Federal Court judge labels Robodebt ‘shameful’ and ‘waste’ after approving $1.8bn settlement

Judge Bernard Murphy condemned the scheme for the toll it took on people who were incorrectly targeted over debts they never had.

Gordon Legal's Peter Gordon (R), Senior Partner and Labor's Bill Shorten (L) speak at a press conference after the judgment of the Robodebt Class Action. Picture: NCA NewsWire / David Crosling

The Morrison government’s ­illegal robodebt scheme was a “shameful chapter” in the ­nation’s history and a “huge waste of public money”, a Federal Court judge said, after approving a $1.8 billion legal settlement.

Labor demanded a royal commission following the court ­approval, which also see the government pay $8.4 million in complainants’ legal costs.

Judge Bernard Murphy condemned the scheme for the toll it took on people who were incorrectly targeted over debts they never had. “The proceeding has exposed a shameful chapter in the administration of the commonwealth social security system and a massive failure of public administration,” he said.

“One thing … that stands out … is the financial hardship, anxiety and distress, including suicidal ideation and in some cases suicide, that people or their loved ones say was suffered as a result of the ­robodebt system, and that many say they felt shame and hurt at being wrongly branded welfare cheats. This has resulted in a huge waste of public money.”

Justice Murphy did say that there was little evidence the government knew the scheme was unlawful. Robodebt was an computer-run debt collection system – in place between July 2015 and November 2019 – which used data-matching to identify the overpayment of welfare benefits.

Opposition government ser­vices spokesman Bill Shorten – who spearheaded the public campaign against robodebt and triggered the successful class action with Gordon Legal – said on Friday that a royal commission was needed to find out how an illegal scheme was allowed to run for more than four years.

“No public servant has been held to account. No senior public servant that is. No minister has been held to account,” he told the ABC. “What Justice Murphy said is, on the evidence he had in front of him, he tended towards a massive stuff-up as opposed to a conspiracy. But that’s why we want to have a royal commission. Because when does massive stupidity actually become negligent, reckless and bad?”

Labor sources said the opposition would pursue the government over robodebt in the next two sitting weeks of parliament in the belief the government can no longer claim a public interest indemnity as the court matter is now settled. Mr Shorten will demand any legal advice on robodebt be ­released.

Josh Frydenberg on Friday repeated Scott Morrison’s apology to people harmed by the robodebt scheme, but said the government continued to not claim liability.

“It is very difficult when it comes to recovering debts but it’s a process that has been adopted by successive governments,” the Treasurer said in Melbourne.

Government Services Minister Linda Reynolds said the government had refunded $725 million to nearly 418,000 people affected by robodebt as of last month.

“I am committed to ensuring the lessons learnt and improvements we have made from this ­experience continue to be applied to all of the agency’s future work,” she said. “Services Australia is now focused on delivering settlement payments to eligible group members as soon as possible.”