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The federal government has agreed to pay a further $548.5 million to victims of the unlawful RoboDebt scheme, lawyers announced Wednesday, bringing the total compensation and repayments to more than $2.4 billion in what is now the largest class action settlement in Australian history.
The deal, unveiled by Gordon Legal after six years of litigation, will benefit more than 450,000 Australians. The settlement follows damning findings from the 2023 Royal Commission into RoboDebt, which exposed systemic misconduct in the government’s handling of welfare debts.
“This is a day of vindication and validation for hundreds of thousands of Australians afflicted by the RoboDebt scandal,” said Gordon Legal co-founder Peter Gordon. “Today, they know that their voices have been heard. Today is also a day of warning to governments and bureaucrats at all levels not to recklessly and unlawfully attack the people they were hired to protect.”
Years of Legal Battles
The RoboDebt program, introduced in 2015, used automated income-averaging to calculate welfare overpayments, raising hundreds of thousands of debts against Australians — many of them false. Victims were told to prove they did not owe money or face recovery actions, often with little explanation or documentation.
Mounting challenges eventually forced the government to refund or forgive $1.7 billion in debts in 2020. Gordon Legal launched the first class action in 2019, which settled two years later for $112 million. That case was limited to claims of unjust enrichment, meaning victims received only refunds and interest on repayments.
The 2023 Royal Commission, led by Commissioner Catherine Holmes, found evidence suggesting elements of misfeasance in public office, a far more serious tort. Gordon Legal then launched fresh proceedings in September 2024, arguing the first settlement had been reached without access to key documents later revealed during the inquiry.
A full hearing before the Federal Court had been scheduled for July 28 this year. Instead, mediation ordered by the court resulted in the government agreeing to the $548.5 million payout last week.
“This outcome means Australia’s most vulnerable citizens have received over $2.4 billion arising out of government wrongdoing,” Gordon said. “It is frankly infuriating to know that our own Commonwealth Government caused so much suffering to its own people, and that it arose out of willful misconduct.”
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Largest Class Action in Nation’s History
Gordon said the combined outcomes of the two lawsuits represented “far and away the largest class action settlement in Australia’s history,” both in terms of the money involved and the number of people affected.
“More than 450,000 Australians have or will benefit from this settlement,” he said. “Whether you look at the number of group members, the amount of today’s settlement, or the result overall over the last four years, it is unprecedented.”
The new payments will be subject to Federal Court approval, expected within six months. Once approved, victims will be able to choose between a fixed compensation amount — which could be delivered within six months — or an individualised assessment of their losses.
“That’s really important because one of the problems that brought about RoboDebt was people being treated as though they were numbers,” Gordon said. “They will have the option of having individualised assessments, though that process will be longer because we expect tens of thousands to come forward.”
Victims Speak of Lasting Harm
Victims who attended Wednesday’s announcement described the enduring toll of the scheme.
Felicity Button said she lost $11,500 from her bank account without warning while she was supporting a six-month-old daughter.
“It was traumatising,” Button said. “I was driving down the freeway thinking of running into a tree because that would solve all my problems. What happened to us was unfair, unjust, cruel, torturous and inhumane. But we used the legal system for what it’s there for — justice prevailed.”
She said the settlement brought relief but could not undo the damage. “There’s a bittersweetness to it, thinking of the people that have had irreparable damage — people that have lost family members, people that have gone through divorce, become bankrupt, irreparable mental health issues that have stemmed from this,” she said.
For her, the outcome marked a rare moment of trust in the justice system. “For the first time in my whole life, I can say that there was a bit of fairness, not just justice in our system,” she said.
A Warning for Government
Gordon said the scandal was a reminder that government must be held to account under the rule of law.
“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. Long may that be the Australian way,” he said.
He credited Legal Aid lawyers, social workers, financial counsellors, academics such as Professor Terry Carney, and politicians including Bill Shorten for their roles in challenging the system. He also praised journalists who “asked relentless tough questions of those in power” and legal counsel who worked on the two trials.
Gordon acknowledged that while the settlement was a historic legal victory, it could not erase the suffering inflicted on ordinary Australians. “We understand that for some, there are wounds that will never heal. But we’ve been inspired and driven by the stories and the support of ordinary Australians,” he said.
Greens Call for Further Reform
The Greens welcomed the additional compensation but warned that without systemic reform, similar scandals could recur.
