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The Department of Social Services has dropped a debt it had incurred against a woman in Melbourne who is challenging the Coalition against Robodebt's program in federal court.
In February, Victoria Legal Aid and Madeleine Masterton lodged an appeal against the "cryptic" process whereby Centrelink's Automated Debt Collection system calculates overpayments of social badistance.
But The test case comes up against a new hurdle as a result of the ministry's decision to withdraw its claim on the $ 4,000 that it informed Masterton that it owed the government in July of the same amount. last year. The move allows the Commonwealth to argue that there is no case to answer.
It is now unclear whether the court will review the legality of a program in which the government has claimed about $ 1.5 billion of overpayments from welfare recipients, both old and new. the Labor Party has described as "poorly conceived".
In February, it was revealed that the government had spent at least $ 400 million on the program but had received only $ 500 million in social badistance recipients' repayments. The ministry defended the program's initially unprofitable system, which also aimed at ensuring the "integrity" of the social protection system.
The court's decision to declare the $ 3.7 billion Robodets program illegal could blow the federal budget by several million each year.
Last month, the ministry told Masterton that it had recalculated the alleged debt and discovered that there was no debt left.
But the ruling was made at a federal court hearing last week alone, prompting his lawyer, Peter Hanks, QC, to charge the department for acting "bad faith."
"This is … an illustration of the medico-legal benefit that the respondent has in this business," Hanks said.
"It can generate debt. It can then recalculate, recalculate in one way – and of course, the recalculations are completely cryptic at this point; they have not been revealed – it destroys the debt, and by destroying the debt, they are then able to go to this court and say there is no use. "
Hanks argued that the case had to go forward because it was focused on the process used to calculate the debt rather than whether money was due or not. no.
The department's lawyer, Zoe Maud, said there was "no basis for [bad faith] allegation".
Maud said the ministry had chosen to recalculate the debt after reviewing new information contained in the court documents filed by Masterton's lawyers, which revealed a possible "double counting" of the earnings of one of Masterton's former employers. .
The case of the Melbourne nurse is based on what is known as the "average" income of a welfare recipient over a period of time, which, according to Legal Aid, leads Centrelink to a miscalculation debts.
Since the introduction of the system, people said they received letters stating that Centrelink felt owed a sum of money, sometimes tens of thousands of dollars, as a result of an "overpayment" ". The letters provide no proof of the calculation of the debt and entrust the burden of proof to the recipient.
The government reacted to the outrage over the regime in 2016 by giving the alleged debtors more options to prove their income, for example by providing previous bank statements. The ministry says the initial letters are not "debt notices" and that people are simply asked to "clarify" a difference between their income reported to the tax office and what they reported to Centrelink.
Earlier this year, Senate estimates revealed that Centrelink had erased, reduced or written off 70,000 debt, or about 17 percent of the 409,572 debt incurred between July 2016 and October 2018.
Masterton, who was studying and receiving a youth allowance during the period when the debt was now canceled, said in February that she had received "no information on how my debt was calculated".
Judge Jennifer Davies is yet to rule on the possibility of continuing the case. He will return to court in August.
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