Steph Hodgins-May (Victoria, Australian Greens) Share this | Link to this | Hansard source

The committee is considering the Social Security and Other Legislation Amendment (Technical Changes No. 2) Bill 2025 as amended and amendment 2 on sheet 3481 moved by Senator Thorpe. The question is that schedule 5 stand as printed.

Penny Allman-Payne (Queensland, Australian Greens) Share this | Link to this | Hansard source

Just following the questioning this morning around schedule 5, I want to note that Economic Justice Australia and the Australian Council of Social Services put out a media release which stated:

The highly contested Schedule 5 amendment to the Social Security and Other Legislation Amendment (Technical Changes No.2) Bill 2025 (the Bill) has this morning taken up the majority of discussion in Senate.

During questioning about the legitimacy of the amendment, the debate included discussions about whether any organisations were consulted about Schedule 5. Led by Senators Penny Allman-Payne and Lidia Thorpe, Senator Katy Gallagher was asked whether any organisations were consulted. Comments made could have been heard as suggesting consultations did take place.

Both EJA and ACOSS would like to make clear that we were at no point consulted on the Schedule 5 amendment.

EJA and ACOSS confirm that, from the first notification from the Government about the proposed Schedule 5, both organisations have made clear we oppose the Schedule 5 amendment.

Subsequent to learning of the addition of Schedule 5 to the Bill, both organisations have put out strong statements opposing it. Each organisation has urged Parliament to reject Schedule 5.

We continue to urge all parliamentarians to reject Schedule 5 in its entirety.

And then there are a couple of links to their individual statements.

Minister, I just wanted to get some clarity. Earlier today you talked about the fact that you were talking with ACOSS and EJA about the way that they could work with you in relation to this schedule 5. Could you just elaborate a little bit more on what those discussions have actually entailed?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

Just to be clear in relation to that, I never once said that those organisations had been consulted. I said they were advised. If people have misinterpreted my comments, I just want to be clear about that. I said they were advised ahead of the government's public announcement, and that remains a fact.

My other comments this morning were that the minister has indicated she is prepared to work with those organisations as guidance around how that part of the bill will work once and if it passes the Senate, so that is really a matter for the minister and those organisations to determine.

Penny Allman-Payne (Queensland, Australian Greens) Share this | Link to this | Hansard source

I just want to clarify, because this morning my understanding was that there had been discussions about how they could do that. For clarity, at this point, is it just the case that the minister has indicated they will work with them, not that any discussions have happened about how that might occur?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

No, I didn't indicate that there had been discussions about that; I said that the minister had indicated to those organisations that she was prepared to work with them, and I'm advised that she has written to them to that effect.

Penny Allman-Payne (Queensland, Australian Greens) Share this | Link to this | Hansard source

Could you advise on what date the minister wrote to the organisations to that effect?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I don't have the exact date, but I understand it was last week.

Question agreed to.

Penny Allman-Payne (Queensland, Australian Greens) Share this | Link to this | Hansard source

by leave—I move amendments (1) to (6) on sheet 3499 together:

(1) Schedule 1, item 2, page 4 (lines 7 to 12), omit the paragraph beginning "Division 2 validates things done" in section 1112.

(2) Schedule 1, item 2, page 4 (lines 13 to 16), omit the paragraph beginning "Division 2 does not validate any income averaging" in section 1112.

(3) Schedule 1, item 2, page 9 (line 16) to page 14 (line 25), Division 2 to be opposed.

(4) Schedule 1, item 2, page 16 (line 32), omit paragraph 1117D(12)(a).

(5) Schedule 1, item 2, page 18 (line 28), omit subsection 1117E(9).

(6) Schedule 1, item 2, page 21 (line 8), omit subsection 1117F(11).

The Greens have real concerns about the retrospective validation of income apportionment. We understand this is not the first time that Minister Plibersek has retrospectively made lawful things that were unlawful. She did something similar when she was previously the minister. We have a concern that the retrospective validation of income apportionment will impact people's rights—in particular, the ability for individuals to challenge convictions arising from this unlawful method—and it represents a bad precedent for future legislation.

In relation to this particular part of the bill, the government has been unable to provide clarity regarding support for individuals who've been subject to a conviction as result of income apportionment. In his submission to the inquiry on this bill, Dr Rudge notes:

Indeed the implications of a person accepting the resolution payment are of great concern. It does not appear clear to me whether the person forfeits their rights to appeal the income apportioned debt or to appeal any criminal conviction that may have arisen in respect of the income apportioned debt. This should be clarified and no such forfeiture should be the consequence of the resolution payment scheme created by this Bill.

My question to the minister is: why is retrospectivity necessary, and would it undermine the resolution scheme—and, if so, how would it do that?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I think I can answer in the way I'm going to respond to this amendment. The government will be opposing this amendment. Retrospective validation of income apportionment is a central part of the government's resolution approach and is necessary to manage the legal resourcing and operational risks posed by income apportionment. Retrospective validation recognises that income apportionment, although not consistent with the legislation prior to this bill, was nonetheless a reasonable method for determining the extent to which someone's income affects their entitlements or a social security payment.

In the vast majority of cases, income apportionment only affected debts around the margins. The person did own a debt; the question was just how much. Without retrospective validation, millions of social security decisions, going back decades, will remain incorrect at law. Going back and recalculating millions of debts is not viable. Debts many years old would have to be reopened, which could cause distress and protracted uncertainty for the millions of current and former social security recipients affected. It could cost up to an estimated $9 billion, require thousands of officials working over many years and divert resources from frontline services.

