I have been writing on welfare law over on my substack blog Welfare Law in Australia. One recent post and video deals with the question of ‘unlawfulness’ as it arises in respect of the former section 1073B of the Social Security Act 1989 (Cth). The way that that section was applied by the welfare departments between 2003 and 2020 was, as the Ombudsman has confirmed, unlawful. But what does unlawful mean here?
As I suggest, it essentially means that the departments acted in a way that was not expressly authorised by the legislation. But, perhaps more faultily than this, the departments misinterpreted or misconstrued their powers under the section; and, accordingly, they acted without power on an assumption that they did have power. As I note (perhaps somewhat agonisingly), this is a little like playing football with ‘boots on your hands’ — essentially doing something that is within the rules (‘kicking the ball’) but completely misunderstanding what the rules mean (ie, the rules require players to kick the ball with their feet; not simply ‘with boots on one’s limbs’). For mine, the lesson to arise from this (the Ombudsman’s statement, after all, is titled ‘Lessons in Lawfulness’) is that reading legislation carefully is absolutely indispensable. The more sophisticated version of that lesson is that:
- internal calculators or automation tools in government departments need to be crafted in accordance with legislation to the letter;
- the calculator in this case, the Earnings Apportionment Tool (within the Adex Debt Statement) should never have been permitted to create apportionments that went beyond the statutory limit of one ‘instalment period’; and
- cross-disciplinary legal practitioners must be identified and employed, or alternatively trained — those who have skills in statutory interpretation as well as computer and software design — in order to avoid internal tools being run and applied that perform operations that are contrary to law.
The issue that arose in relation to the legal construction of the provision was simple enough — at least in hindsight. The provision provided as follows:
1073B Daily attribution of employment income
(a) a person is receiving a social security pension or a social security benefit; and
(b) the person’s rate of payment of the pension or benefit is worked out with regard to the income test module of a rate calculator in this Chapter; and
(d) the person earns, derives or receives, or is taken, either by virtue of the operation of section 1073A or any other provision of this Act, to earn, derive or receive, employment income during the whole or a part of a particular instalment period of the person;
the person is taken to earn, derive or receive, on each day in that instalment period, an amount of employment income worked out by dividing the total amount of the employment income referred to in paragraph (d) by the number of days in the period.
As I have noted in my analysis in this video, it was perfectly lawful for the agencies to apportion income, as the provision provides, by ‘dividing the total amount of the employment income… by the number of days in the [instalment] period.’ However, it was not lawful for the agencies to divide the ‘total amount of the employment income … by [a greater number] of days [than exist] in the [instalment] period,’ which is what they did. It’s all there in the last sentence of the provision.
The word ‘period’ as it is used in the last clause of the provision appears to have taken on an expanded meaning on the agencies’ construction so that it could apply to the entire payslip period; however, as is clear on a plain language reading of the provision, the term ‘period’ can only refer back to the word ‘instalment period’ that appears earlier in the provision. Otherwise it has no fixed meaning, which is clearly unbearable.
I was very disappointed by the Deputy Secretary of DSS, as well as by the Ombudsman, when they appeared recently in the Senate inquiry on poverty in Australia, because both these senior governmental figures bemoaned the ‘complexity’ of the matter, and stressed how difficult it was to explain. I was disappointed because it really need not be described in this way. It can be explained quite tersely and clearly. And if senators who are not legally trained have questions, they can be answered pretty well. What needs to be explained is that the agencies made a very rudimentary reading error. They identified the word ‘period’ in the provision as a word that has no fixed meaning but could potentially expand to any quantum. When one thinks about it, that was a very amateurish mistake. And one imagines, as in the case of robodebt, the mistake was bordering on one that used to be described, in the old actions on the case, as faulty for ‘want of due care.’
