About 400,000 Australians who had money taken from them unlawfully in the federal government’s robodebt scandal will be compensated for more than $1.2 billion.
While not admitting legal liability, the commonwealth settled a class action on the day a Federal Court trial had been due to begin over the scheme.
The government agreed on Monday to pay $112 million in compensation to about 400,000 individuals as well as legal costs.
This comes on top of $720 million it had previously agreed to repay over the scheme declared unlawful in the Federal Court last year.
It has also dropped $398 million in debts it had been pursing against class action members, law firm Gordon Legal said.
The robodebt saga involved matching Australian Taxation Office and Centrelink data to claw back welfare benefits the government said had been overpaid.
Federal Labor frontbencher Bill Shorten was pleased with the settlement but criticised the government for dragging out the case.
“We said it was illegal and the government ignored us. We said it was unfair, the government ignored us. We asked for documents in parliament from the government and they ignored us,” he told reporters.
“Why should people have to go to lawyers, put together a class action just to get the government to obey the law?”
The final detail of the settlement will still require court approval at a later date.
Gordon Legal hopes it will finish distributing the repayments by the end of next year.