Adkins and Secretary, Department of Family and Community Services
[2005] AATA 390
•29 April 2005
DECISION AND REASONS FOR DECISION [2005] AATA 390
Administrative
Appeals
Tribunal
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2004/796
GENERAL ADMINISTRATIVE DIVISION )
Re ERIN ADKINS Applicant
And
SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICESRespondent
DECISION
Tribunal Ms M J Carstairs, Member Date29 April 2005
PlaceBrisbane
Decision The Tribunal affirms the decision under review.
.............[Sgd]..............
M J Carstairs
Member
CATCHWORDS
SOCIAL SECURITY – Pensions benefits and allowances – Overpayment of family tax benefit – administrative error – whether debt should be waived – applicant would not suffer severe financial hardship if the debt were not waived – decision under review affirmed.
A New Tax System (Family Assistance)(Administration) Act 1999 s 71, 97, 101
A New Tax System (Family Assistance) Act 1999 s21Re Reynolds and Secretary, Department of Social Security (AAT Decision 2656, 2 May 1986)
Re Feneley and Secretary, Department of Family and Community Services [2003] AATA 496
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Director‑General of Social Services v Hales (1983) 47 ALR 281
REASONS FOR DECISION
29 April 2005 Ms M J Carstairs, Member 1. This is an application by Mrs Erin Adkins (the applicant) for review of a decision made by Centrelink on 20 June 2002 and affirmed by the Social Security Appeals Tribunal (the SSAT) on 3 September 2004 to raise and recover an overpayment of family tax benefit in the amount of $4,823.62 for the period 30 November 2001 to 4 April 2002.
2. At the hearing conducted by telephone the applicant represented herself with the assistance of her husband Mr Barry Adkins. The respondent was represented by its advocate, Ms S Oliver.
3. The Tribunal had before it the documents lodged under s37 of the Administrative Appeals Tribunal Act (1975) numbered T1-T45 as well as exhibits marked A1-A2 for the applicant and R1 for the respondent.
BACKGROUND
4. A number of facts were not in dispute. The applicant is thirty-six years of age. She has three children, who are now aged 8, 7 and 4 years, in respect of whom she was receiving parenting payments and family tax benefit when the family was living in Australia during 2001.
5. On 28 November 2001, Mrs Adkins advised Centrelink that from 30 November 2001 she and her husband were moving to New Zealand permanently (T4). Mrs Adkins states she was told by Centrelink that she could continue to receive family tax benefit and parenting payment partnered until her husband obtained employment in New Zealand.
6. A Centrelink file note dated 28 November 2001 recorded that the applicant was no longer entitled to family tax benefit or parenting payment due to her planned departure from Australia. Letters were sent to the applicant on 28 November 2001 advising that she was not entitled to family tax benefit and parenting payment partnered if she left Australia and that her payments would cease (T5 and T6). The applicant and her husband left Australia on 30 November 2001.
7. The SSAT accepted, and the respondent also accepts, that the applicant provided Centrelink with her new address in New Zealand and that she did not receive the letters from Centrelink because they were sent to her old address in Australia, that is, to the wrong address.
8. It also was not disputed that despite the applicant having advised her departure, Centrelink failed to stop the payments of family tax benefit and parenting payment partnered after the applicant left Australia even though they stopped paying her husband’s newstart allowance.
9. On 10 April 2002, the applicant provided the information to Centrelink that her husband had commenced employment in New Zealand.
10. On 20 June 2002 Centrelink raised overpayments of family tax benefit (T14 and T12) and parenting payment partnered (T13 and T10). Centrelink later waived the parenting payment partnered debt, but not the family tax benefit debt.
11. On 9 July 2004 Mrs Adkins appealed the decision concerning family tax benefit to the SSAT. On 3 September 2004 the SSAT decided that the debt should not be waived. The SSAT was satisfied that the debt had arisen solely due to an administrative error and that the applicant had received the money in good faith but was not satisfied that the applicant would suffer severe financial hardship if the debt were recovered. On 4 October 2004 Mrs Adkins applied to this Tribunal for review of the decision.
12. The issue for this Tribunal is confined to whether the debt should be recovered. The main provision dealing with that question is s97 of the A New Tax System (Family Assistance)(Administration) Act 1999 (the Administration Act) which provides:
97.(1) The Secretary must waive the right to recover the proportion (the administrative error proportion) of a debt that is attributable solely to an administrative error made by the Commonwealth if subsection (2) or (3) applies to that proportion of the debt.
97.(2) The Secretary must waive the administrative error proportion of a debt if:
(a)the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt; and
(b) the person would suffer severe financial hardship if it were not waived.
