawyers and appeal branch managers in the Department of Human Services (DHS) knew what was going on and did nothing to change course.

Under Commonwealth model litigant obligations and separate responsibilities enshrined in social security law, the federal government is required to have “due regard” to AAT decisions and should act to contest them where it involves a significant matter of law or policy or where different decisions create “inconsistencies” in the application of policy.

Former DHS appeals branch manager Elizabeth Bundy, a qualified lawyer, told the Royal Commission into the Robodebt Scheme on Tuesday that she probably didn’t read one of Professor Carney’s adverse tribunal decisions that was explicitly sent to her for monitoring “because it was very long and legalistic”.

Emails between Bundy and a lawyer in her team, Damien Brazel, sent in late March 2017, show they understood the significance of the Carney decision because it involved the use of income averaging from the “manual” pilot stage of robo-debt, a domain they say they believed was not an issue.

“We need to escalate this ASAP,” Bundy wrote to Brazel on March 24, suggesting they should inform DHS deputy secretary Malisa Golightly.

The following day, a Saturday, at 8.35pm, Darren Zogopoulos, a manager in DHS, emailed about a “third set aside … decision”  with a note of alarm.

“This one is very interesting,” he wrote. “I would be concerned of [sic] legal services didn’t contest this. If they don’t, it will open up Pandora’s Box.”

Not only did they not contest this or any other decision, however, but DHS lawyers met some of the decisions with institutional arrogance.

On May 30, 2017, Aaron Baril from DHS forwarded a query from an authorised review officer, Karen Keary, who was given the job of implementing an AAT decision with directions to recalculate a debt to his division’s legal team.

“Apparently, Ms Keary has been unable to obtain income verification from one of the applicant’s employers such as to substantiate the debt in the manner contemplated by the Tribunal,” he wrote.

“Is there a process we follow in these instances? On the face of the Tribunal decision, it appears to me that, if we cannot base the debt on salary records, the debts are not recoverable.

“Would we then write off the debt? I note that the debt amount is $7452.76.”

DHS principal government lawyer Brian Sparkes was dismissive of the tribunal in response.

“It is not the case that we cannot raise a debt on the basis of the ATO advised income regardless what the AAT1 said in this instance but we do need to explore all avenues and to use our information gathering powers before we do so,” he wrote.

“The AAT2 has expressed this view in the past and indeed the AAT1 has, where it has sensibly considered the law.”

Brazel, the former acting general counsel in DHS’s litigation division, was questioned about this email exchange while on the stand on Wednesday.

“In your time in the Department of Human Services, did you ever encounter a situation where the DHS gave explicit advice recommending actions contrary to a direction from the AAT?” Angus Scott, KC, asked.

Brazel said he could not recall such a situation and that this was the first time he had ever seen it happen. The debt was recalculated against the direction of the tribunal.

“Would you agree with me,” Scott asked, “that it’s plainly contrary to the obligations of the Commonwealth as a model litigant to continue with the process which an administrative tribunal has concluded is unlawful, without any appeal by the Commonwealth against that decision, in circumstances where its own internal advice concludes that decision involved no error of law?”

As with many of this week’s witnesses, Brazel tiptoed carefully around the inference. “I’m not sure I agree with that proposition entirely,” he said, “but I can see why you’re suggesting that.”

 

What has emerged from the third robo-debt hearing block might seem complex and at times incremental, but it builds spectacularly on the half-answered questions supplied during sessions held late last year. The picture it provides is horrifying.

On Wednesday, as successive DHS and Department of Social Services (DSS) witnesses took the stand in the most revealing day so far, the squeeze from the senior counsels assisting – Justin Greggery, KC, and Angus Scott – finally began producing names of people who made critical decisions.

One of these crucial decisions led to a months-long mission to “conceal information” from the Commonwealth Ombudsman. This mission began the moment officials learnt the ombudsman was investigating the online compliance intervention, which was the first iteration of robo-debt.

It is helpful to go through this time line in detail.

The sequence of events begins around January 11, 2017, when DSS officials – including former director of payment integrity and debt strategy Robert Hurman – became aware of the ombudsman’s investigation.

