Robodebt Class Action Appeal Settlement Reached

The Albanese government has reached an agreement to settle Knox v The Commonwealth, the appeal arising from the original Robodebt class action case of Prygodicz v The Commonwealth.

The deal, subject to Federal Court approval, would see the Commonwealth pay $475 million in compensation to eligible group members who were affected by the unlawful debt recovery program.

If endorsed by the Court, it would become the largest class action settlement in Australian history.

Background To The Case

Robodebt was introduced under the former Coalition government and relied on income averaging to recover welfare debts. The method was ruled unlawful after it raised debts without proper verification.

An initial settlement in late 2020 saw repayments of wrongfully raised debts, along with interest. The latest agreement builds on that outcome, aiming to address broader harms identified through the appeals process.

The Court will also decide on allocations for the applicants’ legal costs, capped at $13.5 million, and administration costs for running the scheme, capped at $60 million.

Impact On Australians

Group members are not required to take action at this stage, other than keeping contact details updated with Services Australia. More details will follow once the Federal Court sets next steps.

Attorney-General Michelle Rowland said the outcome was about accountability and fairness.

“Today’s settlement demonstrates the Albanese Labor government’s ongoing commitment to addressing the harms caused to hundreds of thousands of vulnerable Australians by the former Liberal government’s Robodebt scheme,” Rowland said.

She pointed to the findings of the Royal Commission, which 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 and that Robodebt was a costly failure of public administration, in both human and economic terms,” she said.

“Settling this claim is the just and fair thing to do.”

Next Steps

Approval from the Federal Court remains the final hurdle before payments are distributed. If granted, the settlement will mark a milestone in the long-running saga that has seen multiple legal actions and a Royal Commission expose the impact of the scheme.

The government said further updates will be provided to group members once the Court confirms the settlement arrangements.

Last Updated on September 4, 2025 by Nick Ross