‘You’re denying what you did to my son’: mother of robodebt victim told she is ineligible for compensation

The mother of a robodebt victim who ended his life says she is experiencing “injustice of another kind” after commonwealth lawyers said she would be excluded from an historic $475m class action settlement.

Kath Madgwick’s son, Jarrad, was 22 when he died by suicide in 2019 after being told he owed nearly $2,000.

Seven years on, the real estate agent said she was still fighting to ensure it never happens to another person.

“I just want them to admit what they’ve done to my son … to start to take responsibility for their errors, and to ensure that this doesn’t happen to somebody else again,” Madgwick told Guardian Australia.

“I won’t give up until such time as they do, and that creates havoc on my life.”

The federal government last year agreed to pay an additional $475m in compensation to about 450,000 victims of the robodebt scandal.

But Madgwick said commonwealth lawyers informed her last month she would not be eligible, because her son did not receive an official debt notice before or after his death.

Services Australia, which administers support payments, also disputes Jarrad’s estimated debt was generated through the unlawful income averaging method used in the scheme.

This is despite a royal commission detailing the impacts that the scheme has had on the Madgwick family.

Royal commission focus

The $475m settlement followed an appeal by Gordon Legal of the original robodebt class action, settled in 2020.

The appeal focused on the grounds that the robodebt royal commission had in July 2023 unearthed “damning new evidence” to support claims that the public servants who ran the scheme engaged in “malfeasance in public office”.

The settlement, which will begin paying out compensation from December, will extend to scheme victims who experienced economic loss, distress, or psychiatric illness or conditions. It will also extend, in some circumstances, to those with close personal relationships with victims who are now deceased.

Madgwick expected her son’s situation would be captured. The royal commission itself dedicated more than a page of its final report to his case.

On 28 May 2019, Jarrad had received a letter from Centrelink asking him for payslip details, which he provided later that day. The young adult had returned home due to financial distress and was applying for a Newstart allowance.

The department had began conducting a review after determining there was a “discrepancy between his declared earnings and ATO PAYG income amounts, indicating a potential overpayment”, according to the royal commission’s report.

Jarrad was informed through his MyGov portal that “the review would be processed” and that “a provisional debt outcome” had been determined in the amount of $1,795.85 for the period 28 April 2018 to 22 June 2018.

Two days later after speaking with Centrelink, Jarrad told his mother he didn’t believe he would receive his Newstart allowance because of the debt. He died by suicide that evening.

The royal commissioner’s report said the way Jarrad was informed about a potential debt with Centrelink was a “precipitating factor” in his death.

After his death, Madgwick spoke to Centrelink to inform them of Jarrad’s death. The debt was raised on 3 June 2019 – four days after his death – and “permanently written off” on 4 June 2019, according to an internal customer record released under freedom of information laws.

Madgwick said she had been told by the commonwealth that because Jarrad never received an official debt notice – apart from the provisional estimate through the MyGov portal – they would not be eligible for compensation.

Services Australia responds

A spokesperson for Services Australia said the agency acknowledged the royal commission’s findings about Jarrad’s “circumstances and the profound impact of the robodebt scheme on individuals, families and vulnerable people”.

However, it disputed that his provisional debt outcome was calculated using income averaging.

“The robodebt scheme was found unlawful due to the use of income averaging in raising debts. The key basis for eligibility under both settlements is whether the person’s debt involved income averaging,” the spokesperson said.

“Mr Madgwick’s provisional debt outcome did not involve income averaging.”

The royal commission’s report found Jarrad’s provisional debt notice was calculated after he uploaded his payslips. However, the agency’s review into potential overpayments to Jarrad was triggered by the income averaging method using tax office data.

The spokesperson for Services Australia said it now recognised communication about potential debts “cause distress, particularly for vulnerable customers”.

“Since 2019, Services Australia has changed how it communicates with customers about debts and reviews,” the spokesperson said.

“We now assist customers who’ve been overpaid with clearer information online, strengthened support pathways for vulnerable people and increased access to specialist social work assistance for those with situations requiring extra help.”

Madgwick said the seven-year saga continues to affect her mental health, but has vowed to continue fighting for justice.

“When they say that they’ve cut me out of [the settlement], it says to me you’re denying what you did to my son,” she said.