In echoes of the Robodebt report, the NSW Ombudsman has criticised the use of automation to recover fines and debts from defaulters’ bank accounts as practised by Revenue NSW until 2022.

Revenue NSW's garnishee order (GO) process system allows it to recover overdue debts directly from the bank accounts of defaulters, a practice it has had the power to conduct since 1998 under the Fines Act 1996 and since 2018 under the State Debt Recovery Act 2018 (SDR Act).

The number of garnishee orders issued annually by Revenue NSW increased dramatically over the years. In the 2010-11 financial year, 6,905 garnishee orders were issued. This number rose to 1,517,748 in the 2017-18 financial year.

“There are lessons for all public sector agencies from our investigation of Revenue NSW,” said NSW Ombudsman, Paul Miller.

“In particular, when agencies are thinking about introducing automation technology to assist in the performance of their functions, whether that involves Artificial Intelligence or otherwise, it is imperative that they seek relevant legal advice and involve legal experts in the design and implementation process," said Mr Miller.

The report Revenue NSW – The lawfulness of its garnishee order process found that Revenue NSW’s conduct in using the garnishee order system was contrary to law until March 2019, and wrong until March 2022.

During the investigation, Revenue NSW obtained advice from the NSW Solicitor General. That advice has confirmed that the version of the garnishee order system that is now in place (and has been in place since May 2022) for the recovery of overdue fines is compliant with the Fines Act 1996. Revenue NSW has advised that it ceased using the garnishee order to recover any other State debts in 2020.

The garnishee order process has evolved over the years, from a manual system to one assisted by technology, and since 2016, an automated system capable of issuing high volumes of garnishee orders daily. This automated system, referred to as the GO system, has varied in its degree of automation.

From January 2016 to March 2019 the GO system period was found to be contrary to law as it did not comply with the Fines Act. The automated system issued garnishee orders without an authorized decision-maker forming the required evaluative judgment or making a decision to issue the order.

From March 2019 to March 2022, while the system was modified to include a human review step, it remained defective. Decision-makers lacked a clear and complete basis for decisions, and the system failed to fully record the decision-making process, making it wrong within the meaning of the Ombudsman Act

The Ombudsman’s investigation highlighted the significant hardship caused by the garnishee orders, particularly on vulnerable individuals. Revenue NSW had implemented several changes over the years, such as:

- Introducing a minimum protected amount left in accounts post-garnishment.

- Ceasing the practice of imposing multiple garnishee order costs for each order issued.

- Developing a machine learning model to identify and exclude vulnerable persons from the GO system.

- Implementing a documented hardship policy and criteria for assessing refund requests.