Alonso and Secretary, Department of Family and Community Services
[2003] AATA 915
•17 September 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 915
ADMINISTRATIVE APPEALS TRIBUNAL )
) N2002/709
GENERAL ADMINISTRATIVE DIVISION ) Re EDUARDO CARLOS ALONSO Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Ms SM Bullock, Senior Member Date17 September 2003
PlaceSydney
Decision The decision under review is affirmed.
...............................................
Ms SM Bullock
Senior Member
CATCHWORDS
SOCIAL SECURITY – Age Pension – Agreement on Social Security Between Australia and Spain
LEGISLATION
Social Security Act 1991 (Cth) ss 7, 43, 513, 593, 660XBA, 729, 1064, 1208, 1210, 1220A, 1220B, 1221
Social Security (Administration) Act 1999 (Cth) ss 152
Agreement on Social Security between Australia and SpainREASONS FOR DECISION
17 September 2003 Ms SM Bullock, Senior Member 1. This is an application for review to the Administrative Appeals Tribunal (“the Tribunal”) by the Applicant, Eduardo Carlos Alonso of a decision of the Social Security Appeals Tribunal (“the SSAT”) made on 17 April 2002 (T1). The SSAT decision affirmed a decision made by Authorised Review Officers (“ARO”) on 19 May 1994 and 24 October 2001 which determined what rates Mr Alonso could be paid Age Pension at various times since 27 August 1992.
2. On 25 November 2002, Mr Alonso advised the Tribunal with the assistance of a telephone interpreter in the Spanish language, that he wished his application for review to be dealt with on the papers. Mr Alonso explained that he was very ill and unable to attend a Hearing. Mr Alonso further stated that it was his intention to return to Spain. By letter of 25 November 2002, Ms H Schuster, Departmental Advocate, advised that the Respondent had no objection to Mr Alonso’s application for review being heard on the papers.
3. The Tribunal took into evidence documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (“T Documents, T1-T110”). Also taken into evidence was Mr Alonso’s submission and attachments received by the Tribunal on 26 July 2002 (Exhibit A1). The Respondent’s Statement of Facts and Contentions was taken into evidence as Exhibit R1 and was dated 10 January 2003.
ISSUES
4. The issues to be determined in this matter are:
(i)the transfer of Mr Alonso from Newstart Allowance to Special Benefit in 1991;
(ii)the non-payment of the Australian Age Pension during Mr Alonso’s first 12 months absence overseas from 20 August 1996 until 19 August 1997.
LEGISLATION
5. A decision in this matter requires consideration of a number of pieces of legislation, that is, the Social Security Act 1991 (“the Act”) and the Social Security (Administration) Act 1999 (“the Administration Act”). Also of relevance to this matter is the Agreement on Social Security between Australia and Spain (“the Spanish Agreement”).
6. Section 7 of the Act deals with Australian residence definitions. The section is lengthy and not repeated here.
7. Section 43 of the Act deals with the qualification criteria for Age Pension.
8. Section 593 of the Act deals with qualification for Newstart Allowance.
9. Section 660XBA deals with qualification for Mature Age Allowance.
10. Section 1064 of the Act comes under Part 3.2 of the Act concerning Pension Rate Calculator A. Relevantly, section 1064 of the Act deals with the rate of Age Pensions.
11. Section 1208 of the Act provides that the provisions of a scheduled international social security agreement have effect despite anything else in the Act.
12. Section 1210 of the Act provides for the rate of pension or allowance payable under a scheduled international social security agreement where the rate to be determined is under the social security laws of Australia.
13. Sections 1220A and 1220B come under Division 3 of Part 4.2 of the Act dealing with the rate of portable pensions. The overall rate calculation process is dealt with under section 1221-A1.
14. Section 152 of the Administration Act provides that where a person has waited for greater than 13 weeks after being notified of a decision to request a review of that decision, the date of effect of any change of a decision can only be the date on which the person asked for a review by the SSAT.
15. The Spanish Agreement was signed on 10 February 1990. It is dealt with under Schedule 6 to the Act, which commenced on 1 July 1991, the Agreement beginning on 3 June 1991. It should be noted that on 20 March 2000, the Spanish Agreement was made part of the new Social Security (International Agreements) Act 1999 and is Schedule 5 to that Act. There were no substantive changes to the Schedule or to the Spanish Agreement. Further amendment occurred with the Social Security (International Agreements) Act 1999Amendment Regulations 2002 (No 5) and a new agreement with Spain was substituted on 1 January 2003 as Schedule 5 to the Act.
16. Clause 4 of Article 9 of the Spanish Agreement, stated at the time, that the Age Pension rate is to be worked out according to the legislation of Australia. The Agreement also expressly provides that the income test cannot be applied to the Spanish pension received by a person. Instead, any entitlement to a Spanish pension must be deducted from the amount of the Australian benefit to which the person would otherwise be entitled. Clause 1, Article 9, states that where an Australian benefit is payable by virtue of the Spanish Agreement to a person outside Australia, the rate of benefit shall be determined according to the legislation of Australia.
