The federal government has agreed to pay $475m in additional compensation to roughly 450,000 victims of the robodebt scandal, in the largest class action settlement in Australian history.
The government announced on Thursday it had agreed to settle Knox v the commonwealth – an appeal from the original 2020 robodebt class action settlement.
The appeal was launched last year after a royal commission exposed fresh evidence that commonwealth officials who ran the debt-raising scheme knew it was unlawful but proceeded anyway.
Robodebt was an automated debt-recovery program, run by Australia’s conservative government from 2015 to 2019, that wrongly accused hundreds of thousands of welfare recipients of overpayments.
Felicity Button, a robodebt victim and applicant in the class action, said the verdict showed there was “no room in Australia for unethical and illegal conduct”.
“For the first time, I think in my whole life, I can say that there was a bit of fairness – not just justice – in our system,” she said.
The total settlement is $548.5m, with up to $60m set aside to administer the scheme and $13.5m to cover the applicants’ reasonable legal costs.
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The additional compensation, which requires federal court approval, is in addition to the $112m in compensation and legal costs paid following the original robodebt class action settled in 2020.
The total financial redress to robodebt victims is now more than $2.4bn, according to Gordon Legal, which launched the first class action in late 2019.
That figure includes $1.76bn in debts that were forgiven, cancelled or paid back by the government.
The federal attorney general, Michelle Rowland, said on Thursday that settling the claim was the “just and fair thing to do”.
“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,” she said in a statement.
“The royal commission described robodebt as a ‘crude and cruel mechanism, neither fair nor legal’. 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’.
At a press conference , Peter Gordon of Gordon Legal said the settlement was “vindication and validation” for robodebt victims, while acknowledging that “for some, there are wounds that will never heal”.
Victims will be eligible to receive a fixed compensation payment within six months of the federal court approving the settlement.
Gordon said victims should register with the firm for updates about the process.
“Today is a day of warning not to attack the people who elected them or who they were hired to protect,” Gordon said.
“Today is also one more vindication of the principle that Australia remains a nation ruled by laws and not by kings. Laws which even hold the government accountable. Long may that be the Australian way.”
Gordon Legal filed an appeal to the first settlement in September last year on the grounds the robodebt royal commission, which was released in July 2023, had unearthed “damning new evidence” to support claims that the public servants who ran the scheme had engaged in “malfeasance in public office”.
On Thursday, Gordon said the first class action would never have been settled on the terms it was if all the evidence was available at the time.
Under the robodebt scheme, which ran under Coalition governments from 2015 to 2019, some 443,000 welfare recipients were wrongly accused of underreporting their income and therefore being overpaid benefits.
The royal commission into the scandal, overseen by Catherine Holmes, described the scheme as a “failure of administration” that was “neither fair nor legal”.
The Greens social services spokesperson, Penny Allman-Payne, welcomed the additional compensation for robodebt victims but said the government should go further an abolish its “cruel” target compliance system.
The government last week announced changes to its Centrelink debt-raising regime after the federal court found a previously used method to calculate a welfare participant’s payment – known as income apportionment – was invalid.
Under the changes, debts smaller than $250 will be waived and no longer raised and compensation of up to $600 will be offered to victims of the unlawful method.
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