EVIDENCE
13. The factual matters are not in dispute and the respondent accepts the position as being that set out by the SSAT at para 8-9 of their reasons as follows:
The Tribunal sees no reason to doubt Mrs Adkins’ account of what happened at the interview on 28 November 2001, and the subsequent events. The letter Mrs Adkins sent when her husband started work is not on the Centrelink file, though the receipt of a letter from Mrs Adkins is noted in Centrelink computer documents dated 10 April 2002. Centrelink immediately cancelled the payments at that point. The fact that Mrs Adkins advised Centrelink when her husband started work is entirely consistent with her honestly believing that she remained entitled to the payments up to that point. The Tribunal accepts that Mrs Adkins received the overpayment in good faith.
14. The applicant provided a statement of financial circumstances in which she set out that her husband’s gross annual income in New Zealand is $65,000. His net fortnightly take-home pay is $1,833. The applicant set out the following expenditure as summarised by the Tribunal (based on fortnightly expenditure):
§ $420 rent
§ $450 car lease
§ $155 car related expenses
§ $500 food
§ $525 other (inc. clothing, electricity, telephone, educational)
§ $52 health and medical
§ $45 visa card debt
15. In her oral evidence the applicant said that the family expenses are higher than those stated as she said that she did not allow for higher heating costs in winter and increased petrol costs. The applicant and her husband said that they do not qualify for social security payments in New Zealand as their income is too high.
16. The applicant stated that they purchased a car in 2001. They owed $33,000 on this car in December 2004 and her husband estimated that this debt is now about $27,000. They estimated in December 2004 that the car was worth about $23,000 and that they would lose money if they sold it.
CONSIDERATION OF THE ISSUES
17. The relevant legislation in this case is the A New Tax System (Family Assistance) 1999 (the Act) and the (the Administration Act). The SSAT in their written reasons went through the legislative provisions regarding the debt. There is no need to set this out in detail, when the applicant does not assert that she had an entitlement to the payments that she received. Her case is simply that, having told Centrelink that she was leaving Australia, she had done all that was necessary in carrying out her obligations under the legislation and that it is unjust that demands for repayment are made.
18. The Tribunal was satisfied that a debt arises in this case because the legislation provides that the applicant ceased to be eligible for the payment once she became a New Zealand resident and was no longer an Australian resident: s21(1) and (1A) of the Act. Section 71(1) of the Administration Act provides:
71.(1) If:
(a)an amount has been paid to a person by way of family tax benefit, maternity allowance or maternity immunisation allowance (the assistance) in respect of a period or event; and
(b)the person was not entitled to the assistance in respect of that period or event;
the amount so paid is a debt due to the Commonwealth by the person.
19. Ms Oliver conceded that the debt in this case arose solely due to an administrative error and that the applicant received the overpayment in good faith. However, she submitted that before the Commonwealth’s right to recover the debt can be waived under s97 of the Act, the Tribunal must be satisfied that the applicant would suffer severe financial hardship if the debt were recovered (s97(2)(b) of the Administration Act).
20. Ms Oliver submitted that severe financial hardship was not established. She submitted that whilst the financial circumstances are straitened and difficult, they do not constitute severe financial hardship.
21. The applicant stated in her application to the Tribunal (T1) that she acted with complete integrity and honesty. This is not in issue as is confirmed by the concession made by Ms Oliver. The task for the Tribunal is to decide whether a debt that has arisen, despite the undoubted honesty of and care taken by the recipient, should be waived.
22. Ms Oliver referred to a number of Tribunal decisions that have looked at the question of severe financial hardship.
23. In Re Reynolds and Secretary, Department of Social Security (AAT Decision 2656, 2 May 1986), Deputy President Jennings considered the meaning of the phrase severe financial hardship and stated:
….[I]n the ordinary case ‘severe financial hardship’ is a condition that is more likely to be demonstrated by a person whose income is materially less than the current maximum pension.
The facts …..demonstrate a joint income of at least $2,000 per annum more than the maximum pension and accordingly I cannot describe the present circumstances of the applicants as involving them in severe financial hardship.
24. Ms Oliver submitted that the applicant’s financial circumstances show that they are currently receiving NZ$1,833.52 per fortnight from employment and this is materially more than the maximum payments of social security benefits to which they would be entitled. She submitted therefore that these are not circumstances of severe financial hardship.
25. The Tribunal took into account that the applicant’s net household income is $1,833 with fortnightly outgoings being $2147 (based on the figures set out above at para 10). Thus on the figures stated there is a net shortfall of $314 per fortnight. (In her letter dated 1 February 2005 the applicant stated it to be a shortfall of $340 per fortnight.)
