Robodebt victims were treated like "criminals" and made to feel like "welfare cheats" by Centrelink staff and debt collectors, the Federal Court has been told.
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Hundreds of participants in a class action against the Commonwealth's robodebt scheme have objected to a $1.2 billion settlement of the case.
Fiona Forsyth QC, representing more than 600,000 members of the Gordon Legal action, said the use of flawed income averaging tools to raise debts caused vulnerable people stress and humiliation.
Victims were "treated like criminals" and left "feeling like welfare cheats" as they received rude calls from debt collectors and Centrelink staff, Ms Forsyth said.
They had their tax returns garnisheed, were forced to take extra jobs or expensive loans, and suffered detrimental effects in their relationships and mental health, sometimes leading to self-harm.
One man, John, said he couldn't eat or sleep and lost wages because he couldn't work while trying to prove he did not owe debts to Centrelink.
"The government is getting away with being shysters while making the little people feel like what they did is wrong," he said in a statement read to Justice Bernard Murphy.
The automated matching of tax and Centrelink data to raise debts against welfare recipients the government claimed to have overpaid was ruled unlawful in 2019.
The Commonwealth subsequently settled the case without admitting legal liability.
Under the settlement, which still requires final court approval, victims would receive $112 million in compensation, be repaid $720 million and have $400 million in unlawful debts wiped.
Justice Murphy described it as a "good settlement", but also questioned how fair the ultimate distribution of funds would be.
"You've got a series of people with strong claims and weaker claims," he said.
"And rather than apportioning them, the strong claims get everything and weak claims get nothing."
Acting for Gordon Legal, Bernie Quinn QC defended the firm's acceptance of the settlement.
"You have to ask: do I risk losing everything or do I take what I can get?" he said.
Meanwhile, the firm's plan to take a $4.4 million administration fee cut from the final figure was criticised by Michael Hodge QC, acting for the Commonwealth.
He also took aim at Gordon Legal's plan to deduct another $14,000 for the production of a previous video promoting the action.
Mr Hodge argued the clip led to "unmeritorious claims" on behalf of individuals not eligible to share in the settlement.
More than 500 people made objections to the settlement and many of them had "harrowing tales", Justice Murphy earlier noted.
Some claimants complained no one in power had been held to account for the robodebt scandal.
Jennifer Miller on Thursday said robodebt played a "very prominent" role in her son Rhys Cauzzo taking his own life about four years ago, after he was pursued by Centrelink and debt collectors.
The case will return to court at a later date.
Australian Associated Press
