Court approves $1.2billion robodebt settlement


Massive $1.2billion settlement to Centrelink robodebt victims is approved by the court as judge blasts ‘shameful’ scheme that drove several people to suicide

  • Disastrous robodebt scheme will cost taxpayers another $1.2billion in damages
  • Federal government settled the class action with 640,000 victims
  • Scheme used AI to automatically calculate and chase Centrelink debts
  • However, it was frequently, and wildly, wrong and did enormous damage 

A judge has approved a $1.2 billion settlement between robodebt victims and the federal government while blasting the scheme for being a ‘shameful chapter’ in public administration.

Justice Bernard Murphy on Friday said the use of flawed income averaging tools to raise debts caused vulnerable people financial hardship, distress and anxiety.

Many felt shame and hurt at being wrongly branded ‘welfare cheats’, he said, with some driven to take their own lives.

The settlement distribution scheme had also resulted in a ‘huge waste of public money’.

‘The proceeding has exposed a shameful chapter in the administration of the Commonwealth social security system and a massive failure of public administration,’ Justice Murphy told the Federal Court.

A judge has approved a $1.2 billion settlement between robodebt victims and the federal government while blasting the scheme for being a 'shameful chapter' in public administration

A judge has approved a $1.2 billion settlement between robodebt victims and the federal government while blasting the scheme for being a ‘shameful chapter’ in public administration 

It should have been ‘obvious’ to the government that many welfare recipients do not earn a stable or constant income, he said, and may only be employed on a part-time, casual or intermittent basis.

However, Justice Murphy was not convinced the federal government knew the robodebt scheme was unlawful from the start.

‘I am reminded of the aphorism that, given a choice between a stuff-up and a conspiracy, one should usually choose a stuff-up,’ he said.

The 648,000-strong class action was led by Gordon Legal.

Justice Murphy approved $8.4 million in costs to the firm and said the 680 people who objected to the settlement would be given the opportunity to opt out.

Gordon Legal partner Andrew Grech said the settlement approval would bring closure to the victims of the robodebt scheme, which he described as a ‘callous’ practice.

The automated matching of tax and Centrelink data to raise debts against welfare recipients the government claimed to have overpaid was ruled unlawful in 2019.

The Commonwealth has now settled the case without admitting legal liability.

Federal Treasurer Josh Frydenberg hosed down calls for a royal commission into the robodebt scheme after Justice Murphy approved the $1.2 billion settlement.

Mr Frydenberg apologised for the hurt caused, but argued that similar practices had been used by different governments in Australia over the last 20 years.

ARE YOU ELIGIBLE FOR A ROBODEBT REFUND?

You may be eligible for a refund if all of the following apply:

– You received an income compliance debt on or after July 2015

– The government raised your debt using averaged ATO income data

– You repaid some or all of that debt.  

If you haven’t paid any money towards the eligible debt, the government will reduce your debt to zero. 

You will be sent a letter letting you know when we process this.

Services Australia

He also did not appear to accept that the robodebt scheme had been linked to suicides, describing mental health issues as ‘very complex’.

‘Suicides, when they occur, are absolute tragedies,’ Mr Frydenberg told reporters.

‘We apologise for any hurt, harm, hardship, that has been caused by the administration of that scheme.’

Jennifer Miller in May said robodebt played a ‘very prominent’ role in her son Rhys Cauzzo taking his own life about four years ago after he was pursued by Centrelink and debt collectors.

Ms Miller objected to the settlement in a previous Federal Court hearing, arguing that no one in power had been held accountable.

‘The only thing I’ve ever had is platitudes – I’ve been shown no respect,’ she told the court.

‘There has been no accountability. This was proven to be an illegal process early in the piece.’

Ms Miller said Centrelink pursued her son despite knowing he had mental health issues and also gave private information about him to the media.

Under the settlement, victims will receive $112 million in compensation, be repaid $720 million and have $400 million in unlawful debts wiped.

Justice Murphy earlier described it as a ‘good settlement’, but also questioned how fair the ultimate distribution of funds would be among the group members.

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