Knox Class Action (Facilitation) Bill 2026
Ms PLIBERSEK (Sydney—Minister for Social Services) (09:27): I move: That this bill be now read a second time. The illegal and immoral robodebt scheme, created by the former coalition government, caused pain and trauma for more than 400,000 people across Australia. It was a shocking and deliberate case of maladministration, perpetrated knowingly by ministers.
Those opposite said they were going to save taxpayers $4.7 billion through this scheme. Instead, so far it has cost the Commonwealth more than $2 billion. None of us can forget when former minister Tudge said, 'We'll find you, we'll track you down, you will have to repay those debts, and you may end up in prison.' It was a mess left by the former government for us to fix.
The Albanese Labor government has a strong record of ensuring justice for the victims of the former government's robodebt scheme. We established a royal commission as one of our first priorities when we came to government. Sadly, that royal commission heard countless tragic stories of people being hounded by their government to repay debts they didn't even owe.
The royal commission concluded the scheme was a crude and cruel mechanism, neither fair nor legal. We agreed, or agreed in principle, to all 56 of the royal commission's recommendations. Fifty-two of those 56 recommendations have been fully implemented, and implementation of the remaining four measures is ongoing.
For example, we have: Delivered a new debt management program for Services Australia and ceased the use of external debt collection agencies, and Introduced mechanisms to ensure that all new programs and schemes are developed with a focus on the real people who are actually affected by policy changes. Last year we also passed legislation to make social security debt fairer to recipients and fairer for taxpayers, including raising the small debt waiver for the first time in 30 years to $250.
Because of that, around 1.2 million debts were waived or no longer needed to be raised in 2025-26. We've also expanded the special circumstances debt waiver to better protect victims-survivors of family and domestic violence from coercive social security debt. This bill is our next step in ensuring justice for robodebt victims.
The Commonwealth reached agreement in the Knox class action in September 2025 for the harms caused by the robodebt scheme, with a cohort of approximately 168,000 class action members. The settlement makes $475 million available to compensate eligible group members, which can be paid as either fixed payments or by individualised assessment. The payments are intended to compensate eligible individuals for a range of economic and non-economic loss types.
The settlement was approved by the Federal Court of Australia on 23 June 2026 and is the largest class action settlement in Australian history. With the Knox Class Action (Facilitation) Bill 2026, the government is taking action to make sure that compensation paid to Robodebt victims under the Knox settlement is received in full. Under normal circumstances, lump sum compensation payments like these may be subject to taxation, income testing arrangements and Commonwealth statutory recovery schemes.
That means amounts may be withheld and entitlements to benefits like social security or veterans payments, NDIS supports and aged-care contributions can be impacted. To be clear, we are not changing the normal operation of this system with this bill. There are good reasons for it generally to work this way.
What we are doing is making an exception because of the extraordinary and unique circumstances of the robodebt scheme. This was an illegal government program which the royal commission found knowingly inflicted harm on economically and socially disadvantaged people, many of whom were vulnerable. In its judgment approving the Knox settlement, the Federal Court described robodebt as a fiasco in public administration and an abrogation of ministerial responsibility and competent oversight.
In recognition of these extraordinary circumstances, the government has resolved to exempt Knox settlement payments from the tax, income testing and statutory recovery arrangements that ordinarily apply. That means members of the class action will get the settlement payments they are owed in full. We could not accept a circumstance where someone loses their pension because they are being compensated as a robodebt victim.
We also will not allow a situation where a robodebt victim has a debt raised against them because they have received a compensation payment through this settlement scheme. We will not have people retraumatised by the system that inflicted harm upon them in the first place. This bill amends the National Disability Insurance Scheme Act 2013to exempt Knox settlement payments from recoveries and reductions to the funding of reasonable and necessary supports in participants' plans under the National Disability Insurance Scheme.
It will also amend the Social Security Act 1991 and the Veterans' Entitlements Act 1986 to prevent Knox settlement payments being classified as income or compensation for the purposes of those acts. Other exemptions will follow, including an exemption from income tax, to be legislated before the end of the 2026-27 tax year. For many recipients of these settlement payments, interaction with the social security system was itself a source of distress during the operation of robodebt.
It is not appropriate that people should be required to re-engage with those systems, navigate complex assessments, or face uncertainty about the treatment of compensation paid in recognition of harms caused by robodebt. This bill removes that uncertainty and the potential for further distress. The circumstances surrounding robodebt and the royal commission process set this matter apart from other cases in which the Commonwealth may be found liable.
This bill should be understood in that context. It does not create a precedent. It is important that this bill pass quickly through both houses of parliament to ensure settlement payments to robodebt victims are not delayed, and I thank parties that have pledged their cooperation in this respect.
It is a duty of this parliament to do all it can to address the toxic legacy of robodebt, and ensure that nothing like it can ever happen again. We have to ensure the victims of robodebt get what they are owed as part of this historic settlement process. The swift passage of this bill will demonstrate the parliament's commitment to ensuring that those affected by robodebt receive fair, meaningful and lasting redress, and the toxic legacy of robodebt is banished for good.
Debate adjourned.