Government to Pay Extra $475m to Robodebt Victims in Record Settlement

The federal government has agreed to pay an additional $475 million to people affected by the unlawful robodebt scheme, taking the total class action settlement to $548.5 million - the largest in Australian history if approved by the Federal Court.

Attorney-General Michelle Rowland said the decision reflects the government's commitment to acknowledging the harm inflicted on hundreds of thousands of Australians.

"Today's settlement demonstrates the Albanese Labor government's ongoing commitment to addressing the harms caused by the former Liberal government's disastrous robodebt scheme," Ms Rowland said.

The settlement also includes $60 million for the administration of the scheme and $13.5 million to cover legal costs.

The royal commission into robodebt found the scheme was a "crude and cruel mechanism, neither fair nor legal" that traumatised recipients and represented a costly failure of public administration both in human and financial terms.

Robodebt, introduced by the Coalition government in 2015, used tax office data to average incomes and automatically issue debt notices to welfare recipients. The deeply flawed system wrongly accused thousands of people of owing money, recovering more than $750 million from nearly 400,000 people before it was scrapped in 2019.

The scheme was also linked to severe psychological harm, with reports of recipients taking their own lives.

This new payout comes in addition to the $1.8 billion settlement delivered in 2020. The government has confirmed it will not defend the appeal lodged by Gordon Legal, which spearheaded the class action.

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