Robodebt victims to receive $475 million in compensation over 'illegal and immoral' scheme
The federal government has agreed to pay $548 million as part of a compensation package to victims of the "illegal and immoral" robodebt scheme.
In the biggest class action settlement in Australian history, nearly 450,000 victims of the robodebt scandal are set to receive $475 million, along with legal costs not exceeding $13 million and the costs of administering the settlement, which could be as much as $60 million.
Details of the deal were finalised in the Federal Court today after the government decided not to pursue defending an appeal against the original class action settlement of $112 million.
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The government agreed to pay $548 million in compensation to victims of the disastrous and "illegal" Robodebt Scheme. AAP
The original settlement was reached in 2020 under the Morrison government and only covered interest on the money victims had been forced to illegally pay the government.
This would have resulted in almost half of the victims receiving less than $100.
"Today's settlement demonstrates the Albanese Labor government's ongoing commitment to addressing the harms caused to hundreds of thousands of vulnerable Australians by the former Liberal government's disastrous robodebt scheme," Attorney-General Michelle Rowland said.
"The royal commission described robodebt as a 'crude and cruel mechanism, neither fair nor legal'.
The federal government said the scheme was "illegal and immoral" while announcing the revised compensation figure.
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A royal commission into the robodebt scheme described it as "crude and cruel". AAP
"It found that 'people were traumatised on the off chance they might owe money' and that robodebt was 'a costly failure of public administration, in both human and economic terms'," Rowland added.
"Settling this claim is the just and fair thing to do."
The settlement is still subject to approval by the Federal Court.
Victims have been told they don't need to do anything other than ensure their contact details are up to date.
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Robodebt's averaging system used to calculate debts was problematic. Supplied
What is robodebt?
When robodebt was rolled out in 2015 it was hailed by the government as a key tool to be used in tracking down welfare fraudsters.
The scheme saw 443,000 Australians wrongly pursued by Centrelink for $1.7 billion in welfare debts they didn't owe,
The automated scheme made use of data matching algorithms.
It assessed annual income data from the Australian Tax Office against fortnightly Centrelink welfare payments.
But robodebt's averaging system used to calculate debts was problematic and, in some cases, inaccurate.
It was declared unlawful by the Federal Court in 2019.
Robodebt was described by Justice Bernard Murphy - the presiding judge over the class action - as "a shameful chapter" and "massive failure in public administration".
Gordon Legal's class action lawsuit led to the government agreeing to repay all of the unlawful debts.
The royal commission found it had led to three suicides, and likely many more.
The National Anti-Corruption Commission (NACC) said in February that six public officials will now be investigated over their part in the illegal welfare debt scheme.
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