A now homeless grandfather says he was badgered for a $2300 Centrelink debt he didn’t owe as he underwent treatment for cancer.
Raymond Murphy revealed the government pursued the amount from him as part of the controversial robo-debt scheme where tax office data is used to work out if welfare recipients owe money due to overpayments.
It is believed thousands of Australians have been wrongly billed as a result, with the government now distancing themselves from elements of the scheme.
“They have no respect for me at all, I am classed as a criminal and I am guilty and I have to prove my innocence,” an emotional Mr Murphy told A Current Affair.
Trying to fund the debt along with his medical care has forced Mr Murphy to move out of his home and into a work shed.
Breaking down in tears, the grandfather said he had been “ripped to shreds” over a “measly” couple of thousand dollars.
"It's really, really hard and they've got no idea of what they're doing,” he said.
Mr Murphy claims he and others have been told they must prove they don’t owe the money yet many debts refer to payments received years ago and they no longer have the documentation to prove they don’t owe the money.
A class action has since been started by about 4000 Australians to take on the robo-debt scheme.
Federal government backs away as legal questions loom
The Department of Human Services has told staff to not rely entirely on the robo-debt system and instead undertake further investigations to determine whether people may owe money.
A legal challenge against the scheme, argued by Victoria Legal Aid, will be heard by the Federal Court in Melbourne next month.
Victoria Legal Aid says the method of calculating possible debt, and the fact welfare recipients have to prove they don't owe the money, is unlawful.
Robo-debt is also facing a class action lawsuit, brought on by Melbourne firm Gordon Legal.
Labor frontbencher Bill Shorten says the government's decision on Tuesday is a "complete backflip" and admission of guilt.
The government had felt the "hot breath of litigation", he said.
People who receive a debt notice are presumed guilty and must prove their innocence, and the onus of proof would not change, Government Services Minister Stuart Robert said.
Mr Robert has downplayed the changes, saying income averaging would still be used with other methods of proof.
"Compliance activity will continue for past and future welfare payment recipients where there is a reason to believe they have been overpaid," he said.
Centrelink will reach out to people who received a debt notice in coming weeks.
This group of people is limited to those who did not respond at all to Centrelink, a spokesman for Mr Robert told AAP.
The decision to walk away from robo-debt has been broadly welcomed by welfare groups, the public sector union and the Greens.
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