BRADLEY NEILSEN and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
[2012] AATA 591
•3 September 2012
[2012] AATA 591
Division GENERAL ADMINISTRATIVE DIVISION File Number
2012/0507
Re
BRADLEY NEILSEN
APPLICANT
And
SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
RESPONDENT
DECISION
Tribunal Mr RG Kenny, Senior Member
Date 3 September 2012 Place Brisbane The Tribunal affirms the decision under review.
...........................[sgd].............................................
Mr RG Kenny, Senior Member
CATCHWORDS
SOCIAL SECURITY – Pensions, benefits and allowances – Claim for newstart allowance – Receipt of termination payment – Imposition of income maintenance period (IMP) – Severe financial hardship for part of the IMP – Certain expenditure not unavoidable or reasonable in the applicant’s circumstances – Decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth) ss 8, 19C, 593, 1068-G7AH, 1068-G7AM
Employment and Workplace Relations Amendment (Welfare to Work and Other Measures) Act 2005 (Cth)
CASES
Hinterland Marine Pty Ltd v Maritime Global Pty Ltd [2010] FCA 683
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
SECONDARY MATERIALS
Employment and Workplace Relations Amendment (Welfare to Work and Other Measures) Act 2005 (Cth) – Explanatory Memorandum
REASONS FOR DECISION
Mr RG Kenny, Senior Member
3 September 2012
APPLICATION
On 25 May 2011, Bradley Neilsen applied to Centrelink for income support payments in the form of newstart allowance under the Social Security Act 1991 (Cth) (the Act). Although accepting that Mr Neilsen was qualified for newstart allowance, a Centrelink delegate determined on 25 May 2011 that an income maintenance period (IMP) be imposed on him for the period from 20 April 2011 until 11 August 2012. That decision was affirmed on 28 October 2011 by an authorised review officer and, in turn, on 27 January 2012, by the Social Security Appeals Tribunal (the SSAT). The effect of the decision was that Mr Neilsen did not receive newstart allowance during the IMP.
LEGISLATION AND ISSUE FOR DETERMINATION
It is not in dispute that Mr Neilsen meets the qualification requirements in the Act for newstart allowance.[1] The IMP was imposed on Mr Neilsen because, at the end of his employment with QR National, he received, on 19 April 2011, a termination payment of $60,898.26[2]. It is not in dispute that the termination payment comprised “ordinary income” as defined in s 8 of the Act or that the duration of the IMP was correctly calculated in accordance with the requirements of s 1068-G7AH[3]. Under s 1068-G7AKA of the Act, the commencement for the IMP is taken to be from the date of payment. I am satisfied that the respondent’s imposition of the IMP, its duration and its commencement date were correctly determined.
[1] These are set out in s 593 of the Act.
[2] His actual payment before certain reductions was $61,535.35.
[3] This provision deals with the characterisation of termination payments for the purposes of the Act.
Mr Neilsen seeks to have exercised in his favour the discretion which arises under s 1068-G7AM of the Act. This enables the whole or part of the IMP not to apply if the recipient is in “severe financial hardship” where that severe financial hardship resulted from his incurring “unavoidable or reasonable expenditure” while the IMP applies. It is common ground that Mr Neilsen lives as a member of a couple and, in that case, he is considered, to be in “severe financial hardship” under s 19C(3) of the Act:
…
if the value of the couple’s liquid assets (within the meaning of subsections 14A(1) and (2)) is less than twice the fortnightly amount at the maximum payment rate of the payment, benefit, pension or allowance that would be payable to the person:
(f) if the person’s claim were granted; and
(g) in the case of a person to whom an income maintenance period applies, if that period did not apply.
Section 19C of the Act also provides the following meaning for “unavoidable or reasonable expenditure”:
(4) Unavoidable or reasonable expenditure, in relation to a person who is serving a liquid assets test waiting period or is subject to a seasonal work preclusion period, or a person to whom an income maintenance period applies, includes, but is not limited to, the following expenditure
(a) the reasonable costs of living that the person is taken, under subsection (6) or (7), to have incurred in respect of:
…
(iii) if an income maintenance period applies to the person—that part of the period that has already applied to the person;
(b) the costs of repairs to, or replacement of, essential whitegoods situated in the person’s home;
(c) school expenses;
(d) funeral expenses;
(e) essential expenses arising on the birth of the person’s child or the adoption of a child by the person;
(f) expenditure to buy replacement essential household goods because of loss of those goods through theft or natural disaster when the cost of replacement is not the subject of an insurance policy;
(g) the costs of essential repairs to the person’s car or home;
(h) premiums in respect of vehicle or home insurance;
(i) expenses in respect of vehicle registration;
(j) essential medical expenses;
(k) any other costs that the Secretary determines are unavoidable or reasonable expenditure in the circumstances in relation to a person.
