The watchdog that investigated the debt theft program says it should have referred the responsible federal government department to the appeals court in 2017 because of its doubts about the legality of the scheme.
Richard Glenn served as Acting Commonwealth Ombudsman between January and April 2017, when an inquiry into the department of human services took place.
The department misled his office by withholding key documents that pointed to problems with the plan’s legality.
However, the ombudsman’s staff still had concerns about the advice provided by the department.
Questions about the legality of the scheme raised in a draft of the report were removed in the final version, which was used by the former coalition government to defend the continuation of the scheme.
Glenn said that while his team had “questions,” they couldn’t form a definitive opinion on the program.
He decided to focus on improvements with the administration of the scheme, but said he should have made it clear that the report did not answer the question of legality.
“On the material before me, I was not satisfied that we could make a declaratory statement and I chose not to comment on legality,” he said.
“I think I should have said very clearly ‘I’m not dealing with legality’… to rule out the possibility of people reading the report too much.”
The ombudsman did not refer the department to the Administrative Court of Appeals at the time, but Glenn said that knowing what he now knows about the plan, he would have made a different decision.
“My thinking was influenced by the fact that I couldn’t make a clear determination one way or the other about legality,” he said.
“The advice I got from the team was that they were concerned, but we couldn’t get a clear, contrary view.”
Glenn said department staff were “very committed” to championing the programme, but could not recall a similar investment from former coalition ministers.
“Certainly, the department strongly defended its belief in the system,” he said.
The illegal scheme ran from 2015 to 2019 and used annual data from the tax office to calculate and collect debts.
The commission is examining the role of the ombudsman, whose initial investigation identified flaws in the scheme, but did not outlaw the “revenue averaging” process.
Former Principal Deputy Ombudsman Louise Macleod told the commission her team had concerns about how the average was used.
But he was unable to convince his superiors to include these concerns in a final report.
“We flagged concerns about what the department was doing, basically from the beginning, but in the end they were not included in the final report,” Ms Macleod said.
The commission provided Ms. Macleod with several documents, including emails from 2014 that pointed to legal problems with median earnings, that she had not seen before.
Had this legal advice been provided to her office, Ms Macleod said the ombudsman would have publicly called for the plan to be scrapped.