I will be aiming to write a more complete analysis later on why this is not an error that is wholly or even at all distinguishable from robodebt, as seems to be the message from all and sundry now, from the Ombudsman himself, through the department heads, through to the relevant ministers (Hons Shorten and Rishworth). But it is an untextured and, ultimately, untrue message. As the appendix to the robodebt Royal Commission clearly illustrates, more than twenty of the earliest robodebts that came before the AAT1 were subject to recalculation orders by AAT members who found them to be ‘unlawful’ precisely because they were calculated impermissibly under s 1073B.
This project to distinguish miscalculated debts under s 1073B from robodebts is something of a legal nonsense. Yes: robodebts involve debt letters that alleged debts based on ATO data. And, yes, the s 1073B problem predates the OIC and other version of the robodebt programs. But, in terms of the legal problems presented by robodebts, these debts were unlawful, in the end, for two reasons: first, they were insufficiently evidenced in terms of their quantum, as the Federal Court observed in its settlement orders. The Court (Davies J) put it this way (at paragraph 9):
there was no material before the decision-maker capable of supporting the conclusion that a debt had arisen pursuant to s 1223(1)(b) of the SS Act.
But the second and very much related reason why robodebts were unlawful is because they were calculated contrary to s 1073B. The fact that this second reason was not explored in the Royal Commission nor articulated in the reasons of Davies J in Amato, and had not been aired publicly before this month, does not make it any less true that robodebts were unlawful because of this problem. To be sure, the smoking gun in this respect is the fact that the Amato submissions made the s 1073B impermissibility argument (emphasis mine):
56.4 Section 1073B provided for averaging of income earned by a person receiving social security payments over an “instalment period”. An “instalment period” could not exceed 14 days. The effect of s 1073B was to produce an average daily rate of income for each day in the instalment period. Section 1073C then provided that “(a) the rate of the person’s employment income on a fortnightly basis for that day may be worked out by multiplying that amount by 14; and (b) the rate of the person’s employment income on a yearly basis for that day may be worked out by multiplying that amount by 364”. Sections 1073B and 1073C do not authorise apportionment of the kind done under the EIC program. They simply provide a mechanism for working out “the rate of the person’s employment income on a yearly basis” where it is relevant, under the SS Act, to calculate the rate on a yearly basis. The relevant period for Austudy payments was a fortnight, not a year. As the relevant explanatory memorandum states, the main purpose of ss 1073B and 1073C was to facilitate the “working credit” rules in the SS Act, the function of which “is basically to allow a person’s ordinary income to be reduced before it is put through [the] income testing process”. The working credit rules provided for the calculation of “the participant‘s rate of employment income on a yearly basis” for the purpose of working out the effect on working credit balances of social security pensioners. The working credit rules did not apply to Austudy recipients.
But, as I say, more on that later.
Another recent post deals with another issue that arose this month regarding historical errors on the part of the welfare agencies. Services Australia’s IT system committed errors that affected almost 50,000 child support payment recipients in an unspecified period prior to and around 2018. While the IT issue is said to have been resolved in 2020 (some two years after the agency had been consulted on the issue by the Ombudsman), only around 35,000 people had by that time had their assessments and entitlements re-assessed and remediated, while another roughly 15,000 recipients’ entitlements were not reassessed or remediated. Instead, they were simply ‘written off’ as inconsequential and unnecessary to address by the welfare delivery department.
This decision was made by the agency despite the fact that it had committed to reassessing all the affected files in 2019 in representations it had made to the Ombudsman. All of this, of course, was occurring during the robodebt settlement and through the Royal Commission. Clearly concerned that this backsliding on a prior commitment could result in unfair outcomes, the Ombudsman this year sought to re-engage with the department to ‘make things right’ — and that, as it happens, is the name of the statement published by the Commonwealth Ombusdman in respect of this matter.
This short statement is not to be confused with a report of the same name published by the Ombudsman with respect to the Department of Education back in 2015. (I suppose, when one is the Ombudsman, titles like Making things Right or Lessons in Lawfulness will probably need to be recycled every few years.) As I argue in the post, it is just another example of the recalcitrance of the agency among several that have emerged since the Robodebt Royal Commission.
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