Big picture: Robo-debt, politics and poverty
Shortly after lunchtime on Monday, as Scott Morrison was speaking at the release of the most wide-ranging inquiry into the costs of mental illness in Australia, lawyers announced the Commonwealth had settled a $1.23 billion class action against the controversial robo-debt scheme.
These are not two separate stories. Instead, they speak to the way the Australian government’s punitive stance towards vulnerability ultimately bears out in spiralling mental health costs for the nation.
“People receiving unemployment benefits are three times as likely to have anxiety or depression as wage earners are,” the prime minister said during the speech on Monday, quoting a key finding of the government’s Productivity Commission report. “This is not only as a result of financial hardship, but often associated with limited social support, loneliness and a decreased sense of personal control and achievement.”
The robo-debt fiasco is a neat illustration of this point. It stands as a clear example of how the government’s “tough love” approach to disadvantage can quickly metastasise. Designed to raise more than $4 billion in Centrelink debts, many of which never existed, it used an automated income averaging process that was illegal and relied on relentless private debt collectors, all enforced by a bureaucracy callous in its rigidity.
Victims of the robo-debt scheme never got their day in court. Much of the battle had already been won by Victoria Legal Aid before Gordon Legal announced the $1.23 billion settlement affecting some 400,000 people – on the same day the trial was due to begin in Melbourne.
After this settlement, the entire scheme will have cost the Commonwealth about $2 billion. There were never any savings made.
It was early in 2016, less than a year after the robo-debt program had started, when James Cruz received a phone call from Dun & Bradstreet, one of the largest external recovery agencies in the country and a favourite of what was then known as the Department of Human Services.
“They demanded I pay, immediately, $16,000. I was just shocked. I had no idea, hadn’t heard that this was happening,” Cruz tells The Saturday Paper. “I just said, ‘I don’t know where this is coming from. Where are you getting these details?’ ”
Centrelink had sent previous debt notices to Cruz’s old addresses, but this was the first he’d learnt about any debt he owed. He was shocked, especially because the supposed debt was so large. It would have been difficult to accrue on the meagre Youth Allowance payment he had received in his early 20s.
“It felt like a scam,” he says. “It was the most shocking, anxiety-inducing phone call. One of the worst I have ever had.”
The collection agent had an obligation to inform Cruz of his right to enter into a payment plan, instead of paying all at once, although he had to push them to reveal this. Even though he suspected the debt was dodgy, Cruz agreed to pay $50 each fortnight while he disputed it.
It would take four years and two legal challenges mounted by others before Cruz would win this battle.
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The Productivity Commission’s mental health report, commissioned by Scott Morrison when he was treasurer, has much to say about the way psychological distress is born of struggle and disadvantage.
While robo-debt is one of the most explicit examples of government policy that’s caused harm, the commission’s report draws a portrait of a system that entrenches stress and mental injury.
And just as robo-debt was a decision, so are other social policy settings.
“Recognition in all government policies, payments and programs, of the importance of social exclusion and disadvantage as ongoing risk factors for mental illness, could form a basis for improvement in mental health outcomes,” the report says. “… The most disadvantaged fifth of the population are almost twice as likely to have high or very high levels of psychological distress than the least disadvantaged fifth.”
By its own conservative estimate, the commission places the cost of mental illness to the Australian economy each year between $200 billion and $220 billion – just shy of the projected $227 billion spend on the entire Social Services portfolio this financial year. Part of this grand figure is the cost of living with diminished health and reduced life expectancy, which the commission estimates is a “largely avoidable … $150 billion per year”.
Although many of the recommendations in the Productivity Commission’s report have been made previously, this project was unique in the way it was allowed to roam across government.
Even so, its authors note: “It is beyond the scope of this inquiry either to consider reforms that would address income and wealth inequality in Australia or to determine levels of income support payments that might alleviate psychological stress.”
They continue: “But it is clear that there is an association between socioeconomic disadvantage and mental illness that contributes to social exclusion [and] social exclusion is not completely alleviated by the income support safety net … In some situations [it] may be exacerbated by aspects of the income support system.”
One of those aspects is mutual obligation: the idea that recipients of welfare have a right to support only where they meet a series of strict conditions ostensibly designed to encourage them into work, study or other training.
In practice, these obligations are often anything but supportive.
