Robodebt inquiry probes department role

A royal commission into robodebt has probed the actions of key department figures as fundamental issues with the failed scheme came to light.

It comes after former Prime Minister Scott Morrison told the inquiry he wasn't privy to discussions between departments that flagged the scheme as unlawful.

Karen Harfield, who was general manager for customer compliance at the Department of Human Services at the time, said she noticed a swell of dissatisfaction by welfare recipients.

She told the commission on Thursday, by around September 2016 she became aware income averaging was being applied to more recipients than previously intended.

Robodebt involved using individuals' annual tax information provided by the ATO to determine average fortnightly earnings and automatically establish welfare debts, an approach ruled unlawful by the Federal Court in 2019.

The scheme wrongly recovered more than $750 million from 381,000 people and led to several people taking their lives while being pursued for false debts.

"The recipient would be sent a letter, whether they received the letter or not, if there was no engagement from the recipient with the department, debt would just be calculated on the basis of income average," Counsel Assisting, Angus Scott KC put to Ms Harfield.

"And what…you were becoming aware of was that there were significant levels of recipients whose entitlements were being incorrectly calculated because no reasonable steps to investigate were being undertaken."

Ms Harfield replied, "In addition that they weren't providing further information, maybe hadn't gone online to actually engage in the process, yes." 

Ms Harfield said she was involved in discussions with "maybe a dozen or more" directors in her department as to the issues that were arising with the scheme.

In one email to a superior Ms Harfield stated the methodology of assessing employment income by Centrelink had not changed and that "income averaging" was only used as a last resort.

"You would agree that is incorrect?" Mr Scott asked Ms Harfield.

Ms Harfield replied, "It was the way that it was described to me, I agree that it is incorrect."

On Wednesday, Mr Morrison blamed departmental staff for omitting legal concerns from a policy proposal he presented to cabinet despite having signed an earlier briefing document in which concerns were raised.

"Had that advice come forward I sincerely believe we would not be sitting here today," he told the commission.

Commissioner Catherine Holmes SC questioned why Mr Morrison had not inquired further as to how the legislative issues had been resolved after they disappeared.

"That is how the cabinet process works," he replied.

"I was satisfied that the department had done their job."

Ben Lumley from the Department of Human Services will also appear as a witness before the commission on Thursday.