Applicant and Secretary, Department of Social Services (Social services second review)

[2015] AATA 749

Applicant and Secretary, Department of Social Services (Social services second review) [2015] AATA 749 (25 September 2015)

Division	General Division
File Number(s)	2015/3508 & 2015/3509
Re	Applicant
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Mr S. Webb
Date	25 September 2015
Place	Sydney

The decision in application 2015/3508 is varied to the extent that the income maintenance period commences on 23 June 2014 and end on 17 November 2015.

The decision in application 2015/3509 is set aside. The Applicant is qualified for special benefit from 9 March 2015 to 5 May 2015.

The application is remitted to the Secretary to determine the amount of special benefit that is payable.

.....................[sgd]..............................................

Mr S. Webb

CATCHWORDS

SOCIAL SECURITY – newstart allowance – income maintenance period – discretion to waive all or part of period – severe financial hardship – meaning of ‘reasonable or unavoidable expenses’ – overseas travel – guardianship – severe financial hardship not due to reasonable or unavoidable expenses – income maintenance period incorrectly calculated – decision varied

SOCIAL SECURITY – special benefit – preconditioning criteria for exercise of discretion – unable to earn sufficient livelihood – medically unfit for work – reasonable expectation of obtaining employment – discretion exercised – applicant qualified for Special Benefit – decision set aside

LEGISLATION

Social Security Act 1991 (Cth), ss 19C, 643, 729, 1068, 1068-G7AH-G7AR

SECONDARY MATERIALS

Guide to Social Security Law

REASONS FOR DECISION

Mr S. Webb

25 September 2015

1. For reasons of privacy in the circumstances of this case, I will refer to the applicant as Ms Applicant. I have acceded to her request to supress information that might identify her or her mother. Orders for this purpose have been issued.

2. Until June 2014, Ms Applicant was employed on a full-time basis. Her place of work was slated for closure and she accepted a redundancy. She received a lump sum payment. Things did not go well. At about this time, Ms Applicant’s mother fell ill. Ms Applicant was appointed as her guardian and financial manager. She experienced stress and anxiety. After a while, Ms Applicant became unwell. She fell into financial difficulty and claimed newstart allowance and special benefit. A delegate of the Secretary determined that an ‘income maintenance period’ applied, precluding payment of newstart allowance to Ms Applicant. Her application for special benefit was also rejected.

3. Ms Applicant has pressed her review rights. So far, the decisions have been affirmed, most recently by the Social Security Appeals Tribunal (SSAT).

4. The issues to be determined are –

   (a)whether newstart allowance is payable; and if not

   (b)whether special benefit is payable.

   NEWSTART ALLOWANCE

5. The Secretary accepts that Ms Applicant qualified for newstart allowance from 1 October 2014, but maintains that this allowance is not payable because an ‘income maintenance period’ applies.

6. Ms Applicant accepts that this is correct, but she is concerned that the length of the period may not be correct and, in any event, she says that the period should be reduced because she is in severe financial circumstances.

7. The Secretary agrees that Ms Applicant meets the test of ‘severe financial hardship’, but argues that those circumstances are not due to ‘reasonable or unavoidable expenses’ Ms Applicant incurred. For this reason, in the Secretary’s submission, the ‘income maintenance period’ cannot be reduced.

8. In Ms Applicant’s submission, it would be unjust, unfair and unreasonable to refuse to reduce the income maintenance period in her particular circumstances. She says that the reason she is in severe financial difficulty relates to a series of unfortunate events that were beyond her control that caused or required her to expend money until her redundancy payment was exhausted, leaving her effectively homeless, without money and in ill-health.

9. No doubt, Ms Applicant’s circumstances are unfortunate and extremely difficult.

10. The issue is to be determined under the Social Security Act 1991 (the Act). Under s 643, the rate of newstart allowance is to be determined using the rate calculator at the end of s 1068. The rate calculator requires assessment of the person’s ordinary income. As Ms Applicant received a lump sum payment on termination of her employment, by operation of s 1068-G7AH she is taken to have received ordinary income for the period to which the payment relates. This period is known as an ‘income maintenance period’. The formula for working out the ordinary income the person is taken to have received in a payment fortnight during an income maintenance period is set out in s 1068-G7AL.

