Bonnefin and Secretary, Department of Education, Science and Training
[2006] AATA 471
•31 May 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 471
ADMINISTRATIVE APPEALS TRIBUNAL )
) N2005/1353
GENERAL ADMINISTRATIVE DIVISION ) Re
HEATH BONNEFIN
Applicant
And
SECRETARY, DEPARTMENT OF EDUCATION SCIENCE AND TRAINING
Respondent
DECISION
Tribunal Ms N Isenberg, Member Date31 May 2006
PlaceSydney
Decision The decision under review is affirmed.
[Sgd] Ms N Isenberg, Member
CATCHWORDS
SOCIAL SECURITY – Whether Applicant is regarded as independent for the purpose of assessing entitlement to youth allowance – Whether Applicant has been supporting himself through paid work consisting of a period or periods of employment over an 18 month period – Whether through this period or periods the Applicant has earned at least 75% of the maximum Commonwealth training award payment that applied at the start of the period of employment.
LEGISLATION
Social Security Act 1991, section 10A(2), 1067(A)10
CASELAW
Moran and Secretary, Department of Family and Community Services [2003] AATA 1003
Newcastle City Council v GIG General Ltd (1997) 149 ALR 623
R v Young (1999) 46 NSWLR 681REASONS FOR DECISION
31 May 2006 Ms N Isenberg, Member DECISION UNDER REVIEW
1. The decision under review by this Tribunal is the decision of the Social Security Appeals Tribunal (“SSAT”), dated 7 September 2005, which affirmed the decision of an Authorised Review Officer (“ARO”) to reject Mr Heath Bonnefin’s claim for youth allowance at the independent rate.
THE HEARING
2. A hearing was held on 14 February 2006 at which Mr Bonnefin was self-represented and the Respondent was represented by Ms Andrea Garcia, an advocate from the Centrelink Service Recovery Team. The hearing resumed on 17 May 2006 and further submissions were made.
3. I had before me documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which I took into evidence. In addition, Mr Bonnefin and the Respondent filed Statements of Facts and Contentions. Mr Bonnefin gave evidence and was cross-examined by Ms Garcia.
ISSUE BEFORE THE TRIBUNAL
4. The main issue for me to determine is whether Mr Bonnefin is regarded as independent for the purposes of assessing his entitlement to youth allowance.
5. Section 1067A(10) of the Social Security Act 1991 (“the Act”) provides the criteria which must be met in order for a person to be considered ‘independent’ as follows:
“1067A(10)A person is independent if the person has supported himself or herself through paid work consisting of:
(a)full-time employment of at least 30 hours per week for at least 18 months during any period of 2 years; or
(b)part-time employment of at least 15 hours per week for at least 2 years since the person last left secondary school; or
(c)a period or periods of employment over an 18 month period since the person last left secondary school, earning the person at least the equivalent of 75% of the maximum Commonwealth training award payment that applied at the start of the period of the employment.”
6. I must therefore consider whether:
(a)Mr Bonnefin had been supporting himself through paid work consisting of a period or periods of employment over an 18 month period since leaving school?; and
(b)Throughout this period or periods Mr Bonnefin has earned at least the equivalent of 75% of the maximum Commonwealth training award payment that applied at the start of the period of employment?
BACKGROUND
7. The following facts were not in dispute:
· Mr Bonnefin completed secondary school on 10 November 2003 (T13) and commenced work with David Jones the following day (T17).
· The Commonwealth Training Award rate in place on 11 November 2003 was $22,828 and 75% of this amount is $16,536 (T28).
· From 11 November 2003 to 20 May 2005, a period of 18 months since Mr Bonnefin left secondary school, he worked during various periods, for which he was paid as follows:
Source Period Amount Received in $ David Jones (T17) November 2003 to June 2004 6,646 Bricklaying (T19, p.76) December 2003 to February 2004 400 David Jones (T19, p.74) July 2004 to May 2005 6,297 Tutoring (T19, p. 77) February to November 2004 980 Total: $14,323
· During the relevant period Mr Bonnefin also received monies from a number of scholarships in the following amounts:
Source Period Amount Received in $ Lions Scholarship (T7 and T10) Early 2004 and 2005 1,000 Business/Law Scholarship (T8) April 2004 1,500 Foundation Scholarship (T5) April 2004 4,000 Total: $6,500
· On 23 May Mr Bonnefin made a claim for youth allowance at the independent rate at Centrelink in Wyong (T13).
· On 6 June 2005, Mr Bonnefin's claim for Austudy at the independent rate was rejected on the basis that his earnings from paid employment, over an 18 month period since he left secondary school, were not equivalent to 75% of the maximum Commonwealth Training Award rate. (T12 and T15). In making their decision, Centrelink did not take into account the scholarship monies.
