It may be a case of making an example of someone to make a point and under the current climate this couple happen to be the 'examples'!
In my opinion, Australia (compared to the UK) can appear harsh and I think people who have perhaps not lived here do not realise this or maybe have not been a situation yet where they have encountered this. An example of this is at one place I worked an employee ran out of sick pay (which can happen very quickly over here when you only get 10 days a year and have to accrue it) and was to go onto no pay. The employee rang up with a sob story about not having any money, the HR Managers response was "we have an income protection scheme, it was their choice not to pay into it - no pay". I am not saying this would be the response from all employers, but just highlighting an example and at the end of the day, the employee did make the decision not to have the insurance - it was their decision.