A Commonwealth ombudsman’s report handed down last month found more than 1,000 welfare recipients had their payments unlawfully cancelled by automated processes over two years.
Last week, the Greens and crossbenchers introduced a bill to force the government to implement the outstanding recommendations of the Royal Commission, including a six-year limit on debt recovery.
“It’s good news that RoboDebt victims will be getting more compensation, but it sure would be cheaper and easier for everyone if the government would stop ignoring the law and punching down on poor people,” said Greens social services spokesperson Senator Penny Allman-Payne.
“The last time the Greens asked in Estimates, neither the minister nor the department could confirm the current welfare compliance system is lawful. Millions of payments are suspended every year under this potentially unlawful system, with little process or oversight,” she said.
“The Greens have a bill in parliament right now. Labor could implement the outstanding RoboDebt recommendations including the six-year limit on debt recoveries, and stop the rampant suspension of welfare payments which takes life-saving funds out of the hands of over a hundred thousand people each month. History will repeat itself until they do.”
Next Steps
Victims are being urged to register with Gordon Legal to receive updates on the approval process. If the settlement is approved, fixed payments could reach claimants within six months, while more complex individual claims will take longer to resolve.
“We hope that most will feel at least some sense of vindication in today’s announcement,” Gordon said. “We know that for some, no amount of money will ever heal the harm done.”
The RoboDebt saga, spanning nearly a decade, has been widely condemned as one of the most serious governance failures in recent Australian history. The Royal Commission concluded that the scheme was not only unlawful but had inflicted untold human suffering.
Button said she hoped the outcome would deter future governments from similar misconduct. “It doesn’t matter how vulnerable a population is and it doesn’t matter where you come from or what your circumstances are, there is no room in Australia for unethical and illegal conduct, particularly within our government,” she said. “Today is the first step forward to rebuild that
Former Labor leader Bill Shorten said victims of the unlawful robo-debt scheme have finally been vindicated, after the federal government agreed to pay nearly half a billion dollars in compensation to welfare recipients targeted by the program.
Speaking on Sky News Politics Now, Shorten described the $475 million settlement as a necessary step, though one that could never undo the harm caused.
“No compensation can replace the actual unlawful behaviour not happening,” Shorten said. “It would have been better if it just never happened to begin with. The people who went through robo-debt would rather they didn’t get treated as de facto cheats and crooks by their own government with no lawful basis.”
The robo-debt scheme, which began in 2015, used an automated process to match Centrelink and tax data to claw back alleged overpayments from welfare recipients. The process was found to be unlawful and led to widespread financial stress, with several suicides linked to the scheme.
Shorten, who launched the class action against the government in 2019 alongside lawyer Peter Gordon, said critics at the time dismissed the effort as political point-scoring.
“All these years, six years on, $2.4 billion later, it wasn’t the victims making up their sense of grievance. That was real,” Shorten said. “Thank goodness the Albanese government had a royal commission. That found the facts, and now it showed that the victims not only were being treated unlawfully, but there was real malfeasance in the way senior people were treating the victims to begin with. It was wrong. It was just terribly wrong.”
The Albanese government commissioned a royal commission into robo-debt, which reported last year. It found the scheme had no legal foundation and recommended sweeping reforms to ensure similar failures could not recur.
Asked whether proposed Labor changes to freedom of information (FOI) laws risked hiding details of future scandals, Shorten dismissed the link.
“The problem with robo-debt wasn’t a lack of FOI power,” he said. “It was deliberately set up as a war on the poor. The government didn’t hear the complaints and kept attacking the critics … FOI wouldn’t have solved that problem. I think the problem was in the hearts of the people driving the scheme at the top. They just thought they could get away with sinking the boot into the disadvantaged.”
The interview also touched on Victorian Premier Daniel Andrews’ decision to attend a Chinese military event, which some critics described as propaganda. Shorten declined to comment, saying, “I know I didn’t get invited, so I’ll never know if I would have accepted the invitation.”
Turning to domestic politics, Shorten expressed concern over recent anti-immigration rallies under the “March for Australia” banner, where neo-Nazi groups were reported to be present.
“I don’t recognise our streets when I see marches like that,” he said. “Some people go there very well-intentioned, but what good can come with being in a march with neo-Nazis? I just don’t like Nazis.”
The $475 million settlement adds to the $1.8 billion already paid to victims through earlier legal action and repayments of unlawful debts.
For Shorten, the outcome is bittersweet: “It is a good outcome … but it never should have happened in the first place.”
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