11. First, it is necessary to work out the duration of the income maintenance period.

    Duration of income maintenance period

12. The Social Security Appeals Tribunal decided that the income maintenance period commenced on 19 June 2014 and ended on 13 November 2015.[1]

    [1] T2 folio 8.

13. Under s 1068-G7AKA an ‘income maintenance period’ commences on the day the person receives a termination payment, and it runs for the period to which the lump sum termination payment relates.

14. The present materials establish, and Ms Applicant accepts, that she received a lump sum payment on termination of her previous employment. On 23 June 2014, the amount of $77,576.46 was deposited into her bank account by her previous employer.[2]

    [2] T5 folio 47.

15. Examination of the details of the calculation of this lump sum payment reveals a discrepancy in the figures. The ‘Redundancy Calculations’ document, verified on 21 May 2014, shows that Ms Applicant was entitled to the following amounts –

    (a)$59,937.59 gross in untaxed redundancy pay covering 255 days or 51 weeks;

    (b)$9,039.88 gross ($6,192.88 net) in recreation leave pay covering 38.75 days; and

    (c)$16,621.72 gross ($11,386.72 net) in extended leave pay covering 71.25 days;

    (d)for a total of $85,599.20 gross ($77,517.20 net).[3]

    [3] T6 folio 77.

16. As can be seen, the net amount ($77,517.20) does not accord with the amount paid into Ms Applicant’s bank account ($77,576.46).

17. A pay slip covering the period from 20 June to 3 July 2014 states that the amount of $77,850.46 was deposited into Ms Applicant’s bank account on 3 July 2014.[4] No such deposit appears in the relevant bank records. The pay slip total is said to include the amounts I have referred to in [15], above, as well as a 10 hour flex credit of $333.27 gross. The pay slip records the total gross payment to be $85,932.46 from which $8,082.00 tax was deducted to arrive at the net amount. These figures accord with the Employment Separation Certificate Ms Applicant’s previous employer provided to Centrelink.[5]

    [4] T6 folio 78.

    [5] T7 folio 153.

18. The difficulty is that there is no present evidence that the net amount of $77,850.46 was paid to Ms Applicant by direct credit to her bank account on 3 July 2014 or on any other date – as I have said, the amount deposited on 23 June 2014 was $77,576.46.

19. On the present materials I am not able to explain these discrepancies. It is quite clear that Ms Applicant was paid almost $60 more than the amount due to her under the Redundancy Calculations. That being so, it is possible that the additional amount of flex credit ($333.27) was not paid in full, or it was incorrectly taxed. Ms Applicant’s average gross weekly rate of pay prior to redundancy was $1,166.44.[6] The rate of pay underlying the flex credit amount is $33.32676.[7] Applying this rate, it is likely that Ms Applicant’s lump sum payment included payment for roughly two hours of flex credit.

    [6] Ibid.

    [7] T6 folio 78.

20. The Secretary argued that the full 10 hour flex credit, more than one full day, should be included. I do not accept this submission. I will proceed on the basis of the amount Ms Applicant actually received, rather than the higher amount set out in the pay slip to which she might be entitled, but which has not yet been paid in full.

21. Under s 1068-G7AJ and 1068-G7AP, the periods covered by the different parts of the lump sum Ms Applicant received, in respect of redundancy and different kinds of leave, must be added together. This equates to 365.25 working days, or 73.05 weeks.

22. As the ‘income maintenance period’ commences on the day Ms Applicant received the lump sum termination payment, her income maintenance period starts on 23 June 2014. The period will end after 73.05 weeks have elapsed, on 17 November 2015.

