Paul Bongiorno
Dogged by dollar dilemmas

While politicians, experts and commentators debate the threats and opportunities China poses for Australia, our own government’s behaviour has also come into the frame. In focus: the Department of Human Services’ bullying of at least one million Australians over debts that they, in many cases, did not owe.

At least Australia has the separation of powers, and an independent judiciary can check the overreach of a government when it’s basically out of control. This last resort for justice has something else authoritarian China doesn’t – a democracy with opposition parties whose job it is to represent the same people the governing majority has targeted. The Greens and Labor have played their parts here. And, since the election, Labor’s Bill Shorten has intensified the pressure. Not to be left out of the picture is a free media, which has also played a big role in the robo-debt furore.

Shorten, now the relevant shadow minister with his Government Services portfolio, says, “There are a lot of our fellow Australians – single mums, pensioners, people who’ve been unemployed, people on Austudy, students – who’ve been forced to pay up under a regime which, in my opinion, is not validly based in law.” That validity will be tested in the courts imminently, when Victoria Legal Aid mounts a challenge in the Federal Court. Law firm Gordon Legal is also going ahead with a separate class action.

Since the robo-debt scheme began, more than one million people have paid nearly $700 million to the government. On Tuesday, in a brief doorstop interview, minister Stuart Robert confirmed an ABC report – based on a leaked departmental memo – that DHS would “no longer raise a debt where the only information we are relying on is our own averaging of Australian Taxation Office income data”. The averaging, a controversial aspect of the scheme, matches data from the ATO with income reported to Centrelink by welfare recipients. The appalling design of the program meant that a computer automatically did the matching and dispatched a letter demanding repayment with the threat of harsh penalties, all without human oversight.

The system, which started in 2015, is all very “Big Brother” – employing automation for efficiency gains in a way that would make the apparatchiks in Beijing proud. But the flaw in the matching system is that it does not take into account that Centrelink payments are made fortnightly, based on the recipient’s situation at the time. Inaccuracies were not checked by trained human assessors and the burden of proof was placed entirely on the alleged debtors. Shorten says the government needs to stop treating citizens like “bludgers and cheats”.

Backbenchers from all parties have been confronted by distraught constituents. They are being extorted by big government, intimidated into paying money they are sure they don’t owe but don’t have records – in some cases going back seven years – to prove it. A senate inquiry was told that 2030 people had died within two years of receiving a robo-debt letter. The Greens senator Rachel Siewert told the inquiry there are at least five families who believe the debt notice led to their loved ones taking their own life.

One Liberal MP says it’s a shocking way for a government to treat its own citizens. He says it is the result of being distracted by other things, such as leadership tensions and electioneering. Up until this week, Stuart Robert has resolutely defended robo-debt, no doubt keen to do his part in delivering the much-vaunted budget surplus. The budget papers have projected $2.1 billion in debt recoveries over the next three years. That will now almost certainly fall short, as the DHS memo also said the compliance section of the department would conduct a sweeping review of all debts where the contentious averaging was used.

Robert insisted only a “small cohort” of Australians are affected and his department “will reach out and contact them over the coming weeks”. Minimising the debacle is an old trick of those caught out in being conveniently “lazy” – as Shorten says the government has been with this scheme in its anxiety to fatten the bottom line.

Whether it’s a case of face-saving or defiance, Robert says, “We’ll continue to use income averaging, with other proof points, as the basis to identify the possibility of debt.” That should make private debt collectors – the biggest beneficiaries of the botched scheme – happy. As Crikey reported this week, more than $2 billion worth of so-called debt has been outsourced. This has so far cost the government $534 million – almost as much as the $658 million that has been collected.

This model of outsourcing government services, which so often sees taxpayer funds being funnelled to some of the government’s biggest friends and supporters, is increasingly problematic. It is operating in the National Disability Insurance Scheme and in the aged-care sector – where, as the Royal Commission into Aged Care Quality and Safety has shown, millions of dollars of public money is going to the private providers’ profits. But, as Deng Xiaoping supposedly said, “To get rich is glorious.”

