As more terrible details emerge in the robo-debt royal commission, a case is being built of misfeasance in public office. By Rick Morton.
FW: URGENT: Tudge leaked personal data to cow welfare critics
Early on the morning of February 18, 2017, staff of then Human Services minister Alan Tudge saw the front page of The Saturday Paper, dedicated to a story about the death of Rhys Cauzzo, who killed himself after being hounded by Centrelink debt collectors. They immediately went on the offensive.
“It is one of the most disgraceful pieces of reporting I’ve ever seen and, unfortunately, The Saturday Paper has left me with this impression before,” senior media adviser Rachelle Miller wrote at 7.33am, in an email tagged “FW: URGENT: HEAD’S UP”.
She noted that he “owed a debt” and “did not declare an entire employer”. There was no mention of his treatment by debt collectors or his suicide. Miller signed off, “Nice start to the weekend!”
Within hours Tudge and his staff had sought legal advice from the Department of Human Services’ chief counsel, Annette Musolino, clearing the way to use a loophole in the social security law to release Cauzzo’s personal Centrelink record.
The full machinery of government was then set towards smearing the reputation of the 28-year-old florist and musician. “Response looks fine from a legal perspective in that we are disclosing [protected information] for the purposes of the social security law,” Musolino wrote in the advice.
“To correct record to ensure public confidence in the integrity of system.”
This was not the first time Tudge had authorised the release of the otherwise protected personal information of welfare recipients. He had done so on at least six occasions since January 25, part of a desperate bid to turn the tide on negative robo-debt stories.
Four days later, the minister would again release information. This time, it was in response to an opinion piece published in the then Fairfax papers under the full name of the author. Tudge’s office disclosed her Centrelink information to another journalist who wrote an article in response, pushing the government’s line.
In the stand at the Royal Commission into the Robodebt Scheme, Tudge became uncomfortable as these actions were detailed. He asked whether the inquiry had the power to examine this specific case, because it did not involve the so-called robo-debt scheme.
“Well, we’re talking about – possibly, on some evidence we’ve heard – a strategy to intimidate people who might have complained about robo-debt,” Commissioner Catherine Holmes said.
Tudge was curt: “I don’t agree with that, commissioner.”
He continued: “There was a lot of misinformation ... and certainly I was keen to correct some of that. To point out that, well, someone is claiming that they were being hard done by by this so-called, the automated debt recovery system, when, in fact, they weren’t.”
According to Miller – who was awarded a no-liability $650,000 payout from the Commonwealth for bullying and harassment she alleges happened while she worked for Tudge and Senator Michaelia Cash – she and others in the office thought the people being quoted in the media were “whingers”, dole-bludgers or, worse, committing fraud.
This was an ongoing theme in Tudge’s communications strategy. During an interview with A Current Affair in December 2016 he now infamously said that if a person is doing the wrong thing “we’ll find you, we’ll track you down and you will have to repay those debts and you may end up in prison”.
In a testimony littered with the phrases “can’t recall” and “I don’t know”, Tudge was adamant that he remembered the precise question put to him by the journalist for ACA and that it, he claims, was pointedly about welfare fraud.
But Tudge had briefing notes that explained, in a clear table, that welfare fraud accounted for just 0.1 per cent of all transactions in the system he oversaw. Its role in his media commentary was vastly disproportionate.
“I’d suggest it to you that it was an easy fix, that you could put out something very clear ... because you had knowledge of actual fraud cases, and it was minuscule,” senior counsel assisting the royal commission Justin Greggery, KC, said on Wednesday.
“That is, you could go further: you could actually say in your interviews that fraud represents 0.1 per cent.
“I’m suggesting that the reason you didn’t do it was the overlay of fraud made it more likely that people would engage with the [robo-debt] system and repay the money. There was a particular strategy.”
Tudge was dismissive. “I disagree,” he said.
An ugly “strategy” of demonising welfare recipients extended to almost all elements of the official response to the developing media storm.
In the Rhys Cauzzo matter, in the week following publication of The Saturday Paper story in February 2017, the minister’s office debated the merits of releasing a dead man’s personal information in order to strike back at what they perceived to be unfair coverage.
Tudge’s chief-of-staff, Andrew Asten, appeared to draw a line in the sand.
“I would advise against going through these details in public because I think it is a bad look to be discussing the wrongdoing of a person who committed suicide.”
