A class action is being launched against Centrelink's controversial robo-debt welfare recovery scheme.
Melbourne law firm Gordon Legal will argue the commonwealth must repay debts collected and provide compensation to people affected by the scheme.
Senior partner Peter Gordon, appearing alongside Labor frontbencher Bill Shorten in Canberra on Tuesday, said he believed the scheme amounted to unjust enrichment in the eyes of the law.
He said the robo-debt algorithm, which calculates the alleged debt owed by welfare recipients from overpayments, was "inadequate" and "simplistic".
Mr Shorten dubbed the suit a "David and Goliath" struggle against a "pig-headed" government.
"Think of Big Tobacco in the United States. Think of asbestos. And now robo-debt," Mr Shorten said.
Government Services Minister Stuart Robert said the suit was a "political stunt" and pinned the blame for robo-debt on Labor.
The previous Labor government introduced a similar process in 2011 but had each case reviewed by a staff member at the Department of Human Services, while the coalition moved to a fully-automated system in 2016.
Mr Robert said the government hadn't received any advice from the department that suggested robo-debt was unlawful.
Mr Shorten said in the past couple of months, people's legal challenges against their robo-debt had been settled by the government so it could avoid proving the legal basis on which it was trying to reclaim debts.
"My own research in the (past) couple of months has led me to believe that it is almost certainly illegal," Mr Shorten said.
Mr Gordon said he expected the matter to go on trial in the next 18 to 24 months if the government didn't settle beforehand.
People who wanted to join the suit would have to opt in with the law firm, but it had already been approached by several people.
Mr Gordon said there were "novel aspects" to the case that would require precedents to be set by the High Court.
Australian Associated Press