Josh Frydenberg reminded us of this quote with the opening of his speech to The Australian’s Strategic Forum this week, where China’s increasing impact on the peace, stability and economy of the world was the preoccupation. The treasurer pointed to the transformation that happened in China under Deng’s leadership, which “set China on a pathway to economic reform and openness”. His speech was very much a corrective – context-setting for some of the government’s more rabid China hawks, rather than a defence of dedication to privatisation.

No matter that it’s contested whether Deng ever said the famous line at all. What has caught so many by surprise is the rapid success of his project. In 1978, a poor, ideologically hidebound China needed access to the wealth that Europe and the United States could provide to power Deng’s economic reforms. The last thing he wanted to do back then, according to the Australian National University’s Professor Hugh White, was spook the West. His guiding principle was “hide your power, bide your time”. Forty-one years later, there’s no hiding. Xi Jinping’s China is more oppressive, and the president himself is more confident and more assertive in throwing his weight around than any Chinese leader since Mao.

And he has plenty to throw around. As Frydenberg said, “Even as the annual growth rate has more than halved – from a peak of 14.3 per cent in 2007 to around 6 per cent today – the Chinese economy is growing off a larger base. It is adding an economy the size of Spain to itself each year.”

The treasurer said Australia, like so many other countries, has played a part and been a great beneficiary of China’s rise. China is the No. 1 trading partner of more than 50 countries, including Australia, and a top three trading partner for more than 130 countries. Already it is the largest economy in the world on a purchasing power parity basis – and second to the US on a market exchange rate basis.

White says China’s wealth and mastery of technological innovation sees it also rapidly enhancing its military power, particularly its power at sea. Its Asian neighbours – Vietnam, the Philippines, Indonesia and Japan – are all in territorial disputes with China, particularly in the South China Sea.

Frydenberg says China and its growing role in the world is not going away, and that comparisons with the Cold War are misplaced. White agrees. Soviet Russia was a military adversary of the United States but was an economic minnow. Besides, the US under President Donald Trump is withdrawing from real engagement with the rest of the world and our region in particular.

The treasurer says Australia will be best served by being clear and consistent in the policy positions “we take in accordance with our values and national interest”. Frydenberg says we may disagree at times on human rights, for example, but that shouldn’t derail the relationship.

It all sounds reassuring, but the China of today is not the China that the Hawke, Keating, Howard, Rudd or Gillard administrations had to deal with.

Speaking at the Strategic Forum this week, former prime minister Paul Keating said, “Big states are rude and nasty – but that does not mean we can afford not to deal with them – whether it be the United States or China.”

Not adding sophistication to the debate, another former prime minister, Tony Abbott, was calling for less engagement with China and warning it was “hard to see relations with China rising much above the level of a ‘cold peace’ any time soon”.

Abbott’s old ally Senator Eric Abetz is calling for Australia to be more forceful in condemning China for the “barbaric” practice of forced organ donation. He joins two other Liberal China hawks – James Paterson and Andrew Hastie – in criticising China. The prime minister defends their right to do so, though they have attracted a travel ban to China for their outspokenness and been told to “repent”. But in a week when it was revealed China will not renew its formal yearly human rights dialogue with Canberra, the message is clear: this virtue signalling is whistling in the wind.

In fact, China says we should look to our own record on human rights and the way we treat refugees and asylum seekers. On that, a high-profile victim of our cruelty on Manus Island, Behrouz Boochani, agrees, tweeting this week: “Anyone who supports this barbaric policy is criminal and terrorist.”

One million welfare recipients may also join the chorus calling for our government to practise what it preaches.

This article was first published in the print edition of The Saturday Paper on November 23, 2019 as "Dogged by dollar dilemmas".

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