Basem Abdo (Calwell, Australian Labor Party) Share this | Hansard source

Australians should never be punished for seeking in good faith the help that their government offers them to manage life's challenges. Good government exists to lend a hand, not to turn that hand against the people it serves. Yet, through the bitter experience of robodebt, Australians have seen too clearly what happens when that principle is betrayed. Thousands of people were treated not as citizens entitled to fairness but as suspects to be pursued.

Labor is determined to repair the damage that was done to so many innocent Australians who were hurt by the previous coalition government's cruel and disastrous robodebt scheme, to restore trust, to uphold the law and to rebuild a system that treats people with dignity, because, when government makes an error, it is not a line on a spreadsheet that suffers; it is a person, it is families, it is the parent sitting at the kitchen table staring at a letter from Centrelink—it is the quiet humiliation of being told you owe money you don't have and never should have owed.

These mistakes go to the heart of something bigger than administration; they go to the social contract itself—the promise that our institutions will deal with people fairly and lawfully and that government will take responsibility when it falls short. That is why this bill is so important. It is addressing an issue that is less notorious and without the malice of robodebt but that, nevertheless, has a negative impact on vulnerable people in our community, and that is the longstanding process known as income apportionment.

With income apportionment, imagine your pay slip covers two weeks of work but begins halfway through a Centrelink fortnight. One week falls in the first Centrelink period, the other week in the next. If you work more shifts in one week than the other, your income fluctuates, so your payment should too. But for years Centrelink assumed that income was earned evenly across the whole pay slip period. It spread that pay across both fortnights, even though the law said that income could only be counted in the period it was actually earned. It made an assumption that every income-earning day was the same and that, as a result, recipients had been overpaid when in fact they hadn't. That's income apportionment. It sounds technical, but its consequences were very real.

For some, it meant an underpayment, a smaller payment than they were due. For many more, it meant a letter telling them they owed money to the Commonwealth. Debts were raised—some were repaid, some prosecuted—all based on a practice that was later found to be unlawful. This went on for nearly two decades and, while this was not robodebt—it was not automated, nor was it implemented against legal advice—it shared a troubling trait: a deep-seated presumption of mistrust towards those who rely on government support.

When the system starts from a belief that people on welfare are to be met with distrust, errors multiply and compassion disappears. That attitude costs more than money: it corrodes trust, it hardens the spirit of social safety nets and it leaves a stain that can take generations to remove.

Tammy is a financial counsellor who works with people in my community. She saw firsthand the real-life damage that was done to people who were slugged with a wrongful debt by income apportionment at a time when they were already struggling to stay afloat. Tammy told my office: 'There's this depressing feeling of "I'm being punished again. The government is after me. Oh, my goodness, it's the government. I'm scared and I need this money for my children." They'd often call Centrelink and agree to a payment plan where they'd promise something they couldn't afford. Imagine not having enough money for food because you've overpromised, you've got this debt and the government wants their money back and you feel like you are being punished. There's a sense of shame in not having enough money for food. Nobody ever wants to hear their child say, "I'm hungry, Mum."'

This is the bitter legacy that mechanisms like income apportionment left for far too many Australians. Thankfully, this legislation ends that once and for all. In 2020 a Federal Court decision made it clear beyond doubt that income apportionment was not permitted under the law that then stood. The government changed the legislation that year to fix the issue going forward, but that still left an enormous historical tangle. Decades of debts and decisions had been made using a method now deemed unlawful.

The Commonwealth Ombudsman's investigation examined what should happen next and what should have happened much sooner. The Ombudsman found that, since at least 2003, Services Australia and its predecessor agencies had been unlawfully spreading income across multiple fortnights. The effect was that people's payments were often calculated on the wrong evidence at the wrong time and for the wrong amount. The investigation also found that, when doubts were first raised in 2020, the agencies took too long to act. They sought multiple rounds of legal advice, some of it conflicting, but delayed finalising a clear position. They paused around 13,000 debt reviews and identified 87,000 potentially affected cases but failed to alert oversight bodies quickly enough. The Ombudsman made four key recommendations: (1) seek an authoritative legal view from the Solicitor-General or the Federal Court, (2) develop a clear policy on the secretary's power to review historical debts, (3) work with the Commonwealth Director of Public Prosecutions to manage the impact on past and future criminal cases and (4) share all relevant legal advice transparently across agencies.

The agencies accepted or partially accepted every one of those recommendations. The Ombudsman's message was plain: the law must be followed even, and especially, when it is inconvenient. This is a very important principle which we must never forget, especially when it's inconvenient. The administration of social security must be transparent, accountable and humane. This bill is the government's comprehensive response—an effective, rational response. It fixes the rules, reforms the debt process and builds in fairness for the future.

