Stuart Robert said ‘we will double down’ after being advised robodebt was unlawful, inquiry told

The former government services minister, Stuart Robert, told the boss of his department the Coalition would “double down” after he was informed the robodebt scheme was unlawful, a royal commission has been told.

Fronting the high-profile inquiry on Tuesday, Renee Leon, the former human services secretary, revealed she was forced to stop the scheme before the government agreed, amid the cascading personal legal risks of continuing to administer the program.

Leon also pointed to deep cultural problems across the public service and government, claiming some top officials were punished for providing negative advice while others who backed its agenda were “rewarded”.

Leon faced questioning from senior counsel assisting the commission, Justin Greggery KC, about her role running the department as it faced an ultimately successful landmark court challenge from Victoria Legal Aid.

Leon recalled being “shocked” when the Australian Government Solicitor found in late March 2019 the case was likely to be successful and the department should seek advice from the solicitor general on the whole scheme.

That advice, handed down after delays in September 2019, found the program was unlawful, but Leon suggested Robert had dismissed its significance.

Corroborating evidence from the department’s chief lawyer about Robert’s view, Leon produced a handwritten note of a key 29 October 2019 conversation.

Leon said Robert had treated the conversation “appropriately seriously” but added the minister had responded to her briefing by saying: “Legal advice is just advice.”

On the stand, Leon offered an impersonation of the comment, adding: “I remember it because it was so shocking to me, I suppose. Because we weren’t talking about some low-level advice, it was the solicitor general.”

Leon later recalled Robert’s response to her advice on about 7-8 November 2019 that the department should apologise, “admit the error”, and “inform customers and staff of the steps we will take to correct the error”.

Leon claims Robert responded: “We will absolutely not be doing that. We will double down.”

“I thought my advice was obvious,” she said. “It seemed the only thing for an organisation that had been found to be doing something unlawful was to cease doing it and to remediate and to apologise.”

Leon’s evidence detailed the chaotic period when the Coalition considered what to do about the program, crucial to billions in budget savings, describing how this conversation prompted the creation of a brief for Robert to explain that “one couldn’t just dismiss” the solicitor general’s advice.

She added there were suggestions from some ministers that the government might “stop the process, but not repay the debts” or “stop the process but not tell anyone” or “stop the process and only repay if people appealed”.

The inquiry heard Leon received advice from her chief lawyer, Timothy Ffrench, in November 2019, warning of her obligations and the risk of misfeasance in public office from continuing to oversee an unlawful program.

“I ended up having to stop the program in advance of a decision by the government to do so,” Leon said.

Leon said she felt it was only after the attorney general, Christian Porter, had validated the solicitor general’s opinion that “minister Robert and the government as a whole felt they did in fact have to abide by the solicitor general’s opinion”.

Robert announced the robodebt scheme would be “refined” on 18 November 2019, but did not apologise and claimed only a “small cohort” of people were affected.

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Guardian Australia revealed in March 2020 the government had privately accepted it would need to refund hundreds of thousands of victims. It announced the decision on a Friday afternoon in May 2020.

Robert is set to appear before the royal commission on Thursday.

Leon, who replaced Kathryn Campbell, the former department secretary, in October 2017 and held the role until December 2019, said a top departmental lawyer, Annette Musolino, told her on several occasions that the program was legal.

Leon said she had no reason not to trust Musolino, who was an experienced lawyer in the department. Musolino is expected to appear on Wednesday.

More generally, Leon spoke of what she believed were deep cultural problems at senior levels at the department when she took over from Campbell.

“You end up with a situation where people are afraid to raise risks or say something negative because they might get humiliated or yelled at,” she said.

She also pointed to a broader culture across the public service and government where negative advice was “unwelcome”.

“It was unwelcome, certainly under the government for whom I served as secretary,” she said.

Leon said senior public servants who were seen as “unhelpful” might be frozen out or moved on, in what Greggery called a “reward or punishment” culture.

She said regardless of the government’s agenda, legality should be a “red line” for the public service.

“It’s the right thing for the government to know so they don’t fall into a situation which is administering a program that was unlawful … and caused harm to hundreds of thousand of people,” Leon said.

The inquiry before Catherine Holmes AC SC continues.