“In Australia’s social security system people don’t just have to live in poverty, they have to administer their poverty,” Dr Darren O’Donovan, a senior lecturer in law at La Trobe University, tells The Saturday Paper. “They have to break themselves to chase magic words, to unspool crude assumptions built into policy, push to chase botched paperwork and loose phrases in medical reports. The conditionality itself is an engine of inequality.”
O’Donovan, who specialises in administrative law, has followed the robo-debt saga since a number of grassroots activists brought it to national attention in 2017.
“What’s the really dangerous type of power? It’s not the power that makes a mistake, it’s the power that disappears the mistake, that denies,” he says. “When I think of what they did for five years: they used every structure of administrative law, every bit of technical knowledge to stop the media [and] lawyers being able to pin them down.”
Robo-debt was conceived of as a program to help the budget claw back a surplus. A rarely discussed aspect of the saga is how badly it failed in this aim.
By February last year, the scheme had recovered only $500 million, at a cost of $400 million. A net saving of just $100 million. Six months later, it had spent $600 million to recover $785 million. The government had intended to collect five times as much.
These figures don’t begin to factor in the human toll, either. Speaking about robo-debt at a senate estimates hearing last February, then Department of Human Services secretary Renée Leon said, “There is not an elevated death rate … amongst people who have received an income data-matching letter … It’s not to say that we are not troubled that people die.”
However, data released by Leon’s department during that estimates hearing showed 2030 people had died after receiving a robo-debt collection notice, more than a third of whom were aged under 45.
“People ended their lives over this,” says James Cruz. “There were people who were thrown into absolute financial chaos because of this. It was really a collective traumatic experience for a lot of us.”
This is what the Productivity Commission details in its report – that both the costs of bad policies and potential savings from more humane ones are not contained in a single budget line item or even within a single portfolio.
“Some recommended actions lead to greater benefits, relative to the expenditure required to implement them,” it says. “… Some groups of actions would lead to net cost savings, as they are likely to not only improve lives but also to increase income and/or reduce government expenditure. These groups of actions, including income support and employment services, carers and families, social participation and suicide prevention, are classified as ‘cost saving’.”
In this regard, robo-debt is just one failure among many.
In 2014, a budget measure that was meant to save $12.3 million by cancelling the disability support pension of anyone who travelled overseas for too long ended up costing $15.9 million to implement after a series of administrative mistakes. Morrison, while Social Services minister, attempted to recast the blunder as an “integrity measure”.
Two years later, in the 2016-17 budget, the Coalition announced plans to use government doctors to medically review 30,000 disability support pensioners each year for three years. Its forecasts suggested 2300 people would have their pension cancelled, 1800 of whom would instead receive the lower-rate unemployment allowance.
Instead, the program managed to cancel only 135 pensions over a 16-month period. The measure projected to save $61.2 million over five years became an enormous cost. The policy was eventually scrapped.
While policy mistakes such as these – when ideology crashes headfirst into reality – make news, the more ordinary architecture of the social security system is just as harmful, according to the Productivity Commission.
“There are good grounds to be much more cautious from a policy perspective in implementing stringent MORs [mutual obligation requirements] for people with pre-existing mental illness,” the mental health report says. “… Sound reasons and plausible evidence suggest this could aggravate their illness and increase distress.”
There is a question mark, the commission notes, over whether these arrangements can cause mental health issues in the first place.
“While it is likely that more stringent MORs also impose stress on participants, little is known about the degree to which different intensities of MORs could precipitate clinically defined mental illness in previously well participants,” it says.
“This report finally recognises what we have been saying for years – mutual obligations hurt people,” Australian Unemployed Workers’ Union spokesperson Kristin O’Connell tells The Saturday Paper. “We need to stop mucking around with the inherently flawed jobactive system that systematically breaks people and creates mental health issues.
“This policy failure, taken together with the brutally low payments, the government’s refusal to accept responsibility for robo-debt and countless other punitive measures meted out to poor people in this country, is just proof that the government is happy for people in the welfare system to be constantly brutalised and denied justice.”
A former national mental health commissioner and co-director of the University of Sydney Brain and Mind Centre, Professor Ian Hickie, says government policies ought to come with mental health assessments the way infrastructure projects must meet environmental approvals.
“You should be considering, could a program do harm? Not just not do good, but could it do harm? All of these issues should be looked at,” he says. “If you really care about mental health, why was social housing not a major focus of the budget in October? Continuation of JobSeeker and JobKeeper, investments in social housing, we would have said they were the big-ticket items for mental health in the Covid-19 era.”