For the first time in more than 30 years, the small debt waiver threshold will rise to $250 and will now be indexed annually to CPI. That single change will wipe or prevent about 1.2 million small, undetermined debts in 2025-26—almost half the backlog currently sitting with Services Australia. It makes no sense to spend more money recovering a debt than the debt is worth. This change saves taxpayers money and spares ordinary Australians unnecessary stress. It brings an outdated threshold, unchanged since the 1990s, in line with modern realities.

Importantly, this bill also expands the special circumstances waiver, allowing decision-makers to consider a person's broader life circumstances when deciding whether a debt should be pursued, including extending it to situations of financial abuse or coercive control. If someone's partner controlled their access to income or pressured them to give false information, the system should recognise that. This reform delivers on Labor's 2025 election commitment to embed safety in Commonwealth systems and implement a key recommendation of the 2024 joint parliamentary inquiry into financial abuse. It ensures that our welfare system can never again be weaponised against those already living with abuse. It is practical reform with profound moral importance.

The bill also addresses the long shadow left by the income apportionment practice itself. Between the early nineties and 2020, millions of debts were calculated by using this method. The scale of this legacy is immense: around 5.5 million debts involving three million people and worth approximately $4.4 billion. To manually recalculate them would take years and divert thousands of staff away from their core job of supporting Australians who need help right now. That is why this bill does two things: first, it retrospectively validates the historical use of income apportionment to prevent mass legal uncertainty. Second, it creates a fair and compassionate pathway for those affected through the Income Apportionment Resolution Scheme. Under the scheme, people with debts from 1 September 2003 to 6 December 2020 will be eligible. They can apply for resolution payments of up to $600, depending on the size of their original debt. Applications open in January of next year.

This is how good governments should act, in terms of admitting where fault lines are in the system, compensating fairly and ensuring that such errors cannot recur, with a response that does not overwhelm the very same system designed to support vulnerable Australians. Others have asked, 'Is this robodebt 2.0?' It's not. Robodebt was a scheme born of deliberate disregard. It was automated and unlawful and was maintained against explicit legal advice. Income apportionment was a human error—manual, mistaken and unchallenged for too long, but never driven by malice. Yet both are linked by a common thread: the need to rebuild trust between citizens and the state. That is what this bill sets out to do. This package is fair, and it is fiscally responsible. It has an indicative cost of $283.7 million over the forward estimates and $41.2 million per year ongoing from 2029-30.

Those numbers matter, but so does what they represent: a system that values fairness, efficiency and humanity in equal measure. For decades, the administrative machinery of welfare debt recovery has been built on the assumption that error and fraud are widespread, but the evidence shows that the overwhelming majority of Australians do the right thing. This legislation recognises that reality and shifts our system from suspicion to support. In electorates like mine, where casual and shift work is common and people juggle multiple jobs to make ends meet, these technical errors are not abstract. They're lived experience. They're the reason someone's rent fell behind or their electricity was disconnected. This bill means those people will not be chased for minimal errors. It means decision-makers can see the full picture, including when coercion or abuse were at play. It means those affected by an unlawful process have a clear and fair path to closure.

The lessons from this saga extend beyond Services Australia and the Department of Social Services. They go to the culture of government itself. The ombudsman called it a lesson in lawfulness and a reminder that good intentions are not enough if the law is not followed and oversight is ignored. Transparency and accountability are not optional extras. They are the conditions of public trust. In government, mistakes will sometimes happen, but integrity is measured by how government responds to them. This bill represents that response. It is grounded in recognition, guided by law and motivated by compassion. This legislation is about more than technical amendments. It's about restoring a simple but vital truth: our social security system exists to support, not to punish. It ensures that people who did nothing wrong are not left carrying the burden of bureaucratic error. It upholds the law, strengthens protections and clears away years of accumulated unfairness. It reflects what Labor stands for: a government that takes responsibility, fixes mistakes and treats every Australian with respect.

I want to acknowledge the Minister for Social Services for her careful and principled work on this issue and on all issues in relation to her portfolio. I thank the community organisations—Economic Justice Australia, ACOSS, Legal Aid and so many others—who have advocated tirelessly on this issue. This is thoughtful, responsible reform. It is about integrity in administration, compassion in government and justice for ordinary Australians who deserve nothing less. I'll leave you with a thought from Tammy, who made it clear that being liberated from a punitive debt can be life altering for people on the margins: 'It means less stress. It means that a parent in crisis can say, "I will be okay; my kids will be okay." It means they've got a fighting chance to keep their heads above water.' When people reach out for help, their government should meet them with a hand, not a demand.

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