The government has established a Royal Commission into the disastrous Robodebt saga which unlawfully sent automated debt collection notices sent to vulnerable Australians.

Prime Minister Anthony Albanese described Robodebt as a “cruel system” that affected 400,000 Australians.

“[This was] a human tragedy with very real consequences for its victims,” he said at a press conference on Thursday.

“The Royal Commission will examine the establishment of the scheme, who was responsible for it and why it was necessary, how concerns were handled, how the scheme affected individuals, and the financial cost to government, and measures to prevent this ever happening again.”

Former Queensland Supreme Court Justice Catherine Holmes will be the Commissioner.

Holmes’s commission will be empowered to produce any documents and speak directly with witnesses who were involved in the scheme.

The final report is due to be handed down on 18 April, 2023.

Robodebt was implemented in 2015 as a ‘debt recovery’ system for welfare recipients which compared data from Centrelink and the Australian Tax Office (ATO).

The methodology to determine these debts was deeply flawed and involved averaging a welfare recipient’s income, as reported to the ATO, over a 12-month period.

Where averaged sums didn’t match granular income reported to Centrelink, the system would automatically send notices suddenly informing people of a debt they owed the government.

People already in financial hardship were shocked to discover they apparently owed the government thousands of dollars, leading to financial hardship, and mental health concerns.

In some cases, the debt notices were linked to self-harm and suicide.

Since being publicly announced in 2016 by then-Treasurer and now former Prime Minister Scott Morrison, the scheme that would be known as Robodebt has been administered by Alan Tudge and Stuart Robert – all of whom will likely be called upon to provide evidence at the Royal Commission.

Social Services Minister Anne Rishworth described Robodebt as a “fiasco” that “should be of deep concern to all Australians”.

“As late back as 2016 there were members of the public flagging concerns that these debts weren’t right, that there were problems with it, and we saw the government take no action whatsoever,” she said.

“We’ve continued to hear stories where individuals felt increasingly anxious, depressed, and worried because these debts kept coming and they couldn’t understand them.

“We know this program was meant to save money. It clearly didn’t save money, and the human cost was great.”

Robodebt was seen variously as a failure of government automation, a reason to be wary about government data matching, and as an example of failed IT professionalism.

Class actions were filed and won, with the Federal Court ruling in 2019 that Robodebt was “unlawful”, and the conclusion through this automated process that debts had arisen were “irrational”.

By 2020 the government of the day finally admitted its scheme was wrong and began issuing $721 million worth of refunds.

NDIS Minister Bill Shorten, who was the Shadow Social Services Minister following the 2019 election, said the Royal Commission would give victims “robo-justice” to what he described as “a massive failure of policy and law”.

“At one level, it was certainly the conduct of irresponsible ministers and senior public servants,” he said.

“At another level, no one ever [considered] maybe the machine was wrong, and the people complaining were right.”