He was overruled, presumably by Tudge himself, who micromanaged every aspect of his office’s media strategy, down to dictating the formatting of documents. Journalists were duly briefed about the “facts” as the government saw them.
What is particularly telling about this specific episode – one in a catalogue of grotesque and deliberate acts designed to save robo-debt from “unethical” journalists, as Miller described them, and their good-for-nothing welfare complainants – is that Tudge ordered an investigation into the department’s handling of Cauzzo’s matter, but only to make them look good.
A month after briefing journalists with Cauzzo’s protected Centrelink record, a departmental liaison officer working in Tudge’s office emailed her colleagues in the DHS with a “specific request” from the minister. The department and minister’s office had been drafting a letter to send to Rhys Cauzzo’s mother, Jennifer Miller.
“The Minister has a specific request to open an investigation into Rhys’ circumstances,” the officer wrote on March 31, 2017. “He would like a brief on the investigation. The intent is to be able to update the letter to include a line similar to [redacted] letter, stating that he has investigated the matter and is confident the Department has done everything correctly (etc).”
Within days, Tudge got the pre-determined outcome he was looking for: a ministerial brief from his department that noted “all interactions were appropriate and undertaken within the parameters of departmental processes”.
What Tudge didn’t do, however, was investigate the use of income averaging in the creation of debts attributed to Rhys Cauzzo. Part of the fury about The Saturday Paper story at the time was that it was “not a robo-debt case” – even though this newspaper did not suggest that it was. The royal commission heard on Wednesday that Cauzzo’s matter was part of the manual PAYG intervention, which still included the use of income averaging and is now considered to be the very first iteration of the illegal robo-debt scheme.
Greggery said that this matter was “the first point in time when the potential adverse consequences have gone beyond a matter of mere finance”.
Addressing Tudge, he said: “Did you ask for an investigation into whether the role of averaging led to the death of Mr Cauzzo, a factor relevant to the suicide?”
Tudge said what had been written in the piece “concerned him” and he “did want to … directly understand what had occurred”.
Tudge’s inquiry deliberately avoided the two key criticisms of the debt recovery system, aired at length by this time in early 2017 and now accepted by Tudge. They were that debts being raised under the system were inaccurate and that Centrelink recipients were being swamped by the sudden reversal of the onus of proof.
Now, people were killing themselves.
The conflagration had ruined Tudge’s summer. There were many of these negative stories, beginning in December 2016, before Tudge went to Britain on a family holiday. Over Christmas, however, the situation was so obviously bad that then prime minister Malcolm Turnbull demanded Tudge cut short his holiday and return to deal with the crisis.
In the royal commission this week, the former minister made a point of mentioning this holiday over and over again. It was a significant moment in a significant career because it was a media disaster and Tudge was a media performer.
Miller had described her then boss as a “media tart” so obsessed with making a name for himself that he, a junior minister, sometimes did even more media appearances than his senior minister, Christian Porter, who held the Social Services portfolio at the time.
Turnbull had forwarded to Tudge an article by the Fairfax economics editor Peter Martin, a former Treasury official and economist, in which Martin confidently – and presciently – declared the raising of Centrelink debts by use of income averaging could not be legal.
Tudge flew back to Melbourne on January 9, 2017. From there he went immediately to Canberra, where “every second or third day” he held meetings in his parliamentary office, in committee meeting rooms or in the Department of Human Services, with the most senior leaders.
“When I came back I very quickly had confirmed for me that this was a program that had been through the cabinet process,” he told the commission. “They are a rigorous process that always have a legal overlay through it so Social Services lawyers would have to have formed a view that it was lawful.”
Later, Tudge claimed it was “unfathomable” to him that a secretary of his department would ever continue with a scheme that he or she knew to be illegal. That said, he didn’t expect them to bring their concerns to him, if there were any, without first “resolving” them within the department.
And so his self-described “laser-like” focus on fixing the scheme never went to the issue of lawfulness in this period. It apparently never went there at all during his time as minister.
“I did not know the full context about the legalities,” he said. “It just had not crossed my mind until the [2019 federal] court case.”
One of the “hurdles”, as Justin Greggery described it, was that Tudge knew how important these welfare compliance schemes were for the Coalition government because he had unwittingly, or otherwise, helped further them in the July 2016 election.
Tudge was sworn into the ministry in February that year and told the royal commission that the then Finance minister, Mathias Cormann, had asked him if there was anything more they could get out of welfare compliance – that is, he was asked by one of the most senior members of the government if there were budget savings that could be made from welfare recipients.
