Hundreds of thousands of Australians forced to pay back welfare debts created by an illegal automated system have won the largest payout in the country’s history.
Known as “Robodebt”, the scheme wrongly told welfare recipients they had been overpaid and demanded they repay these debts, which often never existed.
In 2020, a successful class action resulted in a A$1.8bn (£876m; $1.2bn) settlement for victims of the scheme – some of whom took their own lives.
However, the group’s lawyers appealed for more money after new evidence showed officials of the then-Liberal National coalition government knew the scheme was “unlawful” but continued anyway.
On Thursday, the current Labor government announced it would settle that claim, and hand an extra A$475m over as compensation for the harms caused by the “illegal and immoral Robodebt scheme”.
Another A$13.5m has also been earmarked for legal costs and up to A$60m to administer the compensation scheme.
“[It] is the just and fair thing to do,” Attorney-General Michelle Rowland said, adding that it reflected the harm caused to thousands of vulnerable Australians under the “disastrous” scheme.
Lawyers for the class action said the extra compensation was “validation” for the victims.
“Today is also one more vindication of the principle that Australia remains a nation ruled by laws and not by kings – laws which even hold the government accountable,” Peter Gordon told reporters, according to the Australian Broadcasting Corporation (ABC).
One of the victims, Felicity Button, told reporters it was a bittersweet moment, as some victims had lost family members, gone through divorce or become bankrupt.
“Irreparable mental health issues that have stemmed from this… we can never compensate for that.”
It is estimated that more than 440,000 people were impacted by the illegal system, which ran from 2016 to 2019 under the conservative government of former prime minister Scott Morrison. It was aimed to save about A$1.7bn.
Those affected were some of the country’s poorest, and a landmark inquiry heard the scheme led to at least three suicides.
A royal commission – Australia’s most powerful form of public inquiry – into the scheme finished in mid-2023 and drew hundreds of public submissions.
It heard how the algorithm used to determine if someone had been overpaid was based on flawed calculations by averaging a person’s fortnightly income.
This income figure was used to determine how much welfare was paid, but the calculation led to mistakes if a welfare recipient worked irregular hours from week to week.
The commission also unearthed new evidence that showed senior public servants who designed and ran the scheme knew it was unlawful.
This prompted lawyers handling the class action to appeal the original settlement, and demand further compensation due to “misfeasance in public office”.
In total, the redress scheme amounts to about A$2.4bn. This includes A$1.76bn in debts that were wiped and and money given back to victims who paid false debts.
Thursday’s announcement of an extra A$475m in compensation is in addition to the A$112m awarded in 2020, meaning a total of A$587m.
The largest payout previously was A$500m for survivors of the 2009 Black Saturday bushfires in Victoria – Australia’s worst-ever – which killed 173 people, according to Nine.
