Bill Shorten and lawyer Peter Gordon at Parliament House on Tuesday.Credit:Alex Ellinghausen
Gordon Legal senior partner Peter Gordon said its investigations had revealed between $200 million and $300 million had been"wrongly"taken from people through the scheme,with many hit with an extra 10 per cent penalty. He said the basis for the challenge was that the federal government financially benefited when it took money that legitimately belonged to welfare recipients.
"These people are the least able ... to afford the heavy-handed actions,which are based on a system that used ATO averages that didn't take into account individual circumstances,"Mr Gordon said in Canberra on Tuesday."The unfair and incorrect assumptions had a devastating financial impact on people's lives. The emotional distress for people who have done nothing wrong has been high."
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The controversial scheme uses an algorithm that compares information held by government agencies,usually the Australian Taxation Office,to income reported by a person to Centrelink. If the system finds a difference,it sends the person a letter requesting further information and advising of a potential debt.
Minister for Government ServicesStuart Robert - who has defended the program since taking on the portfolio,saying it had added almost $2 billion to the budget's bottom line - in July confirmed as many as one in five debt recovery notices issued by his department might have been incorrect.
On Tuesday he said the class action announcement was a"political stunt"as there were"no plaintiffs"."I am sure we will let the court process stand for itself,"Mr Robert said.
Labor's government services spokesman,Bill Shorten,likened the legal battle to previous"underdog"actions such as those overthalidomide,tobacco and asbestos. The former opposition leader said since taking the portfolio following Labor's federal election loss in May,he had formed the view the robo-debt scheme was built on"shaky legal foundations".