After an extensive legal approval process, victims of Australia’s notorious robodebt scheme are slated to receive compensation in the nation’s largest-ever class action settlement.
A total of $475 million will be distributed among approximately 125,000 individuals who registered claims, having been adversely impacted by the illegal debt recovery practices of the federal government.
The intention behind the Robodebt system was to address overpayments of social security benefits. However, between 2015 and 2019, it mistakenly accused hundreds of thousands of people of having government debt.
Consequently, many among Australia’s most vulnerable populations faced severe financial difficulties, suffered from hunger, or tragically, some even resorted to taking their own lives.
The mismanaged initiative has now resulted in over $2.4 billion in costs to the government, following numerous class action lawsuits.
Federal Court Justice Jonathan Beach ruled on Tuesday that an additional settlement of $548.5 million, including the approved compensation figure, was fair and reasonable.
It also includes up to $13.5 million in legal costs, to be paid by the Commonwealth.
Class action representatives will be paid between $20,000 and $25,000 each for “inconvenience occurred over a number of years”.
The settlement comes on top of an earlier $112 million agreement that lawyers successfully appealed.
Justice Beach thanked victims who had been part of various class actions since 2019, particularly Jenny Miller and Kath Madgwick.
They lost their sons, Rhys Cauzzo and Jarrad Madgwick, to suicide after they were issued with robodebt notices.
“I did appreciate hearing their perspectives and the fortitude that has been shown particularly from the two mothers whose sons were lost,” the judge said.
He added the “fiasco” was an opportunity to learn lessons, chastising government officials who were ‘insulated and detached” from the consequences of their actions.
A settlement was first reached in 2021, but it did not consider information later uncovered in the Royal Commission into the Robodebt Scheme.
That included the revelation that government officials tried to mislead investigations into the scandal.
Further compensation was then requested in the successful appeal by law firm Gordon Legal, which led the class action.
The class action was launched by Sydney woman Katherine Prygodicz, who had twice been chased for a debt of more than $14,000.
About 450,000 people are estimated to have been affected by the scandal.