The Royal Commission into the failed Robodebt scheme will focus on senior decision makers and seek to prevent similar failures of public administration occurring again, the government says.

Prime Minister Anthony Albanese on Wednesday announced the formal establishment of the royal commission, which will be led by Catherine Holmes SC and was one of Labor’s key election promises.

Mr Albanese also outlined the terms of reference, which include:

• The design and implementation of the scheme, who was responsible for it, and its legality and fairness

• How concerns about the scheme were handled, including decisions made by the Administrative Appeals Tribunal

• The outcome of the scheme in terms of cost to government and the individuals involved

• How to prevent the same mistakes being made again

Mr Albanese said the scheme, which used a computer program to find out if welfare recipients owed the government money rather than involving a real person, claimed some 400,000 victims.

“The Royal Commission is vital so that we can get to the bottom of how Robodebt came about so that we can ensure it can never ever happen again,” he told reporters.

The $30 million Royal Commission will be headquartered in Brisbane and will deliver its report by April 18, 2023.

Robodebt relied on algorithms to pursue debt recovery from Centrelink clients who in many cases had no debt to repay, and unlawfully raised almost $2 billion worth of debts.

The government stopped using the system in November 19 amid legal concerns and in June 2021 reached a settlement to repay $1.8 billion to affected parties after a class action.

A former Chief Justice of the Queensland Supreme Court, Ms Holmes previously led the Queensland Floods Commission of Inquiry following the 2010-11 floods and acted as counsel assisting the Commission of Inquiry into Abuse of Children in Queensland Institutions in 1998-99.