17. Clause 2 of Article 9 of the Agreement provides that the Spanish pension, rather than being directly deducted, is to be treated as income for the purpose of calculating a pension rate and only a proportion of this is assessed as income. Clause 2 of Article 9 of the Agreement also notes that in assessing the income of a person for the purposes of calculating the rate of benefit, only a proportion of any Spanish benefit (or benefits) shall be regarded as income. That proportion is to be calculated by multiplying the total number of months of the person’s period of residence in Australia, which must not exceed 300, by the amount of the Spanish benefit and dividing that product by 300.
18. Clause 3 of Article 9 provides that as a person’s Australian Age Pension is proportionalised, then the person’s income from the Spanish Age Pension must also be similarly proportionalised.
BACKGROUND
19. Mr Alonso was born on 25 August 1927 and arrived in Australia for permanent residency with his family on 7 September 1988 aged 61 years. At that time, Mrs Alonso was 58 years old. On 4 September 1989, Mr Alonso and his wife were granted what was then Unemployment Benefit, later renamed Newstart Allowance (T101, p292). On 4 November 1991, Mr Alonso was transferred from Newstart Allowance to Special Benefit (T103, p349). The rate of payment remained unchanged. On 25 August 1992, Mr Alonso turned 65, the Age Pension age and claimed Age Pension on 27 August 1992 (T4). At that time, Mr Alonso had been resident in Australia for a period of 47 months. As part of the claim process for Age Pension, Mr Alonso was required to claim a Spanish pension before being assessed for any Australian pension. Mr Alonso continued to receive Special Benefit.
20. On approximately 12 May 1993, Mr Alonso’s Spanish pension was granted by the Spanish Instituto Nacional de la Seguridad Social (“INSS”) effective from 26 August 1992 (T21, p98; T22, p99). Mr Alonso last received payment of Special Benefit on 27 July 1993 (T35, p119).
21. At some time in September 1993, the Australian Age Pension was granted to Mr Alonso payable from 27 August 1992 (T43, p129; T53, p157). The rate of Mr Alonso’s Age Pension was reduced by the amount of Spanish pension (direct-deduction). There were adjustments made for the rate of Special Benefit paid during the period (T41,T42).
22. On 22 September 1993, Mr Alonso was informed by letter that he had been granted the Age Pension under the Spanish Agreement at the rate of $161.60 per fortnight (T43, p129).
23. Mr Alonso requested a review of the adjustment calculations on 17 November 1993 and 17 January 1994. He claimed that more arrears were owed to him in the period from 27 August 1992 until 9 September 1993 and furthermore, that no pension payment had been made to him for the payday 23 September 1993. He further claimed that the direct-deduction of the Spanish pension was denying him the benefit of the pension income test. On 9 May 1994, Mr Alonso was informed by an ARO that the decision regarding the arrears and rate calculation was affirmed. The ARO also noted that an arrears payment for a missing cheque had been made (T58, p166).
24. On or about 26 June 1996, Mr Alonso applied to have his Age Pension paid during an extended overseas absence (T68, p191-196). On 15 August 1996, Mr Alonso advised he would be separating from his wife (T68, pp199-200). Mr Alonso left Australia to live in Spain on 20 August 1996. On or about that day, a letter was sent to Mr Alonso informing him that he would be paid his Australian pension on four weekly intervals during the period of his overseas absence. Mr Alonso was further informed that the rate would be calculated differently by basing it on the period of time he had resided in Australia between the age of 16 until aged 65 and provided a fortnightly payment of $53.70 (T69, p201).
25. The ten year anniversary of Mr Alonso’s first arrival in Australia occurred on 7 September 1998. At that time, Mr Alonso was still residing in Spain.
26. On or about 8 July 1999, Mr Alonso’s pension payments were suspended (T105, p377).
27. Mr Alonso returned to Australia on 17 September 1999 and advised of his return on 25 October 1999 (T105, p377). There was further advice that he was reconciling with his wife (T105, p378).
28. On 18 January 2000, a decision was made to pay Mr Alonso the non-agreement or autonomous pension rate from 17 September 1999, the date he returned to Australia. Mr Alonso was treated as a member of a couple and it was accepted that he had attained ten years qualifying residence while residing overseas, that occurring on 7 September 1998. Arrears of pension were paid from 17 September 1999 until 12 January 2000 in the amount of $1,548.30 (T75, p212).
29. On 17 March 2000, Mr Alonso again applied for a review of all of his pension payments (T76, p214). On 20 November 2000, a Departmental Delegate affirmed the decision that Mr Alonso became qualified for the autonomous pension from 17 September 1999. The Delegate decided that the “working life residence” of 47 months which had been used to calculate the rate of pension paid to Mr Alonso during his absence in Spain was in fact incorrect. The Delegate found that the correct working life residence was 48 months and that arrears of pension were payable to Mr Alonso for the period 8 August 1996 until 16 September 1999 in the amount of $519.48 (T83, pp233-234).
30. On 24 November 2000 and 27 December 2000, Mr Alonso again requested a review of the rate of payment of his pension (T84, T85). Mr Alonso was advised in writing on 11 January 2001 of the way in which the rates were calculated (T87, pp243-245).
31. On 24 October 2001, an ARO affirmed the decisions. (T94, pp262-266). Mr Alonso then requested a review by the SSAT on 21 October 2002.
