Echoes of robo-debt: Lawyer warns Labor after hundreds illegally denied payments

A major law firm is warning the Albanese government it risks court action after a damning finding that hundreds of people were illegally denied income support and dozens more had payments cancelled even after the problem was noticed.

The Commonwealth Ombudsman revealed last week that 964 people had their JobSeeker payments unlawfully terminated by an automated system, and even when the problem was noticed and seemingly rectified, a further 45 people had their payments cancelled.

Gordon Legal partner Andrew Grech, who led a class action for victims of the robo-debt payment scandal – in which people had their earnings incorrectly calculated, leading to erroneous debt letters being sent – said there was an eerie familiarity between the two government payment problems.

Warnings of court action over welfare payments will test Prime Minister Anthony Albanese on his first-term promise to protect vulnerable people and his criticism of the former Coalition government’s handling of the robo-debt crisis.

The investigation found cancellations were made through a digital system called the targeted compliance framework, designed to monitor if recipients were meeting the conditions of their welfare payments. This includes the requirement to search for work or report changes in income.

This was contrary to law changes in 2022 after the robo-debt crisis, requiring consideration of a jobseeker’s circumstances before deciding to cancel income support.

“The ombudsman report is deeply troubling and, like the much larger robo-debt scandal, it’s another example of how government creep of deployment of automation influences the lives of our most vulnerable – it plays an inappropriate role,” Grech said.

“The government should move swiftly to address what’s really mass-scale unlawful termination of payments.”

Secretary of the Department of Employment and Workplace Relations Natalie James advised the ombudsman in December 2024 that decisions to cancel income support occurred automatically, affecting 964 jobseekers from April 2022 to July 2024.

Despite James’ decision to pause cancellations, a further 45 jobseekers received automated cancellations when they should not have, the ombudsman found.

Services Australia also raised concerns with the ombudsman that support payments may have been unlawfully cancelled in December 2024. DEWR is responsible for the design of the payment system, and Services Australia then delivers the payments to recipients.

The watchdog’s investigation gave seven recommendations, including that automatic cancellations not resume until departments were satisfied errors had been rectified, agencies have staff who made delegated decisions, and they rectified issues with the automated decision-making.

All seven recommendations have been accepted by the department. The ombudsman is due to deliver a second report that will consider whether the decision-making processes to cancel welfare payments are fair and reasonable.

Grech said it was understandable for the government to take time in its response, but warned legal action would be necessary if there was limited change.

“We’ve got about 80,000 people who registered with us through robo-debt, and we’ve had calls from some of them who’ve been affected by this,” he said.

“We are hopeful the government will respond properly and deal with it but if they don’t, people will be forced to go to the courts to get the situation rectified.”

In 2023, robo-debt royal commissioner Catherine Holmes, SC, found that 526,000 people were asked to repay money they did not owe under the robo-debt scheme that was intended to recoup welfare overpayments.

When the report was handed down in July that year, Albanese slammed the Coalition government’s handling of the crisis.

“The robo-debt scheme was a gross betrayal and a human tragedy … it was wrong, it was illegal, it should never have happened, and it should never happen again,” he said in July 2023.

A spokesperson for Employment Minister Amanda Rishworth said the government expected the ombudsman’s recommendations to be implemented.

“The report reinforces that when legislative changes are made, it is essential the processes and systems that agencies employ to deliver services reflect the legislation,” the spokesperson said.

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