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The Albanese Government has reached a historic agreement to settle the Robodebt class action appeal, offering a $475 million compensation package to eligible victims of the "crude and cruel" scheme. If approved by the Federal Court, the settlement would be the largest of its kind in Australian history, a move the government says reflects the immense harm caused to vulnerable Australians by the previous administration's policies.

The settlement resolves the appeal Knox v The Commonwealth, which stemmed from the original class action Prygodicz v The Commonwealth. The compensation is in addition to the repayments of wrongfully raised debts and interest that were part of the 2020 settlement.

Attorney-General Michelle Rowland MP stated the settlement demonstrates the government’s commitment to addressing the harms caused by the scheme, which the Royal Commission described as a “costly failure of public administration, in both human and economic terms.”

“The Royal Commission described Robodebt as a ‘crude and cruel mechanism, neither fair nor legal’. It found that ‘people were traumatised on the off chance they might owe money’,” Rowland said. “Settling this claim is the just and fair thing to do.”

Beyond the compensation for group members, the agreement also allows the Federal Court to determine separate amounts for legal costs, capped at $13.5 million, and administration costs, not exceeding $60 million.

Gordon Legal, the firm representing the victims, celebrated the result on LinkedIn, stating the settlement is the largest in Australia’s legal history and demonstrates how class actions can provide a path to “meaningful compensation.” The firm noted that the second class action, initiated after the Royal Commission’s report, uncovered new evidence that senior public servants were responsible for designing, implementing and running the unlawful scheme for years.

Andrew Grech, a partner at Gordon Legal, hopes the settlement will give victims “who’ve been patiently waiting for this result” a sense of “vindication and completion.”

“I hope it says to them that no stone has been left unturned to get them what they deserve, which is the truth and compensation,” Grech said.

The new settlement now needs to be approved by the Federal Court, which is expected in the first half of 2026. For now, group members are advised that they do not need to take any action. The government recommends that affected individuals ensure their contact details are current with Services Australia. Further information will be provided once the Federal Court outlines the next steps for the settlement process.