The Social Security Appeals Tribunal Decision
32. On 17 April 2002, the SSAT affirmed the AROs’ decisions. The SSAT decided in relation to Mr Alonso’s primary concern that initially the Spanish Age Pension was directly deducted from his Australian Age Pension so that he did not receive the benefit of the usual age pension income test, that the SSAT had to consider the Spanish Agreement, as did previous Centrelink decision-makers who were also bound by its provisions. The SSAT noted that Article 3 of the Spanish Agreement operated so that Mr Alonso’s entitlement to receive an Australian Age Pension needed to be considered under the terms of the Agreement. The SSAT also noted that under Article 8 of the Spanish Agreement, the periods during which Mr Alonso made contributions to acquire a right to receive a Spanish benefit are treated as being also periods he resided in Australia. The SSAT further noted that under the terms of the Spanish Agreement, Mr Alonso satisfied the residence qualifications to be paid an Australian Age Pension. However, as he did not otherwise satisfy the residence qualifications, he could only be paid an Australian Age Pension in “by virtue” of the Agreement.
33. In addressing Mr Alonso’s primary concern of how his income from the Spanish Age Pension should be assessed, the SSAT had regard to Clause 4 of Article 9 which noted that where an Australia benefit is payable only by virtue of the Spanish Agreement to a person who is in Australia and until the person becomes eligible under the Australian domestic legislation, the amount of benefit is to be determined according to the legislation of Australia. This is determined without taking into account in the computation of his income, any Spanish benefit which he is entitled to receive and also by deducting the amount of the Spanish benefit from the amount of the Australian benefit to which the person would otherwise be entitled.
34. The SSAT decided that Mr Alonso’s Australian Age Pension was payable only by virtue of the Spanish Agreement. This meant that while Mr Alonso was in Australia, Clause 4 of Article 9 of the Spanish Agreement had to be applied in respect of the calculation of his Australian Age Pension. Under Clause 4(a) of Article 9, Mr Alonso’s Spanish Age Pension is specifically excluded from being taken into account under the provisions of the Australian legislation. The SSAT noted that this meant the pension could not be taken into account under the income test. However, under Clause 4(b), the full amount of the Spanish Age Pension must be deduced from his Australian Age Pension. The Social Security Appeals Tribunal decided that the decision to not apply the Age Pension income test in respect of Mr Alonso’s Spanish Age Pension income was correct while Mr Alonso was present in Australia. In reaching that decision, the SSAT noted Mr Alonso’s concern that the Spanish Agreement operated illegally to remove his entitlement to the income test. The SSAT noted that it had no authority to disregard the provisions of the Agreement, and accordingly must apply its provisions.
35. In relation to Mr Alonso’s concern that he had lost entitlement to the benefit of the income test when he was granted, in his view incorrectly, Special Benefit, the SSAT noted that that decision had not been reviewed by an ARO. Accordingly, the Tribunal did not have the jurisdiction to continue that issue. While not proceeding to make a determination, the SSAT made a number of observations. In this regard, the SSAT noted that the prior grant of Special Benefit had no effect on Mr Alonso’s subsequent entitlement to receive Age Pension. Furthermore, his entitlement to Age Pension was based on the legislation. Under the provisions of subsection 729(2)(a) of the Act, Special Benefit was only paid to a person if no social security pension was payable to that person. Although the Age Pension was only payable to Mr Alonso because of the Spanish Agreement, that pension was nevertheless payable to him and therefore his Special Benefit could not continue to be paid. The SSAT noted that if Mr Alonso continued to be paid Newstart Allowance instead of Special Benefit, then those allowances would have ceased once he reached 65 years of age. This was because a person who is over “pension age” could not qualify to receive those allowances under the Act as it stood at the time. The allowance did not exist until 20 March 1994. In any event, under subsection 660XBA(1)(a) of the Act, that allowance could also not be paid to a person who had reached pension age. For those reasons, the SSAT observed that once Mr Alonso reached age 65, his only entitlement to an Australian payment was to the Australian Age Pension worked out under the terms of the Spanish Agreement. The SSAT further observed that Mr Alonso’s prior social security payment history, including the payment of Special Benefit had no affect on his subsequent entitlement to receive or on the rate of an Australian Age Pension.
36. The SSAT examined the calculations of the rates of Mr Alonso’s Australian Age Pension. For the initial period whilst he was in Australian between 1992 and 1996, the SSAT considered the three rate calculations set out in the file papers 27 August 1992 until 9 September 1993. The SSAT concluded having checked the rates and the relevant legislation and the Agreement, that its calculations agreed with the calculations made by Centrelink for Mr Alonso’s Age Pension rates for the period 27 August 1992 until 18 August 1996.
37. For the next period of August 1996 until September 1999 while Mr Alonso was away, the SSAT noted that he repeatedly raised with Centrelink concerns that his rate of Age Pension was not properly calculated in particular during the first 12 months of his absence. The SSAT noted that there were changes to Mr Alonso’s Australian Age Pension rate when he went overseas. There was a recalculation because Mr Alonso separated from his wife at that time and thus became qualified for the Age Pension single rate. Clause 1 of Article 9 of the Spanish Agreement provided that Mr Alonso’s Spanish Age Pension impacted on the Age Pension according to the legislation of Australia, effectively providing Mr Alonso with the benefit of the Age Pension income test. Furthermore, the SSAT noted that Clause 2 of Article 9 of the Spanish Agreement provided that only a proportion of Mr Alonso’s Spanish Age Pension worked out with regard to his “period of residence in Australia” was to be taken into account. The “period of residence in Australia” is effectively defined, the SSAT noted, by Clause 1 of Article 1 of the Spanish Agreement in conjunction with subsection 1210(3) of the Act, as being that period Mr Alonso resided in Australia prior to turning 65. Because Mr Alonso was then single, the proportion of Spanish Age Pension to be taken into account needed to be calculated with regard to the full and not half rate of that pension.
