‘A shameful chapter’: how Australia’s robodebt saga was allowed to unfold

When Cameron Brown learned of an idea to tighten Centrelink welfare debt collection in late 2014, he was "almost immediately" concerned.

It was around the same time copyright holders had been sending so-called "speculative invoices" on a mass scale to people who may have illegally downloaded films - the so-called Dallas Buyers Club saga.

The Centrelink debt recovery idea reminded the mid-level policy adviser at the Department of Social Services of the same practice. And he felt it was not just potentially unlawful but "unethical".

Brown sought legal advice that turned out to be damning. The idea, to quote the legal advice, "may not be derived within the legislative framework".

Brown put it more succinctly in a hearing this week: "That's the end of the proposal." Of course, it wasn't.

What happened to this bombshell legal advice is one of the central questions being investigated by a royal commission into what a judge called a "shameful chapter" when he signed off on a $1.8bn settlement with hundreds of thousands of victims last year.

How was it that the legal advice, finally revealed this week, was dismissed, discarded or overruled? And, crucially, how far up the chain did these initial legal concerns go?

Did they reach top departmental officials, such as Kathryn Campbell, the secretary of the Department of Human Services, which was leading the robodebt plan, or even the social services minister, Scott Morrison?

The commission is examining these questions because the consequences were unprecedented: hundreds of thousands of people received unlawful demands for money from their own government.

Many paid back thousands of dollars in welfare payments, and some suffered badly as a result. It affected their mental health and their financial circumstances. Some individuals said they were made to feel ashamed. Some were homeless or had disabilities, many were already struggling financially, and at least a handful took their own lives after getting debt notices, according to their families.

Civil society and grassroots groups had made their complaints about the scheme known for years, but the hearings have revealed there were several crucial crossroads moments at which the robodebt saga could have been averted, or at least, stopped much earlier than it was.

This week's hearings have focused on mid-level officials at the Department of Social Services (DSS), which was responsible for social policy at the time robodebt was created. However, the robodebt proposal came from the Department of Human Services (DHS), which handled agencies such as Centrelink and therefore the recovery of social security overpayments.

The picture that has emerged is damaging, but incomplete. The opaque relationship between the two departments is likely to be an important theme of the hearings to come. And overlaying this is the relationship between the departments and government ministers.

The inquiry has heard it was the backing of Morrison that catapulted a fledging debt recovery idea being worked up within DHS to a serious policy proposal to be considered for the upcoming budget. It heard that this put serious time pressure on officials.

Anne Pulford was a lawyer at DSS in late 2014. She co-authored internal legal advice that cast doubt on the legality of what became the robodebt scheme.

By March 2015, Pulford's team was being asked for more feedback.

The debt recovery idea that Pulford warned would not be possible without changing the law was now a formed policy proposal, replete with costings showing it could rake in an extra $1.2bn for the budget.

Despite the massive scale of the policy, the inquiry heard, the lawyers at DSS had only two days to give legal feedback. Still, they identified several other potential legal issues.

Under questioning from senior counsel assisting the commission, Justin Greggery KC, Pulford agreed this meant all the lawyers could do was "identify potential legislative problems of significance without providing meaningful advice on any of them".

Two months later, Morrison announced a budget measure known as "strengthening the integrity of welfare payments", to begin in July 2015.

Though its significance was not known at the time, the measure included the tools required for the robodebt scheme.

But the law was never changed.

By early 2017, the debt recovery scheme was firing on all cylinders. It had become embroiled in controversy following complaints from affected individuals and online grassroots activists who had coined the "robobebt" moniker.

The Commonwealth Ombudsman was investigating the scheme and Pulford was asked to provide new advice on the "income averaging" method central to the scheme.

According to evidence aired in the commission, her response was filled with caveats but, in essence, gave the green light to the same concept she had said might be unlawful only three years earlier.

Pulford told the commission she "felt pressure" to provide the answer in these terms.

After the ombudsman reviewed Pulford's advice from 2014 and 2017, it handed down a report that raised no questions about the legality of the scheme.

From then on, the Coalition government pointed to this report to justify the scheme's existence.

Greggery has indicated he wants to examine the role of the ombudsman, though the inquiry has heard its special status may create obstacles.

Another potential crossroads moment appeared in 2018. By this time, a former top social security academic, Terry Carney, had identified the potential illegality of the scheme. Carney had been a member of the administrative appeals tribunal, which reviews Centrelink decisions, and had ruled against DHS on a number of robodebt matters.

Another AAT matter that made its way to Pulford's team prompted the team to get external legal advice from the firm Clayton Utz in August 2018.

The draft advice was, in the words of a DSS official who received it, potentially "catastrophic" in that, if accepted, it would mean the end of robodebt.

The inquiry heard Pulford forwarded the advice to other officials within DSS, including some superiors, but she had little recollection of what happened to it.

Pulford said she found no record the damning draft advice was finalised, something she said was common if it did not represent "the department's preferred view".

Commissioner Catherine Holmes said: "So what do you do? You get an advice in draft, and if it's not favourable you just leave it that way?"

Pulford: "Yes, commissioner."

"I'm appalled," said Holmes.

The robodebt scheme rolled on for another 15 months, ending only when the government was forced to seek legal advice from the solicitor general in response to a challenge in the federal court.

Next week, the inquiry will hear from key DHS officials Scott Britton and Jason Ryman, who had responsibility for the design and implementation of the early robodebt programs, and Annette Musolino, general counsel at DHS.

It will also hear from Finn Pratt, who led DSS when the scheme was created, and Campbell, who was secretary of DHS and later DSS. It is likely Morrison and other former ministers will be called as witnesses later.

Later in the week, Holmes, a former chief justice of the Queensland supreme court, reflected on the fact it was apparently common for the federal government to discard draft legal advice that was unfavourable.

"It's legal advice. It's come from lawyers. It's paid for. It exists," she said. "It's like a child putting its hands over its eyes and thinking you can't see it."

The inquiry continues.