Senior public servants will be referred for prosecution over the unlawful Robodebt scheme, after a scathing royal commission report.

Commissioner Catherine Holmes on Friday handed a landmark 990-page report containing 57 recommendations to Governor-General David Hurley.

Her report included a sealed chapter that was not part of the bound documents.

“It recommends referrals of individuals for civil and criminal prosecution,” the commission said in a statement.

Parts of the report have been referred 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.

The names of those referred have not been disclosed.

In her overview, Ms Holmes writes that: “Robodebt was a crude and cruel mechanism, neither fair nor legal, and it made many people feel like criminals. In essence, people were traumatised on the off-chance they might owe money. It was a costly failure of public administration, in both human and economic terms.”

Among key findings, she directly criticised former prime minister Scott Morrison, who was among a string of former Coalition ministers to give evidence to the inquiry.

“Mr Morrison … took the proposal to cabinet without necessary information as to what it actually entailed and without the caveat that it required legislative and policy change to permit the use of the ATO PAYG data in the way proposed,” she said.

“He failed to meet his ministerial responsibility to ensure that cabinet was properly informed about what the proposal actually entailed and to ensure that it was lawful.”

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Ms Homes accepted the evidence of Mr Morrison, who was social services minister when Robodebt began in 2015, that his then department should have advised him of potential legal problems.

She also found that some of Mr Morrison’s evidence to the inquiry, relating to a 2015 executive minute, was untrue.

Mr Morrison hit back in a lengthy statement on Friday afternoon acknowledging his “regret for the unintended consequences” of Robodebt, and its impact on recipients and their families.

“I reject completely each of the findings which are critical of my involvement in authorising the scheme and are adverse to me,” he said.

“They are wrong, unsubstantiated and contradicted by clear documentary evidence presented to the commission.”

She said former minister Christian Porter misled the public about the rate of complaints, the fairness of the process and its lawfulness.

If Mr Porter had promptly directed his department to provide him with advice on the legislative basis of the scheme in early 2017 “the probable result [is] that its unlawfulness would have been identified and the scheme ended”, the report said.

Ex-minister Stuart Robert was also found to have made misleading comments.

“Mr Robert … was going well beyond supporting government policy. He was making statements of fact as to the accuracy of debts, citing statistics which he knew could not be right,” the report said.

The ABC reported on Friday afternoon that Mr Robert had released a statement saying he hadn’t been advised of his inclusion in the sealed section of the report.

The inquiry found ministerial colleague Alan Tudge, who made repeated public comments about a “war on welfare rorting”, was aware the program was issuing inaccurate debt notices by January 2017.

He instituted improvements, but was “not open to considering any significant alteration, or cessation, of processes underlying” the program’s fundamental features.

Mr Tudge released a lengthy statement on social media on Friday, denying any wrongdoing.

“Consistent with principles of procedural fairness, individuals who have been referred have received prior notification. I have not received notification that I have been referred,” he said.

“My legal team has not identified any basis of which any civil or criminal prosecution could successfully be made against me.”

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Albanese: ‘Gross betrayal’

Prime Minister Anthony Albanese slammed Robodebt as a “gross betrayal and human tragedy” on Friday.

“We have arrived at the truth because of the courage of some of the most vulnerable Australians. People who have shown bravery in the face of injustice, hardship and sometimes terrible grief,” he said.

“The courage stands in stark contrast to those who sought to shift the blame, bury the truth and carry on justifying the shocking harm.

“The Robodebt scheme was a gross betrayal and a human tragedy. It pursued debt recovery against Australians who in many cases had no debt to pay. It was wrong. It was illegal. It should never have happened and it should never happen again.”

Asked if Mr Morrison should quit parliament, Mr Albanese said that was a decision for the former PM.

“Scott Morrison, of course, is mentioned countless times in this report. It is a matter for him what action he takes in response,” he said.

“But I make this point: The royal commission has comprehensively rejected the Liberal Party talking points that the system had not changed at all, and it calls that falsehood.”

NDIS Minister Bill Shorten accused the former government and senior public servants of “gaslighting” Australians.

“They betrayed the trust of the nation and its citizens for 4½ years with an unlawful scheme which the Federal Court has called the worst chapter of public administration,” he said.

“It fundamentally says that it has broken the sacred trust, that when citizens give some of their power to the government, that the government will make sure that it helps, not hurt, citizens.

“This is a report that shows how the previous government and senior public servants hurt, not helped, citizens.”

Mr Shorten said the scheme’s 433,000 victims were “literally shaken down by their own government … and, in fact, (it) did break the law”.

The former Coalition government launched Robodebt to “detect, investigate and deter suspected welfare fraud and non-compliance” in mid-2015 in an effort to save billions of dollars.

It 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.

Victims told the royal 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.

Launched in August last year, the royal commission held 303 hours of hearings with 115 witnesses, and received 1099 submissions.

Ahead of the report’s release, Opposition Leader Peter Dutton said he would wait and see what its findings were. But he accused the government of politicising it.

“There is no question about why it’s being dropped today,” he told Nine’s Today program, pointing to the upcoming Fadden byelection.

In fact, the final reporting date was set a week before Mr Robert, the outgoing Fadden MP, resigned from parliament, triggering the byelection.

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– with AAP