    Discretion to reduce period

23. The Secretary, and in those shoes this Tribunal, has discretion to reduce the duration of an income maintenance period if the person is in ‘severe financial hardship’ because of ‘unavoidable or reasonable expenditure’ incurred during that period: s 1068-G7AM. The phrase ‘severe financial hardship’ is given meaning under s 19C(2); and the phrase ‘unavoidable or reasonable expenditure’ is explicated by s 19C(4).

24. The Secretary accepts, correctly in my view, that Ms Applicant meets the test of ‘severe financial hardship’ under s 19C(2).

25. The Secretary contends, however, that Ms Applicant’s severe financial hardship is not the result of ‘unavoidable or reasonable expenses’ incurred during the income maintenance period.

26. Ms Applicant disagrees and says that she was forced to incur expenses as financial manager and guardian for her mother. In her submission, the expenses she incurred meeting outstanding rate charges and undertaking necessary repairs to her mother’s house were unavoidable and reasonable. She also maintains that the expenses she incurred taking her sons to Canada and to the United States of America were reasonable, as this trip was for a family reunion and it served a therapeutic purpose, as she was unwell at the time.

27. What constitutes ‘unavoidable or reasonable expenses’ is illuminated by s 19C(4). I note that this section is inclusive in its terms, and provision is made for inclusion of ‘reasonable costs of living’ and ‘any other costs that the Secretary determines are unavoidable or reasonable expenditure in the circumstances in relation to a person’.

28. The amount that may be included in respect of ‘reasonable costs of living’ is capped by s 19C(6). This means that the total amount of Ms Applicant’s reasonable living costs cannot exceed the total amount of newstart allowance she would have been paid during the income maintenance period that has already elapsed. This amount is $503 per week, or a total of approximately $16,400 for the period from 23 June 2014 to the present.

29. Ms Applicant agreed that her expenses during the income maintenance period included –

    (a)Canada trip – $18,113

    (b)Payment of mother’s expenses – $8,601

    (c)Gifts for mother – $1,885

    (d)Costs of cleaning mother’s house – $1,800

    (e)Money for sons – $2,662

    (f)Loan repayments – $2,000

30. Furthermore, Ms Applicant explained that she had to repay a family tax benefit debt of $1,014.

31. There is very little material to verify these amounts.

32. I accept that Ms Applicant was in difficult financial circumstances when she took a trip to North America with her sons in December 2014 – an error had been made with a direct debit, effectively draining her bank account for 10 days or so.[8] And I accept that the purpose of the trip was to introduce her sons to family members who reside in Canada and the United States of America. I do not accept, however, that this trip is properly characterised as a trip undertaken for medical reasons.

    [8] See T5 folios 62-64.

33. Ms Applicant relies on a letter from Dr Parras dated 3 March 2015.[9] Ms Applicant’s evidence is that Dr Parras had been her treating general practitioner over a long period of time until she moved into her mother’s house in the latter part of 2014, probably in or about September 2014. Thereafter, she consulted a local doctor in the area where she was residing – Dr Maung. There are two things to say about Dr Parras’ letter. Firstly, the present materials do not establish that the doctor treated Ms Applicant for a mental health condition in 2014, or that she consulted him before taking the trip to Canada. Secondly, Dr Parras’ letter is dated in March 2015, a number of months after Ms Applicant took the trip. There is no material before me suggesting that the trip was recommended by a doctor as treatment for any kind of illness.

    [9] T6 folio 90

34. That said, however, I accept Dr Parras’ evidence that Ms Applicant may have obtained some therapeutic benefit from undertaking this trip with her sons. I note the medical certificate of Dr Prasad, dated 29 September 2014,[10] in which the doctor certified that Ms Applicant was then suffering from “marked anxiety/ depression” and she was unfit for work or study from 29 September 2014 to 29 December 2014.

    [10] T5 folio 68.

