Record payout for victims of 'illegal and immoral' Australian welfare scheme

The Australian government has agreed to pay AU$1.2 billion (US$820 million) to more than 200,000 welfare recipients who were victims of an illegal and immoral scheme operated by Centrelink.

The class-action settlement was reached after three years of litigation, with the federal court approving the settlement on Wednesday. The scheme, which has been described as "unprecedented in its unfairness" and "operated for a decade", has impacted hundreds of thousands of people.

What was the scheme?

The welfare scheme involved the robo-debtoring of Centrelink beneficiaries. It was designed to compare the incomes of welfare recipients with the Australian Tax Office data. Thousands of people received threatening letters demanding that they repay benefits they had received, or face severe penalties and legal action. Many claimants were forced to pay back thousands of dollars, ending in financial ruin for many.

How did it work?

The automated system notified citizens that they owed money to the government, but many of the robo-debt notices were issued due to algorithmic errors and a lack of transparency. The system would not give people the chance to explain their circumstances or issue refunds for honest mistakes. Many citizens were left traumatized by the invasive and threatening tactics of the scheme.

What was the settlement amount?

Each victim will receive an average payout of AU$5,000 (US$3,200). The settlement was estimated to be AU$1.2 billion (US$820 million) and will be fully funded by the Australian government. Although many victims will finally receive the compensation they deserve, many have criticized the government for not admitting to the scheme's innocence.