A compliance manager who suggested the Department of Human Services declare a major response into Robodebt amid growing criticism from tribunals and media has told a royal commission it made her boss "very angry".
Karen Harfield was the general manager of the customer compliance division of the Department of Human Services, now known as Services Australia.
The scheme was ultimately found to be illegal, and unlawfully claimed almost $2 billion from more than 400,000 current or former welfare recipients.
The royal commission heard by late 2016 there had been criticism from the Administrative Appeals Tribunal about the new process of using Australian Taxation Office data for income averaging.
There was also intensifying negative media coverage.
Ms Harfield gave evidence that she started to think the program had not really been implemented "in a way that had been anticipated".
She raised these issues with DHS deputy secretary Malisa Golightly, who has since died, in the early days of January 2017.
Counsel Assisting Angus Scott asked Ms Harfield how Ms Golightly had responded.
"She was very angry that I had suggested that it required major response, or that there was a requirement to re-evaluate the budget measures at all," Ms Harfield said.
"She made it very clear that as the Band 3 in the department, it was her decision about whether something be classified as a major response — and that what I needed to do was make sure that I was able to respond to what she needed me to do."
"Did she engage with you at all in the substance of the issues you were raising?" Mr Scott asked.
"Not in that conversation, no. In other conversations, yes," Ms Harfield said.
"After this conversation… did you raise with Ms Golightly again, your opinion that the assumptions upon which the program had been based were falsified?" Mr Scott asked.
"I didn't categorise it that way," Ms Harfield said.
"My sense was that the system, the process that had been introduced, was not happening in the way it had been conceived.
"In terms of, I suppose our interactions... I had a number of interactions with Ms Golightly and that would have been in response to information she had requested.
"We never really had a more general sort of strategic conversation about the program."
Earlier in her evidence, Ms Harfield told the royal commission that the program had been behind schedule and over budget, and that by July 2016 her focus was mainly on the delivering it.
She was asked if she felt under pressure to accelerate the implementation of the program.
"There was a very, very strong focus on the achievement of the budget measures," Ms Harfield said.
"Particularly from the secretary, almost a daily sort of interaction about where the system was up to, when the system would go live.
"It had been anticipated that it would go live on the first of July which it didn't do."
Email shows manager misunderstood how the scheme calculated debt
The commission was shown an email Ms Harfield had sent to Ms Golightly and others on the same day she raised the concerns more broadly.
Mr Scott questioned her about the description the email provided of the process used for the online compliance intervention (Robodebt).
The email said "the methodology for assessing and calculating debt has not changed and averaging is only used when the customer does not provide the detailed information".
"Would you agree with me… that statement was false?" Mr Scott asked.
"At the time, I understood that the way we were assessing and calculating the debt had not changed," Ms Harfield said.
"The issue, in my mind, of the system, was more about the customer not interacting with the process."
Commissioner Catherine Holmes asked whether she had understood at the time that they had moved from using ATO data as a "last resort" to applying averaging automatically for a significant portion of the debts.
Commissioner: "That's a change isn't it?"
Ms Harfield: "It is, and it wasn't as had been perceived in the budget measures, and I think that was the reason for trying to re-look at what was occurring."
Commissioner: "But it means the method for assessing and calculating a debt had changed from a last-resort position to an automatic application, in relation to a substantial proportion of customers simply because they hadn't responded. So that does make the statement untrue doesn't it?"
Ms Harfield: "I'm just saying, I think at the time I wrote it, I hadn't made all of those – I didn't think it to be an untrue statement when I wrote it in an email."
The royal commission heard Ms Golightly then forwarded that email higher up, saying "please find an explanation below of how the algorithm is used" and the information was passed on to the then-minister Christian Porter.
