Kathryn Campbell, who joked in an address to public servants about attention on her department's Robodebt scheme letters, has explained the intent of her remarks.
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The senior public servant also revealed Scott Morrison was warned the Robodebt scheme would be illegal without major changes, but accuracy of automatically calculated debts was only a secondary concern.
The former head of the human services department that ran the unlawful Centrelink debt recovery scheme resumed giving evidence in the witness box at the Robodebt Royal Commission on Wednesday.
She was asked about her speech in late 2018 to the Institute for Public Administration Australia, in which she described personally working on the scheme's debt recovery letters with her then-minister, Alan Tudge.
The letters sent out to welfare recipients resulted in distress and were linked to suicides.
Ms Campbell said the arrangement was not ideal.
"I think that example I gave during that speech ... the intent of that comment was that sometimes it's best left to others to do that type of work," Ms Campbell told the royal commission.
"And to also understand that citizens sometimes come at things from a different way, using co-design and testing of such letters was a beneficial process."
It was not an ordinary situation for the minister to be personally involved in approving letters, she confirmed, but the letters were "a very contentious issue in the department at the time".
'You find that's the only headline in town'
In Ms Campbell's remarks to IPAA in 2018, she said the backlash began when letters went out to Centrelink customers, but the people either didn't receive the letters or respond to the letters and "the first they heard about it was when the debt collector rocked up to ask them to repay the debt".
"So this happened in early January of 2017. That's another lesson: try not to roll things out in January, because there is not much other media going on ... and you find that's the only headline in town," she told IPAA.
"I kept thinking, where are those cricketers when you need them doing something naughty? But they were well behaved that year."
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Ms Campbell told the royal commission she was not involved in implementation of the Robodebt letters prior to the media attention in January 2017.
Her role was to focus on service delivery, Ms Campbell said, ensuring the program was delivered as designed in the proposal that was approved by cabinet, that it was providing citizens with a service, and that they were abiding by the law.
"Now, we know that that was not the case," she said.
In her testimony, Ms Campbell has denied responsibility for the Robodebt scheme. Instead, she placed the blame for the scheme's unlawful design on the Department of Social Services, which was led by Finn Pratt at the time. DSS was responsible for social security policy, but not the delivery and implementation.
Accuracy of debts secondary to engaging recipients
Asked if she was responsible for implementation, Ms Campbell told the royal commission that, with around 35,000 employees, she needed to delegate responsibilities and the scheme was not the most pressing issue needing her attention.
When she took a more active role in the scheme after backlash in January 2017 her priority was encouraging welfare recipients to engage with the system. Ensuring the accuracy of calculated debts was secondary.
Ms Campbell said she was not aware who authorised a change in the policy to give Australian Taxation Office data supremacy in the income averaging algorithm.
"I was troubled that citizens weren't able to engage with the system," she told the commission when ask if she was troubled that reliance on income averaging would lead to false debts.
In her earlier evidence last month, Ms Campbell said she did not check the legality of the scheme.
Earlier this week lawyers for former prime minister Scott Morrison applied to rely on protected cabinet documents during his evidence, despite public interest immunity preventing such documents to be included as evidence.
Mr Morrison's lawyer said there would be "considerable difficulties" for the former prime minister if the commission upheld the public interest immunity ruling in regard to cabinet documents.
Scott Morrison, who was social services minister when the scheme began in 2015, is due to give evidence next week.
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