A class action run by the law firm Gordon Legal for welfare recipients who were wrongly sent debt notices under the now unlawful ‘Robodebt’ system has been settled Gordon Legal has just announced. It will cost the government (really the tax payer) more than $1.23 billion when all is added up, with the federal government agreeing to pay huge compensation to 400,000 members of the legal action.
Robodebt involved an automated IT system developed to match data from multiple government services, to calculate if recipients had been paid too much by Centrelink. This dud service itself had cost the Australian government more than $400 million.
When countless people were handed big debts for money they did not owe, the Robodebt was ruled illegal by the Federal Court for lack of human oversight.
The federal government had to suspend the program in February this year.
Not long after a class action suit from law firm Gordon Legal was launched to seek compensation for victims of unfair debts.
Today, the trial hearing was due to commence in the Federal Court but was delayed for last-minute negotiations and a settlement was reached.
The settlement requires the Federal Court’s approval which will be a mere formality.
Under the terms of settlement, the government would have to refund more than $720 million in debts class action members have already paid. In addition to that the government will no longer chase nearly $400 million in debts it was chasing from people making the total figure of $1.12 billion.
Add to that $112 million in compensation and legal costs that the government has agreed to pay as well. A total of $1.232 billion will be paid out by the federal government for an IT application which had cost $400 million plus in the first place.
Add to that the administrative and staff and staff training costs of the scheme and you will not get much change for $2 billion.
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
“Subject to court approval, a settlement distribution scheme will provide that eligible individual group members’ entitlements will be assessed and all amounts due to them be paid in 2021,” Gordon Legal said in a statement.
“In settling the class action, the Commonwealth has not admitted that it was legally liable to group members.”
The federal government is yet to comment publicly on the settlement.
This is big win for the Labor party in Opposition in Canberra and more so for their shadow government services minister, Bill Shorten who kept relentless pressure on the government pursuing the issue for the Aussie battlers.
Gordon Legal said their clients wanted to particularly thank Bill Shorten “for his relentless pursuit of this issue, for his compassion over the last four years for vulnerable Australians hurt by robodebt and for bringing the case to Gordon Legal’s attention when it seemed that all other options had been exhausted and only resorting to the legal system would help.”