Government settles Robodebt class action appeal for $475 million in compensation

The federal government has reached a $475 million compensation settlement in an appeal case from the Robodebt class action.

The settlement of the appeal, which is still to be approved by the federal court, would be the largest class action settlement in Australian history.

It is for compensation for the harm caused by the Robodebt scheme, which was found to have been illegal. The scheme and the ministers and public servants involved in it were strongly condemned by a royal commission set up by the Labor government. Robodebt ran between 2015 and 2019.

The scheme involved using automated processes for levying debts, many of which were non-existent or calculated wrongly. The scheme traumatised thousands of welfare recipients.

Attorney-General Michelle Rowland, said the settlement would be in addition to what was paid after the original Robodebt case action settlement in 2020. That comprised interest and repayments of wrongfully-raised debts. It amounted to a $1.2 billion payout.

The latest agreement also allows the court to determine separate amounts for the applicants’ “reasonable legal costs” and for the reasonable costs of administering the settlement scheme.

Rowland said, “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”.

“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’.

"Settling this claim is the just and fair thing to do,” Rowland said.

She said class action members did not have to take any action at this stage other than ensure their contact details were up to date with Services Australia.