From this date, the fuse of bureaucratic panic was lit.

Within hours, Hurman had been sent the only written advice his department had ever sought about the legality of the scheme: the 2014 advice written by Simon Jordan and second-counselled by senior lawyer Anne Pulford, which was unequivocal in its statement that the fundamental basis of robo-debt was illegal.

What to do?

Greggery laid out the department’s blueprint for deception.

“I suggest to you there was a common understanding within DSS – from the time the ombudsman’s investigation was received – to go on the front foot and defend the scheme as being both lawful and accurate in raising debts,” he said to Hurman.

“There was a pattern of behaviour from the start by people within DSS, of which you were a part, and it was designed to establish the lawfulness of the scheme in the representations that it made to the ombudsman, irrespective of the true position.”

Hurman responded that they “were trying to show it in a positive light”, a description that rankled the senior counsel.

“Yes,” Greggery said, “but it’s a bit hard to put a positive light on something that you understood was being conducted unlawfully according to the advice that had been given in 2014.”

Hurman and colleagues commissioned a new set of legal advice from Pulford, the same lawyer who co-authored the 2014 advice, only this time the answer to ostensibly the same proposition was that income averaging could be used to raise a debt.

This “2017 advice” wasn’t delivered until later in January. Six days before it arrived, on January 18, DSS officials attended a walkthrough with DHS leadership about the robo-debt scheme. About the same time then ministers Alan Tudge and Christian Porter were making public statements asserting the lawfulness of the program.

Although Hurman was on leave for this January 18 walkthrough, he authored an email that stated DSS staff were “comfortable that the current process is lawful and clear”.

Greggery asked how this could have been so. The walkthrough happened after the 2014 advice had been recirculated, noting the scheme was unlawful, and before the new Pulford advice had been received.

“So how could you be satisfied, or how could you represent that senior department staff were comfortable that the current process was both lawful and clear,” Greggery pressed, “in circumstances where you had been given contrary advice?”

Initially, Hurman had believed the original advice should be withheld. After a tense back and forth between the policy and legal teams, a decision was made to send both to the ombudsman.

However, on February 23, Greggery said, Hurman learnt that only the 2017 advice had gone to the ombudsman. The legal opinion acknowledging the scheme was likely unlawful was not sent. Former branch manager Russell de Burgh, Hurman’s boss, accepts that the 2017 advice was the only document the department ever had that could be construed as suggesting the scheme was even remotely lawful.

Hurman told the commission that the initial effort to hide the first round of legal advice from the ombudsman came because “someone in DSS had changed the draft” email he had written. For the first time in these hearings, he gave a name: DSS deputy secretary Serena Wilson.

This was a significant moment in the royal commission. What Wilson didn’t know then was that the Department of Human Services had been a little too overeager with the ombudsman, handing over the original ministerial brief that was prepared for Scott Morrison and was subject to cabinet-in-confidence.

It did not have to do this, but in providing the document, DHS inadvertently tipped off the ombudsman about the existence of other written advice and legal input regarding robo-debt.

 

This article was first published in the print edition of The Saturday Paper on January 28, 2023 as “‘Pandora’s box’: Real conspiracy behind robo-debt”.

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Rick Morton writes in The Saturday Paper

Early on the morning of February 18, 2017, staff of then Human Services minister Alan Tudge saw the front page of The Saturday Paper, dedicated to a story about the death of Rhys Cauzzo, who killed himself after being hounded by Centrelink debt collectors. They immediately went on the offensive.

“It is one of the most disgraceful pieces of reporting I’ve ever seen and, unfortunately, The Saturday Paper has left me with this impression before,” senior media adviser Rachelle Miller wrote at 7.33am, in an email tagged “FW: URGENT: HEAD’S UP”.

She noted that he “owed a debt” and “did not declare an entire employer”. There was no mention of his treatment by debt collectors or his suicide. Miller signed off, “Nice start to the weekend!”

Within hours Tudge and his staff had sought legal advice from the Department of Human Services’ chief counsel, Annette Musolino, clearing the way to use a loophole in the social security law to release Cauzzo’s personal Centrelink record.

