Australian government agrees to record $548.5m Robodebt settlement, total payouts reach $2.4b

The Australian federal government announced Thursday, September 4, it will pay $475 million in additional compensation to robodebt victims through the Knox v Commonwealth case. The settlement represents the largest class action resolution in Australian legal history.

The total settlement amount reaches $548.5 million, with $60 million allocated for scheme administration and $13.5 million covering applicants' legal costs. Federal court approval is required before the settlement takes effect.

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Robodebt compensation now totals $2.4 billion following multiple settlements

The additional robodebt settlement supplements the original $112 million in compensation and legal costs from the 2020 class action. Gordon Legal, which initiated the first robodebt class action in late 2019, reports total financial redress now exceeds $2.4 billion.

The comprehensive payout includes $1.76 billion in debts that were forgiven, cancelled, or repaid by the government. The Knox case was launched after a royal commission revealed additional evidence regarding the automated debt recovery system.

Attorney General calls settlement just response to Robodebt scheme

Federal Attorney General Michelle Rowland defended the government's decision to settle the robodebt appeal rather than pursue litigation.

"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," she said in a statement to The Guardian.

Rowland characterized the settlement as the "just and fair thing to do" for affected individuals.

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Royal Commission findings condemned automated debt recovery system

The royal commission investigation into the robodebt scheme provided damaging assessments of the automated Centrelink system implemented by the previous Coalition government.

"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'," Rowland stated.

The royal commission's findings contributed to the launch of the Knox v Commonwealth appeal, which sought additional compensation beyond the original 2020 settlement terms.

Class action history spans multiple legal proceedings

The robodebt legal proceedings began with Gordon Legal's initial class action filed in late 2019. The original settlement was reached in 2020, but subsequent royal commission revelations prompted the Knox appeal case.

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The automated debt recovery scheme affected hundreds of thousands of Australians who received Centrelink benefits. The system used automated processes to calculate potential overpayments and pursue debt recovery from recipients.