Government defeated in landmark robo-debt test case

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The government has lost a significant legal challenge against robo-debt, with the Federal Court ruling that the debt was unlawful.

The Australian Government has conceded that they acted unfairly and unlawfully when raising a robo-debt cases against 33-year-old Deanna Amato.

It is the first definitive ruling of two robo-debt test cases that have been brought against the Government with the legal assistance of Victoria Legal Aid.

Ms Amato was originally issued a robo-debt of $2754 based off the Government's previous income auto-averaging scheme, which matches Australian Tax Office data with income information welfare recipients have provided to Centrelink.

A recalculation revealed that she was actually overpaid by $1.48.

The Federal Court today ordered the Australian Government to pay Ms Amato $92 in interest for the $1700 in tax return they withheld from her to cover the unlawful debt.

‘It feels amazing. You can feel so small and helpless next to the government, but I am so glad that the unfair and ultimately unlawful aspects of this system have been brought to light’, she said.

My robo-debt should never have occurred in the first place. I feel pleased to have gotten this outcome but it’s bittersweet to know so many people have paid money under this system.

The Court also ordered the Government to pay for Victorian Legal Aid’s (VLA) legal costs.

‘Deanna’s case has helped to clarify the unlawfulness of the robo-debt system for hundreds of thousands of Australians in the same situation, who received or paid off a robo-debt based only on averaging,’ said VLA Executive Director of Civil Justice Access and Equity Rowan McRae.

The government’s controversial "online compliance intervention" program -- dubbed robo-debt -- began at the end of 2016 and compares Australian Tax Office data with income information welfare recipients have provided to Centrelink. If the computer detects a discrepancy, it will trigger a request for more information, such as payslips dating as far back as 2010. A debt notice will be issued if information isn't provided or a discrepancy is outstanding. 

Last week, the Federal Government announced that they would cease using the income auto-averaging scheme to issue debts. 

“While these announcements are significant, the change comes too late for many people who have experienced distress and hardship, or who have already paid robo-debts through tax garnishee action and debt collectors,” Ms McRae said.

“Today’s result shows the Federal Government has accepted what advocates have been saying for years – using only income averaging to raise debts is both inaccurate and inconsistent with the Social Security Act.”

Victorian legal aid took on Ms Amato’s case in June when she learned she had a debt after the Government garnished her full $1700 tax return.

Centrelink sent eight letters to an address Ms Amato no longer resided at and was not obligated to update her contact information after she stopped receiving social security.

“I feel a weight lifted off my shoulders. I’ve proven my innocence, but also proven that there are reasons why you need all the facts before you can demand debt payments from people,” Ms Amato said.

“I can’t believe that in the space of one year, I’ve gone from fear and anxiety over a government debt, to helping change the system – it’s phenomenal.”

The successful case follows on from legal submissions filed by Victorian Legal Aid in February on behalf of Victorian nurse Madeleine Masterton who is challenging a $4000 robo-debt she was issued.

While her debt has been wiped by the Government, Ms Masterton’s case is still before the courts.

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