Royal commission into robodebt scheme will rebuild public trust, Social Services Department tells Albanese government

With advocates continuing to call for people responsible for the contentious program to be held accountable, the incoming briefs for the new social services and government services ministers show the department, which oversees the design and administration of Australia's social security system, suggested the new government focus on building the accuracy of payments rather than raising debts from welfare recipients.

The briefing documents, obtained under freedom of information, said robodebt remained contentious and conflated with government debt policy, and admitted public faith in the handling of debts needed repair.

The Commonwealth unlawfully raised $1.73 billion in debts against 433,000 people through the program, leading to a robodebt class action and a Federal Court settlement worth at least $1.8 billion for wrongly pursued Centrelink clients. The Commonwealth has not admitted liability.

"The implementation of the royal commission, coupled with resolution of refund and settlement of the class action will help to rebuild trust with the public on the government's management of future debt matters," the department's briefing said.

The incoming government brief for Social Services Minister Amanda Rishworth and Government Services Minister Bill Shorten also reveals officials warned them the accuracy of social security payments had fallen and government outlays had increased since the Morrison government loosened controls on the integrity of payments during the pandemic.

It flagged the new government could reset efforts to maintain the integrity of the social security system by focusing on education and payment accuracy instead of chasing welfare recipients for overpayments.

"There are opportunities to shift the focus of the compliance program to payment accuracy and debt prevention, rather than debt raising, through improved communication and education, early intervention for high risk activities and increased opportunities for data matching," the brief said.

Labor has promised to consult immediately on terms of reference for a royal commission into robodebt, the scheme introduced by the Coalition government in 2016 to recoup welfare overpayments, and has vowed to establish the inquiry by the end of the year.

After the Coalition introduced the program, officially named "online compliance intervention", reports rapidly emerged welfare recipients were being wrongly told to pay back welfare overpayments.

Centrelink's automated debt recovery system detected possible overpayments by comparing agency records of client earnings with an averaged figure based on annual income reported to the tax office. It triggered a major backlash from welfare recipients, social services and advocates, who said the scheme also unfairly reversed the onus of proof in proving a debt.

After years defending the scheme, the federal government in 2020 agreed to pay back hundreds of thousands of people targeted incorrectly with Centrelink debts over four years.

Social Services Department briefing papers said most robodebt refunds had been paid and the class action settlement was expected to be completed by the end of 2022.

"These actions ... present an opportunity to refocus debt policy to be fairer and more efficient," the department said.

The Albanese government will ask the royal commission to investigate who was responsible for establishing the robodebt program, what advice and processes informed its design and implementation, and inquire into the handling of complaints - including in relation to the scheme's legality - by federal agencies.

Labor has also flagged the inquiry will determine the overall cost of the scheme, and investigate the harm caused to people wrongly pursued for overpayments.

A spokesperson for Attorney-General Mark Dreyfus said the government would follow through on its election commitment to establish a royal commission into robodebt.

Advocates and experts in law and social policy said a royal commission was needed to answer questions about the origins of the robodebt scheme and its impact on welfare recipients.

Australian Council of Social Service acting chief executive Edwina MacDonald said there was a need to hold people accountable in relation to robodebt.

"We've seen hundreds of thousands of people who were victims of what was a gross abuse of government power, and we're yet to see anyone to be held to account for this," she said.

"Many of the questions that were put to the former federal government have still gone unanswered and a royal commission would hopefully provide those answers.

"But also a royal commission would help to ensure that we don't see a repeat of such a scheme. For public administration of human services there has to always be humans involved in the decision-making."

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La Trobe University senior lecturer in administrative law Darren O'Donovan, who has long written about the robodebt scheme, said there was a need to keep those affected by the program front and centre in the commission.

"The big picture here is how a data-obsessed institution is failing to understand how its dataset is in fact shaped by exclusion, vulnerability and a lack of access to justice," he said.

"The royal commission needs to drive for an accessible and reflective system that takes into account the real world impact of administrative burden on people interacting with Centrelink.

"Being forced to listen to the voices of those who suffered, the frontline staff who wanted to help people, will be a long delayed, teachable moment for Services Australia."

Australian National University social security expert Peter Whiteford said the problems with robodebt should have been obvious.

"The question to me is, how did the government and the public service come to institute something that was really obvious from the beginning not the right way of calculating debts?" he said.

"It seems to me that there's a breakdown in the ethical behaviour of government, and also a breakdown in the sort of mechanisms for ensuring that policies are properly scrutinised and reviewed before they're implemented."

The Social Services briefing paper said there had been a drop in the accuracy of welfare payments, and an increase in government spending, in the last two years after the previous government reduced compliance activities and controls on payment integrity.

"A reduction in compliance activities and payment integrity controls expedited access to payments for a large number of new recipients during the pandemic. This approach has contributed to increased outlays as a result of declining payment accuracy," the department said.

"Compliance activity remains at levels below pre-COVID due in part to redirecting resourcing to payment processing in emergencies - activity is not expected to increase until 2022-23."

A random sample survey of results showed JobSeeker payments fell from a 93 per cent accuracy rate in 2019-2020 to about 83 per cent during the pandemic. The benchmark for the Department of Social Services was 95 per cent accuracy.

"Emerging debt and compliance matters are likely to need consideration before the findings of the royal commission are finalised," the department said.