The federal government has agreed to a $1.2 billion payout to nearly half a million Australians affected by the controversial robodebt scheme, expected to be the largest class action payment in the country's history once approved by the Federal Court.
The trial was expected to begin on Monday morning but after being delayed for hours, Gordon Legal, who represents the approximately 400,000 class action members, announced it had reached a more than $1.2 billion settlement with the government.
The payout to members of the class action was agreed to on the basis the government, nor any of its officers, not admit it was legally liable.
Gordon Legal have secured a landmark settlement of the Robodebt Class Action. If approved by the Federal Court, more than $1.2 billion in financial benefit will have been provided to approx. 400,000 group members since the commencement of the class action. https://t.co/hygBuSJt2h— Gordon Legal (@gordonlegal_au) November 16, 2020
Of the $1.2 billion total, $721 million had already been agreed to be paid back in May 2020. A further $398 million of invalid debts under the scheme would be erased with $112 million being provided in compensation for those affected.
Gordon Legal partners, Andrew Grech and James Naughton, said they hoped the $112 million compensation payout would be completed by the end of 2021 but was still subject to the court's approval.
"I think no money amount will ever compensate people for the hardship they've been through," the partners said in a media briefing on Monday afternoon.
"We've listened intently over a long period of time now to the more than 70,000 people that have contacted us and there are some really dreadful stories that we've heard through that process."
It's expected legal costs and other fees will be deducted from the compensation payout, leaving the remainder of the $112 million for the 400,000 members to share.
Prime Minister Scott Morrison said it had already paid back more than half of the amount owed, admitting the foundation of the scheme was "not appropriate".
"We're dealing with income averaging being used as a basis for raising debts," Mr Morrison said during a press conference in Melbourne on Monday.
"That has been addressed as not being appropriate to base those payments [for] raising those debts.
"And we've corrected that and we've been paying the money back, some $700 million already out of $1.2 billion."
Labor government services spokesman Bill Shorten said it was a long time coming but that a royal commission into the scheme was now needed to give the public answers.
"It should never have taken four years," Mr Shorten said on Monday afternoon.
"I ... congratulate all of the advocates, all of the welfare activists, the Victorian Legal Aid authority, who over the last four years, have been trying to get fairness and the law applied to some of our most vulnerable fellow Australians.
The income compliance program, which became known as Robodebt, was first introduced in 2015 and was the subject of intense scrutiny from social services advocates and opposition parties.
It connected data from the Australian Taxation Office (ATO) with payments being made through the then human services department, in search of discrepancies it could then issue a debt notice to.
The class action case argued that the averaged data from the ATO misrepresented the actual payments received during a fortnightly basis resulting in flawed calculations.
But claims have been made that the scheme is linked to a number of suicides, based on the great stress relatives say it put on those already in vulnerable financial positions.
During a parliamentary hearing in July 2020, Department of Social Services secretary Kathryn Campbell said she did not accept the link being made by an opposition senator that robodebt was to blame for a number of deaths.
"No I do not accept that people have died over Robodebt, senator. I do not accept those assertions that are being made," Ms Campbell said in July.
Community and Public Sector Union national secretary Melissa Donnelly said its members within Centrelink and Services Australia had warned the scheme was flawed before it was ever rolled out.
"The government should be embarrassed by the entire robodebt fiasco. More than that, it owes all these Australians, and its workforce an apology," Ms Donnelly said.
"This program never should have got the go ahead and had the Morrison government listened to our members it would not have."
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