However, unavoidable or reasonable expenditure does not include any reasonable costs of living other than those referred to in paragraph (a).
Meaning of reasonable costs of living
(5) The reasonable costs of living of a person include, but are not limited to, the following costs:
(a) food costs;
(b) rent or mortgage payments;
(c) regular medical expenses;
(d) rates, water and sewerage payments;
(e) gas, electricity and telephone bills;
(f) costs of petrol for the person’s vehicle;
(g) public transport costs;
(h) any other cost that the Secretary determines is a reasonable cost of living in relation to a person.
…
(7) For the purposes of paragraph (4)(a), the amount of reasonable costs of living that a person who is a member of a couple is taken to have incurred, may not exceed:
…
(c) in the case of a person to whom an income maintenance period applies—twice the amount of allowance or parenting payment (as the case may be) that would have been payable to the person during that part of the income maintenance period that has already applied to the person, if the period did not apply to the person.
EVIDENCE
Mr Neilsen
Mr Neilsen lives with his partner and their two children, the youngest of who was born on 29 July 2011. His partner has two older children from another relationship who live mainly with their grandparents but who stay with him and their mother for two or three days each week. Over the years, the circumstances of the children have come to the attention of a Queensland Government Department[4] (the Department) associated with the care of children. This resulted in the imposition of special counselling arrangements on the children as well as an obligation on Mr Neilsen to transport them to places to enable him to meet those commitments. Mr Neilsen had concerns that the Department would take the children into foster care if he and his partner were unable to provide for them financially. The Department arranged for Mr Neilsen to see a psychiatrist, Dr Keith Muir, and a psychologist, Suzy Dormer.
[4] Variously, this was the Department of Child Safety, Department of Communities and Department of Human Services.
At the time when he received the termination payment, Mr Neilsen owned a small Toyota car which was 14 years old. He described this as too small for the needs of his family and in a state of disrepair. He had been advised by officers from the Department that he should replace the old car. On receiving the termination payment, he decided to purchase a new utility which would meet the transport needs of his family, including the child with whom his partner was pregnant at the time. He received a credit of $500 for the Toyota car and he purchased a six-seat twin-cab Toyota utility on 21 April 2011. The price was $36,524.14. The utility was fitted with optional extras which Mr Neilsen associated with increased safety. Mr Neilsen was uncertain of the cost of these, variously stating that the cost was for amounts from $1,500 to $4,000. He was uncertain whether the payment of $36,524.14 included the extra items.
Mr Neilsen repaid an outstanding personal loan of $16,556.06 on 20 April 2011. He had borrowed money some years earlier and had added to the amount of the debt periodically. He had an arrangement with the lending institution whereby he would make fortnightly payments of $238. No demands had been made on him to repay the loan at a rate greater than that agreed fortnightly payment. However, having received his termination payment, Mr Neilsen decided to finalise the loan. He did this after obtaining information from the lending institution about the savings he would make on interest payments by doing so. His enquiries led him to believe that he would save about $3,500. He described feelings of stress in relation to servicing the loan and to a great sense of relief when it was settled.
Mr Neilsen said that he also purchased furniture (dining suite) on 20 April 2011 in the amount of $4,000. He agreed that he and his partner had spent additional monies on costs of living as well as expenses in relation to the children, health-related items and other household expenses. He accepted the respondent’s estimate of these of $7,245.85. Mr Neilsen’s evidence was that he and his partner currently have credit in their respective bank accounts of $1.98 and $260.
On learning of the imposition of the IMP, Mr Neilsen realised that he had insufficient funds for his family needs. He said that this was reinforced by a recommendation from a Centrelink officer that he consider selling the utility. He contacted the used-car component of the dealership who sold him the car to which he agreed to sell the car for $21,000 on 27 May 2011. In relation to the substantially reduced price, he said that he understood that new vehicles depreciated in value immediately on use. He did not consider the prospect of obtaining a greater price by alternative means such as private sale or approaching other car dealers. The monies from the sale of the utility were paid into his bank account and his evidence was that this was spent on general household matters until, currently, when he has only $1.98 in that account.