38. The SSAT noted that Clauses 1 and 2 of Article 9 of the Spanish Agreement provide that where an Australian benefit is payable by virtue of the Agreement to a person outside of Australia, the rate of the benefit shall be determined according to the legislation of Australia. Furthermore, under Clause 2 of Article 9 of the Spanish Agreement, notwithstanding the provisions of Clause 1, when assessing the income of a person for the purposes of calculating the rate benefit, only a proportion of any Spanish benefit or benefits shall be regarded as income. Clause 2 noted that the proportion shall be calculated by multiplying the total number of months of the person’s period of residence in Australia which should not exceed 300, by the amount of that Spanish benefit and dividing that product by 300.
39. The SSAT noted that given the legislation of Australia, Mr Alonso’s rate of Australian Age Pension had to also be apportioned in accordance with the “International Agreement Portability Rate Calculator” according to section 1210 of the Act as it was at August 1996. Section 1210 effectively applied in Mr Alonso’s case so that the maximum rate of Australian Age Pension payable was to be reduced by multiplying the rate by 48/300. Accordingly, the SSSAT decided that Centrelink was correct to only pay Mr Alonso his Australian Age Pension at a proportional rate while he was overseas.
40. Mr Alonso in his discussions with the SSAT had referred to the publication “The Independent Social Security Handbook” (“the Handbook”) which he said showed that for at least the first 12 months of his absence, he should have been paid his Australian Age Pension at the rate that pension was paid in Australia. The SSAT did not have access to that handbook, which is a policy document only, but did note from the Fourth Edition of the Handbook at page 598, that there was mention of the special rules which apply where a person is receiving payment under an International Social Security Agreement. The SSAT noted quite correctly that the Handbook has no authority in law. All decisions must be based on relevant legislation and where applicable, legal government policy. The SSAT again checked the actual calculations of the rate paid to Mr Alonso of his Australian Age Pension while he was overseas noting that Centrelink had corrected its own mistake when it calculated his period of residence initially and incorrectly at 47 months but later correctly at 48 months.
41. The SSAT noted that while Mr Alonso was overseas, he was not entitled to receive rent assistance or pharmaceutical allowance and he had insufficient income to reduce his rate.
42. By September 1998, Mr Alonso was qualified to receive an Australian Age Pension in his own right without reliance upon the Spanish Agreement. He was unable to be paid any arrears for any resulting increase in his Australian Age Pension as he was not in Australia in September 1998. Although Mr Alonso was no longer subject to the “International Agreement Portability Rate Calculator” provided for by section 1210 of the Act, he was however subject to the provisions of the “Pension Portability Rate Calculator” provided for under sections 1220A, 1220B and 1221 of the Act. Those sections provide for an identical reduction as that worked out under the “International Agreement Portability Rate Calculator” to be applied. As Mr Alonso’s Australian Age Pension is therefore still proportionalised, Clause 3 of Article 9 provides that his income from his Spanish Age Pension must also be similarly proportionalised. Therefore, there was no effective change to how Mr Alonso's rate of Australian Age Pension was to be calculated from September 1998 and while he continued to live overseas. The SSAT checked and agreed with the rate of $112.00 per month paid from October 1998 and $113.20 paid from April 1999.
APPLICANT’S SUBMISSIONS
43. Mr Alonso provided his submissions in writing (Exhibit A1). In opening, Mr Alonso noted that he is not an ambitious person wanting to take advantage of Australia. He noted that he had arrived in Australia on 7 September 1988 with his wife, and three sons. His daughter was already a resident in Australia. Mr Alonso stated that he bought with him the equivalent of $160,000.00, which he completely spent in Australia. Mr Alonso also noted that the family now has 20 members with nine of the family being born in Australia. Mr and Mrs Alonso obtained Australian Citizenship on 25 May 1994.
44. Mr Alonso submitted that the facts he wished to be reviewed were that he and his wife were illegally transferred from Newstart Allowance to Special Benefit on 4 November 1999 and that this stripped them of their rights to the benefits of the income test. Furthermore, Mr Alonso wanted a review of his Australian pension payment during the first 12 months of his absence overseas.
45. Mr Alonso noted that Unemployment Benefit was granted to himself and his wife on 4 September 1989. He noted that the Spanish Agreement came into force on 3 June 1991. On 1 July 1991, Mr and Mrs Alonso were transferred to Newstart Allowance. On 4 November 1991, Mr and Mrs Alonso were transferred to a Special Benefit. On 25 August 1992, Mr and Mrs Alonso were transferred to the Australian Age Pension under the Spanish Agreement.
