The federal government has agreed to pay $475 million in compensation to victims of the Robodebt scandal, one of the largest class action settlements in Australian history. This payout will benefit nearly 450,000 individuals who were wrongfully pursued for debts they did not owe under the automated welfare scheme.

Robodebt, implemented in 2015, utilized a flawed algorithm to match income data from the Australian Tax Office with welfare payments from Centrelink. This system led to the wrongful identification of $1.7 billion in debts owed by welfare recipients. Many victims faced severe financial distress, with some taking out loans to cover the alleged debts.

Attorney-General Michelle Rowland stated that if the settlement is approved by the court, it will mark a significant step in addressing the harms caused by the previous government's actions. "Settling this claim is the just and fair thing to do," she said. The settlement includes not only the $475 million for victims but also legal costs not exceeding $13 million and administrative costs that could reach $60 million.

The original class action settlement in 2020, which was for $112 million, only refunded the interest on the debts and did not compensate victims for the distress and suffering they experienced. Rowland emphasized that the royal commission described Robodebt as a "crude and cruel mechanism, neither fair nor legal."

The settlement is still pending court approval. Victims have been advised to ensure their contact information is current to facilitate the compensation process. The royal commission into the scheme revealed that it contributed to significant trauma among victims, with some cases leading to suicides.

Justice Bernard Murphy, who presided over the class action, referred to Robodebt as "a shameful chapter" in public administration. The National Anti-Corruption Commission is currently investigating six public officials for their roles in the scheme.

Gordon Legal, the law firm behind the class action, has successfully secured over $2.4 billion in financial redress for victims of Robodebt and other related issues.