The full machinery of government was then set towards smearing the reputation of the 28-year-old florist and musician. “Response looks fine from a legal perspective in that we are disclosing [protected information] for the purposes of the social security law,” Musolino wrote in the advice.

“To correct record to ensure public confidence in the integrity of system.”

This was not the first time Tudge had authorised the release of the otherwise protected personal information of welfare recipients. He had done so on at least six occasions since January 25, part of a desperate bid to turn the tide on negative robo-debt stories.

Four days later, the minister would again release information. This time, it was in response to an opinion piece published in the then Fairfax papers under the full name of the author. Tudge’s office disclosed her Centrelink information to another journalist who wrote an article in response, pushing the government’s line.

In the stand at the Royal Commission into the Robodebt Scheme, Tudge became uncomfortable as these actions were detailed. He asked whether the inquiry had the power to examine this specific case, because it did not involve the so-called robo-debt scheme.

“Well, we’re talking about – possibly, on some evidence we’ve heard – a strategy to intimidate people who might have complained about robo-debt,” Commissioner Catherine Holmes said.

Tudge was curt: “I don’t agree with that, commissioner.”

He continued: “There was a lot of misinformation … and certainly I was keen to correct some of that. To point out that, well, someone is claiming that they were being hard done by by this so-called, the automated debt recovery system, when, in fact, they weren’t.”

According to Miller – who was awarded a no-liability $650,000 payout from the Commonwealth for bullying and harassment she alleges happened while she worked for Tudge and Senator Michaelia Cash – she and others in the office thought the people being quoted in the media were “whingers”, dole-bludgers or, worse, committing fraud.

This was an ongoing theme in Tudge’s communications strategy. During an interview with A Current Affair in December 2016 he now infamously said that if a person is doing the wrong thing “we’ll find you, we’ll track you down and you will have to repay those debts and you may end up in prison”.

In a testimony littered with the phrases “can’t recall” and “I don’t know”, Tudge was adamant that he remembered the precise question put to him by the journalist for ACA and that it, he claims, was pointedly about welfare fraud.

But Tudge had briefing notes that explained, in a clear table, that welfare fraud accounted for just 0.1 per cent of all transactions in the system he oversaw. Its role in his media commentary was vastly disproportionate.

“I’d suggest it to you that it was an easy fix, that you could put out something very clear … because you had knowledge of actual fraud cases, and it was minuscule,” senior counsel assisting the royal commission Justin Greggery, KC, said on Wednesday.

“That is, you could go further: you could actually say in your interviews that fraud represents 0.1 per cent.

“I’m suggesting that the reason you didn’t do it was the overlay of fraud made it more likely that people would engage with the [robo-debt] system and repay the money. There was a particular strategy.”

Tudge was dismissive. “I disagree,” he said.

An ugly “strategy” of demonising welfare recipients extended to almost all elements of the official response to the developing media storm.

In the Rhys Cauzzo matter, in the week following publication of The Saturday Paper story in February 2017, the minister’s office debated the merits of releasing a dead man’s personal information in order to strike back at what they perceived to be unfair coverage.

Tudge’s chief-of-staff, Andrew Asten, appeared to draw a line in the sand.

“I would advise against going through these details in public because I think it is a bad look to be discussing the wrongdoing of a person who committed suicide.”

He was overruled, presumably by Tudge himself, who micromanaged every aspect of his office’s media strategy, down to dictating the formatting of documents. Journalists were duly briefed about the “facts” as the government saw them.

What is particularly telling about this specific episode – one in a catalogue of grotesque and deliberate acts designed to save robo-debt from “unethical” journalists, as Miller described them, and their good-for-nothing welfare complainants – is that Tudge ordered an investigation into the department’s handling of Cauzzo’s matter, but only to make them look good.

A month after briefing journalists with Cauzzo’s protected Centrelink record, a departmental liaison officer working in Tudge’s office emailed her colleagues in the DHS with a “specific request” from the minister. The department and minister’s office had been drafting a letter to send to Rhys Cauzzo’s mother, Jennifer Miller.