35. Ms Applicant relies on a short report by Dr Maung, her treating general practitioner from February 2015, which is dated 8 September 2015.[11] This report confirms the present of an anxiety disorder with depression, but it does not shed light on the medical need, if any, for Ms Applicant to take a trip to Canada with her sons. I note that Dr Maung issued a medical certificate on 23 February 2015, in which he stated that Ms Applicant was suffering from an anxiety and stress disorder, and that she was unfit for work from 5 February 2015 to 5 May 2015.[12]

    [11] Exhibit 1.

    [12] Exhibit 8.

36. On balance, while I accept that Ms Applicant may have been stressed by her financial circumstances and by the circumstances relating to her mother, and that she may have obtained some relief by taking a holiday with her sons, I do not think that the family holiday satisfies the description of ‘reasonable costs of living’ for the purposes of s 19C(4)(a); nor do I think that it meets the test of ‘unavoidable or reasonable expenditure’ in the circumstances for the purposes of s 19C(4)(k). I note that the Secretary’s policy Guide to Social Security Law at 1.1.U.20 lists a family holiday as an example of an expense that would not be considered to be unavoidable or reasonable.

37. As regards the other expenses Ms Applicant claims to have incurred, she told me that she had paid only part of her mother’s outstanding rates notice[13] and she had given her sons amounts of money for them to spend on food and other items when looking after themselves while she was attending to her mother’s house and affairs. Furthermore, she explained that she had incurred costs relating to repairs to her mother’s house, including insurance excess amounts and various cleaning and maintenance costs.

    [13] See Exhibit 2.

38. The significant difficulty here is that Ms Applicant has produced very scant evidence to support her alleged expenses. Examination of her bank records suggests that she had expended her lump sum termination payment by January 2015. The bank records show numerous automatic teller machine withdrawals of amounts up to $1,000 sometimes only days apart, see withdrawals on 24 June, 26 June and 30 June 2014;[14] 18 and 19 November 2014;[15] and 13 and 17 December 2014,[16] for example. Ms Applicant explained this in three ways. Firstly, she said that she needed to give her sons cash for them to live on while she was absent. Secondly, she told me that there are few banks near her mother’s house and residence, so she needed to carry cash. And thirdly, she explained that she was repaying loans from friends that she incurred when her bank account was erroneously drained.

    [14] T5 folio 47 and 48.

    [15] T14 folio 195.

    [16] T14 folio 199.

39. That may be so, but these explanations suggest that the amounts withdrawn were expended on living costs of one form or another.

40. As regards Ms Applicant’s assertions regarding the repayment of loans, her Family Tax Benefit debt was not incurred during the income maintenance period, and the personal loans she discussed in her evidence apparently arose when her bank account was drained in error by a utility company. By her own account these loans were repaid when the error was rectified and funds were deposited into her account. Her severe financial hardship is not attributable to these factors.

41. Ms Applicant referred in her evidence to costs incurred when addressing legal matters relating to guardianship of her mother. No such costs have been quantified or substantiated in these proceedings.

42. Considering Ms Applicant’s alleged expenditure on repairs and maintenance to her mother’s house, Ms Applicant’s bank records reveal electronic payments that may meet this description, for purchases at Bunnings for example. I accept that she may have expended amounts in this way or for this purpose but, on the present materials, I am not able to quantify the amount of such expenditure during the income maintenance period or to conclude that her severe financial hardship is attributable to expenditure of this kind.

43. Finally on this point, the present materials suggest that Ms Applicant was authorised, at least from August 2014, to draw amounts from her mother’s bank account to pay for necessary repairs and expenses relating to her mother’s house and circumstances. No adequate explanation has been provided why this did not occur. If it is true that Ms Applicant considered it necessary to expend her own funds instead of her mother’s funds in order to establish her financial management credibility with guardianship authorities, expenditure of this kind may have been avoidable. Ms Applicant told me that her mother’s pension was paid to the nursing home in which she resided, and for this reason Ms Applicant was not able to access those funds to cover repairs and maintenance on her mother’s house. Even if I accept this unsupported evidence, and there is no probative evidence of her mother’s finances, it does not assist – on the present materials I am not able to quantify the amount of Ms Applicant’s expenditure on repairs and maintenance of her mother’s house.