46. Mr Alonso submitted that the transfer of himself and his wife from Newstart Allowance to Special Benefit was illegal. It was illegal because his acquired rights were taken away.. It was also illegal to take such action by invoking the Spanish Agreement. Mr Alonso noted that if he and his wife had not been transferred to Special Benefit, they would have reached 25 August 1992 receiving Newstart allowance with the right to the income test. He noted that there was no law stating that one must be a resident of Australia for ten years to be entitled to the income test.
47. Mr Alonso noted that unexpectedly on 18 January 2000, a number of days after he asked the Welfare Rights Centre about his legal rights, Centrelink decided to consider as temporary his absence of three years abroad and then recognised that he had ten years of residence in Australia since 8 September 1998. Accordingly, arrears of $1,669.27 were deposited into his bank account. Again, a few days after he requested an interview with the Commonwealth Ombudsman, Centrelink suddenly noticed that it had incorrectly noted a 47 month period of residence instead of the correct 48 months and then deposited $521.88 into his bank account as arrears of payment.
48. In relation to the SSAT, Mr Alonso noted that it had ignored the issues by stating that it could not comment on a transfer to Special Benefit because the decision had not been reviewed by an ARO.
49. Mr Alonso submitted that Centrelink had systematically refused to review his case during almost two years, using any excuse. Furthermore, Mr Alonso noted that the Commonwealth Ombudsman did not want to open an investigation despite him having requested this on two occasions and despite the “erratic behaviour of Centrelink”.. Mr Alonso also noted that the Sydney Welfare Rights Centre refused to answer his questions about the legality or illegality of the Centrelink decisions he was appealing. He noted that the solicitors from the Welfare Rights Centre had refused to confirm whether the Social Security Handbook was true or not and if the book was not a deceit then, Mr Alonso submitted, the behaviour of the solicitors is abnormal. Mr Alonso concluded that he thought that his case is the only one of its nature in Australia and asked the Tribunal to look into whether there are other cases because he felt that he had been unjustly treated and was completely impotent and senseless.
50. Mr Alonso’s submission was accompanied by excerpts from the Independent Social Security Handbook, specifically Chapters 27, 39 and 41. Also attached was a document entitled “Dates and Facts for SSAT” and a letter he had written to Ms K Wringley, Welfare Rights Centre, dated 19 February 2002. Further attachments were correspondence between Mr Alonso and Centrelink concerning his Special Benefit, Unemployment Benefit and Newstart Allowance.
RESPONDENT’S SUBMISSIONS
51. The Respondent noted that there are three issues for the Tribunal’s determination, namely the transfer from Newstart Allowance to Special Benefit in 1991 depriving Mr Alonso of future entitlement. The second issue related to the qualification and rate of pension under the Spanish Agreement between 1992 and 1996. The third issue related to the payment of proportionalised rate of Age Pension while Mr Alonso was overseas.
52. Ms Schuster submitted that Mr Alonso has argued that by being transferred to the Special Benefit prior to reaching the Age Pension age, he was deprived of the benefit of the income test. The Respondent noted that the SSAT had no jurisdiction to address this issue as it had not been considered by an ARO.
53. The Respondent accepted that Mr Alonso could have remained on Newstart Allowance until he reached Age Pension age, but he would have been required to satisfy the activity test throughout the period. The transfer from Newstart Allowance to Special Benefit on 4 November 1991, was not required under any section of law, but it did not deprive Mr Alonso of any benefit that would otherwise accrue to him, Ms Schuster submitted. At that time, due to not having any income, the rates of Special Benefit and Newstart Allowance were the same so there was no financial disadvantage to Mr Alonso by him receiving the Special Benefit. Furthermore, Mr Alonso was advantaged by receiving Special Benefit at that time, as he was not required to satisfy an activity test in order to receive benefits.
54. Mr Alonso ceased to be legally qualified for Unemployment Benefit on 25 August 1992, when he reached Age Pension age. Ms Schuster noted that at the time, section 593 of the Act provided that he could not receive Newstart Allowance if he had reached the pension age. Ms Schuster submitted that even if Mr Alonso had been receiving Newstart Allowance instead of Special Benefit, he would have lost qualification upon turning 65 and would have had to test his eligibility for another payment at that time. At the time, Mr Alonso had not been resident in Australia for ten years and was thus not qualified for the Age Pension under section 43 of the Act, which refers to the autonomous Age Pension. Consequently, Special Benefit was the only benefit under the Act for which Mr Alonso was qualified. In this regard, Ms Schuster noted that it was the benefit he continued to receive until his entitlement to an Age Pension was determined under the Spanish Agreement. Ms Schuster noted that when an Age Pension was eventually granted to Mr Alonso after some delay, it was backdated to 27 August 1992, covering a period for which benefit had already been received and creating the need for a clearance (T53, p157). When this occurred, Special Benefit was effectively replaced by the Age Pension paid under the Spanish Agreement.
55. Ms Schuster submitted that no disadvantage arose to Mr Alonso by virtue of having been in receipt of Special Benefit rather than Newstart Allowance prior to the age of 65. Nothing in the Act allows for a different income test to be applied to Age Pensioners who were formerly on Special Benefit rather than Newstart Allowance. Each benefit under the Act has its own income test, which is not transferable to other payments.
