Knox Class Action (Facilitation) Bill 2026

Ms AMBIHAIPAHAR (Barton) (16:42): I rise to speak on the Knox Class Action (Facilitation) Bill 2026. It's purpose is to amend three particular pieces of legislation: the National Disability Insurance Scheme Act, the Social Security Act and the Veterans' Entitlements Act. This is to exempt Knox settlement payments, from the robodebt class action, from existing Commonwealth statutory recovery schemes and income-testing provisions that ordinarily apply for recipients of lump sum compensation payments.

There are some bills that come into this place that deal in the very technical language of statutory recovery schemes, income-testing provisions and rate calculators. And on the surface that is exactly what the Knox Class Action (Facilitation) Bill 2026 does. But underneath the schedules, underneath the subsections, this bill is about something much simpler.

It is really about whether this parliament will let a government finish what is broken or whether we'll let one more piece of red tape reach into the pockets of the very people the robodebt scheme already hurt. I want to start, if I may, with a story—not from a courtroom situation or from the royal commission transcript, but from the kinds of conversations I used to have across my desk in my old life as an employment lawyer and also from the kinds of conversations my electorate office still has most weeks in Hurstville, Kogarah, Rockdale and Bexley.

Picture a woman in her 60s. She has worked cleaning offices around Kingsgrove for the better part of two decades, on and off, while caring for a parent and, later, a grandchild. One year her hours changed twice; her income averaged out strangely across the financial year.

A letter arrived from Centrelink telling her she owed almost $11,000. She hadn't done anything wrong. She hadn't hidden anything.

A computer had simply averaged her income across fortnights—in which she had never actually earned that much—and decided she was a debtor. She said she didn't sleep properly for the better part of a year, and she started to avoid the mailbox. She said it felt like being accused of stealing from her own community by the very people who were supposed to have your back.

That is robodebt—a real person in a real electorate like mine, Barton, in a lounge room, staring at a letter that told her that the government believed she was a cheat, when in truth it was the government's own scheme that was breaking the law. We know now, because the royal commission told us in the clearest possible terms, that this was not a bureaucratic accident.

It was a scheme built on income averaging that officials were advised again and again was not lawful. It was pursued anyway, against people who were disproportionately economically and socially disadvantaged, many of them already vulnerable. The Commonwealth unlawfully asserted more than $1.7 billion in debts against 433,000 Australians.

It recovered $751 million of that from people who owed nothing, and it did so using private debt collectors. Ordinary citizens were threatened with the machinery of law over debts that existed only on a spreadsheet. Those opposite, when they were in government, told Australians this scheme would save taxpayers $4.7 billion.

Instead it has now cost the Commonwealth more than $2 billion, and an immeasurable human cost besides. When the royal commission was established to get to the truth of what happened, those opposite called it a political stunt, a witch-hunt, a trial by media. We should never forget the words of a former minister, who told Australians: We'll find you, we'll track you down and you will have to repay those debts and you may end up in prison.

Those are not the words of a government administering a lawful scheme. They are the words of a government that had lost sight of who it was supposed to serve. I raise this history not to relitigate the past for its own sake but because it is the only way to properly understand why this bill exists in the first place and why the exemptions it creates are so necessary.

The first robodebt class action resulted in a settlement approved by the Federal Court in 2021, an acknowledgement that administrative decisions under the scheme were never validly made, alongside $112 million in interest payments to group members. But when the royal commission's findings revealed that Commonwealth officials knew of it or were recklessly indifferent to it—the unlawfulness of what they were doing—an appeal followed.

That appeal, brought by Nathan Knox and David Mandell on behalf of group members, led to a new settlement in September 2025, the Knox settlement, which the Federal Court approved in June this year. Under that settlement, the Commonwealth will pay $475 million in compensation to eligible group members on top of everything already repaid or written off in the earlier settlement.

Combined with the debts refunded and the amounts already zeroed out, the total value of remedying this scandal now sits at over $2 billion. In its judgement, the Federal Court did not mince words. It called robodebt 'a fiasco in public administration, an abrogation of ministerial responsibility and competent oversight'.

It found that the suffering experienced by those affected was in, in its words, 'immeasurable and ongoing'. I think of that woman from Kingsgrove, and I think that is exactly right. Here is the problem this bill solves.

Under normal circumstances—and there are good reasons—the system usually works a particular way. A lump-sum compensation payment like this one would be subject to taxation, to income testing and to Commonwealth statutory recovery arrangements. That means a veteran on an income support pension could see their payment reduced.

It means someone receiving NDIS support could have the National Disability Insurance Agency claw back the cost of past supports directly from their settlement money. It means a pensioner could be pushed into a preclusion period and lose access to income support they rely upon or find a portion of their long-awaited compensation swallowed up by aged-care fees or an unexpected tax debt they never saw coming because tax is not usually withheld from settlement payments.

Let that sink in; without this bill, some of the very Australians who were wrongly treated as debtors by an unlawful scheme could find part of their compensation for that scheme clawed back by the ordinary operation of other Commonwealth systems. It would be robodebt's ghost reaching out one more time to take money from people who have already waited years for justice.

This bill makes sure that doesn't happen again. It amends the National Disability Insurance Scheme Act 2013 so that the Knox settlement payments are specifically excluded from the definition of compensation that would otherwise trigger cost recovery or reduce a participant's future NDIS plan. It amends the Social Security Act 1991 so that these payments are treated as exempt income and not counted as compensation for the purposes of pension and benefit assessments.

And it makes equivalent amendments to the Veterans' Entitlements Act 1986 so that a veteran who is one of the roughly 168,000 people covered by this settlement will not see their income support pension reduced or subjected to a preclusion period because of the money the Commonwealth owed them in the first place. In practical terms, this bill means the difference between a Barton pensioner receiving the compensation they are owed in full and the same pensioner discovering that a portion of it has quietly disappeared into a recovery scheme or an income test.

It really means that a veteran in our community is not penalised twice, once by an unlawful scheme and again by the ordinary machinery designed for very different, very ordinary circumstances. As the Minister for Social Services put it in her second reading speech, this is not about changing how our system usually works; it is about recognising that robodebt was never ordinary and that the 'extraordinary and unique' circumstances of the scheme demand an extraordinary response.

I want to be frank with the House about why this matters so deeply to me as a former workplace lawyer. For a decade, I stood in the Fair Work Commission and the Federal Circuit Court representing people—workers, employees and also employers—trying to get a fair and lawful outcome under systems that are supposed to operate by the rule of law. What made robodebt so corrosive was precisely that it inverted that principle.

It was the government itself acting outside the law, against people with the least power to fight back. When you have spent years in rooms where the stakes for ordinary people are entitlements, wages and dignity, you develop a low tolerance for systems that get this wrong and an even lower tolerance for governments that know they have got it wrong and delay putting it right.

This bill is this Albanese Labor government putting it right methodically and completely. We established the royal commission. We agreed or agreed in principle to all 56 of its recommendations.

We are delivering the largest class action settlement in Australian history, and, with this bill, we are making sure that settlement is not diminished by the very Commonwealth systems it was meant to remedy against. The government has also flagged that complementary exemptions relating to Medicare and aged care will follow through regulation and that a full exemption from income tax on these payments will be legislated before the end of the 2026-27 tax year.

This bill is not the end of that work. It is the next necessary step in it. To the woman from Kingsgrove and to the tens of thousands of Australians like her across this country and across Barton, in Hurstville, Bexley, Rockdale and Carlton, this bill says something very simple.

We see what was done to you. We are not going to let one arm of government quietly undo what another arm of government has finally agreed to make right. You are owed this in full, and this parliament intends to see that you receive it.