Robodebt victims still waiting for $112m in settlement payments

Almost 400,000 victims of Centrelink‘s Robodebt scandal are still waiting to be paid money owed to them as a result of Gordon Legal’s enormous class action against the Commonwealth Government.
Services Australia has repaid close to $1.73 billion in unlawful debts generated through its inaccurate income averaging system, which was used between 2015 and 2019. 

A further $112 million – which equates to the interest owed on money unlawfully collected by the government – was awarded to the 394,000 class action members who paid a Robodebt as part of the class action settlement.

A key component of the government's robodebt scheme has been halted.
The Robodebt class action settlement of $112 million is yet to be paid by Services Australia. (AAP)

Services Australia originally promised to pay out the $112 million settlement to class action members in March this year. It later pushed back the expected dates for payments to June.

Gordon Legal partner Andrew Grech told 9news.com.au that Services Australia was yet to pay out any of the settlement amount despite both of those dates having come and gone.

“The process has been very delayed,” Grech said.

“Services Australia told us that they would get the payments out in March and then they told us June and now they’re not saying when they’ll get them out – which is quite troubling.”

“It’s pretty unacceptable that it’s taken this long.”

Grech said his law firm had written to Services Australia asking for an explanation for the delays but had not received a response.

Staff at Gordon Legal were busy fielding queries from class action members asking when their share of the settlement would arrive in their bank accounts, Grech said.

“It’s adding insult to injury for a lot of them because we can’t tell them very much,” he said.

High school science teacher Katherine is one of the lead plaintiffs in the robodebt class action.
High school science teacher Katherine was one of the lead applicants in the Robodebt class action. (Nine)

Under the settlement deed approved by both parties in the Federal Court, Services Australia has until September 17 to pay the settlement sum.

Grech said Gordon Legal would ask Services Australia to explain in court the reason for the delays if it was not paid by then.

Services Australia is yet to send out letters to class action members telling them of how much their individual settlement will be.

So far, Service Australia has only informed class action members if they are entitled to a payment.

A spokesperson for Services Australia said: “There are a number of steps in the settlement distribution scheme process that need to be completed before we can start making payments.

“We’re working hard to provide payments as soon as possible.”

How much will Robodebt victims get?

Not a lot, is the short answer for most class action members.

Gordon Legal’s fees – which total around $9.6 million – are included in the settlement amount and therefore will be taken from the pool available to class action members.

A crude average suggests a payment of about $200 per member, however individual settlements are expected to vary broadly.

As the settlement relates to the amount owed in interest, members who paid the oldest and largest debts will receive the biggest payouts.

Centrelink has been using an unlawful averaging system since the 1990s, and possibly even as far back as the eighties.
The class action settlement does not include compensation for the pain and suffering of people given the unlawful debts. (Supplied)

Federal Court documents, published earlier this month, have provided some insight into how the settlement payments are likely to be broken down. 

About 20,000 class action members are expected to get less than $100, the court document said.

Just over 75,000 members will receive between $250 and $500, while almost 80,000 members will be paid between $2,500 and $5,000. 

About 275 members will fall into the top payout category, receiving an amount between $20,000 and $25,000.

Royal commission to probe unanswered questions

The class action settlement does not include any compensation to members for the financial hardship as well as pain and mental suffering caused by Robodebt.

Robodebt victims have spoken about the financial and mental distress the unlawful debts caused. Many had their wages and tax refunds garnisheed to pay off the debts or were chased by debt collectors. 

Jarrad was Ms Madgwick's only child.
Kath Madgwick, pictured with her son Jarrad. (Supplied)

One of the lead applicants in the class action was Katherine, a Melbourne high school science teacher.

Katherine first found out she had a Centrelink debt when her tax refund suddenly disappeared.

“I was confused. I thought there must have been some sort of mistake,” she previously told 9news.com.au.

The debt dated back to 2012 when Katherine was briefly receiving Newstart payments while working as a casual at a university.

Katherine said she asked Centrelink for a spreadsheet to show how they had calculated her debt, but no details were forthcoming.

“They said it was based on an algorithm. I was told that it would be too complicated for me to understand.”

The presiding judge over the class action, Justice Bernard Murphy, described Robodebt as “a shameful chapter” and “massive failure in public administration”.

Government Services Minister Bill Shorten has reaffirmed Labor’s commitment to holding a royal commission into Robodebt now the party is in government, telling the Herald Sun last week it would probe the mechanisms under which such a flawed scheme was delivered.

Grech said it would be important for the planned royal commission to look into whether it would be appropriate to compensate those who were severely disadvantaged by the scheme.

“Not all of the 400,000 people who had money effectively stolen from them by the government suffered in the same ways, but there are certainly some cases where the harm caused to them was quite egregious,” Grech said. 

“We think those people are very deserving of being compensated.” 

Gordon Legal partner Andrew Grech says a Royal Commission into Robodebt is needed.
Gordon Legal partner Andrew Grech says a Royal Commission into Robodebt is needed. (AFR)

The key questions of which government ministers knew what and when, as well as what legal advice they received, are also yet to be dealt with and are expected to form a key part of the planned royal commission.

“The royal commission may be a good opportunity to ask, particularly of the politicians involved, what they knew about the unlawfulness of this process, when they knew it was unlawful and why it took court proceedings to bring them to heel,” Grech said.

“The government should not be allowed to hide behind legal professional privilege or parliamentary privilege in the way that it has in this case.

“Not a single politician has been called to account, not a single senior public servant has lost their job over it.”

Those expected to be asked to provide evidence to the royal commission include former prime minister Scott Morrison, who was social services minister at the time Robodebt was implemented, as well as Alan Tudge, Stuart Robert and Christian Porter.

Contact reporter Emily McPherson at emcpherson@nine.com.au.

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