Section 1117C in schedule 1 of the bill expressly preserves individuals' right to bring legal proceedings and pursue legal remedies in respect of any existing cause of action—for example, any common-law remedy, such as compensation, that may be available in relation to the use of income apportionment. Decisions affected by income apportionment can still be reviewed. If a decision affected by income apportionment is reviewed in future, it will be reviewed in line with the method in this bill.

Penny Allman-Payne (Queensland, Australian Greens) Share this | Link to this | Hansard source

Minister, during the inquiry into this bill, when the person giving evidence from Economic Justice Australia was asked whether they had concerns about retrospectivity, their comment in the inquiry was that it wasn't their preferred approach, but that it wasn't on the table—sorry. Their preferred approach was to waive the debts, noting that many of these debts are very old. So my question is: why has the government gone down the path of making past actions that were unlawful lawful, which is effectively giving the department a free pass for more unlawful activity, which we see repeatedly in the Department of Social Services. Why did the government choose to go down that path, when they could have simply waived outstanding debts?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

On the issue of income apportionment, this practice was utilised over many years—I think going back to the 1990s—and it was understood to be a lawful way of interpreting the social security legislation. As it turns out—and, as senators know, that has now become clear—it is incorrect, and that process had been used in an inconsistent way with the legislation.

As I just said, in relation to explaining our opposition to the amendment being moved, I understand retrospective legislation is something that is used very rarely. Nobody, I think, enjoys coming in and doing retrospective legislation. On very rare occasions, there are times when it is the appropriate course of action. In relation to the issues that I've just outlined, in relation to the cost, in relation to the millions of customers that would have to go back and the amount of resources that would be displaced to go and deal with this, if we weren't retrospectively dealing with this matter, I think it would be just unreasonable.

In the vast majority of cases, income apportionment only affected debts around the margins, like I just said. These are the situations where the person was overpaid. The question is just by how much. Most of those debts are not due to fraud. Debts can occur because a person made a mistake when reporting, or due to an unintended oversight, but they are still debts, and I think that needs to be understood.

In the vast majority of those cases, it would be unreasonable to waive that debt in full. For example, there was a $3,900 Newstart allowance debt that arose because a person misrepresented their earnings from multiple employers for 10 months in 2016. When recalculated, that debt decreased by $300, but this is still a significant amount owed to the government. Based on all the information available to us and the resources that would have had to have been deployed if we were to have gone back and investigated all of those cases, and in some cases spending hours only to find out that income apportionment hadn't been used—so there were all of those examples as well—the government decided that this was the most appropriate course of action.

Penny Allman-Payne (Queensland, Australian Greens) Share this | Link to this | Hansard source

Minister, we currently have a situation where we've got the Department of Employment and Workplace Relations, in conjunction with Services Australia, having to regularly indicate that they are, for example, suspending payment cancellations because it turns out that the basis on which that was happening is unlawful. We've got a department that have said in estimates that they can't be certain that the targeted compliance framework, in the way that it's been operationalised—this is their language—is consistent with the legislative requirements, which is another way of saying that it's unlawful. We have had numerous occasions in the past where it seems that Services Australia or the department has miscalculated something or hasn't done it the way it's supposed to.

I note that Dr Rudge, in his evidence to the inquiry into this bill, said that whilst there is this general view that everybody thought that what they were doing was lawful at the time and was therefore fine there were different ways that the department could have apportioned people's income and that this unlawful way was chosen in particular because they took the view that it was more likely to uncover fraud. It was an active decision to do it that way. Minister, can you understand why people on income support are concerned that the government is again passing legislation to retrospectively validate something that was unlawful. I mean, robodebt was the most egregious example, but we have this ongoing issue where unlawful activity takes place and then the government and the department get a free pass. Can you understand why that causes such a level of concern and distrust amongst people on income support?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

To be clear, robodebt and income apportionment, although they're often put together, are quite different from each other. I want to make that point clear. In relation to the work that's underway, Minister Plibersek and I are dealing with a lot of issues that have been identified around the legislative framework and how it's put into practice. Where those issues arise, governments have to deal with them.

Income apportionment hasn't happened since December 2020—I think it's December 2020—so this is not a current problem. But we are cleaning it up. We are trying to deal with it and make sure that the legislation aligns with practice. In dealing with that, yes, on income apportionment, we have had to go back 30 years and deal with the fact, which has become clear as of December 2020, that the way it had been done for 30 years was inconsistent with the legislative framework. So we're dealing with it and we're trying to deal with it in the fairest way. We're dealing with it in terms of some of the changes we're putting in place on debt recovery and waiving debts. I agree that the trust of people who receive income support payments is essential, and part of trying to ensure there's trust in the system is dealing with problems when they arise. That's exactly what we're trying to do here today.

I've already said that retrospective legislation is not something that anyone who comes into this chamber is happy to do, but there are times when it is the most appropriate course of action to deal with a problem that has affected millions over 30 years and to deal with it in the most reasonable and careful way. That's what this bill does.

Penny Allman-Payne (Queensland, Australian Greens) Share this | Link to this | Hansard source

The relevant legal case that essentially gives rise to this—

Progress reported.