About three million Australians wrongly pursued for Centrelink debts will be eligible for compensation of up to $600 each.

Social Services Minister Tanya Plibersek on Wednesday unveiled a $300 million package to improve fairness in the system, after the federal government admitted a long-used calculation method was unlawful.

The method — used from the early 1990s until 2020 and known as income apportionment — assumed a recipient’s income each fortnight if their pay did not align with Centrelink reporting periods.

A Federal Court ruling in July found the historical practice of income apportionment was invalid, and confirmed the new process in place since 2020 is lawful.

Those who had debts calculated under income apportionment between 2003 and 2020 will have them waived and will re

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