Lessons in Lawfulness: An extraordinary development in social security law

On 2 August 2023, the Commonwealth Ombudsman published a terse report outlining its findings after an investigation into the lawfulness of ‘income apportioning’ — a method of debt calculation used by Australian welfare agencies DHS and DSS since at least 2003 (ie, for more than 17 years).

As the Report states, this process, as it turns out — after all these years! — is unlawful. This is an astonishing finding, and all the more so in the wake of the Robodebt Royal Commission. While the Ombudsman, and relevant ministers of the current government, have been at pains to distinguish the so-called section 1073B error from the robodebt error, my provisional analysis has led me to conclude that the two are not just linked or overlap but are intrinsically interwoven.

Of course, the Ombudsman is no court; and the statement that so many debts are unlawful is — though informed by legal advice of the agencies and no doubt its own legal analysis — far from the final word on the matter. Indeed, that is really at the heart of the issue. The matter is far from resolved.

Whenever I have had any time over the last 10 days, I have been following up on this extraordinary development. I have made two long videos: one reviewing the report (1hr 40 mins) and one (around 90 minutes) that speculates on why the Ombudsman has so clearly said that so many debts calculated under s 1073B of the Social Security Act 1991 (Cth) are unlawful.

The two of them are here:

I have also now written a detailed blog post on my research so far on my Welfare Law in Australia substack site here. I extract the first few paragraphs below but encourage interested readers to explore the full text on the substack.

Recommendation 1
Firstly, in the context of the legal advices the agencies have received, and in view of the fact that the Ombudsman states the practice is unlawful, the Report recommends that Services Australia (SA) and the Department of Social Security (DSS) should obtain a declaration of the law. It makes this recommendation in two parts, as recommendation 1A and 1B.

Notably, this first recommendation refers not only to the way in which the agencies have historically calculated the debts, but also to the way they have calculated the debts since 2021, when the Ombudsman first brought the matter to the agencies’ attention. Since that time, the agencies have developed a position or form of guidance contained in the so-called General Instructions that directs decision-makers about how to putatively lawfully calculated social security entitlements prior to December 2020. However, because there has not been any legal declaration on this guidance, nor on the original, pre-Guidance calculation method, the first recommendation asks the agencies to get that clear advice on both methods.

— 1A: SA and DSS should seek the opinion of the Solicitor-General (SG) through a referral under Law Officers Act 1964 (Cth).

— 1B: SA and DSS should seek a Federal Court of Australia ‘opinion’ through referral by the Administrative Appeals Tribunal (AAT) under the Administrative Appeals Tribunal Act 1975 (Cth).

Before we move on, it is worth looking at the legal provisions underlying these recommendations.

Recommendation 1A

The referral to the SG is said to be authorised by the AG under the Law Officers Act 1964 (Cth) (‘LO Act’) but, as is common in brief Reports of this nature, the Report does not name the section authorising this action.


Read the full post here.

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