Email reveals top bureaucrat pressed ombudsman to delete comments questioning robodebt’s legality

The former head of the Department of Human Services pressured the commonwealth ombudsman to delete language questioning the legality of the robodebt scheme from a key report, according to emails published by a royal commission.

The commission is investigating why the former Coalition government's unlawful welfare debt recovery scheme was established in 2015 and ran until November 2019, ending in a $1.8bn settlement with hundreds of thousands of victims.

A key question that has emerged during the hearings is the role of the ombudsman, whose initial March 2017 investigation backed the scheme and was then repeatedly cited by the Coalition government in its defence of the program.

An email published by the commission reveals that Renee Leon, then secretary of the Department of Human Services, wrote to the federal watchdog on 9 March 2019 to respond to a draft of an upcoming follow-up report.

After a discussion with the then ombudsman Michael Manthorpe, Leon said in the email to the ombudsman that any commentary on the scheme's legality would be inappropriate due to a court challenge.

Leon wrote that she was "concerned that your comments clearly imply that there is doubt as to the legality of the EIC [earned income compliance] system", but the department's view was "the legal position in relation to the program is not uncertain".

"Comments made by the ombudsman on this aspect will undoubtedly be cited in public commentary, in circumstances where a court is yet to determine the matter," Leon wrote.

"I think it is particularly undesirable to buy into the argument about legality when litigation is on foot, as comments from the ombudsman as a significant part of the administrative law system may be considered to be pre-judging the outcome or may in fact prejudice the issue.

"For these reasons, I ask that the commentary regarding the legality of the [EIC] system be removed from the Implementation Report and that further commentary be reserved until after the Federal Court matter has concluded."

Leon was referring to a federal court challenge launched by Victoria Legal Aid a month earlier in February 2019 that ended in the government accepting the scheme was unlawful in November that year.

According to Leon's letter, the ombudsman's draft report recommended the department publish its legal advice and consider clarifying the law through legislation.

Leon wrote that publishing the legal advice would "risk waiving privilege in circumstances where, as in this very case, those programs may become the subject of legal challenge".

The royal commission has heard the government departments responsible for the scheme held conflicting internal legal advice - including a damning 2014 opinion that suggested the scheme was unlawful - and the ombudsman had seen those documents, which were otherwise secret.

The ombudsman's implementation report, published in April 2019, made no reference to any uncertainty about the scheme's legality. The report noted the ombudsman was "pleased" by progress the department had made, while suggesting further practical changes to the way the agency engaged with welfare recipients.

The commission has previously heard the department received legal advice from the Australian government solicitor on 6 March 2019 that recommended it "recalculate the debt" at the centre of the legal challenge "without using averaged income from ATO records and instead conducting the fullest investigation reasonably possible". Income averaging was central to robodebt and was ultimately found to be unlawful.

The commission has not heard any evidence Leon had seen this advice at the time of her letter.

Three weeks later, in 27 March 2019, the AGS advised the department that income averaging was likely not in line with social security law. The AGS suggested the department seek advice from the solicitor general.

Approached for comment, Leon noted public hearings were ongoing and said it would be "inappropriate in those circumstances for me to make public comment on the matters that are before the commission".

The royal commission has heard evidence the commonwealth ombudsman had privately raised questions over the program's legality with the Department of Social Services in the middle of 2018. It never made those concerns public.

The inquiry has also heard the Department of Human Services officials believed they had a "great opportunity to effectively co-write" the ombudsman's first report in 2017, after they were sent a draft to comment on.

It is common for the watchdog to allow government agencies to comment on draft findings before publication.

The ombudsman - which cannot be compelled by a royal commission - confirmed last year it would voluntarily cooperate, after initial uncertainty about its position.

A commonwealth ombudsman spokesperson did not directly answer when asked by Guardian Australia why it removed references to the legality of the robodebt scheme from the final report.

"An ombudsman must weigh up complex and often competing matters in deciding how to deal with a matter, how to seek to influence an outcome and what to say publicly about a matter," the spokesperson said.

"When forming a view, assessing evidence or making decisions, an ombudsman may consider a range of matters including, but not limited to, relevant laws, the role of the legislature and judiciary, and how best to guide an agency towards best-practice administration.

"The ombudsman does not have the power to determine a matter or to compel an agency to act but can only express an opinion and make recommendations. Different ombudsmen may decide to take different courses in relation to an issue, but neither path may necessarily be wrong."

Leon lost her position as secretary of the Department of Human Services in early 2020 when the department was replaced by a new agency, Services Australia. She is now vice-chancellor of Charles Sturt University.

The royal commission will hold its next hearings from 20 February.