Senior personnel behind the unlawful robodebt scheme will be referred for civil and criminal prosecution as a royal commissioner lashes the "dishonesty and collusion" behind the program.
Former Queensland chief justice Catherine Holmes on Friday handed a 990-page report containing 57 recommendations to Governor-General David Hurley.
The report also included a sealed chapter that is not part of the bound report.
"It recommends the referral of individuals for civil action or criminal prosecution," Ms Holmes said in the report.
The commissioner has also referred parts of her report to the Australian Public Service Commission, the National Anti-Corruption Commission, the president of the Law Society of the ACT and the Australian Federal Police.
"It is remarkable how little interest there seems to have been in ensuring the scheme’s legality, how rushed its implementation was, how little thought was given to how it would affect welfare recipients and the lengths to which public servants were prepared to go to oblige ministers on a quest for savings," she wrote.
"Truly dismaying was the revelation of dishonesty and collusion to prevent the scheme’s lack of legal foundation coming to light."
The report said it was at the beginning of 2017 when robodebt's "unfairness, probable illegality and cruelty became apparent".
"It should then have been abandoned or revised drastically and an enormous amount of hardship and misery ... would have been averted," it said.
Among the former coalition ministers identified in the report, Scott Morrison was highlighted as having allowed cabinet to be misled over the lawfulness of the scheme.
Prime Minister Anthony Albanese said the government would carefully consider all 57 recommendations laid out in the final report.
"The robodebt scheme was a gross betrayal and a human tragedy ... it was wrong, it was illegal, it should never have happened and it should never happen again," he told reporters.
"This tragedy caused stress, anxiety, financial destitution and sadly had a very real human toll."
Government Services Minister Bill Shorten said the previous government and senior public servants "gaslighted the nation" for years.
"They betrayed the trust of the nation and its citizens for four and a half years with an unlawful scheme which the Federal Court has called the worst chapter of public administration," he said.
The former coalition government launched the scheme to "detect, investigate and deter suspected welfare fraud and non-compliance" in mid-2015 in an effort to save billions of dollars.
The scheme - which became known as robodebt - issued debt notices to people identified through a process called income averaging, which compared reported incomes with tax office data.
More than $750 million was wrongfully recovered from 381,000 people, with victims telling the commission of their trauma and fear as they received notices and debt collectors made contact.
The inquiry also heard evidence of bureaucrats ignoring serious questions and advice about the legality of the scheme.
The scheme was ruled unlawful by the Federal Court in 2019.
A settlement of $1.2 billion was reached between robodebt victims and the then-government in 2020.
The report said the robodebt scheme was set up to deliver budget savings of $4.7 billion, but only delivered $406 million in savings, with the scheme costing $971 million.
Australian Council of Social Service chief Cassandra Goldie said the thousands of victims had been vindicated by the report's findings.
"This abuse of power hit people at a time when they were facing their hardest reality ... they came to government for help and instead, what they faced was the terror of being pursued for debts they clearly did not own," Dr Goldie said.
Madeleine Masterton, who was a litigant in a test case for the legality of the robodebt scheme, told AAP she did not want compensation following the report.
"It’s gratifying to see the failures laid out clearly and the horror of having targeted people with the least capacity to navigate a complex system," she said.
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