44. I am not persuaded that the severe financial hardship Ms Applicant has experienced, and continues to experience, is attributable to unavoidable or reasonable expenditure she incurred during the income maintenance period. Certainly, some of the expenses she incurred could have been avoided. She might have decided to defer the trip to Canada, or she might have drawn upon her mother’s funds to pay for house cleaning and repairs, for example. Other expenses were perhaps unavoidable, the increased cost of running two households, for example, or conceivably the cost of repairs and maintenance to her mother’s house that could not be paid from her mother’s funds.

45. The question of reasonableness needs to be considered in the context of s 19C and s 1068-G7AH. Something that might appear to be reasonable, generally, like taking a family holiday for example, may not meet the test of reasonableness for the purposes of s 19C(4) where the purposes of the legislation and all of the person’s circumstances, including his or her financial position at the time of the expenditure, must be taken into account.

46. I am satisfied that the maximum permissible amount for living costs would be reasonable in Ms Applicant’s circumstances - $16,400. These costs were unavoidable or reasonable expenditures in the circumstances. But Ms Applicant’s severe financial hardship is not attributable to these expenditures, rather it is attributable to other expenditures that were avoidable or that have not presently been quantified or substantiated.

47. Having regard to all of these matters and to Ms Applicant’s circumstances, I am satisfied that it is not appropriate to exercise the discretion conferred by s 1068-G7AM to reduce the duration of Ms Applicant’s income maintenance period.

48. For this reason the decision under review in application 2015/3508 cannot be set aside. It is necessary, however to vary the decision to properly set out the duration of the income maintenance period from 23 June 2014 to 17 November 2015.

    SPECIAL BENEFIT

1. On 9 March 2015, Ms Applicant applied for special benefit to alleviate her difficult financial circumstances.[17]

   [17] T7.

2. The Secretary maintains that special benefit is not payable to Ms Applicant because she does not meet the qualification tests under the Act. In particular, the Secretary submits that Ms Applicant was able to earn a sufficient livelihood, but failed or omitted to do so and for this reason the discretion to grant special benefit is not enlivened.

3. The qualification criteria for special benefit are set out in s 729 of the Act. For a person to qualify for special benefit, the Secretary, or presently this Tribunal, must be satisfied that each of the pre-conditioning elements for exercise of the discretion conferred by s 729(2) are met.

4. The Secretary contends that Ms Applicant does not meet s 729(2)(e) –

   the Secretary is satisfied that the person is unable to earn a sufficient livelihood for the person and the person’s dependants (if any) because of age, physical or mental disability or domestic circumstances or for any other reason;

5. I do not agree.

6. On the medical certificates of Dr Prasad and Dr Maung, Ms Applicant was unfit for work from 29 September 2014 to 29 December 2014 and from 5 February 2015 to 5 May 2015. This is so even though Ms Applicant says that she undertook maintenance work on her mother’s house and garden. I have serious doubts about the veracity of Ms Applicant’s evidence that she undertook work of this kind for up to 17 hours per day – the frequency, duration and content of the maintenance tasks Ms Applicant actually undertook is very far from clear. Ms Applicant suffers from a mental illness that her treating doctor considers to be sufficient to render her medically unfit for work. This is much more reliable than an inference of fitness for work drawn from Ms Applicant’s unsupported evidence about maintenance work she says she undertook.

7. I am satisfied that Ms Applicant was not able to earn a sufficient livelihood for herself and her dependants during these periods. This means that s 729(2)(e) is satisfied.

8. The Secretary took no issue with respect to other pre-conditioning criteria and I will proceed on the basis that each of the criteria in s 729(2)(a) to (h) is satisfied.

9. It follows that the discretion to grant special benefit is enlivened.

10. In the Secretary’s submission it is not appropriate to exercise the discretion to grant Ms Applicant special benefit as the financial difficulty she faces is attributable to expenditures she incurred that were avoidable.