After this conversation, Tudge spoke with his department’s secretary, Kathryn Campbell, to pass on this request. Her department dutifully sent a raft of so-called “new policy proposals”, or NPPs, with attendant savings figures that could be pursued.
The April 28 brief noted there were “five NPPs that will increase compliance and debt activity and deliver significant savings commencing July 2016”.
That year was an election year. Tudge agreed that, once announced, there would be added political pressure making it more difficult to walk-back any money-saving measures if they were later deemed too hard to implement. He noted Cormann would “have absolutely been aware” of the figures.
Tudge’s office had sent an email to then treasurer Scott Morrison or Cormann, or both, with the new policy proposals attached “for the purpose of announcing during the election campaign, literally a few days before the election”.
According to estimates shared with the commission, robo-debt was expected to add $1.2 billion to the 2016-17 bottom line. If the debts were raised under the older, manual, lawful system, that number dropped to $150 million.
One post-election measure was to extend the robo-debt scheme by two years. By early December 2016, Tudge had been given a brief from his department responding to questions about the fiscal savings robo-debt programs were expected to produce for the budget over the forward estimates.
That figure was $4 billion. Tudge was quick in instructing his staff to drop this story with the “friendly” newspaper The Australian, where it ran on page one on December 5, 2016, with the headline: “Welfare debt squad hunts for $4bn.”
The interview with A Current Affair followed on December 6, but, according to the national media manager for the Department of Human Services, Bevan Hannan, Tudge was so “bullish” in his approach that it put a big target on their backs.
“It conflated welfare fraud with compliance activities,” Hannan told the inquiry on Tuesday.
“The rest of the story had nothing to do with putting people in jail, but that – that grab seemed to galvanise everyone.
“And so suddenly instead of being a story which would explain what we are doing, it put a big target on things, and the program and the minister became the hunted.”
Having amplified a problem that was always coming down the pike, the online compliance intervention hit full speed in September 2016. When problems began being reported in the press, Tudge fought back with the only weapon he had bothered to sharpen in his political career: a dependent and obsequious relationship with the right-wing media.
In January, on his instruction, the Department of Human Services put together a dossier of all of the people with debts who had complained in the media. This information contained their protected Centrelink information, albeit anonymised, and special legal sign-off from DHS chief counsel Annette Musolino. It was sent to The Australian’s political editor, Simon Benson. He ran the story as the front-page splash in the next day’s edition: “Debt scare backfires on Labor.”
This tactic of tying a neat bow around a story and handing it to a favoured journalist, Greggery said to Rachelle Miller, was to ensure the story was written “or at least presented in a way that the minister liked”.
She agreed. “And Simon Benson,” she said, “was very good at doing that.”
This preoccupation with establishing a “counternarrative”, as Miller described it, may have clouded the minister’s judgement. But there were at least three concurrent and damning threads running as Tudge faced the royal commission this week. Many of them involved the at times clandestine behaviour of his own department.
One prominent figure in this is DHS chief counsel Annette Musolino, who herself spent nearly one-and-a-half days in the royal commission witness box this week.
During Musolino’s own leave over the new year break in 2017, lawyers within her team at the Department of Human Services drew up draft instructions to seek advice from the Australian government solicitor that could have settled once and for all whether robo-debt was legal.
The instructions were never sent.
Although “very experienced” deputy general counsel John Barnett had emailed the draft to other senior colleagues Mark Gladman and Matthew Daly on January 10, Musolino says she was never told about this manoeuvre and never mentioned the instructions in her statement to the royal commission.
“They didn’t come to light in searches I had undertaken to prepare my statement,” she told the inquiry on Monday.
“I was on leave. And I haven’t seen them – to my knowledge. To the best of my knowledge, I have never seen those before.”
It is worth noting that these instructions were drawn up within a day of Alan Tudge arriving back in the country from his aborted overseas holiday to deal with the unfolding catastrophe.
Did he know anything about them?
“I’m asking you,” Greggery said on Thursday, “whether you can explain why, if you didn’t turn your mind to legality in the first couple of days when you came back, your legal department would be preparing instructions to the Australian government solicitor about the lawfulness of averaging?”
Tudge said he couldn’t explain it.
“It’s the first I’m even aware that that was occurring,” he said.