“The Minister has a specific request to open an investigation into Rhys’ circumstances,” the officer wrote on March 31, 2017. “He would like a brief on the investigation. The intent is to be able to update the letter to include a line similar to [redacted] letter, stating that he has investigated the matter and is confident the Department has done everything correctly (etc).”

Within days, Tudge got the pre-determined outcome he was looking for: a ministerial brief from his department that noted “all interactions were appropriate and undertaken within the parameters of departmental processes”.

What Tudge didn’t do, however, was investigate the use of income averaging in the creation of debts attributed to Rhys Cauzzo. Part of the fury about The Saturday Paper story at the time was that it was “not a robo-debt case” – even though this newspaper did not suggest that it was. The royal commission heard on Wednesday that Cauzzo’s matter was part of the manual PAYG intervention, which still included the use of income averaging and is now considered to be the very first iteration of the illegal robo-debt scheme.

Greggery said that this matter was “the first point in time when the potential adverse consequences have gone beyond a matter of mere finance”.

Addressing Tudge, he said: “Did you ask for an investigation into whether the role of averaging led to the death of Mr Cauzzo, a factor relevant to the suicide?”

Tudge said what had been written in the piece “concerned him” and he “did want to … directly understand what had occurred”.

Tudge’s inquiry deliberately avoided the two key criticisms of the debt recovery system, aired at length by this time in early 2017 and now accepted by Tudge. They were that debts being raised under the system were inaccurate and that Centrelink recipients were being swamped by the sudden reversal of the onus of proof.

Now, people were killing themselves.

The conflagration had ruined Tudge’s summer. There were many of these negative stories, beginning in December 2016, before Tudge went to Britain on a family holiday. Over Christmas, however, the situation was so obviously bad that then prime minister Malcolm Turnbull demanded Tudge cut short his holiday and return to deal with the crisis.

In the royal commission this week, the former minister made a point of mentioning this holiday over and over again. It was a significant moment in a significant career because it was a media disaster and Tudge was a media performer.

Miller had described her then boss as a “media tart” so obsessed with making a name for himself that he, a junior minister, sometimes did even more media appearances than his senior minister, Christian Porter, who held the Social Services portfolio at the time.

Turnbull had forwarded to Tudge an article by the Fairfax economics editor Peter Martin, a former Treasury official and economist, in which Martin confidently – and presciently – declared the raising of Centrelink debts by use of income averaging could not be legal.

Tudge flew back to Melbourne on January 9, 2017. From there he went immediately to Canberra, where “every second or third day” he held meetings in his parliamentary office, in committee meeting rooms or in the Department of Human Services, with the most senior leaders.

“When I came back I very quickly had confirmed for me that this was a program that had been through the cabinet process,” he told the commission. “They are a rigorous process that always have a legal overlay through it so Social Services lawyers would have to have formed a view that it was lawful.”

Later, Tudge claimed it was “unfathomable” to him that a secretary of his department would ever continue with a scheme that he or she knew to be illegal. That said, he didn’t expect them to bring their concerns to him, if there were any, without first “resolving” them within the department.

And so his self-described “laser-like” focus on fixing the scheme never went to the issue of lawfulness in this period. It apparently never went there at all during his time as minister.

“I did not know the full context about the legalities,” he said. “It just had not crossed my mind until the [2019 federal] court case.”

One of the “hurdles”, as Justin Greggery described it, was that Tudge knew how important these welfare compliance schemes were for the Coalition government because he had unwittingly, or otherwise, helped further them in the July 2016 election.

Tudge was sworn into the ministry in February that year and told the royal commission that the then Finance minister, Mathias Cormann, had asked him if there was anything more they could get out of welfare compliance – that is, he was asked by one of the most senior members of the government if there were budget savings that could be made from welfare recipients.

After this conversation, Tudge spoke with his department’s secretary, Kathryn Campbell, to pass on this request. Her department dutifully sent a raft of so-called “new policy proposals”, or NPPs, with attendant savings figures that could be pursued.

The April 28 brief noted there were “five NPPs that will increase compliance and debt activity and deliver significant savings commencing July 2016”.