Just hours before the Productivity Commission’s report pinpointed housing as a key determinant of mental health – housing “can be as, or more, important than healthcare”, the report said – the Liberal Party’s member for Mackellar, Jason Falinski, tweeted about Victoria’s $5.3 billion social housing plan. The move, he said, was an attempt by a “socialist” government to “entrench inequality”.
It was a moment of bald ideological fervour. For his part, the prime minister was far more subtle. He commended the Productivity Commission’s work. The report and advice from the national mental health adviser, Christine Morgan, he said, “offer very detailed and sober reflections based on excellent research on where we are as a country and, more importantly, what needs to be done”.
But his comments came after the Coalition had already announced the JobSeeker supplement would be cut again after Christmas to just $150 a fortnight. It was $550 a fortnight when first introduced at the end of April.
Analysis from the Australian National University, released last week, modelled the change and predicted an extra 330,000 people would be pushed into poverty. In total, 1.16 million people will be pushed back below the poverty line, or find themselves there for the first time, compared with the number if the $550 supplement had remained in place.
Then on Tuesday, the senate standing committee on community affairs released its final report into legislation that would extend and make permanent the “trials” of the cashless welfare card that have been running since 2016 in most places. While the committee recommended the bill be passed, both Labor and the Greens issued dissenting reports.
During that inquiry, the Royal Australian and New Zealand College of Psychiatrists implored the parliament to reject the bill.
“More than 50 years of psychological research shows that positive reinforcement strategies are more effective than punitive strategies in bringing about behavioural change,” its submission read. “[The trials] risk doing further damage by contributing to entrenched feelings of disempowerment, hopelessness and injustice.”
In a paper, published this week in the Australian Journal of Social Issues, researcher Simone Casey analysed the supercharged conditionality of welfare-to-work strategies in the era of Job Services Australia, which began under Labor in 2009 and was extended by the Coalition.
“Threat of sanction made the job seekers fear for their economic security,” Casey writes. “These threats to economic security evoked fear of not being able to meet the basics of survival such as being able to pay rent or buy food.
“This punitive activation was characterised by the experience of being hassled and bullied in ways that led to disempowerment that was detrimental to autonomy.”
And yet, for all of its now well-documented flaws, this system marches on.
In May, after four years of fighting and under threat of legal precedent, the Australian government announced it would repay about $720 million worth of robo-debt notices. James Cruz’s $16,000 dispute was finally over.
“My debt was immediately put to zero dollars as soon as they made the announcement,” he says. “They refunded the money I had paid.”
Cruz was part of the Gordon Legal class action, which extended the work of the Victoria Legal Aid brief. In all, the Commonwealth has now agreed to drop a further $400 million in debts raised under the program and pay a paltry $112 million in compensation to about 400,000 eligible people.
Cruz says he and many others were shattered.
“I actually feel this is really unjust,” he says. “Not only does the government escape liability for what they’ve done to us, it actually provides political cover for them to rewrite history about what happened. And going back to issues like the cashless debit card and punitive measures against people on welfare, the Labor Party has implemented those too.”
One such change to which he refers is Labor’s overhaul of disability pension rules in 2012, which saw the share of new recipients with a primary psychosocial disability fall by 37 per cent. Almost all of these people ended up on the then Newstart Allowance at an even lower rate of payment.
“The DSP and poverty are so innately linked,” Cruz says. “There are people who are disabled because they had to endure poverty. And reports like this come out and say, ‘This is not sustainable’, even though their recommendations do not go far enough.
“The reason the government doesn’t listen to them is because this is all ideological. It doesn’t have anything to do with actually providing evidence-based support to people. It has everything to do with punishing people into lower-wage work, insecure work and accepting their lot.”
During his launch speech on Monday, Morrison said all the right things about mental illness being a wicked problem. The report was “confronting” and “heartbreaking”.
“It’s not easy reading…” he said. “We need to go far beyond the health system, and we need a whole-of-economy approach.”
The Productivity Commission has given the prime minister an opportunity to begin the work of detaching policy from political instinct and ideology. This report is a schematic for the scale of the harm done and a way forward that hurts less. It’s up to Morrison to choose it.
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This article was first published in the print edition of The Saturday Paper on Nov 21, 2020 as "Big picture: Robo-debt, politics and poverty".
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