Robodebt, a government automated debt recovery system, is unlawful, Federal Court rules

Author:Ms Sonia Hickey and Ugur Nedim
Profession:Sydney Criminal Lawyers

The Federal Court of Australia has found that Centrelink's debt recovery system is unlawful, in a decision that could pave the way for more Australians to take legal action.

Deanna Amato is just one of robodebt's victims, but her case is typical of many who have found themselves on the receiving end of a debt notice.

The robodebt system decreed that she owed a debt of $2900 to the Department of Human Services (which runs Centrelink), based on the period between 2011-12 when she was receiving Austudy.

The overpayment notice was a result of robodebt's system of 'debt-averaging', whereby the software calculates a person's average fortnightly income based on their annual tax return figure.

The problem, however, is that the software does not make allowances for those who work part-time or on a casual basis, or people who have seasonal jobs, or claim welfare payments for part of the tax year; resulting in thousands being issued with debt notices in error, and vigorously pursued, despite there not being a debt at all.

Many have also received notices with inflated debt figures based on incorrect calculations or misinformation within the system. Others, receiving payments such as Youth Allowance and Newstart, have been required to verify their income dating back as far as 2010, an arduous and sometimes almost impossible task.

Many simply paid what was asked of them, while others who could not afford to pay were driven to depression or even the brink of suicide.

Ms Amato versus the federal government

Victoria Legal Aid challenged the federal government on behalf of Deanna Amato, in what is believed to be the first legal case of its kind.

Ultimately, Justice Jennifer Davies found that the court "could not have been satisfied that a debt was owed in the amount of the alleged debt".

Her Honour also remarked, "the demand for payment of an alleged debt... was not validly made", finding that the notice garnishing the plaintiff's tax return was "not a lawfully issued notice".

The court ordered the federal government to reimburse Ms Amato interest of $92.06, and pay her legal fees. The Department had already waived its debt of $1709.87 prior to the court ruling.


Robodebt's official name is Online Compliance Intervention. It is an automated debt recovery system that the Turnbull Government introduced into the Department of Human Services in 2016. It has been a source of controversy ever since, not just for the way debts are calculated, but also for...

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