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# Australia's Robodebt Assumed Welfare Recipients Were Overpaid Unless They Proved Otherwise and Raised $1.76 Billion in Unlawful Debts. Its Minister Was Cleared Because Ministers Must Be Able to Trust Their Departments.
- URL: https://whywecanthavenicethings.info/robodebt-income-averaging/
- Published: 2026-10-10T16:00:00.000Z
- Updated: 2026-10-10T16:00:00.000Z
- Author: The Complaints Department
- Tags: Investigations

Australian social security law works by the fortnight. Since July 2010, the income tests that decide how much a recipient of unemployment benefit, student allowance or a disability pension is paid have applied to income calculated on a fortnightly basis, and recipients report their earnings to Centrelink every two weeks. Someone who works a few shifts in March and none in April is entitled to less in March and more in April.

On about 1 July 2015, the Department of Human Services stopped taking their word for it. A new automated system took the annual pay-as-you-go income figures held by the Australian Taxation Office, divided them evenly across every fortnight of the period under review, and compared the result with what each person had actually reported. Where the two did not match, the system concluded that the person had been overpaid. It came to be known, colloquially, as Robodebt.

## The Arithmetic

Justice Bernard Murphy of the Federal Court later explained the flaw with some patience. Many welfare recipients, he observed, do not earn a stable income, and any work they find "may be casual, part-time, sessional, or intermittent". Spread a year's casual earnings evenly across 26 fortnights and the arithmetic will report income in fortnights when there was none. "It should have been plain," he wrote, that in such circumstances the system "may indicate an overpayment of social security benefits when that was not in fact the case."

The system then reversed the burden. A discrepancy produced an automatic letter telling the recipient to confirm or update their income within a set period. If they could not produce payslips, employer statements or bank records, sometimes for periods years in the past, the system assumed their earlier reports were wrong and that they had earned the ATO figure in equal fortnightly instalments. It then issued a debt notice. Unpaid debts could be recovered from tax refunds or bank accounts, or through private debt collectors with a penalty added.

By the time it stopped, the Commonwealth had asserted debts totalling at least $1.763 billion against approximately 433,000 people, and had recovered about $751 million from roughly 381,000 of them. It did not have a proper legal basis for any debt raised this way. The Commonwealth eventually admitted as much.

## The Advice

The question of legality had been raised before the scheme began. On the first day of the royal commission into Robodebt, in October 2022, counsel assisting Justin Greggery KC read out advice the Department of Social Services had received from its own internal lawyers in December 2014\. The proposal to smooth a debt amount over an annual or other defined period, it said, "may not be consistent" with the legislative framework. The Solicitor-General was not asked until 2019\. Greggery said the evidence would show "an expectation within the departments that the external and authoritative advice may not be favourable."

Scott Morrison, social services minister from December 2014 to September 2015, had publicly cast himself as a "welfare cop" intent on cracking down on cheats "rorting" the system. The commission found that this "contributed to a certain atmosphere in which any proposals responsive to his request would be developed." It also found that a departmental executive minute had told him, weeks before he took the proposal to cabinet, that it needed legislative and policy change. The caveat did not reach cabinet. "Mr Morrison allowed cabinet to be misled because he did not make that obvious inquiry," the commission concluded. Mark Withnell, the Human Services general manager of business integrity, who had described averaging as something for "exceptional cases", was found to have been "a central figure in formulating the language" of the cabinet submission and to have "engaged in deliberate conduct designed to mislead cabinet."

## The Warnings

On 5 December 2016 the human services minister, Alan Tudge, appeared on Nine's A Current Affair to promote the system. "We will find you, we will track you down and you will have to repay those debts and you may end up in prison," he said. The commission later found that Tudge's office had answered critics by placing stories about individual welfare recipients in the media, which it called "an abuse of that power." By July 2017, it found, Tudge knew that at least two people had died by suicide and that their families had identified the scheme as a factor. He did not order a comprehensive review.

The Administrative Appeals Tribunal was less impressed with the arithmetic. By 30 May 2017, according to the Federal Court, approximately 29 tribunal decisions had rejected income averaging as a basis for a debt. The Commonwealth did not appeal any of them to a court, and kept the system running. When the Commonwealth Ombudsman investigated the scheme in 2017, the commission found, Serena Wilson, a deputy secretary at Social Services, instructed that the 2014 advice be withheld from it, "an attempt to conceal critical information from the ombudsman."

