Robodebt compensation is a win for victims, but now we may never know the full story

The news of the largest-ever class action settlement in Australian history seems, in many ways, like the only fitting bookend to the awful ordeal of Robodebt.

Some A$548 million (including legal and administrative costs) will be paid to more than 433,000 victims, once the settlement is approved by the Federal Court.

It’s undoubtedly a win for victims, who’ve spent years fighting for compensation for the trauma they experienced as a result of the Robodebt scheme. Lawyers representing them said it was “day of vindication and validation”.

But now the matter won’t go before a court. Without the piercing gaze of the law and judiciary, there are many questions of government and public service accountability that may never be answered.

We may never know the full Robodebt story.

Years of litigation

Robodebt was a debt-recovery system run under Coalition governments from 2015 until 2019. Designed to secure budget “savings”, it used an unlawful method of income averaging to issue false debts to welfare recipients.

The program unlawfully “withdrew” a predicted $1.76 billion of repayments from welfare recipients, and actually recovered at least $751 million, before it was conceded, in a first settlement, that these debts were unlawfully raised and erroneously calculated.

This compensation settlement will resolve a second class action lawsuit, brought against the government of the day for past wrongdoing. But the quest for justice has been wider.

This class action, an appeal of the first one, was launched after the damning findings of the royal commission.

In 2023, when handing down its final report, the commission described the Robodebt scheme as:

[…] a crude and cruel mechanism, neither fair nor legal, and it made many people feel like criminals. In essence, people were traumatised on the off-chance they might owe money. It was a costly failure of public administration, in both human and economic terms.

Unlike the first class action settlement in 2020, which provided refunds with interest, this payout will provide financial compensation to victims.

It takes the total government bill to staggering heights. If you add up the first class action settlement, the foregone revenue the government had baked into budget projections, and this latest settlement, the total liability of the Commonwealth for this single policy failure approaches $2.43 billion.

What was the legal challenge about?

Though the new class action had not reached the point where full claims had been filed, the litigation was slated to introduce into court the “damning evidence” of wrongdoing uncovered in the royal commission.

The victims’ lawyers stated this evidence was not available and had not been made available by the government during the original class action proceedings in 2020.

Lawyers for the victims had planned to argue this new information supported claims of a specific and serious civil wrong: misfeasance in public office.

What is public office misfeasance?

As a legal wrong, misfeasance is unique. It’s the only one that applies exclusively to public officials who misuse their public power.

The common law recognises that public officials always owe a duty not to abuse their powers because of their obligation to act in the public interest.

The misfeasance tort (a civil wrong) therefore targets the deliberate betrayal of that duty. This is known as “conscious maladministration”.

Read more: Explainer: what is the 'tort of misfeasance' and how might it apply in the case of robodebt?

To prove misfeasance, it’s not enough to show incompetence or a mistake, even a catastrophic one.

Lawyers for the Robodebt victims would have needed to prove specific states of mind held by public officials. They would have had to prove the officials acted recklessly, indifferently or with targeted malice.

Although such settlements are typically reached on the basis that no fault or admissions are made, it’s fair to infer from the settlement that the government regarded the lawyers’ claims with a degree of seriousness.

The government had not, for instance, applied to get the legal claims dismissed.

Why did the government settle?

The decision to settle was likely driven by a combination of legal and political factors.

The evidence unearthed by the royal commission significantly strengthened the victims’ case for misfeasance. A trial would have been risky and potentially even more costly, with the prospect of further damaging revelations emerging in court.

Politically, settling the case allows the current government to draw a line under a scandal that plagued its predecessors. It can frame the payout as a necessary step in righting the wrongs of a “disastrous and heartless” policy.

How the settlement figure was calculated, and what it represents, is not yet, and may never be, clear.

Empirical studies on class actions have shown settlement amounts rarely match the actual damage caused.

Instead, they usually reflect a mix of the estimated damages, litigation risks, insurance coverage, and the strategic interests of both sides to avoid further costs and uncertainty.

However, the large size of this settlement suggests the government has not adopted a “nuisance-value” strategy, where payment is made to efficiently resolve an otherwise meritless claim.

Still, it should be remembered that the large size of the total settlement reflects the size of the cohort, not necessarily the generosity of the compensation. When the millions are divided among more than 433,000 people, the individual awards to victims may be reasonably criticised as modest.

The lingering questions

With the misfeasance claims dropped, there will be no legal finding on whether public servants knowingly acted unlawfully.

This leaves a crucial gap in the public’s understanding of precisely what kind of legal culpability the alleged wrongdoers may have had.

Indeed, other systemic issues that might have been raised, such as evidence suggesting members of the historic Administrative Appeals Tribunal were penalised or terminated for making decisions against the government, will remain untested.

The case has one final frontier: the National Anti-Corruption Commission (NACC).

Earlier this year, the NACC committed to investigating the six referrals it received from the Robodebt royal commission.

This was after initially choosing not to investigate the referrals, which resulted in multiple independent investigations into the watchdog itself and around 1,2000 public complaints.

It’s been a fraught process to get to this point, and there is no public timeframe for the conclusion of its investigation. Its proceedings are also typically held in private to avoid prejudicing any potential future legal action.

While the NACC can recommend criminal charges, it cannot prosecute individuals itself.

Whether we will see substantial findings from its investigation remains to be seen. It’s the last chance to investigate the key public officials behind Robodebt, and if necessary, hold them to account.