A Melbourne nurse has launched a landmark court case against Centrelink's controversial "robo-debt" system, claiming it is unlawful.
Victoria Legal Aid filed documents in the Federal Court this week on behalf of Madeleine Masterton, 31, who was told she had incurred a $4000 debt as a student on Youth Allowance.
The free legal provider said Centrelink's automated debt recovery system makes "crude calculations" when assessing someone's debt.
This means the calculation of alleged overpayments was often inaccurate, and perhaps unlawful, the organisation said on Wednesday.
"The way robo-debt averages people's income assumes that they work neat, regular hours throughout a year," Victoria Legal Aid spokesman Rowan McRae said.
"In reality, we know people work part time or sporadically throughout the year, because they're studying, can't get regular work, have multiple jobs or are unwell."
However the Department of Human Services said all compliance activities are consistent with legislation.
The Commonwealth Ombudsman reviewed the online system and found the calculation system was comprehensive, the department's general manager Hank Jongen said.
He also said no debt was issued until the customer had the opportunity to resolve the discrepancy.
"Even after a debt has been raised, a customer can update their details or provide more information to have the debt reassessed," he said.
But Masterson hopes her case will pave the way for others to speak up about their own concerns with the system, or prevent them from going through undue stress and anxiety.
"Especially people who don't speak English well, or people who might just panic and pay the debt out of fear," she said.
"This case isn't just about me and if I can make life easier for other people then that would be a successful outcome."
She said she approached Legal Aid Victoria about the case because she didn't trust the way her debt was calculated.
"And there is no transparency about how they come up with it," Masterson said.
"If my case proves the whole robo-debt system is wrong under the law, then I hope that the system is wiped and that everyone else who has a debt is freed from it until a better system is in place that calculates transparently and correctly."
The legal challenge was welcomed by Australian Council of Social Service chief executive Cassandra Goldie, who called the robo-debt system a "devastating abuse of government power".
An initial hearing in the case is expected to come before the Federal Court case in coming weeks.Do you have an idea for a story?
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