That year was an election year. Tudge agreed that, once announced, there would be added political pressure making it more difficult to walk-back any money-saving measures if they were later deemed too hard to implement. He noted Cormann would “have absolutely been aware” of the figures.

Tudge’s office had sent an email to then treasurer Scott Morrison or Cormann, or both, with the new policy proposals attached “for the purpose of announcing during the election campaign, literally a few days before the election”.

According to estimates shared with the commission, robo-debt was expected to add $1.2 billion to the 2016-17 bottom line. If the debts were raised under the older, manual, lawful system, that number dropped to $150 million.

One post-election measure was to extend the robo-debt scheme by two years. By early December 2016, Tudge had been given a brief from his department responding to questions about the fiscal savings robo-debt programs were expected to produce for the budget over the forward estimates.

That figure was $4 billion. Tudge was quick in instructing his staff to drop this story with the “friendly” newspaper The Australian, where it ran on page one on December 5, 2016, with the headline: “Welfare debt squad hunts for $4bn.”

The interview with A Current Affair followed on December 6, but, according to the national media manager for the Department of Human Services, Bevan Hannan, Tudge was so “bullish” in his approach that it put a big target on their backs.

“It conflated welfare fraud with compliance activities,” Hannan told the inquiry on Tuesday.

“The rest of the story had nothing to do with putting people in jail, but that – that grab seemed to galvanise everyone.

“And so suddenly instead of being a story which would explain what we are doing, it put a big target on things, and the program and the minister became the hunted.”

Having amplified a problem that was always coming down the pike, the online compliance intervention hit full speed in September 2016. When problems began being reported in the press, Tudge fought back with the only weapon he had bothered to sharpen in his political career: a dependent and obsequious relationship with the right-wing media.

In January, on his instruction, the Department of Human Services put together a dossier of all of the people with debts who had complained in the media. This information contained their protected Centrelink information, albeit anonymised, and special legal sign-off from DHS chief counsel Annette Musolino. It was sent to The Australian’s political editor, Simon Benson. He ran the story as the front-page splash in the next day’s edition: “Debt scare backfires on Labor.”

This tactic of tying a neat bow around a story and handing it to a favoured journalist, Greggery said to Rachelle Miller, was to ensure the story was written “or at least presented in a way that the minister liked”.

She agreed. “And Simon Benson,” she said, “was very good at doing that.”

This preoccupation with establishing a “counternarrative”, as Miller described it, may have clouded the minister’s judgement. But there were at least three concurrent and damning threads running as Tudge faced the royal commission this week. Many of them involved the at times clandestine behaviour of his own department.

One prominent figure in this is DHS chief counsel Annette Musolino, who herself spent nearly one-and-a-half days in the royal commission witness box this week.

During Musolino’s own leave over the new year break in 2017, lawyers within her team at the Department of Human Services drew up draft instructions to seek advice from the Australian government solicitor that could have settled once and for all whether robo-debt was legal.

The instructions were never sent.

Although “very experienced” deputy general counsel John Barnett had emailed the draft to other senior colleagues Mark Gladman and Matthew Daly on January 10, Musolino says she was never told about this manoeuvre and never mentioned the instructions in her statement to the royal commission.

“They didn’t come to light in searches I had undertaken to prepare my statement,” she told the inquiry on Monday.

“I was on leave. And I haven’t seen them – to my knowledge. To the best of my knowledge, I have never seen those before.”

It is worth noting that these instructions were drawn up within a day of Alan Tudge arriving back in the country from his aborted overseas holiday to deal with the unfolding catastrophe.

Did he know anything about them?

“I’m asking you,” Greggery said on Thursday, “whether you can explain why, if you didn’t turn your mind to legality in the first couple of days when you came back, your legal department would be preparing instructions to the Australian government solicitor about the lawfulness of averaging?”

Tudge said he couldn’t explain it.

“It’s the first I’m even aware that that was occurring,” he said.

Musolino was not in the dark about potential legal issues with the scheme. From at least late 2016 and then into 2017, her team was closely monitoring and providing reports on the outcomes of Administrative Appeals Tribunal decisions that were either rejecting the use of income averaging to raise debts or waving them through.