56. Ms Schuster submitted that the sole reason why the Spanish pension was not treated like other income for the purpose of calculating the pension rate from 1992 until 1996, is the joint operation of the Act and the International Agreement under which Mr Alonso qualified for the Age Pension. Mr Alonso’s argument that the “illegal” transfer to Special Benefit deprived him of any rights is baseless, Ms Schuster contended.
57. Turning to the second issue, which relates to the qualification and rate of Australian Age Pension under the Spanish Agreement between 1992 and 1996, Ms Schuster submitted that although no Age Pension under the normal operation of the Act was payable to Mr Alonso when he turned 65, that is, because he did not have ten years residence in Australia, the Spanish Agreement extended payments to those who qualified under it even though they had not reached ten years residence in Australia. This occurred because it overrode the normal provisions of the Act by virtue of section 1208 of the Act as it was in force in 1992.
58. Ms Schuster noted that Article 8 of the Spanish Agreement provides that a person who has been resident in Australia for less than ten years and has accumulated what is referred to as a Spanish creditable period, then for the purpose of a claim for the Australian Age Pension, the Spanish creditable period shall be deemed to be a period in which the person was an Australian resident.. In effect, the section extended payment of Age Pension to those whose residence as contributing members to a fund in Spain and Australian resident totalled at least ten years. It is not disputed, Ms Schuster noted, that Mr Alonso’s creditable period in Spain together with his years of residence in Australia amounted to more than ten years and that he consequently became qualified for the Age Pension by virtue of the Spanish Agreement.
59. In relation to the rate calculation, Ms Schuster noted Mr Alonso’s submission that his Spanish pension should have been treated like income under the pensions income test in the period from 1992 until 1996 rather than being directly deducted. Ms Schuster noted that while a person is in Australia and is paid the Age Pension by virtue of the Spanish Agreement, his or her rate is calculated under the ordinary rate calculator in section 1064 of the Act, with the exceptions provided for by the Spanish Agreement itself. The Spanish Agreement overrides the Act. Specifically, Clause 4 of Article 9 of the Spanish Agreement is determinative in this respect. It states that the Age Pension rate is to be worked out according to the legislation of Australia, that is section 1064 of the Act, which is the rate calculator containing the income test. Ms Schuster contended that the Spanish Agreement also expressly provides that the income test cannot be applied to the Spanish pension received by the person, instead any entitlement to a Spanish pension must be deducted from the amount of the Australian benefit to which the person would otherwise be entitled. Therefore, unlike all other income, a Spanish pension is direct-deducted from the rate of Age Pension payable after the ordinary income test has been applied under the rate calculator in section 1064 of the Act.
60. Ms Schuster submitted that from 1992 until leaving Australia in 1996, Mr Alonso’s Age Pension rate was correctly calculated under the pension rate calculator contained within the Act and Article 9, Clause 4 of the Spanish Agreement.
61. Ms Schuster noted that the decision about the rate of pension payable to Mr Alonso prior to leaving Australia was reviewed by an ARO in 1994 (T58, T63). Mr Alonso was informed of the decision but did not seek a review by the SSAT until 21 January 2002. Pursuant to section 152 of the Administration Act, where a person has waited for more than 13 weeks after being notified of a decision to request a review of that decision, the date of effect of any change of the decision can only be the date on which the person asked for the SSAT review. Under subsection 43(6) of the Administrative Appeals Tribunal Act 1975, a decision to change the SSAT’s decision can only take effect on the date on which a SSAT decision could have taken effect. Consequently, if the Tribunal were to decide that the rate of pension between 1992 and 1996 was incorrect the decision could not take effect, Ms Schuster submitted.
62. In relation to the third issue concerning the payment of a proportionalised rate of Age Pension while Mr Alonso was overseas, Ms Schuster noted that Mr Alonso left Australia on 20 August 1996 to live in Spain. Again, the Spanish Agreement in conjunction with the Act regulated the payability of Age Pension while Mr Alonso was overseas. The Spanish Agreement stated in Article 9, Clause 1 that where an Australian benefit is payable by virtue of the Spanish Agreement, and it was paid to a person outside Australia, the rate of the benefit should be determined according to the legislation of Australia.
63. It was noted by the Respondent that Clause 2 of Article 9 of the Spanish Agreement operated in such a way that the Spanish pension, rather than being direct-deducted, was treated as income for the purpose of calculating the pension rate and that only a proportion of it was assessed as income. The proportion is based on the number of months of “working life residence” a person has spent in Australia. The Respondent noted that subsection 1210(3) of the Act defines the term “period of residence in Australia” as “working life residence”.. In turn, working life residence is defined in section 1210-B1 of the Act, as the period between the age of 16 and turning Age Pension age, which in Mr Alonso’s case is age 65. Since Mr Alonso had arrived in Australia as a resident on 7 September 1988 and turned 65 on 25 August 1992, his working life residence was 48 months, rounded up under subsections 1210-B3 and 1210-B4 of the Act. Ms Schuster did not dispute that the original calculation using a period of 47 months was incorrect but noted that the decision was rectified subsequently on 20 November 2000.
64. It was noted that by virtue of Clause 2, Article 9, 48/300 or 16 per cent of the Spanish pension received by Mr Alonso during his overseas absence was assessed as income. The SSAT had noted that due to this proportionalisation, the amount of assessable Spanish pension was less than the income free area allowed under the rate calculator contained in section 1064 of the Act and consequently, no reduction occurred.