26. However the Tribunal does not accept the financial picture presented in the statement of financial circumstances is that of straitened circumstances let alone severe financial hardship. The applicant produced banks statements that showed their repayments on Visa card were as follows:
§ $1600 29 November 2004
§ $500 8 December 2004
§ $2101 17 January 2005
27. Even accepting that the applicant and her husband choose to pay most accounts by visa card they are clearly able to deal with substantial amounts of debt in a timely and regular fashion.
28. The Tribunal accepts that bringing up a family is an expensive exercise, and accepts that costs continue to increase. Nevertheless the Tribunal’s decisions on the interpretation of severe financial hardship make plain that the emphasis is on the adjective severe.
29. It is always difficult to make a comprehensive summary of the outlays on raising a family and the Tribunal accepts that the applicant has made a genuine attempt to summarise their family’s financial picture and supported her summary with receipts and bank statements. However the Tribunal does not accept that the financial picture is as bleak as the applicant paints. The family can pay the visa card debt in substantial amounts on a regular basis. It is difficult to see how they could do this if in fact they are in debit by more than $300 each fortnight.
30. The Tribunal was satisfied that the applicant has overstated some outlays. The expenditure of $500 per fortnight for food set out in the statement of financial circumstances was not supported by the bank statements which showed outlays that averaged $250 per fortnight. The Tribunal takes into account that it is likely that there were other cash outlays of food apart from those paid for by visa card. Even if the outlay on food is as stated at $500 per fortnight, this expenditure does not suggest circumstances of severe financial hardship. The family has outlays totalling over $600 per fortnight that related to their car and this also would not be possible if they were in severe financial hardship. The family is able to afford a comfortable, though by no means excessive, existence. But they are not in severe financial hardship and would not be placed in such circumstances by recovery of this debt.
31. In Re Feneley and Secretary, Department of Family and Community Services [2003] AATA 496, Member Mr IR Way, stated:
Severe financial hardship is not defined in the Act. However, the meaning of the term, while not implying destitution goes beyond straightened financial circumstances and imports a need for the particular circumstances of a person to include suffering of a severe or extreme nature.
32. The Tribunal was satisfied that the applicant’s financial circumstances are such that they do not meet the terms of s97 of the Administration Act that recovery of the debt would leave them in severe financial hardship. The Tribunal was satisfied that if they rearranged their financial affairs to accommodate repayment by instalments they have the capacity to repay the debt. For this reason the debt cannot be waived under s97 of the Administration Act.
33. The other possible ground under which the debt can be waived is the special circumstances provisions (s101 of the Administration Act). Special circumstances are circumstances which are unusual, uncommon or exceptional such as to make them markedly different from the usual run of cases such as to justify the exercise of the discretion (Re Beadle and Director-General of Social Security (1984) 6 ALD 1).
34. The Tribunal accepts that the applicant and her family have real difficulty in managing a debt not of their making, but with their level of income and demonstrated discretionary spending, and in the absence of other compelling circumstances, there are no special circumstances as this term is understood in social security law. Their situation is no different from that of other social security recipients who through no error of their own have incurred an overpayment. That is, their situation is not unusual, uncommon or exceptional.
35. Furthermore there is more to be considered than the question of perceived unfairness to them which must be weighed up when considering the exercise of this discretion. As the Federal Court set out in Director‑General of Social Services vHales (1983) 47 ALR 281:
The Tribunal must balance the several factors that arise, including in particular the fact that a person has received public moneys to which he or she was not entitled; the circumstances in which the debt arose; and the prospects of recovery of the debt in the context of the applicant's overall financial circumstances.
36. The considerations involve a wider enquiry. The waiver provisions in the legislation contemplate that debts will occur where there is no fault on the part of the recipient. This is not unexpected in the administration of such a large program of payments as the family tax payments. For waiver there must be something more, particularly where, as here, there is capacity to repay. As stated above the Tribunal was satisfied taking into account their statement of financial circumstances that if the family’s expenditures were re-organised they have capacity to repay. More weight must be given in such a case to the applicant having received public moneys to which she was not entitled.
37. Ms Oliver stated at the hearing that Centrelink has deferred recovery of the debt until December 2006. That decision was not on review before the Tribunal and the applicant was unaware that that decision had been taken. The matter of the rate of recovery and other repayment issues are a matter for the applicant and Centrelink to negotiate in due course.
DECISION
38. The Tribunal affirms the decision under review.
I certify that the 38 preceding paragraphs are a true copy of the reasons for the decision herein of Ms M J Carstairs, Member
Signed: Camille Banks
Associate
Date/s of Hearing 26 April 2005 (by telephone)
Date of Decision 29 April 2005
The Applicant was assisted by her husband, Mr B Adkins
For the Respondent Ms S Oliver, Departmental Advocate
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