Mr Neilsen said that his partner did not permit him to have access to her bank account but he agreed that she had received various payments from Centrelink during the IMP. These included family tax benefit of $36,431.29 from June 2011 until July 2012 as well as an amount of $7,152 on 31 May 2011 and an amount of $3,040.24 in July 2012.
Other Evidence
In evidence was an Employment Separation Certificate, dated 28 April 2011, from QR National relating to the cessation of Mr Neilsen’s employment. It nominates a tax‑free portion of his voluntary redundancy payment to him on 20 April 2011.
Psychiatrist, Dr Keith Muir, completed a report, dated 14 December 2011. He described Mr Neilsen as being compromised intellectually and emotionally, as having come from a prejudicial background and as having a chronically anxious personality and low frustration tolerance. His opinion was that Mr Neilsen was barely able to read or write and was functionally illiterate. He considered that it was conceivable that he had difficulty in understanding what his termination payout was for.
Psychologist, Suzy Dormer, completed a report in June 2012 at the request of the Department. She described Mr Neilsen as being “largely illiterate” but “somewhat comfortable with simple mathematics and financial matters”. On the basis of tests she administered, Ms Dormer concluded that Mr Neilsen’s intellectual maturity and his ability to perceive and think clearly were well below average for an adult and was “below the 50th percentile for an average 11 year old”. She described him as not having “the ability for abstract thinking”.
Margaret Crowther, an adult literary teacher at the Barrier Reef Institute of TAFE, completed a report, dated 6 June 2012. The report was an assessment of Mr Neilsen’s “general level of competence with oral communication, learning, reading, writing and numeracy”. Ms Crowther used a scale to identify increasing levels of support required from “full support” (level 1), “high level of support” (level 2), “moderate support” (level 3), “minimal support” (level 4) to “little or no support” (level 5). She concluded that Mr Neilsen demonstrated skills of learning, reading, writing and numeracy at level 1 and oral communications at level 2.
A report was completed by the Department which reveals child safety concerns for the children from 2003 onward. It includes a reference to Mr Neilsen’s partner as suffering from depression and anxiety as well as panic attacks.
Meg Lappin is a child safety officer with the Department. She completed a report, dated 28 September 2011, in which she confirmed that Mr Neilsen’s family was the subject of an “Intervention and Parental Agreement” for which she was the case worker for the children. Ms Lappin described depression and anxiety in both Mr Neilsen and his partner. She noted that Mr Neilsen was the primary carer for the children and undertook most of the household chores. She described Mr Neilsen and his partner as “highly honest” people with no alcohol, drug or gambling problems. She noted that Mr Neilsen had sold his utility on the advice of a Centrelink officer and, since then, has been obliged to travel by taxi for school and medical appointments and other necessary travel because the area of their home has no bus services. Ms Lappin’s opinion was that Mr Neilsen’s intentions were good in regard to his spending money and that he did not fully comprehend the consequences of what he did “due to his lack of life experience, mental health issues and limited education”.
In evidence were Mr Neilsen’s bank statements. They record an amount to his credit of $149.66 immediately prior to the deposit of the termination payment; a deposit of $60,898.26 on 19 April 2011; withdrawals of $16,556.06 and $4,000 on 20 April 2011 and $36,524.14 on 21 April 2011; and a deposit of $21,000 on 27 May 2011. They also show that the balance fell below $857.40 from 11 to 17 May 2011, on 26 and 27 May 2011 and from 13 October 2011 to 30 May 2011.
SUBMISSIONS
Mr Rick McQuinlan, for the respondent, submitted that the maximum rate of newstart allowance which would have been paid to Mr Neilsen, as a member of a couple, during the IMP was approximately $857.40. He submitted that Mr Neilsen would be considered to be in financial hardship when the combined level of his and his partner’s liquid assets fell below that amount. Mr McQuinlan submitted that, apart from a few days in May 2011, it fell below this amount from 13 October 2011 to 30 May 2012. However, he also submitted that any such reduction in liquid assets, after allowing for certain unavoidable and reasonable expenditure amounting to some $22,189.60 which was related to costs of living, to needs of the new-born child, to certain household needs and his treatment for sleep apnoea, was due to reckless extravagance by Mr Neilsen. In particular, he submitted, this was in respect of his payment of a personal loan and the purchase of the utility and furniture, all of which actions were taken within a day or so of his receiving his termination payment. Mr McQuinlan submitted that Mr Neilsen’s actions did not demonstrate an incapacity for abstract thinking and that spending on these items was not consistent with the types of matters listed in s 19C of the Act or with the purpose of the IMP to provide income support for those in need. As such, he submitted, Mr Neilsen engaged in expenditure which could not be described as unavoidable or reasonable in his circumstances such that the discretion in s 1068-G7AM of the Act should be exercised in his favour. Mr McQuinlan submitted that the reasonable cost of living for Mr Neilsen in the IMP was $14,943.75.