65. It was noted that while Mr Alonso was overseas, the Spanish Agreement provided that his rate of payment was to be calculated “according to the laws of Australia” (Clause 1, Article 9 of the Spanish Agreement). The Age Pension paid under an Agreement is only portable under Part 4.1 of the Act, specifically section 1210 and the “International Agreement Portability Rate Calculator” at the end of this section. Applying the rate calculator, the maximum rate of the Age Pension payable to Mr Alonso was to be reduced by multiplying the rate by the residence factor, that is, 48/300. Thus 16 per cent of the pension entitlement was payable to Mr Alonso. Ms Schuster contended that Mr Alonso’s Age Pension was correctly proportionalised when he left Australia on 20 August 1996.
66. On the ten year anniversary of Mr Alonso’s first arrival in Australia, which occurred on 7 September 1998, Mr Alonso’s stay in Spain from 20 August 1996 until 7 September 1998 could be counted towards the ten year qualifying residence which a person must have in order to qualify for the autonomous Age Pension (sections 7 and 43 of the Act). Ms Schuster therefore did not dispute that Mr Alonso was able to be paid an autonomous Australian Age Pension from 7 September 1998.
67. Ms Schuster noted sections 1220A, 1220B and 1221 of the Act govern the portability of autonomous pensions. The combined effect of these provisions is that where a pensioner has been overseas for more than 12 months, the pension payable to him or her is proportionalised in the same manner as the proportionalisation under the International Agreement Portability Rate Calculator. That is, the rate payable under either scheme, either the Spanish Agreement or as an autonomous Age Pension, was identical because Mr Alonso had been absent for more than 12 months as at 7 September 1998.
68. Ms Schuster noted that there is no dispute about the rate of pension paid to Mr Alonso after his return to Australia on 17 September 1999.
69. Accordingly, the Respondent contended that the pension rates paid to Mr Alonso from 27 August 1992 until 17 September 1999 were correct and the decision should be affirmed.
FINDINGS
70. In reaching a decision in this matter, the Tribunal has taken into account the documentary evidence, the legislation and Mr Alonso’s particular circumstances.
71. Mr Alonso has asked the Tribunal to review two issues, namely the transfer of himself and his wife from the Newstart Allowance to Special Benefit and secondly the reduction or non-payment of the whole of his Age Pension during the first 12 months of his absence overseas.
72. The Tribunal notes that the Respondent has dealt with the second of Mr Alonso’s issues by breaking it up into the issue of qualification and rate of pension under the Spanish Agreement between 1992 and 1996, in addition to the issue of payment of a proportionalised rate while Mr Alonso was overseas in Spain.
73. It is important at the outset to inform Mr Alonso that while the Tribunal is independent of the SSAT and the Respondent, the Tribunal must still apply the relevant legislation, which in this case is the Act, the Administration Act and the Spanish Agreement.
74. In relation to the first issue raised by Mr Alonso concerning his transfer from Newstart Allowance to Special Benefit, as far as the Tribunal can ascertain, this decision has not been reviewed by an ARO and hence, as was noted by the SSAT, could not be officially reviewed by SSAT, as it had no jurisdiction to do so. Nevertheless, the SSAT made some general observations that there was no error in the application of the law by Mr Alonso being transferred to the Special Benefit. As the issue of the transfer of Mr Alonso to Special Benefit has not been reviewed by an ARO, nor the SSAT the Tribunal similarly has no jurisdiction to review the decision. The Tribunal notes, however, that no detriment has occurred to Mr Alonso by his being transferred to Special Benefit from Newstart Allowance and indeed, the payment of Special Benefit meant that Mr Alonso did not have to satisfy the activity test which arrises out of the payment of Newstart Allowance.
75. At the time Mr Alonso was transferred to Special Benefit on 4 November 1991, he had not been in Australia for ten years and thus did not qualify for the autonomous Age Pension under section 43 of the Act. Consequently, Special Benefit was the only benefit he qualified for on turning 65, as he was not yet able to obtain the Age Pension under either the Spanish Agreement or the provisions dealing with an autonomous Age Pension. There was also no detriment to Mr Alonso being on the Special Benefit rather than Newstart Allowance prior to his turning 65. Once he became qualified for Age Pension under the Spanish Agreement, there was no difference in the income test applied to the Age Pension, whether or not he had been receiving Special Benefit as opposed to Newstart Allowance. Furthermore, under the terms of the Spanish Agreement which must be applied to Mr Alonso’s circumstances and by decision-makers on review, the only reason Mr Alonso’s Spanish pension was not treated like any other income for the purposes of calculating the pension rate from 1992 until 1996 was the joint application of the Act and the Spanish Agreement under which Mr Alonso initially qualified for an Australian Age Pension.
