Victoria's taxpayers will foot a $125 million bill to settle a class action brought by approximately 16,000 businesses that suffered financial losses during the state's 112 days of lockdowns.
The class action was brought on behalf of business owners who suffered economic loss as a result of the Stage 3 and Stage 4 restrictions imposed in Melbourne and regional Victoria in response to the pandemic's second wave. The case was led by Melbourne hospitality business 5 Boroughs NY Pty Ltd alongside 1,000 other Victorian companies, with plaintiffs arguing that failures in the state's hotel quarantine system allowed COVID-19 to escape into the community, triggering Victoria's devastating second wave and the lockdowns that followed.
The settlement carries significant implications beyond the compensation itself. Both current Premier Jacinta Allan and her predecessor Daniel Andrews were expected to have been compelled to give evidence on the reasons for the virus escaping if the case had continued. The settlement agreement avoids what would likely have been a lengthy and high-profile trial with detailed scrutiny of government policies and quarantine procedures.
Businesses involved in the action were mostly hospitality, tourism, retail and events related, with many forced to close or operate under heavy restrictions for extended periods. Estimated losses by the businesses involved in the claim run into hundreds of millions of dollars.
The payout represents a recognition of genuine hardship. Yet the settlement structure reveals practical constraints. The payment will be distributed among eligible businesses after their legal costs and funding account for over 30% of the settlement. This means the 16,000 affected businesses will share considerably less than the headline $125 million figure.
It is worth considering the broader context here. The settlement represents one of the largest pandemic-related class action payouts involving an Australian government, though Victoria has not admitted liability as part of the agreement. The Victorian government spent over $40 million on legal costs in defending the case.
The class action raises legitimate questions about whether governments should bear financial responsibility for economic losses caused by pandemic restrictions, even when public health judgments prove flawed in retrospect. Affected group members can now register their interest in the proceeding to receive compensation if they meet eligibility criteria.