CONSIDERATION OF THE EVIDENCE
8. In coming to the correct and preferable decision, I took into account all the evidence, submissions, case law and relevant legislation.
9. It was agreed that Mr Bonnefin accrued $20,823 in payment over an 18 month period since leaving school. Mr Bonnefin contends that this whole amount, which includes the scholarship monies awarded by the University of Newcastle and the Lions Club, should be considered as earnings for the purposes of the sub section. However, the Respondent submitted that only $14, 323, which includes only the amounts received from David Jones, tutoring and bricklaying, should be classified as earnings from employment as the scholarship monies represent a form of financial assistance provided on the basis of merit and are not earnings through paid work.
10. Therefore, in the present matter, the issue of Mr Bonnefin’s entitlement to youth allowance turns on whether or not the scholarships were ‘paid work’.
Do the periods during which Mr Bonnefin received the scholarship monies amount to ‘periods of employment’?
11. Firstly, it is necessary to consider the term ‘periods of employment’. The Respondent submitted that section 1067A(10)(c) clearly requires earning to be “from employment” and referred to the definition of “employment” in section 10A(2) of the Act as follows:
“employment, in relation to a person, means the holding of any office or appointment, the performance of any functions or duties, the engaging in of any work, or the doing of any acts or things that results, will result or has resulted in the person being treated as an employee” (Tribunal’s underlining)
12. The Respondent submitted that a person in receipt of scholarship monies does not fit into this category as the person is not ‘being treated as an employee’. With this singular statement I agree. However, even if I were to accept that the subsection intended only earnings “from employment” to count toward total earnings, it would necessarily follow that earnings of independent contractors could never, in my view, meet the criteria.
13. In this case, the Respondent accepted Mr Bonnefin’s statutory declaration that he had done bricklaying, for his grandfather, for which he was paid $400 and another statutory declaration that he had tutored in physics and received $980. In neither case, in my view, could it be remotely suggested that Mr Bonnefin was in “employment”, as defined, or “treated as an employee”. Ms Garcia, for the Respondent, submitted that an independent contractor is ‘employed’ to undertake a task or role. I do not accept this as the appropriate interpretation. A fundamental principle of employment law is that there is a difference between an employee and a contractor.
14. Mr Bonnefin said he knew of at least two other examples of Centrelink accepting (in youth allowance applications) statutory declarations about money earned in circumstances which were clearly not “employment”. Given Mr Bonnefin’s own experience, this does not seem unlikely.
15. Mr Bonnefin submitted that a broad definition of ‘employment’ should be applied and that section 1067A(10)(c) should be given, "a construction that would promote the purpose or object underlying the Act" over a construction that would not: section 15AA of the Acts Interpretation Act 1991.
16. Mr Bonnefin contended that a decision maker is at liberty to give words, like ‘employment’ in this instance, an ‘ambulatory operation’ so that the purpose of the legislation is achieved. (R v Young (1999) 46 NSWLR 681 at 687) and that further that this is a case where a “strained construction” needs to be given to the term 'employment' to further the purpose of the Act. (Newcastle City Council v GIO General Ltd (1997) 149 ALR 623 at 642).
17. The Respondent’s submissions regarding the definition of the term ‘employment’ were unhelpful. There was no adequate explanation why the earnings of an independent contractor fall within the definition of employment under section 1067A(10)(c) when, clearly, an independent contractor is not ‘employed’ or ‘treated as an employee’. The section is awkwardly and, it appears to me, to be somewhat thoughtlessly drafted. The Respondent’s interpretation of the term ‘employment’ in the section is inconsistent and perhaps merely convenient.
18. However, it is my finding that the outcome of this case is not affected by the interpretation of the term ‘employment’. The section requires that the earnings be from ‘paid work’. I have considered the definition of ‘paid work’ and the nature of the scholarships received by Mr Bonnefin and have concluded that being in receipt of scholarships does not amount to ‘paid work’.
19. I have considered the issue of ‘paid work’ in the follow paragraphs.
Does Mr Bonnefin, as a scholarship recipient, engage in ‘paid work’?
20. Mr Bonnefin submitted that his scholarships should be considered ‘paid work’ as, throughout 2004, he provided services to the University of Newcastle, and the University of Newcastle Faculty of Business/Law, and throughout 2004/05, to the Killarney Bateau Lions Club, in return for payments.
21. He said, in relation to the Lions Club scholarship, he was obliged to attend a meeting in each of the scholarship years to address the members. This was confirmed in a letter from the Lions Club’s Scholarship Director (T10). He said he was also obliged to ‘permit his name to be used’ in the Club’s newsletter, although there was no mention of that in the letter granting him the scholarship. It is not unreasonable that the Lions Club would want to announce or advertise the award to its members, and I accept that this may have occurred. It is unclear what may have transpired vis-a-vis the scholarship had Mr Bonnefin declined to ‘permit his name to be used’ in the Club’s newsletter. In any event I do not consider that these 2 obligations on his part amounted to ‘work’ for which he was ‘paid’.