11. This submission is drawn from the Secretary’s policy Guide to Social Security Law at 3.7.1.30,[18] in which it is said –

    Circumstances leading to hardship

    SpB is only payable where a person is unable to earn sufficient livelihood. The person’s circumstances must be carefully considered to determine whether their inability to earn a sufficient livelihood was unavoidable or whether they have placed themselves in financial hardship by:

    ·     persevering with an unprofitable business venture,

    ·     spending their money on unnecessary items, or

    ·     disposing of money, by gifting or other means without adequate return.

    SpB should NOT be paid if the delegate believes the person:

    ·     knew at the time, that by spending their funds they would be placing themselves in financial hardship, AND

    ·     could have avoided the situation of financial hardship.

    [18] T4 folios 40 and 41.

12. I do not think that it is appropriate to exercise the discretion, once enlivened, to circumvent the operation of an income maintenance period in circumstances where these two conjunctive policy tests, concerning knowledge and avoidability, are made out. But each case must be considered on its merits and on its own facts, having regard to all of the relevant circumstances.

13. The important point, presently, is in respect of inability to earn sufficient livelihood.

14. To some extent, Ms Applicant is the mistress of her own misfortune. Had she not spent over $18,000 on a trip with her sons, that money may have been applied to alleviate her financial difficulties. Had she used her mother’s funds rather than her own money to meet unavoidable costs and repairs to her mother’s house, she might be in a better financial position; but the amounts expended on these costs were relatively small.

15. Ms Applicant explained these expenditures on the basis of her expectation of being able to work and earn money as she had done for the past 20 or so years. She told me that she fully expected to be able to obtain employment and earn income to meet her expenses. In her submission, two circumstances intervened. The first was the sudden deterioration in her mother’s health, leading to requirements for her hospitalisation, release into Ms Applicant’s care and then admission to a nursing home, and the consequent decision of Ms Applicant to become her mother’s financial manager and guardian (I understand that Ms Applicant is her mother’s only child in Australia). Ms Applicant explained that she found this role to be very stressful and demanding of her time.

16. The second intervening factor was the deterioration in Ms Applicant’s health with the onset of anxiety and depression and, subsequently, the emergence of physical symptoms that caused her to be hospitalised for investigations in or about January 2015.

17. Both of these circumstances were unavoidable. While Ms Applicant says that both factors affected her ability to earn, to my mind only the deterioration in her medical health had that effect. I am not persuaded that Ms Applicant’s financial management and guardianship responsibilities were of such magnitude that these prevented her from obtaining employment in order to earn income to support herself and her children.

18. But Ms Applicant was certified unfit for work for two periods from 29 September to 29 December 2014 and from 5 February to 5 May 2015 as a result of ill health. These were not avoidable circumstances. While in the first period Ms Applicant had sufficient funds to support herself, the same cannot be said for the second period.

19. On the evidence of Dr Prasad, Ms Applicant was suffering from anxiety and depression in September 2014 and on the evidence of Dr Parras, Ms Applicant “may well have suffered a nervous breakdown” if she had not taken the trip to Canada with her sons.[19] I accept that Ms Applicant believed, albeit rather optimistically perhaps, that she may be capable of earning income in employment on her return from overseas – I am satisfied that she did not expend money on the trip knowing that doing so would place her in financial hardship.

    [19] T6 folio 90.

20. Considering all of the circumstances, I am satisfied that it is appropriate to exercise the discretion to grant Ms Applicant special benefit from the date of her claim for special benefit on 9 March 2015 to 5 May 2015.

21. This means that the decision under review in application 2015/3509 will be set aside. Ms Applicant is qualified for special benefit from 9 March 2015 to 5 May 2015.

I certify that the preceding 69 (sixty -nine) paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb

.......................[sgd]............................................

Associate

Dated 25 September 2015

Date of hearing	18 September 2015
Applicant	In person
Solicitors for the Respondent	Ms G Thangasamy, Sparke Helmore