The Australian government has agreed to a $1.2bn settlement for a class action brought on behalf of hundreds of thousands of robodebt victims.
In a deal struck the day a federal court trial was set to begin, 400,000 people will share in $112m in additional compensation, the firm running the action, Gordon Legal, announced on Monday.
The settlement also includes commitments to repay $720m in debts and wipe a further $400m in unlawful demands, which the government had agreed to in a humiliating backdown in May.
The government did not admit to any liability or knowledge of the scheme’s unlawfulness as part of the settlement.
Andrew Grech, a partner at Gordon Legal, told Guardian Australia the lead applicants had shown “enormous courage and determination”.
“When you think about the totality of what’s been achieved since the proceedings were commenced, that really amounts to more than $1.2bn,” he said.
Subject to the court’s agreement, Grech said it was hoped the money would be repaid by the end of next year. “We are really relieved and pleased for our clients,” he said.
Since 2016, community campaigners including the NotMyDebt group have relentlessly resisted the program. Guardian Australia has reported extensively on the flaws of the robodebt program, which used annual pay data obtained from the tax office to accuse welfare recipients of under-reporting their fortnightly income to Centrelink.
Welfare recipients, including some who were homeless, had poor mental health or lived with disabilities, complained of being pursued by private debt collectors and having their tax returns garnished as part of the scheme, which ran from July 2015 to November 2019.
TimelineThe robodebt scandal
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- Growing complaints of faulty Centrelink debts, amplified by social media campaigning
- Guardian reports first call to halt “automated” debt recovery scheme
- Centrelink whistleblower breaks ranks and tells Guardian only a fraction of debts were genuine
- Commonwealth ombudsman launches investigation
- Leaked Centrelink staff logs show fundamental failings of debt recovery process
- Government makes minor adjustments after backlash
- Guardian reports that robodebt victims may be able to sue
- Department of Human Services accused of doxing robodebt victim
- DHS blames debt recipients as Senate inquiry begins
- Commonwealth Ombudsman criticises scheme in report
- Government warned scheme is illegal after losing AAT cases
- Flood-hit Townsville caught up in robodebt scheme
- After fresh scandals, Labor calls for robodebt to be scrapped
- Government abandons “reverse onus of proof”, promises to only raise debts once it can substantiate them with pay records
- Government settles Victoria Legal Aid action
- Emails show government was warned scheme was unlawful
- In class action defence, government claims no duty of care on welfare
In March, four months after the government conceded a test case brought by Victoria Legal Aid, Guardian Australia revealed that the government was drawing up secret plans to repay victims of the scheme.
Those plans were eventually announced in May, and the government began repaying victims in July. About $690m has now been refunded.
Confidential government advice seen by the Guardian revealed the decision to “proactively” announce the refunds in May was aimed at stymying the class action, which argued that the commonwealth had “unjustly enriched” itself.
Grech said a settlement distribution scheme would determine compensation for victims based on how much was “unlawfully demanded and paid to the commonwealth over the period”.
“Their entitlement to the damages or compensation component is determined proportionately to how much they paid,” he said. “It’s a time-based assessment … of the time period to which they’d been kept out of their money.”
Guardian Australia has previously reported that interest owed by the government on the debts has been estimated at about $90m.
Grech told a press conference he was unable to say how much of the compensation would be sucked up by legal fees. He said the court would make a determination based on evidence provided by the firm.
Scott Morrison said his government has been focused on “making this right”.
Asked on Monday if he would apologise for the scheme, the prime minister referred reporters to comments he made in parliament earlier in the year in which he apologised for any “hurt or harm” caused.
“I made remarks on that in the Parliament earlier this year,” he said. I can only refer you back to those where I did just that.”
Morrison noted that the government had already paid back more than $700m of the $721 million it promised to repay in May.
“Remember these payments have been made at the same time that working through government services and our agencies we’ve had to enlist some 1.6 million Australians on to jobseeker ...
But for us to still follow through on the commitments we made here to make this right, we have done exactly that and the settlement announced today is a further demonstration of that.”
Morrison rejected suggestions the government services minister, Stuart Robert, should lose his job over the scandal. Robert was not involved in the creation of the program, which was established in 2015, but has been in charge during an initial legal challenge in 2019.
“I would say that the minister has been the one working together with the attorney general [Christian Porter] having identified the issue of ... making it right,” he said.
“This is the same minister who ensured that 1.6 million Australians have been able to access vital income support, particularly here in Melbourne at a time of great crisis and so to be able to deal with both of these challenges at the same time, suggests to me that he’s been getting very much on top this issue.”
Labor’s government services spokesman, Bill Shorten, said it was now “time for the Morrison government to fess up who knew what when”.
“Call me a bit sceptical, but the only reason why the Morrison government surrendered is they had the hot breath of the court on their throat,” said Shorten, who was involved in establishing the class action.
Shorten, as well as the Greens and grassroots campaigners, have called for a royal commission into the scheme.
The Greens senator Rachel Siewert said: “Now the community needs to know how this all happened. We need a royal commission because it’s very clear that the government is going to continue to keep trying to hide what has happened.”
The Not My Debt campaign, which has rallied against the scheme since the scandal first erupted, commended the firm for reaching the settlement but noted some victims may have “hoped for more from the process”.
It also said the settlement meant no government ministers or officials would “be required to give evidence in court”. “No one in a position of power has lost their job over Robodebt – no one has been held accountable,” the campaign said.
Services Australia, which ran the program, acknowledged the settlement in a brief statement.
It noted that the settlement did not amount to an “admission of liability by the Commonwealth, and does not reflect any acceptance by the Commonwealth of the allegations that the Commonwealth, or any of its officers, had any knowledge of unlawfulness associated with the income compliance program”.
As the trial date neared, Gordon Legal had increased the volume of its claims against the government, accusing the commonwealth of continuing the program despite knowing it was unlawful, and singling out individual officials and ministers for their conduct.
In September the trial was delayed after the firm accused the minister Alan Tudge of either knowing the scheme was unlawful or being “recklessly indifferent”.
It also claimed that the government had lost 76 robodebt decisions at the administrative appeals tribunal, which it then had failed to appeal, meaning the judgments were never made public.
Gordon Legal’s claims were denied by the government, and Department of Social Services officials later said at a Senate estimates hearing that the tribunal had also upheld robodebt cases.
The class action settlement applies only to people who had their debts calculated using the “income averaging” method. Those who responded to a debt letter by providing payslips or bank statements that were later used to substantiate their debt will not receive refunds.
Gordon Legal had previously argued in court that those debts were also “tainted”.
“While I can understand their confusion and their disappointment, it’s never been this case that people who owe money to Centrelink shouldn’t repay it,” Grech told Guardian Australia.