‘Shameful’ robodebt scandal ends with $1.7 billionb settlement

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A mother was unable to pay for her daughter’s medicines when money was wrongly taken from her under the ‘shameful’ Robodebt scheme.

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Labor Frontbencher Bill Shorten has hit the federal government with saying that Robodebt was a plan « that the government lost control of » and was one that was not legal.

Labor Frontbencher Bill Shorten has hit the federal government with saying that Robodebt was a plan « that the government lost control of » and that it was not legal.

The ’embarrassing’ chapter on Robodebt has come to an end. Photo: Jerad WilliamsSource: News Corp Australia

Victims of the botched robodebt scheme have won a major victory over the Australian government over the « shameful » chapter.

The computerized Commonwealth scheme called « robodebt » matched tax and Centrelink data to recover social benefits overpaid by the federal government between 2015 and 2019.

The government agreed to pay $112 million in compensation to people it claimed owed money based on its flawed debt recovery schedule, with a federal court judge clearing the settlement Friday.

« The proceedings have exposed an embarrassing chapter in the administration of the Commonwealth’s social security system and a massive failure in public administration, » Federal Judge Bernard Murphy said in the verdict.

The plan falsely chased more than 443,000 people for $1.7 million in social debt most never owed after the government switched to the flawed system.

Labor's Bill Shorten turned down the scheme.  Image: NCA NewsWire/David Crosling

Labor’s Bill Shorten turned down the scheme. Image: NCA NewsWire/David CroslingSource: News Corp Australia

Since the start of the legal action, the government has pledged to repay $751 million in « invalid » debts people have paid and drop claims for hundreds of millions more.

Justice Murphy said the group of Australians in need of government support included many who were marginalized or vulnerable and could be ill-equipped to understand or challenge the debt.

Melbourne nurse Felicity Button was one of the plaintiffs in the lawsuit and had taken $11,500 from her account to pay off a debt she never owed.

The 33-year-old mother was unable to pay for her daughter’s antibiotics after the money was withdrawn from her account in 2017.

« It was horrific, » said Mrs Button.

The nurse called the collection agency and begged them to give her the money back so she could buy her daughter’s medicines and fuel for her car.

« I honestly haven’t seen a light at the end of the tunnel, » she said.

Ms Button received a youth allowance in 2016 while casually studying and working and believed she was being unfairly hounded for the funds. She is relieved that the long legal battle is finally over.

« It’s sad that it took five years and actually quite embarrassing that it took five years, » the nurse said.

Those responsible for the scheme should have known that the average of revenues based on tax office data was an « unreliable basis » for collecting and recovering debts, Justice Murphy said.

Liberal Secretary Linda Reynolds apologized for parts of the program.  Image: APH via NCA NewsWire

Liberal Secretary Linda Reynolds apologized for parts of the program. Image: APH via NCA NewsWireSource:Supplied

« If you have the choice between a scam, even a huge one, and a conspiracy, you should normally choose a sacrifice, » he said.

He said the government should have made sure it had a good legal basis to cancel and collect any social security debts.

It caused financial hardship, distress and fear in a « large number of vulnerable people » and resulted in a « huge waste of public money, » Justice Murphy said.

But the government admitted no liability as part of the settlement, agreeing that the settlement was illegal.

Opposition government officials, Bill Shorten, denounced the plan targeting people who were marginalized and vulnerable.

« I have met families who believe that pursuing the unlawful debt against a beloved relative has led them to commit suicide, » Mr Shorten said outside the federal court in Melbourne.

He called for a royal commission into the scheme and for those responsible to be held accountable.

Peter Gordon said it was a « rough form » of justice for some involved in the collective action against the federal government. Image: NCA NewsWire/David CroslingSource: News Corp Australia

“Not a single senior official has lost his job, not a single minister has lost his job.”

The founder of the law firm that filed the lawsuit, Peter Gordon, said those who were falsely labeled as scammers and considered suicide could view the settlement as a « rough form of justice. »

He said it was a win for his clients, and Gordon Legal would begin allocating compensation that could range from hundreds of dollars to thousands per person.

The amounts would depend on what was unlawfully taken from people and how long the government had the money, Gordon said.

Despite the settlement receiving court approval, hundreds of people involved in the class action objected. Those objectors will be able to opt out and file their own individual claims against the government.

Treasurer Josh Frydenburg said income averaging had been passed under former Labor Prime Minister Paul Keating and rejected calls for a royal commission.

“When it comes to debt collection, it’s a very difficult situation. This income averaging process had been adopted by previous governments of both political persuasions, » he told reporters on Friday.

It comes as Public Services Secretary Linda Reynolds apologized for the way the program was being managed.

« Obviously this has been a very difficult process for all involved and we apologize for the way aspects of this program have been managed, » she said.

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