Stuart Robert, minister for government services from 2019, defended the debts in public while holding what the commission called a "strong personal view" that averaging produced wrong ones. He told Commissioner Catherine Holmes that cabinet solidarity required it. "As a dutiful cabinet minister, ma'am, that's what we do," he said. "Misrepresent things to the Australian public?" she asked. The test case came from Deanna Amato, a former Austudy recipient whose tax refund had been seized over a debt of $2,754\. Her old payslips showed she had reported her pay to the cent. On 27 November 2019, in the Federal Court, the Commonwealth consented to declarations that her debt, raised by averaging ATO data, was invalid.

## The Bill

The class action led by Gordon Legal on behalf of Katherine Prygodicz and others settled. On 11 June 2021 Justice Murphy approved it. The Commonwealth had already withdrawn the averaged debts and promised to refund the $751 million; the settlement added $112 million, inclusive of legal costs, without admission of liability. The case, he wrote, had "exposed a shameful chapter in the administration of the Commonwealth social security system and a massive failure of public administration." He saw little evidence that anyone had actually known it was unlawful, recalling the aphorism that "given a choice between a stuff-up (even a massive one) and a conspiracy, one should usually choose a stuff up."

Holmes delivered her report on 7 July 2023: three volumes, 990 pages, 57 recommendations, and a sealed chapter referring unnamed individuals to the Australian Federal Police, the National Anti-Corruption Commission, a Law Society and the Australian Public Service Commissioner. She described the scheme as a "crude and cruel mechanism, neither fair nor legal", and the inquiry as having exposed "an extraordinary saga, illustrating a myriad of ways that things can go wrong through venality, incompetence and cowardice." Morrison called the findings against him "wrong, unsubstantiated and contradicted by clear documentary evidence."

The 2021 settlement had not considered what the royal commission later uncovered, so Gordon Legal went back to court. In September 2025 the government agreed to pay a further $475 million in compensation, $548.5 million with costs, which the Attorney-General, Michelle Rowland, said was the largest class action settlement in Australian history. Justice Jonathan Beach approved it in June 2026, criticising officials who had been "insulated and detached" from the consequences of their actions. The total cost of the scheme to the government had passed $2.4 billion. It had been forecast to achieve "very substantial recoveries".

## The Referrals

The National Anti-Corruption Commission initially declined in 2024 to investigate the six people referred to it. An inspector then found that its commissioner, Paul Brereton, had stayed comprehensively involved in the decision after declaring a close association with one of them. A review by Geoffrey Nettle KC concluded an investigation was appropriate, and in March 2026 the NACC published its findings.

Withnell and Wilson were found to have engaged in serious corrupt conduct. Neither was referred for prosecution, the commission citing "insufficient admissible evidence." Kathryn Campbell, who had run both departments, was cleared, along with two other public servants. So was Morrison. His failure to detect the misleading information, the NACC found, was not a breach, because he was expected to rely on the advice of his department. "The NACC has rightly concluded that Ministers must be able to rely on the accuracy of the advice provided by their departments, especially on matters of technical expertise, and receive that advice in good faith," Morrison said. The welfare recipients had been extended no such presumption. Their reported income had been checked against an average, and found wanting.

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*Filed from public reporting:*

- [Federal Court of Australia — "Prygodicz v Commonwealth of Australia (No 2) \[2021\] FCA 634"](https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2021/2021fca0634)
- [ABC News — "Commonwealth warned of potential legal problems with Robodebt scheme two years before it began, Royal Commission hears"](https://www.abc.net.au/news/2022-10-31/qld-royal-commission-robodebt-inquiry-commonwealth/101596246)
- [ABC Media Watch — "Robodebt 'friendly media'"](https://www.abc.net.au/mediawatch/episodes/robo/101934932)
- [ABC News — "Robodebt royal commission findings revealed, individuals referred for criminal prosecution"](https://www.abc.net.au/news/2023-07-07/robodebt-royal-commission-findings-revealed/102531450)
- [ABC News — "What did the Robodebt royal commission find about the people who oversaw the scheme?"](https://www.abc.net.au/news/2023-07-07/political-reaction-to-robodebt-morrison-tudge-porter-robert/102575414)
- [ABC News — "Robodebt victims to get further $475m compensation after class action settled"](https://www.abc.net.au/news/2025-09-04/robodebt-victims-get-compensation-from-class-action/105734030)
- [AAP — "Australia's biggest class action settlement approved"](https://aapnews.aap.com.au/news/australia-s-biggest-class-action-settlement-approved)
- [ABC News — "Two found corrupt over robodebt but Morrison cleared"](https://www.abc.net.au/news/2026-03-11/anti-corruption-investigation-into-robodebt-findings/106440278)