Court approves $1.7 billion settlement for robodebt victims

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The federal court has given the green light to the $1.76 billion settlement for victims of the government's robodebt scheme, paving the way for the distribution of $112 million compensation.

Between 2015 and 2019, the scheme unlawfully used an income averaging method to collect $1.76 billion in debts from 443,000 people. The government had recovered $751 million of that debt from 381,000 people.

Justice Bernard Murphy's judgment described a lack of oversight by ministers and senior public servants that could best be described as sleeping at the wheel.

robodebt settlement

"It should have been obvious to the senior public servants charged with overseeing the robodebt system and to the responsible minister at different points that many social security recipients do not earn a stable or constant income, and any employment they obtain may be casual, part-time, sessional, or intermittent and may not continue throughout the year," he said.

Underscoring this, the robodebt scheme continued unabated despite 29 decisions of the Administrative Appeals Tribunal (AAT) that rejected income averaging.

"We welcome that there is restitution, with the Commonwealth returning money to victims of Robodebt with interest," says ACOSS CEO Dr Cassandra Goldie. "However, this will not compensate for the serious harm caused by this awful abuse of government power. Nor do we yet have any guarantees, legal or otherwise, that these events will not occur again."

Who gets the settlement?

Those affected will have last year received a notice through MyGov informing them of their membership in the Gordon Legal class action, with the option to opt-out.

According to Gordon legal, benefits to Group Members include three parts:

  • The Commonwealth will pay $112 million in compensation to approximately 400,000 eligible individual Group Members, including legal costs;
  • The Commonwealth is repaying more than $751 million in debts collected from group members invalidly and will continue to provide refunds;
  • The Commonwealth has agreed to drop claims for repayment of approximately $744 million in invalid debts that had been partly paid back, as well as dropping claims for $268 million in invalid debts where no repayments had been made.

Much, if not all, of the unlawful debt will have been paid back or cancelled by now.

The compensation amount of $112 million will take longer to pay out. Gordon Legal expects the settlement payments to be made by May 2022.

If you need assistance in relation to the settlement, you can call Centrelink's compliance helpdesk on 1800 171 846, and failing that Gordon Legal on 1300 001 356.

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David Thornton is a journalist at Money magazine and is one of the hosts of the Friends With Money podcast. He previously worked at Your Money, covering market news as producer of Trading Day Live. Before that, he covered business and finance news at The Constant Investor. David holds a Masters of International Relations from the University of Melbourne.