The federal government has announced it will pay an additional $475 million to victims of the "disastrous" robodebt scheme.
The total amount of the deal is now $548.5m, with up to $60m set aside to administer the settlement scheme and up to $13.5m to cover the applicants' reasonable legal costs.
The settlement, which is subject to approval from the Federal Court, is in addition to the more than $1.8 billion payout handed down in 2020.
Attorney-General Michelle Rowland said on Thursday that settling the claim shows the government is doing the right thing.
"Today's settlement demonstrates the Albanese Labor government's ongoing commitment to addressing the harms caused to hundreds of thousands of vulnerable Australians by the former Liberal government's disastrous robodebt scheme," she said in a statement.
"The royal commission described robodebt as a 'crude and cruel mechanism, neither fair nor legal'. It found that 'people were traumatised on the off chance they might owe money' and that robodebt was 'a costly failure of public administration, in both human and economic terms'."
The class action settlement, if approved by the Federal Court, would be the largest in Australia's history.
Between 2015 and 2019, the botched debt recovery scheme, set up by the then Coalition government, automatically used tax office data to calculate average earnings and issue debt notices to welfare recipients.
Robodebt recovered more than $750 million from almost 400,000 people, but the automated process often failed to accurately reflect people's earnings.
Many welfare recipients were falsely accused of owing the government money, and the scheme was linked to several people taking their own lives.
'Bittersweet' moment for victim
One of the lead applicants in the robodebt scheme, Felicity Button, has spoken to reporters in Melbourne following the announcement.
"I'm thankful and I am so relieved that it came to this point, but at the same time, there is a bitter sweetness to it thinking of the people that have had irreparable damage happen," she said on Thursday.
"People that have lost family members. People that have gone through divorce, become bankrupt. Irreparable mental health issues that have stemmed from this, that will never ... we can never compensate for that."
Lawyer Peter Gordon, who worked on the case, spoke along with Button.
"Today is a day of vindication and validation for hundreds of thousands of Australians afflicted by the Robodebt scandal. Today, they know that their voices have been heard," he said.
"Today is also one more vindication of the principle that Australia remains a nation ruled by laws and not by kings — laws which even hold the government accountable."