22. In a letter from the Lions Club to Mr Bonnefin informing him of the scholarship award it is stated that the scholarship is awarded ‘as a result of a fine performance in the Higher School Certificate’ and to assist him with future studies.
23. As far as the University scholarships were concerned, he said he was obliged to attend classes and there was an expectation that he was to achieve above average results. He said the scholarships were offered as an incentive to entice top students to the University. As a result, the overall student performance would be raised and the University’s ability to attract corporate sponsorship and its overall reputation would be enhanced. This was a benefit to the University in return for the money it provided to him; were it not for the scholarships he would have attended a different university. I accept that all this may be the case. However, it does not, in my view, follow that his attendance at this university qualifies as ‘paid work’.
24. Mr Bonnefin said it was implicit in the agreement that if he left the University he would have to repay the scholarship monies. This view, however, is not supported by the conditions in relation to each of the scholarships. While there are termination provisions in both (T6/16 and T9/20), neither has any repayment provision in the event the conditions were not met. No obligation is on the student, other than to attend the course to which the scholarship relates. Even this is put somewhat obliquely in the terms of each scholarship namely that the scholarship shall terminate if the scholar ‘ceases to be a student of the university’ or ‘fails to fulfil any of the conditions of the scholarship’. The conditions outlined in the scholarship documents are vague and do not address the matters Mr Bonnefin would have me read into the documents. The Faculty of Business and Law Undergraduate Scholarship also has a term, for reasons which are unclear, specifically to the effect that the scholar ‘shall not be required by the University to undertake employment as a condition of the award of the scholarship’.
25. The scholarships maintain that the scholarship money represents a form of financial assistance ‘to support and encourage students….’ (Faculty of Business and Law Undergraduate Scholarships), and ‘to provide financial support for academically outstanding undergraduate students…” (University Foundation Undergraduate Scholarship Scheme)
26. The bases for all three awards set out what I consider to be the true purpose of the payments; to provide financial support to gifted students. Attendance at the university does not amount to paid work. In fact, there is no evidence to suggest that Mr Bonnefin was required to provide the University or the Lions Club with specific services in order to receive the scholarships.
27. Ms Garcia submitted that if the scholarships were ’paid work’ pay slips or a statement of earnings with information showing Mr Bonnefin’s pre-tax earnings would be available. I do not accept that this is a necessary requirement for paid work, but would be an indication of paid work.
28. I am satisfied that the evidence demonstrates that Mr Bonnefin’s scholarships were not ‘paid work’ for the Lions Club or the University.
29. Mr Bonnefin also pointed to the inconsistency that Centrelink regards scholarship monies to be “income” for means-test purposes in youth allowance applications, but disallows it from consideration of “paid work”. Ms Garcia explained, and I accept, that all sources of income (eg scholarships, gifts, investments and lottery winnings) were taken into account to determine the appropriate rate of youth allowance. However, only paid work was taken into account for the purpose of eligibility.
30. I accept that this incongruity disadvantages students like Mr Bonnefin who have been engaged in some form of paid work since leaving school, but who have not reached the requisite level set out in section 1067A(10)(c), and yet may have an ‘income’, albeit a limited one.
31. Mr Bonnefin referred to the Second Reading Speech (quoted in T2 at 005), wherein the purpose of the legislation was said to be to "encourage young people to complete or further their education … by removing undesirable incentives to leave education early". Further it was said there that one way in which undesirable incentives have been sought to be removed by this legislation, is through the making available of Youth Allowance Payments to those students who have "achieved financial independence", meaning they "have supported themselves for at least 18 months of the previous two years".
32. I accept that Mr Bonnefin may have in fact supported himself for at least 18 months of the previous two years, through not only paid work, but also utilising his scholarship monies; without the inclusion of the scholarship monies, however, he does not meet the level required for section 1067A(10)(c).
33. I note that in introducing the Social Security Legislation Amendment (Youth Allowance) Bill 1997, the Minister said:
“Youth allowance will be subject to parental income and family assets and actual means tests, as currently apply to AUSTUDY. This parental means test reinforces the Government’s message that families should support their young family members until they have achieved financial independence.”
34. The decision under review is affirmed.
I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of MS N ISENBERG, MEMBER
Signed: Associate
Date of Hearing 14 February and 17 May 2006
Date of Decision 31 May 2006
Representative for the Applicant Self
Advocate for the Respondent Andrea Garcia
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