Summary

Between July 2016 and November 2019 the Australian Government ran an automated debt-raising scheme, known operationally as the Online Compliance Intervention. Annual income reported to the tax office was averaged across 26 fortnights and compared with the fortnightly income people had declared to the welfare system; any difference triggered a debt letter, with the burden of proof shifted to the recipient. The calculation was plain rule-based arithmetic, with no machine learning — and it was unlawful, because averaged income cannot prove a debt under the Social Security Act 1991.

Scale

About 433,000 people were affected and 470,000 debt notices issued; 381,000 people had money wrongly recovered from them, totalling A$751 million. A$1.73 billion in debts was raised in total.

Findings

The Federal Court (Prygodicz v Commonwealth (No 2), 11 June 2021) approved a settlement and found that the averaging method did not support lawful debts. The Royal Commission's final report (7 July 2023) found the scheme unlawful and made 57 recommendations. The Australian Public Service Commission referred 16 officers, 12 of whom were found to have breached the Code of Conduct across 97 instances. The National Anti-Corruption Commission found corrupt conduct by two senior officials but insufficient admissible evidence for criminal prosecution.

Remedy

Relief under the 2021 settlement was valued at A$1.872 billion, followed by an additional Commonwealth settlement of about A$475 million in 2024. Seven families connected a relative's death to the scheme on the Royal Commission's public record; this harm cannot be remedied. Health effects are recorded only at the aggregate level of that public record.