Robodebt class action members will be left in the dark for weeks over access to compensation.
The commonwealth and Gordon Legal on Monday reached a settlement worth $1.2 billion after the government hit thousands of Australians with debt notices falsely accusing them of being overpaid Centrelink.
The settlement makes it the largest class action in Australia’s legal history and includes $112m compensation for legal costs and interest payments for the money held.
However, 400,000 eligible class action members will have to wait until the settlement receives the green light from the Federal Court.
“Now, I appreciate the Gordon Legal will seek to have its costs come out of that amount of money,” Government Services Minister Stuart Robert said.
“But I think we’d all want the vast bulk of those funds to be returned to Australians and those involved.”
The court will also be tasked with approving a settlement distribution scheme to pay people their entitlements.
In May the government announced it would refund 470,000 debts, worth $721m, raised under the income-averaging program.
Mr Robert said on Monday the government had already repaid $705m to 405,000 Australians, or 95 per cent of those eligible.
Interest on the money raised will be given to members after legal fees are taken from the $112m.
However, Australian Greens Senator Rachel Siewert said the amount was not enough to “compensate (for) the trauma” caused by robodebt.
“People have been calculating it at about $280 (a person),” Senator Siewert told the ABC, adding a formula would be applied.
“People felt shamed and unfairly picked on … people felt rage for being called a cheat.”
Some class action group members will not receive a portion of the payment because they did not have their debts raised using “partial or wholly” averaged income data.
However, Senator Siewert encouraged the 5 per cent of people who did repay an illegal debt to reach out to Centrelink.
Under the settlement, the Commonwealth also agreed to drop claims for about $398 million in debts it had invalidly asserted.
National Party senator Matt Canavan told Sky News it was clear mistakes had been made through the robodebt program.
“When you make a mistake you’ve just got to fess up to it and move on,” he said.
Senator Siewert and Labor MP Bill Shorten have ramped up calls for a royal commission to be established to investigate the scandal, which dates back to 2015.
Services Australia, in a joint statement with Gordon Legal, said the agreement to settle the matter “does not reflect any acceptance by the Commonwealth of the allegations that the Commonwealth, or any of its officers, had any knowledge of unlawfulness associated with the income compliance program”.