In one particular matter, in a March 2017 decision by then AAT member Terry Carney, Musolino’s own lawyers agreed Carney had made no error of law in his reasoning. Despite this, and model litigant obligations placed on Commonwealth agencies, Musolino said DHS didn’t have to agree with the decision. It only had to implement it. If there was no appeal against the decision, it was very unlikely it would receive attention – and so the scheme could continue.

“So how does the position get resolved where the AAT is making decisions that a significant program is being conducted on a basis which isn’t lawful?” Commissioner Holmes asked.

“It just ticks along, and as long as nobody ever recommends an appeal, which they never need to because you can always implement the decision without regard to the program, it just goes on forever, does it?”

Musolino said the AAT decisions “were cutting both ways”. Commissioner Holmes was unimpressed. “Okay,” she said. “I think you’re either missing my point wilfully or inadvertently.”

The March 8, 2017, decision from Professor Carney did involve a general point of law that Musolino eventually accepted, after much circular argument. Essentially, it found a fundamental aspect of the scheme was unlawful. “That’s … yes,” Musolino finally said.

This was a significant moment in the hearings, although it was dealt with carefully by Commissioner Holmes.

Musolino was shown a ministerial brief, prepared well over two years later, on November 6, 2019, for then minister for Government Services Stuart Robert, following the unequivocal receipt of legal advice from the solicitor-general, which declared robo-debt had no basis in law.

Even though the solicitor-general’s opinion was “not a declaration of law” it was sufficiently alarming to DHS officials that they recommended robo-debt be terminated.

“There is considerable legal and reputational risk should the Department continue to administer the program in its current form,” the document says.

“[Then] Secretary of the Department, Ms [Renée] Leon, also carries personal risk associated with the continued administration of the program in its current form by reference to various obligations that she had as a public servant.”

Crucially, the brief also put in writing a case that is being built brick by brick by the royal commission. “The continued administration of the program in its current form may amount to misfeasance in public office,” the Robert brief says. “This is because continued administration of the program after receipt of the opinion would contribute to an argument that the Department had been raising and recovering debts in bad faith.”

Commissioner Holmes thought that the Carney decision might have put a concrete time line on when officials ought to have acted. A key element of the offence is acting with “reckless indifference” to the use of an official power that was reasonably expected to cause harm.

“The fact is that the AAT was finding that averaging was not a legitimate procedure in cases – not all of them, but in some – and that proved to be perfectly correct as the solicitor-general’s opinion demonstrated,” Holmes said on Tuesday.

“So that went on through 2017, 2018, to some time in 2019, when, around about March 2017, somebody could have been having a look at this. Is that a fair summary? You were getting decisions from the AAT pointing to a problem?”

When then senior minister in the Social Services portfolio Christian Porter took the witness stand on Thursday afternoon he was asked about whether, while acting for the holidaying Tudge in late December and early January 2017, he formed the view that there was a “reticence” from DHS to publicise detail about how the online compliance system worked.

“I recall … a sort of acceptance of the position and the talking points,” he said.

“That then turned, at some point, into circumspection. Then I became sceptical and in the end I was extraordinarily frustrated with the level of information being provided.”

There was another suicide after Rhys Cauzzo’s. It involved a woman who killed herself just five days after receiving a debt “discrepancy” reminder letter. The woman had previously sought social work support through the department but had no “vulnerability indicator” on her file.

Despite the fact an employment separation certificate was already on the woman’s Centrelink file, which contained more detailed employment information, compliance officers were not permitted to consider this because, under the design of the scheme, it could never have allowed the government to recoup billions of dollars.

This was an element of the scheme Tudge had promised to fix five months earlier, in January. He never did.

Unlike with Cauzzo, whose case had been the subject of reporting, Tudge never ordered an investigation into this case.

Greggery noted this difference and the reason for it. “I am suggesting,” he said, “the reason you didn’t order an investigation into this case, and you did for Mr Cauzzo, is because you were confident this wouldn’t reach the media.”

Tudge denied this.

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