How Centrelink made an Australian with a disability destitute

As time went on, I learned more about how DHS deals with vulnerable people as a group… The more I learned, the more my focus expanded to encompass the experience of all vulnerable and at-risk people who engage with Centrelink. I saw a responsibility to keep speaking up in an effort to change how Centrelink work with their most vulnerable... The people accessing Centrelink are, in many ways, a cohort of the vulnerable, and extra care and attention should be paid to identifying those who need extra help.

— Kath Madgwick

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These forceful words, delivered by a courageous mother on the final day of the Robodebt Royal Commission, have stayed with many of us. They speak to the imperative to work towards deep change in how social security operates in this country. They are particularly important in a week when the Ombudsman slammed the handling of family tax benefits debts while the Department of Social Services, in a little-discussed appendix, merely ‘noted’ a call for legal reforms to address the issue.

Once in a while, we get a tribunal decision which provides insight into the ongoing and serious institutional violence that continues to characterise the social security system in this country. V and Secretary, Department of Social Services — published last week — is certainly one such case. The Tribunal found Centrelink’s refusal to properly and sensitively case manage its compliance had

… the unfortunate, and entirely avoidable, result of leaving Ms V, an already highly vulnerable person, destitute and distressed.

How Centrelink Generates ‘Vulnerability’

The case involved a disability support pension recipient who was the registered owner of a house where their elderly mother had resided for over 25 years. This registered interest had been declared, and the property’s value was disregarded, under the ‘asset hardship’ rules. The house was an unrealisable asset, unable to be sold. It was accepted that taking the value of the house into account in assessing the recipient’s entitlements would impose severe financial hardship. As the Tribunal decision underlines, the recipient held the property on a constructive trust for the benefit of her mother.

While social security law disregards the value of such a property for the purposes of the asset test, a notional annual rate of ordinary income, derived from such assets, may be taken into account instead. If applied, this ‘income’ amount will reduce the amount of pension the person receives. Ordinarily, it is the lower of 2.5% of the property’s value or its commercial lease value. Exceptionally, and more generously, where a near relative occupies the property, the amount taken into account can be 20% of the total income of the occupant.

Centrelink had been unable to get information from the recipient’s mother when the pension was first granted. Evidence before the Tribunal indicated the mother had issues around disability herself, with limited capacity to make decisions.

This meant that the ordinary rules applied to the recipient, which forced her into poverty:

… [the recipient’s] situation has not changed for the better since Centrelink first granted her DSP applying the asset hardship provisions. [she] told the Tribunal that she is experiencing severe financial distress. She is unable to work due to significant mental health issues. [She] has no income, no investments and no other assets. She is facing eviction from her home. She has extremely limited funds in her bank accounts… She has lost a considerable amount of weight as she often does not eat.

On 6 January this year, Centrelink wrote to this person to ask for information about her mother’s financial position. The woman — trapped in poverty — was now alone, holding a Centrelink letter, demanding information she couldn’t get.

What happened next is devastating.

Centrelink cuts off all income

When the recipient was predictably unable to obtain the income information of her mother, Centrelink simply cancelled her pension payment. This decision was made under section 64 of the Social Security (Administration) Act 1999 (Cth). That section allows a social security payment to be cancelled if a recipient does not respond to a notice for information. Crucially, however, this is only meant to occur when that decision is reasonable. It is no exaggeration to say that lives can depend on what Centrelink views as ‘reasonable.’ Here, the Tribunal found:

It was not reasonable for section 64 to apply and the decision to cancel her DSP from 31 January 2025 was not a ‘rational or proportionate’ response to her failure to provide information.

It cannot be overstated just how utterly baseless Centrelink’s conduct was here. It is staggering that the case reached the Tribunal and puzzling why the section 64 decision was not set aside by an authorised review officer. As the Tribunal notes, the request for the mother’s income information was only relevant to the exceptional and far more generous calculation option. Centrelink had all the information it needed to continue calculating the recipient’s DSP at the existing level — the level that had already placed her into poverty. At all times, the reality was, as the Tribunal found, that

… there was no information whatsoever before Centrelink that suggested that her circumstances had materially changed such that she was ineligible to continue to receive DSP.

But in a system which crows ‘mutual obligations’ to justify Centrelink not properly inquiring, assisting or caring, this woman was ‘complianced.’ Thank goodness the recipient appealed before she lost out on arrears. But as the Robodebt scandal underlines, the real truth is that many do not and will not appeal.

Not Isolated. Systemic.

Reading this case was genuinely both rage- and despair-inducing. In 2022, I passed a case involving the same gross abuse to Luke Henriques Gomes at the Guardian. He lit it up as best a social security reporter could: ‘Centrelink’s cancelling of 80-year-old’s age pension ‘absurd and wrong’, tribunal rules.’

In that horrific case, the applicant suffered from dementia, and Centrelink cut off his aged pension when he failed to respond to its automated letters. In that case, the Tribunal was satisfied that the applicant would have been ‘notoriously vulnerable’ — even if he had not suffered dementia. The Tribunal found that a decision to cancel the applicant’s age pension, ‘when there had been no material change in the Secretary’s state of knowledge,’ was ‘ impossible to characterise as ‘rational and proportionate’.

I also noted a similar case study reported by the Ombudsman in 2024. There, the AAT recommended Centrelink itself contact a trust secretary to retrieve information and sort out issues around assets and income. But what unfolded next is gobsmacking. As the Ombudsman recorded,

We found Centrelink had contacted the complainant for the required information about the trust but not the trust secretary, as recommended by the AAT. The complainant had attempted to comply with Centrelink’s multiple requests. However, due to their circumstances, they were unable to provide all of the information required, and their payment remained cancelled.

The overlap between this matter and a report of this week on family tax benefits debts is so obvious it doesn’t need naming. In pursuit of its morally bankrupt and now 30-year-old service-delivery KPIs, Centrelink’s method is to lob a demand while stating a presumption or asserting a datapoint, only to then sit back and wait to be contradicted, failing to engage with the reality that the recipient is living, and failing to see the bigger picture.

This week witnessed a long overdue confrontation over family tax benefit debts. The ‘dead ends’ of the targeted compliance framework’s IT system are the next deficiency to explode into daylight. Now is not the time to settle for unenforceable promises of ‘improved service delivery.’

It is time to challenge institutions that continually lean into structural power imbalances by imposing administrative burdens on recipients. Because those burdens are carried by people living with the ambient suffering and stigma of payment levels near the bottom of all OECD advanced economic nations.

Because the final, heartrending tragedy of this case was that the recipient was actually being underpaid. The empty and broken political framing of ‘mutual obligations’ disappears people’s rights to assistance. There’s no duty of care and no duty to care. We used to view underpayments as a system failure. But as I’ve pointed out here previously, the system now refuses even to capture them.

Now is the time to take away that system’s power to inflict grievous harm in the pursuit of its conveniences.