76. Turning to the issue of the rate of payment of Mr Alonso’s Australian Age Pension particularly during his first 12 months absence from Australia from 20 August 1996, it is clear that Mr Alonso was first paid Age Pension under the Spanish Agreement. This agreement overrode the Act and solely because of the Spanish Agreement, allowed Mr Alonso to be granted the Age Pension earlier than otherwise might have occurred given the residential qualifications for the Australian Age Pension. There are precise rules in place for the calculation of the rate of Australian Age Pension under the Spanish Agreement. Once Mr Alonso was able to qualify for the Age Pension in his own right, without recourse to the Spanish Agreement, he was in receipt of the autonomous Age Pension, which again had precise rules about the calculation of the correct rate of Age Pension. While the Tribunal can understand Mr Alonso’s submission that his Spanish pension should have been treated like income under the pensions income test during the period 1992 to 1996, rather than being directly deducted, this is not allowed for under the provisions of the Spanish Agreement.
77. The Spanish Agreement expressly provides that the income test cannot be applied to the Spanish pension and that any entitlement to a Spanish pension must be deducted from the amount of Australian benefit, in this case, Mr Alonso’s Australian Age Pension. Thus, a Spanish pension is direct-deducted from the rate of Australian Age Pension payable after the ordinary income test has been applied under the rate calculator in section 1064 of the Act. Also applicable is Clause 4 of Article 9 of the Spanish Agreement. The Tribunal has considered the application of Clause 4 of Article 9 of the Spanish Agreement and also section 1064 of the Act and the calculations made pursuant to those provisions made by Centrelink. The Tribunal finds that Mr Alonso’s Age Pension in this period was correctly calculated.
78. When Mr Alonso went overseas on 20 August 1996 to live in Spain, this scenario is also covered by the provisions of the Spanish Agreement in conjunction with the Act. Clause 1 of Article 9 of the Spanish Agreement provides that when an Australian benefit, such as the Age Pension, is payable to a person who is outside Australia, then the rate of benefit is determined according to Australian law. Clause 2 of Article 9 of the Spanish Agreement is also relevant as it meant that Mr Alonso’s Spanish Pension, rather than being direct-deducted, was treated as income for the purpose of calculating his Australian Age Pension rate while he was overseas. Accordingly, only a proportion of the Spanish pension was assessed as income. The proportion was calculated using Mr Alonso’s “working life residence”.
79. Given the application of subsections 1210(3) and 1210-B1 of the Act and the Spanish Agreement applied to Mr Alonso’s circumstances of him having arrived in Australia on 10 September 1988 and turning 65 on 25 August 1992, Mr Alonso’s working life residence (rounded) was 48 months. The Tribunal is satisfied that applying Clause 2 of Article 9 of the Spanish Agreement meant that 48/300 or 16 per cent of Mr Alonso’s Spanish pension received while he was overseas was assessed as income. Because of his proportionalisation, the amount of assessable Spanish pension was less than the income free area allowed under section 1064 of the Act and as a consequence, no reduction occurred.
80. While Mr Alonso was overseas, the Australian Age Pension paid under the Spanish Agreement is dealt with under section 1210 of the Act. Mr Alonso’s circumstances changed again still while he was overseas, but when on 7 September 1998 he attained ten years residency in Australia, the period Mr Alonso remained in Spain from 20 August 1996 until 7 September 1998 was counted towards the ten year residential period and allowed Mr Alonso qualification for an autonomous Australian Age Pension. Thus, from 7 September 1998, the correct decision was to pay Mr Alonso an autonomous Age Pension.
81. The Tribunal finds that once Mr Alonso had been overseas for greater than 12 months, the Australian Age Pension payable to him must be proportionalised in a similar manner to the proportionalisation of his pension under the International Agreement Portability Rate Calculator (see sections 1220A, 1220B and 1221 of the Act). The decision was correct, in the Tribunal’s view, in that the rate of Australian Age Pension paid either under the Spanish Agreement or the autonomous Age Pension was identical because Mr Alonso had been absent from Australia for greater than 12 months as at 7 September 1998.
82. Accordingly, the Tribunal is of the view that Mr Alonso has been correctly paid the Australian Age Pension taking into account the application of the Spanish Agreement, the Act and given Mr Alonso’s particular circumstances of Australian residency, travel overseas and other circumstances. The Tribunal is also satisfied that Mr Alonso received the correct rate of pension when he was estranged from his wife.
83. It is understandable in this matter that Mr Alonso has had doubt about the correct calculation of his Age Pension, given that his dealings with Centrelink have been characterised by some errors and delays. For example, the incorrect calculation of his working life residence, the delay in dealing with his requests for review and the difficulties he experienced in relation to the ten year qualifying residence resulting also in arrears. These errors have been rectified. A consideration of the T Documents and records in documents by supervisors in relation to this matter, indicate that there was concern by Centrelink Management at the way in which Mr Alonso’s matter was treated. Certainly Centrelink supervisors commented on the organisation’s failure to address Mr Alonso’s concerns or to clearly articulate with transparency the reasoning behind various calculations. However, the Tribunal can find that there has been no further error in Centrelink’s calculation in terms of the appropriate Age Pension rate at various stages of his life.
84. Accordingly, for all of the reasons set out above, pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the decision under review is affirmed.
I certify that the 84 preceding paragraphs are a true copy of the reasons for the decision herein of Ms SM Bullock, Senior Member
Signed: .......................................................................................
AssociateDate of Hearing 4 February 2003
Date of Decision 17 September 2003
Representative for the Applicant Self-representedRepresentative for the Respondent Ms H Schuster, Departmental Advocate
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