Morrison Government to settle 'robodebt' class action out of court reportedly for in excess of $1.2 billion

 

In July 2016 the Turnbull Coalition Government began to issue income compliance notices based on automated data matching to recipients of government cash transfers such as Job Seeker, Youth Allowance, Abstudy, Single Parent Payments and Family Tax Benefit payments.

At the time the then Minister for Social Social Services Scott Morrison expected to clawback an est. $1.7 billion dollars over five years from individuals who were, or had been in the past, receiving a Centrelink pension, benefit or allowance.

From its beginning this income compliance scheme was seen as flawed.

On social media and elsewhere the scheme began to be called 'robodebt' and unverified reports began to emerge of vulnerable people in receipt of large robodebts suiciding.

In February 2019 it was revealed that the Morrison Government had spent between $400m to recover just $500m from welfare recipients through the flawed 'robodebt' scheme.

By 2019 at least 570,000 of over 600,000 income compliance notices issued were considered to be unlawful. As were Australian Taxation Office garnishee notices associated with these alleged debts.

A total of 18,000 individuals who consented to automated data matching to calculate an alleged debt were also considered to have been subject to an unlawful action.

In November 2019 the Morrison Coalition Government called a halt to using automated data matching to calculate income compliance, as it was faced with at least one adverse court judgment and a forthcoming class action in the Federal Court of Australia.

On 29 May 2020 the Morrison Government announced that it now accepted that many debts raised under the 'robodebt' system were unlawful and, consequently, that it would refund 470,000 debts raised totalling $721 million to 373,000 people. This refund did not cover all members of the class action.

The class action was scheduled to go to trial on 16 November 2020.

Yesterday, Monday 16 November, came news that the class action had been settled out of court by the Morrison Government. Presumably in order that Morrison & Co. along with senior Social Security and Centrelink bureaucrats could avoid the possibility of having to give evidence in court, to avoid any legal admission of liability and, to avoid the risk of a detailed adverse judgment.

It seems that Scott Morrison's personal war on the poor and vulnerable, begun when he was Minister for Social Services and continued on during his time as Treasurer and now as Australian Prime Minister, has cost the federal government well in excess of  $1.2 billion when one factors in the federal government's legal costs and the pre-existing 'robodebt' scheme administration costs - including debt recovery agent commission payments.

Gordon Legal, media release, 16 November 2020:

Gordon Legal announces today the settlement of the Robodebt Class Action, subject to the approval of the Federal Court of Australia.

The settlement reached with the Commonwealth of Australia means that if approved by the Court, since the commencement of the Robodebt Class Action, more than $1.2 billion in financial benefit will have been provided to approximately 400,000 group members.

In settling the class action, the Commonwealth has not admitted that it was legally liable to Group Members. [my yellow highlighting]

KEY POINTS:

The total financial outcome achieved is made up as follows:

• The Commonwealth has today agreed to pay $112 million in compensation to approximately 400,000 eligible individual Group Members, including legal costs;

• The Commonwealth is repaying more than $720 million in debts collected from Group Members invalidly and will continue to provide refunds;

• The Commonwealth has agreed to drop claims for approximately $398 million in debts it had invalidly asserted against group members of the class action;

• Subject to Court Approval, a Settlement Distribution Scheme will provide that eligible individual Group Members’ entitlements will be assessed and all amounts due to them be paid in 2021.

Subject to approval by the Court, a notice setting out the details of the proposed Settlement Distribution Scheme and the Court approval process will be provided to all Group Members.

Gordon Legal Partner, Andrew Grech said:

“We want to acknowledge the courage of the lead applicants; Katherine, Elyane, Steven, Felicity, Shannon and Devon, who led these proceedings on behalf of all Robodebt victims in pursuit of this class action, which has allowed this outcome to be achieved today.

Our clients have asked us to especially thank Bill Shorten for his relentless pursuit of this issue, for his compassion over the last four years for vulnerable Australians hurt by Robodebt and for bringing the case to Gordon Legal’s attention when it seemed that all other options had been exhausted and only resorting to the legal system would help.

Once again we would like to acknowledge the work of the legal team at Victoria Legal Aid, who worked tirelessly to bring a number of individual claims before the Federal Court before the Class Action was commenced as well as the efforts of many community legal services in the Welfare Rights Network, such as Social Security Rights Victoria who have been advocating for victims of Robodebt for the last few years.

Our clients would also like us to acknowledge the Federal Court of Australia for its preparedness to schedule frequent case management hearings and to facilitate a trial of the proceedings so quickly, notwithstanding the difficult circumstances of the Melbourne Covid-19 lockdown.”

– ENDS –

For more information visit: https://gordonlegal.com.au/robodebt-class-action/robodebt-faqs/