Income averaging key source of mistaken Robodebt ‘debts’

The use of ‘income averaging’ to calculate debts in the failed Robodebt scheme was “completely flawed” and went against long-standing social security law and policy, a new report from The Australian National University (ANU) argues.

Author Professor Peter Whiteford said the Robodebt process assumed many people receiving benefits from the government had stable earnings throughout the whole year.

“But this is simply not the case, and we have known this for a long time,” Professor Whiteford, a leading social security expert and researcher from the ANU Crawford School of Public Policy, said.

“My report finds averaging incomes for social security recipients is completely inconsistent with social security policies that have been developed by governments since the 1980s,” Professor Whiteford said.

“Since 1980, social security legislation has been amended more than 20 times to encourage recipients to take up part-time and casual work. This lack of consistency with long-standing policies should have been obvious from the start.”

Professor Whiteford said a key flaw of the Robodebt scheme was that ‘overpayments’ for many people were based on averaging recipients’ income over the financial year.  ‘Debts’ were then based on the difference between this averaged income and the income that people actually reported while they were receiving payments.

“I warned about this misstep in 2017 and thought at the time ‘they can’t possibly have done that’,” Professor Whiteford said. “Sadly, as the Royal Commission into Robodebt has discovered, this is precisely what they were doing.”

Professor Whiteford’s report analysed data provided to the Robodebt Royal Commission by the Department of Social Services. This data shows almost nobody who received income had completely stable earnings over the period when Robodebt was in force.

“What’s more, significant numbers of recipients of these payments were on payments for only part of any financial year,” Professor Whiteford said.

“Using this to then calculate ‘overpayments’ is not only inconsistent with the policy directions adopted by government for decades, it lacks basic common sense.” 

Read Professor Whiteford’s full report online.