A $1.2 billion settlement has been reached in the robodebt class action with the Commonwealth.
The Commonwealth on Monday agreed to pay $112 million in compensation including legal costs for 400,000 eligible class action members.
This is on top of an agreement to repay more than $720 million in debts collected invalidly.
It will also drop claims for about $398 million in debts it had invalidly asserted.
If approved by the Federal Court, a settlement distribution scheme will provide payments to members next year.
The Commonwealth has not admitted it was legally liable for the welfare program, which assessed if people had been overpaid Centrelink payments since July 2015.
Services Australia, in a joint statement with Gordon Legal, said the agreement to settle the matter “does not reflect any acceptance by the Commonwealth of the allegations that the Commonwealth, or any of its officers, had any knowledge of unlawfulness associated with the income compliance program”.
The robodebt scheme used computer algorithms with little or no human oversight to determine whether a person owed debts.
Government Services Minister Stuart Robert reiterated the government has ceased income averaging, which he says “has been used for decades and decades”.
He claims Gordon Legal “will seek to have its costs come out of that amount of money. But I think we’d all want the vast bulk of those funds to be returned to Australians and those involved”.
Gordon Legal partner Andrew Grech thanked Labor MP Bill Shorten for his “relentless pursuit” of this issue.
Mr Shorten said the government had finally surrendered.
“This will be the largest payment of a financial benefit to the largest group of victims of a class action in Australian legal history,” Mr Shorten said.
“I would like to salute the courage of the seven plaintiffs who have engaged in a David and Goliath struggle against the Morrison government.
“But it should never have taken four years and the resolution of the largest class action … for 400,000 everyday Australians to seek justice.”