Government lawyer did not turn his mind to ‘significant consequences’ of continuing robodebt, inquiry told

A top departmental lawyer has told a royal commission he didn’t turn his mind to the consequences for welfare recipients of continuing the robodebt scheme while awaiting further legal advice, despite what he conceded was “undesirable uncertainty” about its legality throughout 2019.

The commission is investigating why and how the unlawful Centrelink debt recovery scheme was established in 2015 and ran until November 2019, ending in a $1.8bn settlement with hundreds of thousands of victims.

It has already heard the responsible departments had received internal advice in 2014 that the then proposed program would be unlawful, as well further warnings in August 2018 and March 2019 from a top external firm and the Australian government solicitor respectively.

The inquiry heard Paul Menzies-McVey was made aware of a damning draft opinion on robodebt from Clayton Utz when he was appointed deputy chief counsel at the Department of Social Services in the middle of 2019.

The advice was described as “catastrophic” by officials when it was first received in August 2018 but was never finalised, drawing scathing criticism from the commissioner, Catherine Holmes.

Under questioning from senior counsel assisting the commission, Justin Greggery KC, Menzies-McVey said he did not ask questions about why the Clayton Utz advice had never been finalised.

He said it had been “overtaken” by events, noting that by this time the solicitor general’s opinion was being sought on the robodebt scheme. The scheme was finally stopped in November 2019 after the solicitor general found the scheme was unlawful.

“I thought within a couple of months – as it turned out, it was a little bit longer – we’d have a definitive advice from the solicitor general about the program,” Menzies-McVey said.

In March 2019, officials got advice from the Australian government solicitor in response to a court challenge by Victoria Legal Aid.

The draft opinion said the scheme was likely to be unlawful and advised the department to seek the solicitor general’s opinion, but the inquiry heard by June the solicitor general had still not been briefed.

Menzies-McVey said the process of seeking the solicitor general’s opinion had been paused during the election. He said the situation was “not ideal” but it didn’t seem to be a “fundamental problem that needed some intervention on my part”.

The inquiry heard that by the middle of 2019, Menzies-McVey was aware of three legal opinions that suggested the scheme was unlawful.

Greggery said the failure to stop the scheme while they sought the solicitor general’s opinion had “very significant consequences” for welfare recipients and Menzies-McVey must have “appreciated that”.

“I’m not sure my mind turned to that,” Menzies-McVey replied.

Greggery asked how this was possible, to which Menzies-McVey replied: “My view was I was very happy that the matter was going to be finally determined” by the solicitor general or a court.

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More than 52,000 debts were unlawfully raised against welfare recipients between July and November 2019, according to data provided to the commission. The scheme had previously been paused for several months in 2017.

The inquiry also heard Menzies-McVey never shared the Clayton Utz advice with the Department of Human Services, which was the lead agency running the program.

Greggery said it could be inferred from the evidence that Menzies-McVey received the various scathing legal opinions and “then did nothing with them”.

Menzies-McVey said there was an “undesirable level of uncertainty about the legal underpinnings” of the scheme but “steps were already under way to resolve” those issues.

Menzies-McVey also didn’t agree that the Clayton Utz advice had found the program to be unlawful. He said it had not considered all parts of the scheme, including that welfare recipients could challenge the asserted debts by providing new information.

In response to that claim, Holmes said: “But the whole point was the customer didn’t engage and they had their income averaged. And they were under no obligation to engage. And yet out of that you draw an inference that averaging must be fine? That’s just magical thinking, isn’t it?”

Menzies-McVey maintained that those were questions that needed to be determined by the solicitor general, who ultimately found they provided no legal basis.

The inquiry continues.