Musolino was not in the dark about potential legal issues with the scheme. From at least late 2016 and then into 2017, her team was closely monitoring and providing reports on the outcomes of Administrative Appeals Tribunal decisions that were either rejecting the use of income averaging to raise debts or waving them through.
In one particular matter, in a March 2017 decision by then AAT member Terry Carney, Musolino’s own lawyers agreed Carney had made no error of law in his reasoning. Despite this, and model litigant obligations placed on Commonwealth agencies, Musolino said DHS didn’t have to agree with the decision. It only had to implement it. If there was no appeal against the decision, it was very unlikely it would receive attention – and so the scheme could continue.
“So how does the position get resolved where the AAT is making decisions that a significant program is being conducted on a basis which isn’t lawful?” Commissioner Holmes asked.
“It just ticks along, and as long as nobody ever recommends an appeal, which they never need to because you can always implement the decision without regard to the program, it just goes on forever, does it?”
Musolino said the AAT decisions “were cutting both ways”. Commissioner Holmes was unimpressed. “Okay,” she said. “I think you’re either missing my point wilfully or inadvertently.”
The March 8, 2017, decision from Professor Carney did involve a general point of law that Musolino eventually accepted, after much circular argument. Essentially, it found a fundamental aspect of the scheme was unlawful. “That’s … yes,” Musolino finally said.
This was a significant moment in the hearings, although it was dealt with carefully by Commissioner Holmes.
Musolino was shown a ministerial brief, prepared well over two years later, on November 6, 2019, for then minister for Government Services Stuart Robert, following the unequivocal receipt of legal advice from the solicitor-general, which declared robo-debt had no basis in law.
Even though the solicitor-general’s opinion was “not a declaration of law” it was sufficiently alarming to DHS officials that they recommended robo-debt be terminated.
“There is considerable legal and reputational risk should the Department continue to administer the program in its current form,” the document says.
“[Then] Secretary of the Department, Ms [Renée] Leon, also carries personal risk associated with the continued administration of the program in its current form by reference to various obligations that she had as a public servant.”
Crucially, the brief also put in writing a case that is being built brick by brick by the royal commission. “The continued administration of the program in its current form may amount to misfeasance in public office,” the Robert brief says. “This is because continued administration of the program after receipt of the opinion would contribute to an argument that the Department had been raising and recovering debts in bad faith.”
Commissioner Holmes thought that the Carney decision might have put a concrete time line on when officials ought to have acted. A key element of the offence is acting with “reckless indifference” to the use of an official power that was reasonably expected to cause harm.
“The fact is that the AAT was finding that averaging was not a legitimate procedure in cases – not all of them, but in some – and that proved to be perfectly correct as the solicitor-general’s opinion demonstrated,” Holmes said on Tuesday.
“So that went on through 2017, 2018, to some time in 2019, when, around about March 2017, somebody could have been having a look at this. Is that a fair summary? You were getting decisions from the AAT pointing to a problem?”
When then senior minister in the Social Services portfolio Christian Porter took the witness stand on Thursday afternoon he was asked about whether, while acting for the holidaying Tudge in late December and early January 2017, he formed the view that there was a “reticence” from DHS to publicise detail about how the online compliance system worked.
“I recall … a sort of acceptance of the position and the talking points,” he said.
“That then turned, at some point, into circumspection. Then I became sceptical and in the end I was extraordinarily frustrated with the level of information being provided.”
There was another suicide after Rhys Cauzzo’s. It involved a woman who killed herself just five days after receiving a debt “discrepancy” reminder letter. The woman had previously sought social work support through the department but had no “vulnerability indicator” on her file.
Despite the fact an employment separation certificate was already on the woman’s Centrelink file, which contained more detailed employment information, compliance officers were not permitted to consider this because, under the design of the scheme, it could never have allowed the government to recoup billions of dollars.
This was an element of the scheme Tudge had promised to fix five months earlier, in January. He never did.
Unlike with Cauzzo, whose case had been the subject of reporting, Tudge never ordered an investigation into this case.
Greggery noted this difference and the reason for it. “I am suggesting,” he said, “the reason you didn’t order an investigation into this case, and you did for Mr Cauzzo, is because you were confident this wouldn’t reach the media.”
Tudge denied this.
This article was first published in the print edition of The Saturday Paper on February 4, 2023 as "FW: URGENT: HEADS UP: Tudge leaked personal data to cow welfare critics".
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