Mr Aaron Finn, for Mr Neilsen, submitted that the Act should be perceived as beneficial legislation and that a global view of Mr Neilsen’s circumstances should be considered. He submitted that this included his diminished intellectual capacity as reflected in decreased literacy, mathematical ability and capacity for abstract thought. Mr Finn submitted that financial hardship was experienced by Mr Neilsen throughout the entire IMP and not only that part of it identified by Mr McQuinlan. Further, he agreed with Mr McQuinlan’s concession concerning the expenditure by Mr Neilsen of $22,189.60. He submitted that Mr Neilsen’s decision to purchase a car was a reasonable one because of the unreliability and lack of serviceability of his previous car, especially given the particular transportation needs for his family. He also submitted that the decision to finalise a personal loan, in the amount of $16,556.06, rather than to continue periodic repayments, was reasonable because it resulted in a saving in interest payments of approximately $3,500. Mr Finn described Mr Neilsen’s decision to sell the utility, about a month after he purchased it, for a substantially reduced price was a reflection of his depleted thought capacity. In summary, Mr Finn submitted that the discretion under s 1068-G7AM of the Act should be exercised to determine that no part of the IMP was applicable in Mr Neilsen’s case.
CONSIDERATION
While I have noted Mr Finn’s submission concerning the beneficial nature of the Act, it is, nonetheless, the case that the terms of the Act must be given effect. I have also noted his submission that the entire IMP should be the subject of the discretion in this matter. However, a precondition to considering the exercise of the discretion is that Mr Neilsen’s liquid assets must have fallen to a threshold level. That was not the case throughout the IMP.
I am satisfied that the maximum rate of newstart allowance which would have been paid to Mr Neilsen as a member of a couple during the IMP, if this had been granted to him, was $857.40 per fortnight.[5] That is the threshold below which severe financial hardship, as provided for in s 19C(3) of the Act, will, at least initially, be satisfied. From available bank statements relating to the IMP, the liquid assets of Mr Neilsen and his partner fell below that amount for a few days in May 2011 and for a longer period from 13 October 2011. There is evidence of an increase beyond $857.40 on 31 May 2012 when Mr Neilsen’s partner received a payment from Centrelink of $7,152.93. I am satisfied that the major part of the IMP in which severe financial hardship may be considered is from 13 October 2011 until 30 May 2012. I am satisfied that the IMP is to apply during the remainder of the IMP.
[5] See s 19C(8) of the Act.
Even though the level of liquid assets of Mr Neilsen and his partner fell below the threshold level in s 19C(3) of the Act as noted above, the discretion under s 1068-G7AM of the Act should be exercised if that situation resulted from Mr Neilsen having engaged in expenditure which, as provided for in ss 19C(4)(a) to (k) of the Act, was unavoidable or reasonable.
In s 19C(4)(a) of the Act, reference is made to reasonable costs of living in that part of the IMP prior to the liquid assets falling below the threshold as noted above.[6] The maximum level attributable to that form of expense, for a member of a couple, is provided for in s 19C(7)(c) of the Act. This is twice the amount of newstart allowance that would have been payable to Mr Neilsen during that part of the IMP that had already applied to him, if it had not so applied. Based on the fortnightly payment of newstart allowance at the rate for a couple or $857.40 for the period of 25 weeks from the start of the IMP until 13 October 2011 when the period of severe financial hardship may be considered, that maximum amount attributable to reasonable costs of living is $21,435.[7]
[6] See paragraph 20 (above).
[7] This is greater than the amount conceded by the respondent which appears to have been based on the terms of s 19C(6)(c) of the Act, which applies to a single person.
In ss 19C(4)(e), (j) and (k) of the Act, respectively, reference is made to child care expenses, essential medical expenses and unavoidable and reasonable expenses. Mr McQuinlan conceded that this included the purchase of mowing equipment ($600), certain furniture (beds, mattress and chest of drawers – $3,500) child birth expenses ($1,645.85) and a sleep apnoea machine ($1,500). This totals $7,245.85. Mr Finn adopted that concession and I am satisfied that it is appropriate.
