A bureaucrat was told to "tone down" his criticism of the Department of Human Services proposal which became Robodebt, a royal commission has heard.
Andrew Whitecross, the acting group manager of social security policy at Department of Social Services (DSS) in early 2015, has been giving evidence at public hearings at the royal commission in Brisbane.
The inquiry is looking at the way the unlawful Robodebt scheme was designed and implemented.
When Mr Whitecross was in the role, the proposal was being referred to as "income smoothing".
He told the commission he had received a phone call from Catherine Halbert, then acting as the deputy secretary for social security at DSS.
He said Ms Halbert told him she had had a conversation with Malisa Golightly — a senior bureaucrat at DHS — where Ms Golightly had "expressed concerns" about the strength of the DSS's comments.
"She wanted me to tone down the comments … before she provided comments back to DHS," he said.
"Did she say why she wanted you to tone down the nature of the comments?" asked Senior Counsel Assisting Justin Greggery.
"I think … I don't know whether she conveyed it to me in so many words, but the gist of it was, something along the lines of, 'Malisa's unhappy with what we're saying'."
He said Ms Halbert suggested they simply say "it'll present legislative problems".
"The tenor of it was, yes they would still work with us they just didn't want us to go in so hard, I guess."
Mr Greggery asked: "When you receive a call from a deputy secretary, who adopts that position and asks you to do something specifically, did you consider that you had much room to move about it?"
"Well, I took it as a direction," Mr Whitecross said.
"We had a disagreement in the conversation about that because my view was that it merited a further response from the department.
"I think as a general matter of policy, when giving advice, it's poor form to create the impression that there is more latitude in relation to an option than there really is. I think she felt that we needed to have more regard to the relationship. I took it as an instruction to make changes."
'That's not language I would normally use'
Giving evidence late on Thursday, Ms Halbert said she could not recall such a request to Mr Whitecross.
Mr Greggery asked her if she had told Mr Whitecross in a phone call to soften the language.
"I don't recall that," she said.
"That's not language I would normally use, I would think."
"I don't have a recollection of a disagreement with him but we did frequently have different styles of writing, you know, putting points across, that sort of thing, I wouldn't say it was disagreement but we would have a different approach, often," she said.
When Mr Greggery asked if there was a hierarchy that allowed her to make a direction, Ms Halbert gave evidence that she had been acting as deputy secretary at that time, but otherwise she and Mr Whitecross were at more or less equal positions.
"I think we would have had equal experience at that point in time, in terms of our background," Ms Halbert said.
"I take it then you don't recall any exchange that you had on that day could be construed as a direction to him to tone language down?" Mr Greggery asked.
"I don't believe I would use that kind of language, but if I had further information that I thought would impact on the comments, I would have talked to him about that, I'd have no hesitation to talk to him about that," Ms Halbert said.
Ms Halbert said it was "not a good look" for departments to provide conflicting advice to a minister.
"On the other hand, this was an important issue. We had expressed our views consistently and strongly … I don't think I would have tried to soften it because of the relationship — the relationship as far as I was concerned was fine."
A 'radical' policy shift
The commission has been shown emails from within DSS, providing advice about the process — described as using data collected by the ATO as a default, unless customers want to and are able to provide information that varied the outcome.
"As you understood the proposal in these terms, the concept of the application of smoothing of PAYG data does not appear to be a last resort, does it?" Mr Greggery asked.
"This proposal clearly wasn't using ATO data as a last resort," Mr Whitecross responded.
"Would you say that the proposal in those terms represented a radical departure from existing compliance activity?" Mr Greggery asked.
"Absolutely," Mr Whitecross said.
"It was a completely different approach of pursuing the question of whether overpayments had occurred at all and how the Department [of Human Services] would interact with customers in relation to those debts."
Mr Whitecross was also asked about the identification of policy issues, as well as legal advice forwarded to him in December 2014.
The royal commission heard the DSS public law branch had suggested the calculation method did not accord with social security legislation.
"To your mind, there was no wriggle room on that legal proposition, was there?" Mr Greggery asked.
"No, there wasn't," he responded.
"It couldn't be clearer?"
"Exactly."
The commission heard he sent a summary on to Serena Wilson — who has previously told the royal commission she received advice the scheme was unlawful but did not tell anyone.
Emails shown to the royal commission identify other concerns about income smoothing that were raised by DSS — including the potential for recipients not being able to exercise their review rights to ensure they weren't being disadvantaged, shifting the responsibility to the recipient to ensure their debt was correctly calculated, and a previous High Court decision that limited the application of legislative changes retrospectively.
Senior bureaucrats 'attached' to 'unrealistic' savings
Mr Whitecross also told the commission about a meeting he had with Ms Halbert and others, including Mark Withnell from the DSS.
"I felt very strongly about this issue and I wanted to convey the strength of my feelings about the quality of the proposal," he said.
"Or lack thereof?" Mr Greggery interjected.
"Well, indeed, yes."
Mr Whitecross told the commission Mr Withnell seemed to find the feedback "frustrating".
"Mr Withnell was indicating that he felt that there was an amount of unrecovered debt out there that had accumulated over a number of years, because Department of Human Services had not been able to apply as many resources to it as was needed to recover it," he said.
"He felt this was a way of recovering that debt. He seemed to be particularly unhappy that I was suggesting that he wouldn't be able to realise the level of savings that he'd estimated, and I formed the impression that there was quite an attachment at more senior levels to that level of savings."
"That is, more senior than him?" Mr Greggery asked.
"Yes," Mr Whitecross said.
"He seemed reluctant to go down the path that I was suggesting, which was that compliance could only realistically get a smaller amount of savings. He sort of said, but we wouldn't be able to realise the $1.2 billion if we did that."
He said he could not recall any specific people at a more senior level being referred to.
