Kath Madgwick says she is experiencing “injustice of another kind” after commonwealth lawyers informed her that she is excluded from a historic $475m robodebt class action settlement because her son, Jarrad, never received an official debt notice before dying by suicide in 2019 at age 22 after being told he owed nearly $2,000, theguardian.com reported.
The federal government agreed last year to pay the $475m in compensation to roughly 450,000 victims of the unlawful automated debt recovery scheme administered by Services Australia between 2015 and 2019. Payouts from the settlement, which followed an appeal by Gordon Legal over findings of public sector malfeasance unearthed by a royal commission, are scheduled to begin in December for victims who experienced economic loss, distress, or psychiatric illness.
Exclusion From the Settlement Payout
Madgwick expected her son’s case to be covered, noting that the robodebt royal commission dedicated more than a page of its final report to his death. On May 28, 2019, Jarrad received a notification through his MyGov portal regarding a provisional debt of $1,795.85 covering a period in 2018, which was generated after Centrelink flagged a discrepancy between his declared earnings and Australian Taxation Office PAYG records. Two days later, after discussing the matter with Centrelink, Jarrad expressed fear that he would not receive his Newstart allowance and died by suicide that evening. The royal commission found that the way he was informed about the provisional debt served as a precipitating factor in his death.
Commonwealth lawyers informed Madgwick last month that she is not eligible because Jarrad never received a formal, official debt notice. According to internal customer records released under freedom of information laws, the debt was raised on June 3, 2019—four days after his death—and permanently written off the following day.
Services Australia Position on Income Averaging
Services Australia defended the exclusion by stating that eligibility under the class action settlements strictly requires a debt to have been calculated using the unlawful income averaging method. A spokesperson for the agency acknowledged the profound impact of the scheme on families and vulnerable individuals but disputed that Jarrad’s provisional debt outcome involved income averaging. The agency maintains that while the review into potential overpayments was initially triggered by tax office data using income averaging, the specific provisional debt figure issued to Jarrad after he uploaded his payslips was calculated differently.
Critics argue that this narrow administrative distinction overlooks the terror and psychological distress inflicted by automated debt notices issued to vulnerable welfare recipients. While the royal commission established the scheme’s illegality and detailed the devastation experienced by the Madgwick family, it did not explicitly address compensation eligibility.
Settlement Eligibility Comparison
| Requirement | General Class Action Settlement | Jarrad Madgwick Case |
|---|---|---|
| Official Debt Notice Issued | Required | No (Provisional MyGov Notice Only) |
| Debt Generated via Income Averaging | Required | Disputed by Services Australia |
| Royal Commission Impact Acknowledged | Yes | Yes |
| Eligible for $475m Compensation | Yes | No |
Campaign for Accountability Continues
Madgwick stated that she refuses to halt her advocacy despite the legal setback regarding the compensation fund. She emphasized that her primary goal remains securing full accountability for the errors that contributed to her son’s death and ensuring no other family endures a similar tragedy. Compensation payments for eligible claimants are slated to roll out starting in December.
Frequently Asked Questions About the Robodebt Settlement Exclusion
Why is Kath Madgwick ineligible for the $475m settlement?
Commonwealth lawyers ruled her ineligible because her son Jarrad never received a formal, official debt notice before or after his death, which is a core requirement for claims under the class action terms.
Did Services Australia use income averaging for Jarrad Madgwick’s debt?
Services Australia disputes that the provisional debt outcome issued to Jarrad was calculated using income averaging, stating that the specific figure was generated after he submitted his payslips.
What did the robodebt royal commission conclude about Jarrad Madgwick?
The royal commission dedicated more than a page of its final report to the Madgwick family, finding that the manner in which Jarrad was notified of his provisional debt was a precipitating factor in his suicide.
When do compensation payments begin for eligible victims?
Payments for approximately 450,000 eligible victims included in the $475m settlement agreement are scheduled to begin distributing funds in December.
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