Those amounts, along with the maximum amount of reasonable costs of living attributable for the 25 week period to 13 October 2011, total $28,680.85. I am satisfied that that amount comprises unavoidable and reasonable expenditure by Mr Neilsen. Deduction of that sum from the liquid assets of Mr Neilsen on 19 April 2011 would have left him with an amount in excess of $30,000 to carry him through the IMP. His expenditure on the utility, furniture and repayment of his personal loan amounted to more than 93% of the sum at his disposal on receipt of the termination payment. Consider, then, the nature of the expenditure by Mr Neilsen on 20 and 21 April 2011.
There was some confusion in Mr Neilsen’s evidence about the utility purchase. In his statement, dated 23 July 2012, he wrote that he purchased it for $36,524.14. He also described that price as including various optional extras. In his evidence, he said that these extras were valued at $4,000 but he was uncertain whether this cost was included in the $36,524.14 which appears as a withdrawal in his bank statement. Confusion arose because of another withdrawal in his bank statement on the same day for $4,000 which was accompanied by a hand-written notation that it was related to a furniture purchase in the form of a dining suite. His evidence was that he did purchase furniture items at the time. In the absence of any documentation associated with the purchase of the utility, I am satisfied that the full price paid by Mr Neilsen for the utility, including the extras, was $36,524.14.
Specific matters listed in ss 19C(4)(b), (c), (d), (f), (g), (h) and (i) of the Act are repairs to, or replacement of, essential whitegoods; school, funeral and vehicle registration expenses; replacement of essential uninsured household goods lost through theft or natural disaster; essential repairs to a car or home; and insurance premiums in respect of vehicle or home. All of those expense categories, as well as those in ss 19C(4)(a), (e) and (j) of the Act, are characterised by a sense of immediacy, urgency or necessity such that a failure to meet the expense may result in real detriment to the person concerned. The utility and furniture purchase and the loan payment do not fall within those categories. However, of relevance to them are the general terms of s 19C(4)(k) of the Act, which reads:
any other costs that the Secretary determines are unavoidable or reasonable expenditure in the circumstances in relation to a person.
I am satisfied that the sense of immediacy, urgency or necessity which characterises the specific references in ss 19C(4)(a) to (j) of the Act is incorporated into the general terms of s 19C(4)(k) of the Act.[8]
[8] Applying the ejusdem generis rule of statutory construction (general matters are constrained by specific matters). For discussion, see Hinterland Marine Pty Ltd v Maritime Global Pty Ltd [2010] FCA 683 at [18] – [20] per Logan J.
The notions of “unavoidability” and “reasonableness” in s 19C(4)(k) of the Act are expressed as alternatives. They are to be assessed having regard to “the circumstances in relation to [Mr Neilsen]”. In that regard, I have noted the submission of Mr Finn as well as the reports of Dr Muir, Ms Dormer, Ms Crowther and Ms Lappin. In addition to emotional difficulties, those reports refer to Mr Neilsen as having intellectual problems, as reflected in literacy rather than in simple mathematics and financial matters; as needing support with reading, writing and numeracy and, to a lesser extent, with oral communications; and as having no ability for abstract thinking. While I accept that there may be some basis for the opinions given in those reports, my observation at the hearing was that Mr Neilsen did not demonstrate communication difficulty or lack of understanding of the matters in issue in the proceedings in which he participated fully.[9] He described the rationale behind purchasing the utility as well as the safety-oriented reasons on which he selected the optional extras for it. He gave a reasoned basis on which he concluded that he should pay out the loan in full rather than continue to repay it on a long-term basis, thereby demonstrating capacity for abstract thinking and an ability to deal with the financial aspects of those transactions.
[9] A similar conclusion was reached by the SSAT after its hearing.
I am satisfied that Mr Neilsen’s purchase of the utility and furniture and his repayment of the loan do not satisfy the unavoidability component of s 19C(4)(k) of the Act. There is no evidence that any of them was grounded in circumstances of immediacy, urgency or necessity. He could have chosen to retain his other vehicle or could have purchased a less expensive vehicle, either new or used. At the least, he could have made enquiries about alternative purchase options. The avoidability of the utility purchase was demonstrated by his decision to sell it one month later and his capacity, from then on, to conduct the circumstances of his and his family’s affairs with no vehicle at all for more than 12 months to the time of the hearing. In relation to the loan, Mr Neilsen had an agreement with the lending institution to make fortnightly repayment of the loan and had not been required by the institution to finalise the loan. I am satisfied that he was in a position on 20 April 2011 to avoid spending $4,000 on the furniture, in excess of $36,000 on the utility and to avoid making full repayment of the loan in an amount in excess of $16,000.
