An email warning Robodebt's income averaging method could not be used to calculate welfare debts was circulated among top-level government lawyers in late January 2017, a royal commission has heard.
The communication was revealed shortly before the commission heard from a mother whose son took his own life the same month after being targeted in dozens of phone calls, text messages from Centrelink and debt collectors chasing an alleged Robodebt.
Mother Jennifer Miller also told the inquiry that when she raised her son's case with Alan Tudge, the then-human services minister, he had responded with "platitudes" and "false words".
The royal commission, headed by retired judge Catherine Holmes SC, is holding a final block of hearings into Robodebt, a scheme that used income averaging and tax and Centrelink data to calculate social security debts, in Brisbane.
Counsel assisting Justin Greggery KC began the hearing by tendering an email between senior departmental lawyers in the human services department in January 2017.
The email was authored by Glyn Fiveash, a senior legal adviser in January 2017, and headed "Debts" that had been written as "an information piece for the strategic analysis section".
Mr Greggery said this email was provided to the Department of Human Services' then-chief lawyer Annette Musolino.
He said the advice in the email was that "income averaging" could not be used to calculate debts by the department.
"He [Mr Fiveash] concludes that the department cannot apply an income amount received over a large period, for example 12 months in any way against the customer, other than the manner in which the person received it in those individual fortnights,'' Mr Greggery said.
"Mr Fiveash refers to the critical factual point about when income was earned, derived or received rather than the concept of averaging which is set out above."
Mr Greggery said evidence had so far not revealed what Ms Musolino did after receiving that advice.
The federal government eventually paid out a $1.8 billion settlement to those who had been targeted by the Robodebt scheme after it was found in 2019 to be unlawful.
Minister gave grieving mother 'false words'
The inquiry also heard from Ms Miller, the mother of 28-year-old Rhys Cauzzo, who took his own life on January 26, 2017, after being contacted more than two dozen times by Centrelink and debt collectors about a Robodebt, despite the department having previously classified him as vulnerable.
Ms Miller raised her son's suicide in 2017 with Mr Tudge after he had gone on television to say if someone was known to be vulnerable this would be reflected on their file.
She confirmed that she had raised with Mr Tudge the issue of her son having a "vulnerability" indicator status with the department in her correspondence.
He responded in writing defending the handling of the case saying while there had been "some minor errors" of administrative nature, the department agents' interactions with her son had been " handled appropriately, professionally and sensitively", according to a copy his letter sent to Ms Miller and tendered to the inquiry.
Ms Miller said in the years prior to his death, her son had been subject to having a "vulnerability indicator" on his Centrelink file meaning that "maybe a social worker or someone" would be in contact if he had difficulty with anything relating to imputing data or wages.
However, documents tendered to the inquiry revealed that this indicator which had been in place around 2010 had likely been automatically removed from his file after just 12 months.
This had occurred because a required review did not appear to have taken place leaving the indicator to drop off, according to correspondence.
Ms Miller confirmed to the inquiry that she later had a "high degree of frustration with the response" from Mr Tudge because he did not address her question about vulnerability indicators.
"There was absolutely no genuine effort of trying to give me information... as far as I'm concerned they're just false words," she said.
Cauzzo received dozens of calls about Robodebt
Ms Miller's statement to the inquiry recorded that between May 12, 2016 and October 20, 2016, Mr Cauzzo had received 12 letters from Centrelink and was phoned by Centrelink between five and six times.
Then, after his debt was referred to debt collectors Dun and Bradstreet, he received six letters, two text messages and 13 phone calls between November 7, 2016 and January 6, 2017, according to her statement.
Ms Miller said "it certainly broke her heart" when she found out other information about his case.
She said he was let down by the system.
After his death, she said she visited his residence and found artwork he had drawn showing him with a gun in his face and dollar signs coming out of his head.
She also later learned that he had attempted to take his own life in 2016 in connection with debt issues.
Commissioner Holmes commended Ms Miller on her evidence, describing it as a "harrowing story".
The inquiry continues.
