Even by the miserable standards set during nine years of Coalition government, Robodebt was one of its worst scandals. #Mate examines the scheme’s genesis and its disastrous fallout.
The royal commission into the illegal Robodebt scheme that ruined the lives of countless Australians opened in Brisbane this week. The commission is chaired by Catherine Holmes, a former Queensland Supreme Court chief justice.
Inaugurated in 2015, the scheme falsely accused welfare recipients of owing money to the government and issued debt notices to people identified through a process called income averaging, which compared their reported income with Tax Office figures. More than $750 million was wrongfully recovered from 381,000 people.
“Many people at different levels of government will be asked to give an account of their role … with the Robodebt scheme,” Holmes said on Tuesday. “But the focus … will be on those in senior positions, who had or should have had oversight.”
When in government, Scott Morrison, Alan Tudge and Christian Porter oversaw the scheme at different times. Now they are in opposition (Morrison, Tudge) or out of parliament (Porter). The royal commission is opposed by the Coalition opposition.
The scheme was ruled unlawful in 2019 and a settlement of $1.2 billion was reached between Robodebt victims and the former Coalition government in 2020. But its roots go back further, to a year before that talismanic year of 1984.
A built-in failure
Robodebt was always guaranteed to fail. But the genesis of the IT system part of Robodebt goes back to 1983. Officially called the “Online Compliance Intervention” (OCI), it was just one part of a massive $1.5b IT-driven program called “Welfare Payment Infrastructure Transformation” (WPIT).
In all projects, whether Civil or IT, there is the project management triangle. Time, cost and quality: you can only ever have two. A project for handling tax law changes on July 1 has a fixed time, consequently, your choice is therefore between cost and quality. Quality is most often sacrificed so the executives and accountants meet their targets and bonuses. An executive’s bonuses are rarely weighted towards quality.
WPIT was and still is exceptionally complex. When the project began, the Department of Social Security (DSS) was the only place in the world that was still running a ‘Model 204’ mainframe.
In 1983, when the system began being installed Australia was at the bleeding edge of technology, being the largest non-military installation in the world. DSS was already advanced with its computer systems usage, with all 200+ branches already plugged into the national network.
The Social Security Act is over 2,600 pages long. it includes all the rules for payment eligibility, rates and other rules. The rules in these 2600 pages are hard coded into the ‘Income Security Integrated System’ (ISIS) which runs on the Model 204 mainframe.
Six million Australians rely on social security, receiving over $110 billion in payments each year. The system handles over 100,000 permutations of payments and processes millions of transactions each day. Considering this complexity, it is not surprising that even the smallest change takes six months.
Centrelink and prosecutions
The genesis of the rules, culture and algorithm was back in 1998. The government of John Howard created Centrelink as the central department. This decision and many others can only make sense if the intention was to outsource the function.
Two major changes were made. First, Centrelink had new KPIs linked to self-funding. The most significant was the target of having 4,000 prosecution referrals each year. Second, Centrelink stopped being funded through the usual appropriations bills. The government instead established ‘Bilateral Management Agreements’ (BMA) with other departments.
The introduction of the goods and servces tax (GST) and pay-as you-go (PAYG) system effectively provided a single nationwide view of companies’ and workers’ income and expenses.
The PAYG was a masterstroke, a wolf in sheep’s clothing. It was the PAYG identifier that made Robodebt possible. Deployed in 1999 the PAYG enabled the PAYG data matching program to begin, Piloted in 2000-01, it was fully deployed in 2004.
Judge, jury and executioner
In 2004, when the algorithm to Robodebt was installed, it was gazetted in the same way as dozens of data-matching programs are. Like the dozens of other data-matching programs, it used income averaging. The issues with income averaging have been known for over 100 years. The income average became normal in 1915 when the Taxation Act included provisions for uneven farm income.
The algorithm used in 2004 was never designed to be judge, jury and executioner. It was intended to be a flag. Many algorithms produced flags, and these were then analysed by people who would determine whether more investigation was required.
This process and algorithm remained unchanged until 2016, this was made clear in Services Australia evidence to the first inquiry in 2017. The OCI turned the 2004 algorithm designed for “flagging” possible anomalies into a judge, jury and executioner program with no human intervention.
Labor softens the blow
There was one highly significant change made by the Labor government to the Liberal program. Labor removed the 4,000-prosecution target and deployed a policy that assumed most people were not fraudsters.
A PhD thesis by Dr Scarlet Wilcock detailed the removal of the 4,000 prosecution target, including interviews with Centrelink’s Fraud Investigation Team (FIT) leaders.
They revealed a culture of chasing easy debts and ignoring larger complex fraud. Peter, a FIT leader, said:
Policy departments used to tell us ‘you’ve got to do 5,000 investigations, you’ve got to do 1,500 prosecution referrals and you’ve got to raise this much money’. So, what we do there is we go okay, we’ll find the 5,000 easiest cases.
The consequence of the policy change was the reduction in prosecutions from 4,000 to 1,200 while recovering the same amount of money. The significance of these changes is more than statistics, there are thousands of people who have avoided becoming convicted criminals.
And so, a reckoning
There have been multiple Senate inquiries into Robodebt, however, all of them were hampered by the government abusing FOI laws and claiming privilege and public interest immunity over documents. Therefore, a royal commission is needed as all other attempts that require the goodwill of the Liberal ministers have not and will not ever work.
Robodebt can’t be viewed as just a computer algorithm that had known flaws. Robodebt became a vicious process. It is plausible to think the entire end-to-end process was re-engineered with the goal of making each step as hard and soul-destroying as possible. Examples include the issuing of debt notices with the Australian Federal Police logo on them. It can only make sense if the goal was to bully and intimidate people.
As the royal commission begins, it is appropriate to leave you with some of the opinions and comments made by Federal Court judge Bernard Murphy.
Additional material sourced from AAP.
@AusPolMate will be putting a data-matching director’s cut together and will be posting that in the coming weeks, if you find the topic of data matching in government interesting stay tuned for AusPolMate’s post.