While it may have been highly desirable for Mr Neilsen to purchase a new vehicle and to rid himself of debt, it would have been entirely reasonable for him to have at least considered options of solving his transport needs by purchasing a less expensive vehicle or to continue to use the car. I have noted his references to the state of the car but there was no evidence to suggest that it was in a state of un-roadworthiness or that any faults could not have been the subject of repair. Apart from problems with his previous car, Mr Neilsen’s choice of the utility was explained in terms of the transport and safety needs of his family. However, at that time, Mr Neilsen and his partner had only one child and they cared for two other children on only two or three days per week. By purchasing the utility and dining suite and repaying the loan in full, he spent, within two days, more than 93% of the amount to his credit on 19 April 2011 and I am satisfied that those expenditures were neither unavoidable or reasonable in his circumstances.
A consequence of the sale of the utility was a replenishment of Mr Neilsen’s liquid assets. His bank statements reveal a credit balance of $21,720 on 27 May 2011. Since then, there has been a series of continuous debits by way of the payment of various accounts and cash withdrawals. While some of these were in respect of costs of living, the maximum which may be attributable to costs of living, as provided for in s 19C(7) of the Act, as noted above[10], is $21,435. Mr Neilsen’s continuing expenditure far exceeded the statutory maximum allocable to costs of living and reduced his liquid assets to less than $857.40 by 13 October 2011. I am satisfied that those expenditures that exceeded the limit were neither unavoidable nor reasonable in his circumstances.
[10] See paragraph 23 (above).
The costs of repairs to the car and fortnightly loan repayments, if Mr Neilsen had chosen to keep the car and maintain the loan, would have qualified as unavoidable or reasonable expenditure under s 19C(4) of the Act. Mr Neilsen’s evidence was that, since selling his utility, he has used the services of taxis to meet his transport requirements. His evidence to the SSAT was that the cost of this service was approximately $180 per week. This was not challenged at the hearing and this amounts to an approximate expenditure by Mr Neilsen of $3,600 in the period from the sale of the utility until 13 October 2011. If Mr Neilsen had not repaid the loan in full, he would have incurred an expenditure of fortnightly loan repayments of approximately $2,875 prior to 13 October 2011. I am satisfied that such notional sum and the amount attributable to taxi expenses should be treated as unavoidable or reasonable expenditure in Mr Neilsen’s circumstances.
From 20 April 2011 until 13 October 2011, the allowable costs of living, the expenditure conceded by Mr McQuinlan and a notional fortnightly expenditure on the loan, as well as the approximate amount spent on taxi transport since the sale of the utility, total $35,155. That leaves a shortfall, from the amount to Mr Neilsen’s credit at the time of the termination payment of $61,047.92, of approximately $25,890.
Payments of the kind received by Mr Neilsen were included in the calculation of IMP because of amendments introduced into the Act by the Employment and Workplace Relations Amendment (Welfare to Work and Other Measures) Act 2005 (Cth) for which the Explanatory Memorandum reads:
The inclusion of redundancy payments in the calculation of an income maintenance period recognises that the primary purpose of a redundancy payment is to support peoples’ incomes for a period after loss of employment.
The expenditure by Mr Neilsen within two days of receipt of his termination payment of approximately $57,000 comprised approximately 93% of the termination payment. In his circumstances of being unemployed at the time and with a family to support, I accept Mr McQuinlan’s description of his conduct as being reckless extravagance on his part. I am satisfied that Mr Neilsen’s purchases of the utility and furniture, the full repayment of the loan and the continuous expenditure after the date of sale of the utility to a point where his liquid assets were almost exhausted, were neither unavoidable nor reasonable in his circumstances. In that regard, I have noted the purpose of the provisions in the Act as explained above in the Explanatory Memorandum. For that reason, I am satisfied that Mr Neilsen’s severe financial hardship did not arise because he incurred unavoidable or reasonable expenditure during the IMP and that there is no part of the IMP which should not apply to him.
DECISION
The Tribunal affirms the decision under review.
I certify that the preceding 37 (thirty -seven) paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member. ...............................[sgd].........................................
Associate
Dated 3 September 2012
Date(s) of hearing 23 August 2012 Solicitor for the Applicant Mr A Finn Advocate for the Respondent Mr Rick McQuinlan
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