The automated matching of tax and Centrelink data to raise debts against welfare recipients for money the coalition government claimed to have overpaid was ruled unlawful in 2019.
But the Morrison government has never detailed who was accountable for the scheme and which ministers knew of its problems.
The royal commission was a major election commitment by the Albanese government, with it expected to cost $30 million.
The commissioner will be former Queensland Supreme Court chief justice Catherine Holmes.
The final report will be delivered to the governor-general by April 18, 2023.
Albanese said key lessons needed to be learnt following the controversial scheme.
“It is vital so that we get to the bottom of how robodebt came about so that we can ensure that it can never ever happen again,” he told reporters in Sydney on Thursday.
“We know that almost 400,000 Australians fell victim to this cruel system. A human tragedy with very real consequences for its victims.”
The royal commission will look at the establishment, design and implementation of the scheme, who was responsible for it, why they considered robodebt necessary, and any concerns raised regarding the legality and fairness.
As well, it will examine the handling of concerns raised about the scheme, including adverse decisions made by the Administrative Appeals Tribunal.
And the terms of reference will cover the outcomes of the scheme, including the harm to vulnerable individuals and the total financial cost to government, as well as measures needed to prevent similar failures.
Albanese dismissed criticism the commission would be an opportunity to attack the former government, saying there was a human cost to the scheme.
“People lost their lives. Every single one of my local constituents, and every member of parliament can tell stories like this,” he said.
“Those people who were most vulnerable were the least likely to go to their local member, to have the confidence to do that. And that’s why we need to get to the heart of why this occurred.”
Robodebt was set up in 2015 by the former coalition government and continued until November 2019, after a class action lawsuit led to the scheme being labelled as unlawful.
The former government at the time raised more than $1.7 billion from more than 400,000 people.
The scheme was found to have wrongly recovered more than $750 million from 381,000 people.
Government Services Minister Bill Shorten said while the class action lawsuit delivered justice for victims, more was needed to be done.
“This royal commission has to fill a gap,” he said.
“We still don’t know who conceived of this. The Federal Court judge, Justice Murphy, said that the senior public servants and responsible ministers should have known, but didn’t know.”Jump to next article