Former chief counsel did ‘nothing’ to address legal doubts over robodebt, royal commission hears

The former chief counsel at the Department of Human Services has been told at a royal commission that she and her team did “nothing” to address legal doubts over the robodebt scheme despite several warnings.

The commission is investigating why and how the unlawful Centrelink debt recovery scheme was established in 2015 and ran until November 2019, ending in a $1.8bn settlement with hundreds of thousands of victims.

Continuing her evidence at the royal commission on Tuesday, Annette Musolino endured repeated questioning about the Department of Human Services’ failure to appeal tribunal decisions that found the scheme’s central plank – a welfare debt calculation method known as income averaging – was unlawful.

This meant the decisions of the Administrative Appeals Tribunal (AAT) remained confidential and the legal questions weren’t considered by a higher jurisdiction, which critics say was crucial in allowing the unlawful scheme to continue for years.

Related: Age pensioner felt ‘sheer terror’ at receiving robodebt letter demanding $65,000, inquiry told

Under questioning from counsel assisting, Angus Scott KC, Musolino insisted that some AAT decisions had supported the robodebt program. She said the decisions had “cut both ways”.

But the commissioner Catherine Holmes AC SC said that was all the more reason for the department to seek authoritative independent legal advice, something it failed to do while the scheme ran for four years.

“Frankly, it seems to me you let the system run, getting decisions from the AAT that told you there was a fundamental problem with its legality on a kind of, ‘case by case, it doesn’t really matter’,” Holmes said.

“You were chief counsel, you were supposed to keep an eye on all this. You seem to have been oblivious to what was going on, or you knew,” Holmes added.

Musolino responded that her role was to “manage” the legal division, which meant having systems in place to monitor the AAT decisions.

“I couldn’t do the work of everybody in the division,” she said.

Musolino said the department believed in 2017 that the legal issues around robodebt had been “sorted out”.

But Holmes responded: “You had done nothing to get it sorted it out. Not even gotten advice.”

Musolino said the department was relying on the 2017 internal legal advice from DSS that suggested robodebt may have been justified. However, the department also held more categorical legal advice from 2014 saying it was unlawful.

Holmes said the problems with the scheme “could have been dealt with in March 2017” but weren’t “until the end of 2019”.

“I accept that,” Musolino responded.

The inquiry heard on Monday the department had drafted a request for legal advice from the Australian government solicitor in January 2017, but it was never sent.

Musolino was shown internal advice she had received from DHS lawyers in May 2017 saying that there was “no error of law” or the department had “no grounds for appeal” in cases where the AAT had said the robodebt scheme was unlawful.

Despite this, Musolino told the royal commission she was comfortable in the scheme’s legality.

“The Ombudsman’s report had come out in 2017 which gave me assurance and confidence about the program, and the Department of Social Services view, I still had in my head,” she said. “There was nothing in this that made me concerned.”

Holmes noted the ombudsman had not provided a “legal opinion”.

She took Musolino to a specific case she was briefed on that said income averaging did “not comply” with the social security act.

“Similarly unperturbed by that, I take it?” Holmes said.

Holmes added: “It’s enough to be the subject of discussion among lawyers in the department … and yet nothing happens.”

Musolino said that despite the discussion, that didn’t “lead us to a conclusion that [the scheme] is legally invalid”.

Musolino is currently chief operating officer at Services Australia.

Musolino’s evidence will continue next month.