Stop Centrelink Counting Money Injured People Never Receive as Income
The issue
A person goes to work one ordinary morning and never comes home with the same body or the same future.
Their career may be over. Their independence may be gone. They may face years of surgery, pain, rehabilitation and legal proceedings before finally receiving compensation.
That settlement is not a windfall. It may be the only money they will ever receive for permanent injury, lost independence, future treatment and a working life that ended without warning.
Obtaining that compensation requires legal representation, medical evidence and professional expertise. These costs are not optional: they are deducted from the settlement and paid before the injured person receives it. Navigating injury compensation is brutal. Without professional help, an injured person may receive a much smaller settlement, or nothing at all.
Then Centrelink enters the picture and tells the injured person to live on money they never received.
When an out-of-court settlement includes any compensation for lost earnings or lost earning capacity, Centrelink treats 50% of the entire gross settlement as income replacement. It does not base that calculation on the amount actually paid for lost income.
That 50% can include legal fees and disbursements paid directly to lawyers, as well as compensation for pain and suffering, permanent impairment and future medical expenses. Legal costs never reach the injured person, while the remaining compensation is intended to help them live with permanent injury, obtain future treatment and cope with the loss of their working life.
Yet Centrelink declares half of everything to be income replacement and uses that invented figure to stop certain Centrelink payments, including the Age Pension, Disability Support Pension and JobSeeker, potentially for years.
The rule is supposedly intended to prevent “double dipping”. But how is it fair to count money as income when the injured person never received it, or when it was paid to compensate for an entirely different loss?
Imagine you’re an aged pensioner and your home burned down and your insurer paid to rebuild it. Now imagine the government declaring half of that payment to be wages and telling you to pay for food, housing and everyday bills with money already committed to rebuilding your home.
It sounds absurd because it is absurd. Money required to rebuild a home is not ordinary income. Neither is money paid to lawyers to obtain compensation, money reserved for future medical care or money paid for permanent impairment.
This is not about allowing people to receive compensation for lost wages and Centrelink income support for the same period. It is about calculating the preclusion period using the compensation actually paid for economic loss, not an arbitrary percentage of everything.
A workplace accident could happen to any of us. Nobody should lose their health, their working life and their financial security, then be told to survive on money they never received.
Please sign and share this petition. Help us call on Minister Plibersek and the Australian Government to end this unfair rule.
Reform must not abandon the people already living with the consequences of this rule. Anyone currently serving a preclusion period or who lost payments because of it should be entitled to request reassessment under the amended calculation, with payments restored or reimbursed where appropriate.
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The issue
A person goes to work one ordinary morning and never comes home with the same body or the same future.
Their career may be over. Their independence may be gone. They may face years of surgery, pain, rehabilitation and legal proceedings before finally receiving compensation.
That settlement is not a windfall. It may be the only money they will ever receive for permanent injury, lost independence, future treatment and a working life that ended without warning.
Obtaining that compensation requires legal representation, medical evidence and professional expertise. These costs are not optional: they are deducted from the settlement and paid before the injured person receives it. Navigating injury compensation is brutal. Without professional help, an injured person may receive a much smaller settlement, or nothing at all.
Then Centrelink enters the picture and tells the injured person to live on money they never received.
When an out-of-court settlement includes any compensation for lost earnings or lost earning capacity, Centrelink treats 50% of the entire gross settlement as income replacement. It does not base that calculation on the amount actually paid for lost income.
That 50% can include legal fees and disbursements paid directly to lawyers, as well as compensation for pain and suffering, permanent impairment and future medical expenses. Legal costs never reach the injured person, while the remaining compensation is intended to help them live with permanent injury, obtain future treatment and cope with the loss of their working life.
Yet Centrelink declares half of everything to be income replacement and uses that invented figure to stop certain Centrelink payments, including the Age Pension, Disability Support Pension and JobSeeker, potentially for years.
The rule is supposedly intended to prevent “double dipping”. But how is it fair to count money as income when the injured person never received it, or when it was paid to compensate for an entirely different loss?
Imagine you’re an aged pensioner and your home burned down and your insurer paid to rebuild it. Now imagine the government declaring half of that payment to be wages and telling you to pay for food, housing and everyday bills with money already committed to rebuilding your home.
It sounds absurd because it is absurd. Money required to rebuild a home is not ordinary income. Neither is money paid to lawyers to obtain compensation, money reserved for future medical care or money paid for permanent impairment.
This is not about allowing people to receive compensation for lost wages and Centrelink income support for the same period. It is about calculating the preclusion period using the compensation actually paid for economic loss, not an arbitrary percentage of everything.
A workplace accident could happen to any of us. Nobody should lose their health, their working life and their financial security, then be told to survive on money they never received.
Please sign and share this petition. Help us call on Minister Plibersek and the Australian Government to end this unfair rule.
Reform must not abandon the people already living with the consequences of this rule. Anyone currently serving a preclusion period or who lost payments because of it should be entitled to request reassessment under the amended calculation, with payments restored or reimbursed where appropriate.
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Petition created on 8 October 2026