In their rush to find money for next month's tax cuts, Turnbull and Morrison run the risk of making an awful mistake.
Like they did in 2016, and perhaps in 2017.
In 2016, needing to demonstrate that they could pay for their (modest) election promises, they unveiled a $2 billion fix days before the vote.
Social services minister Christian Porter's welfare budget was to be shaved by 0.3 per cent, and it wasn't going to hurt.
The saving would flow from the use of "technology, but also technology that we’ve applied and learnt from previous experience".
According to Porter, Centrelink would cross-match "in a very sophisticated and quick way" data from the Tax Office with data from the Department of Human Services.
The high-tech fix would provide "better and more accurate assessments of employment income and non-employment income".
Anyone found to have been overpaid on a Newstart, disability or other allowance would get their tax return garnisheed.
But it wouldn’t be a dragnet. Morrison spoke of it as a "more bespoke way of dealing with people’s arrangements". It would "cut red tape, and ensure that mistakes are minimised".
Porter promised "a whole range of safeguards" to ensure any repayments weren't onerous or crushing.
And that's where the ministers appear to have left it, leaving the bureaucracy to raise the $2 billion.
A new paper by Professor Terry Carney, at the time a member of the Administrative Appeals Tribunal, details what happened next.
Whereas previously Centrelink staff had satisfied themselves that there had been overpayments before issuing debt notices, if necessary by using their compulsory powers to require employers to provide pay slip records, from July 2016 they didn't bother, and instead raised debts whenever their clients were unable to disprove suspected overpayments.
And suspected overpayments were everywhere.
The Centrelink computer raised an alarm whenever it thought that someone had been working for more than allowed in a fortnight when they had been claiming benefits. But the Tax Office data wasn’t broken down into fortnights – employers report to the Tax Office annually or quarterly. So the computer guessed, by crudely averaging data for longer periods to produce what was often necessarily spurious data for individual fortnights.
The whole point of a program such as Newstart is that people get off it. It is implied by the name. Anyone who did get off it within a reporting period would have income that they gained in fortnights they were off Newstart necessarily attributed to fortnights they were on Newstart, guaranteed. It was a foreseeable error, and one that could have been avoided (at some cost), given that Centrelink had the power to obtain payslips.
Instead, clients were asked to obtain payslips or bank records themselves, dating back as much as seven years, even though the Centrelink website had only advised them to keep them for six months.
If they couldn't, automated "robo-debt" letters told them to pay up, in an inversion of the usual onus of proof. It worked like extortion. Some of the victims were vulnerable, some couldn’t cope.
Terry Carney is a professor of law. His paper says the practice was illegal, and it quotes as an authority former High Court justice Kenneth Hayne, now leading the royal commission into misconduct by banks.
He says it may have also been inconsistent with the Commonwealth’s "model decision making" and "model litigant" policies. The Commonwealth is meant to act fairly, even where there is temptation not to.
The temptation was $2 billion, most of which is as far away as ever. The department has told the Senate it wiped or cut one in five of the debts it issued. In the first 15 months it "raised" $350 million, but received just $84 million.
This week’s Fairfax Media and Four Corners investigation suggests the same sort of pressure came into play towards the end of the 2017 financial year. Staff in the Tax Office appear to have been told to seize funds from the bank accounts of taxpayers assessed to owe it money, regardless of whether they could pay.
One of the emails said: “The last hour of power is upon us ... that means you still have time to issue another five garnishees … right?”
It’s alleged the office targeted small businesses without the resources to fight it. Several collapsed. It is behaviour inconsistent with model decision making, and inconsistent with the role of the public service. Centrelink and Tax Office staff who had previously been trying to do the right thing found themselves demonised, in order to get dollars through the door.
I am fearful something like it will happen again, on May 8, even if the impact isn’t apparent on budget night.
Morrison, Turnbull and Cormann are under enormous pressure to find as many dollars as they can to fund tax cuts. They’ve been helped by lower than expected spending and a better than expected economy, but they’ll be searching for more. As in 2016, they’ll be tempted to do something whose consequences won’t become clear until after the election.
I am concerned that they won’t resist it, or won’t inquire enough. History suggests I’m right.
In The Age and Sydney Morning Herald