Australia’s federal government on Monday agreed to a A$1.2-billion ($875 million) settlement in a class action over an automated debt recovery programme that affected more than 3.7 lakh welfare recipients.

The robodebt scheme, originally introduced to ensure welfare recipients were not under-reporting their income and over-receiving government payments, used computer algorithms to recover money with little to no human oversight.

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The class action settlement, subject to court approval, means that many members will receive a further payment, in addition to refunds received earlier this year, said Gordon Legal who led the case against the government.

In May, the government had agreed to pay back A$721 million to more than 3.7 lakh people who were wrongly pursued.

Monday’s settlement includes that amount and a $112-million compensation together with a decision to drop a further A$398 million in debts wrongly raised.

Prime Minister Scott Morrison has already apologised in Parliament this year for the “hurt or harm” caused by the scheme. Without admitting legal liability, Morrison, on Monday, said the government was correcting the issue.

The opposition is pushing for a government-mandated inquiry into scheme.

“The settlement is justice for victims who have been treated terribly by the Morrison Government,” said Shadow minister for government services Bill Shorten.

“Only a Royal Commission into Robodebt will give the public the answers they deserve.”

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