The Federal Court could award $475 million to victims of the Coalition’s controversial robodebt scheme, creating what would be Australia’s largest-ever class action settlement.
The Albanese government has reached a historic agreement to settle the appeal in Knox v The Commonwealth, stemming from the original robodebt class action (Prygodicz v The Commonwealth), in a move that could mark the largest class action settlement in Australian history.
Under the agreement, the Commonwealth would pay $475 million in compensation to eligible group members affected by the robodebt scheme, which the Attorney-General’s office has described as “illegal and immoral”.
Should the Federal Court approve the agreement, the Attorney-General’s office stated that it would stand to be “the largest class action settlement in Australian history”.
The $475 million payout would come in addition to the $1.2 billion already distributed under the original 2020 settlement, which covered interest payments and repayments for debts that were wrongly raised.
In a statement, the Attorney-General’s office explained that the settlement framework also allows the Federal Court to determine “separate amounts for the applicants’ reasonable legal costs”, capped at $13.5 million, and for the costs of “administering the settlement scheme”, capped at $60 million.
Attorney-General Michelle Rowland MP described the settlement as a demonstration of the Albanese government’s ongoing commitment to righting the wrongs caused by the robodebt scheme to thousands of Australians.
“Today’s settlement demonstrates the Albanese Labor government’s ongoing commitment to addressing the harms caused to hundreds of thousands of vulnerable Australians by the former Liberal government’s disastrous robodebt scheme,” Rowland said.
“The royal commission described robodebt as a ‘crude and cruel mechanism, neither fair nor legal’. It found that ‘people were traumatised on the off chance they might owe money’ and that robodebt was ‘a costly failure of public administration, in both human and economic terms’.
“Settling this claim is the just and fair thing to do.”
Andrew Grech, a partner at Gordon Legal, the firm behind the landmark case, said the achievement was the result of years of perseverance and courage from the victims.
“It has been a great privilege to act on behalf of the applicants and group members for the last six years and to help them to achieve such an outstanding result in very complex and difficult circumstances,” Grech said.
“The team at Gordon Legal are thrilled by and very proud to have achieved this historic result for those harmed by the robodebt scheme. Without the bravery and persistence of so many victims that came forward to tell their story, and the impact that robodebt had on their lives, this day would never have come.”
Representative applicant Nathan Knox expressed his relief that the hundreds of victims involved in the robodebt case can finally begin to move forward and rebuild their lives.
“I am very pleased that our legal challenge has been so successful and that group members can finally begin to put this terrible chapter behind them. Everyday Australians should now know that they can stand up and demand respect and fairness, especially from their government,” Knox said.
