The Department of Human Services has dropped a debt it raised against a Melbourne woman, who is challenging the Coalition’s robodebt program in the federal court, The Guardian reports.
In February, Victoria Legal Aid and Madeleine Masterton filed a challenge against the “cryptic” process by which Centrelink’s automated debt recovery scheme calculates alleged welfare overpayments.
But the test case faces a new hurdle following a decision by the department to drop its claim on the $4,000 it told Masterton she owed the government in July last year. The move allows the commonwealth to argue it has no case to answer.
It is now unclear whether the court will go on to examine the legality of a program under which the government has demanded about $1.5bn in overpayments from former and current welfare recipients, and which Labor has described as “shabbily conceived”.
Last month, the department told Masterton it had recalculated the alleged debt and found no money was owed.
But the decision emerged in a federal court hearing only last week, prompting her barrister, Peter Hanks QC, to accuse the department of acting in “bad faith”.
“It can raise a debt. It can then recalculate, recalculate it in a way – and, of course, the recalculations are entirely cryptic at this stage; they’ve not been revealed – that destroys the debt, and by destroying the debt, they are then able to come to this court and say there’s no utility,” Hanks said.
He maintained that the case should proceed.
The department’s lawyer, Zoe Maud, said there was “no basis for the [bad faith] allegation”.
Justice Jennifer Davies is yet to rule on whether the case can proceed. It will return to court in August.