Debt recovery agency used automated technology to issue garnishee orders on bank accounts of thousands of people
A former Australian human rights commissioner has called for a widespread audit of the use of automated software in debt collection after a scathing report found the New South Wales government had for years unlawfully taken money from financially vulnerable people.
Labelled “Robodebt 2.0” by the state opposition, the NSW Ombudsman report revealed the state’s debt recovery agency unlawfully used automated technology to issue garnishee orders over the accounts of thousands of people during a three-year period from 2016.
The report, tabled in the NSW parliament, found some vulnerable people’s bank accounts had been “emptied” by the scheme, which used automated technology to issue the orders to recoup unpaid fines.
“In a number of cases, the complainants had been left with a zero balance in their account. Some of the complainants were welfare recipients, whose bank accounts had held the funds they were receiving from Centrelink as their only source of income,” the report said.
The use of automated technology led to an explosion in the use of garnishee orders by the state government. In 2010 the agency responsible for the program, Revenue NSW, issued 6,905 orders. By 2019 it had increased to 1.6m.
“As the number of garnishee orders issued increased, we continued to receive a significant and increasing volume of complaints about their administration and impact,” the report said.
But the scheme was unlawful. Under the NSW Fines Act the power to issue the garnishee orders is discretionary, meaning machine technology cannot be used “in a way that would result in that discretion being fettered or effectively abandoned”.
The report, and its echoes of the Robodebt scandal, has prompted calls for a widespread audit of the way the technology is used by government agencies.
Former head of the Australian Human Rights commission, Edward Santow, labelled the ombudsman’s findings “very concerning”, and said the Revenue NSW program suggested a failure to apply fairness in decision making.
In his former role Santow headed a landmark report from the commission looking at the use of artificial intelligence and human rights. Released in March this year, the report called for, among other things, “an independent audit of all current or proposed use of AI-informed decision making by the government”.
While the report was focused on the federal government, Santow says the recommendation would “100% apply” to state governments.
“What came from our consultation is the Australian public are actually really, really clear on what they want when governments use AI. They want it to be fair, accurate and accountable,” he said.
“Where the Revenue NSW program went wrong was on all of those things. It wasn’t fair, it wasn’t accurate and it wasn’t accountable.”
The Ombudsman says it intends to do just that. In a statement following the release of the report, the NSW Ombudsman, Paul Miller, said the agency would seek to “comprehensively map the use of machine technology in administrative decision-making processes across the state”.
“We are concerned that other agencies may also be designing and implementing machine technologies without appreciating all the risks, without transparency, and without getting appropriate legal advice,” Miller said.
The Ombudsman started investigating the scheme in 2016.
“My office began to receive a spate of complaints from people, many of them financially vulnerable individuals, who had discovered their bank accounts had been stripped of funds, and sometimes completely emptied,” Miller said.
In one case, a young pregnant woman in rural NSW had her account frozen while the bank complied with a garnishee order.
The woman had two children and was left without access to any funds, leaving her unable to pay rent or buy food.
Another woman on a disability support pension had her account emptied after a garnishee order.
The woman had been a victim of a crime and had received a payment from Victims Services, but less than two weeks after the money was deposited in her account the entire amount was withdrawn to pay a fine.
After the Ombudsman raised its concerns with the program, Revenue NSW made a number of changes to the way the garnishee orders were made. It introduced a minimum protected amount clause which meant at least $523.10 would be left in an account subject to an order, and it began using a formula which it said meant vulnerable people would not be targeted.
In 2019, it also introduced a level of human oversight. The so-called “traffic light” system saw a human staff member have to sign-off on garnishee orders before they were issued.
But, as Miller said, Revenue NSW did not follow up on its recommendation to receive legal advice on the program. The Ombudsman did, and the advice revealed that even with those changes the program may still be unlawful because the so-called “human in the loop” was not exercising a genuine discretionary function. Instead, they were merely ticking off on the advice provided by the algorithm.
“Where you’re using a discretionary power you need to preserve the space for judgement and this type of harvesting was just too rigid,” Darren O’Donovan, a senior lecturer in administrative law at La Trobe University says.
“The use of public power needs to be justified and reflective and a machine is never going to deliver that. Even in the reformed system, the human decision-maker needs to properly reflect on what the ‘green lights’ on a person’s file indicate and what they don’t indicate.”
The case has prompted comparisons to the Robodebt scandal, which saw the federal government illegally raise $1.5bn in revenue from people who had accessed Centrelink.
NSW Labor’s shadow minister for finance, Anoulack Chanthivong, labelled the program “Robodebt 2.0”, calling the use of automated technology to issue garnishee orders “completely wrong and immoral”.
“How many people have been left penniless and hungry, with no means to support themselves or their families? It is disgraceful that our most vulnerable – many already in severe financial distress – have been treated so appallingly,” he said.
But the government rejected those comparisons, with NSW finance minister Damien Tudehope saying “any suggestion these processes bears any resemblance to ‘robo-debt’ are wrong”.
“Garnishee orders are a last resort – we encourage anyone who has received a fine or has a debt to reach out and work with us to resolve it. Don’t put it in the drawer for another day, contact us now,” he said.
“For those who have chosen to ignore our notices and simply don’t want to pay, the community has an expectation we take action to recover what is owed to the people of NSW. A garnishee order is one option available to the chief commissioner to do exactly that.”