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

[2020] AATA 317

Burdekin and Secretary, Department of Social Services (Social services second review) [2020] AATA 317 (26 February 2020)

Administrative Appeals Tribunal

ADMINISTRATIVE APPEALS TRIBUNAL              )
  )         No: 2019/2945
GENERAL DIVISION  )

Re: Tara Burdekin
Applicant

And: Secretary, Department of Social Services
Respondent

DIRECTION

TRIBUNAL:  Member I Fletcher

DATE OF CORRIGENDUM:            27 February 2020

PLACE:           Perth

The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975, to clarify the reasons for the decision in this application to the following:

1. As per the first page of the decision, the decision under review is affirmed. As stated at [30] the Tribunal notes that the IMP was from 22 February 2019 to 8 May 2019 and not 22 February 2018 to 15 May 2019.

...................................................................

Member

Division:GENERAL DIVISION

File Number(s):      2019/2945

Re:Tara Burdekin

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Member I Fletcher

Date:26 February 2020

Place:Perth

The decision under review is affirmed.

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

Member I Fletcher

CATCHWORDS

SOCIAL SECURITY – Centrelink – Newstart Allowance – Income Maintenance Period – severe financial hardship – unavoidable and/or reasonable expenditure – reasonable expenses – decision affirmed

LEGISLATION

Social Security Act 1991 (Cth) – ss 14A(1), 19C(2), 19C(4), 19C(4)(a)(iii), 19C(5), 19C(6), 19C(6)(c), 19C(8)(b), 598, 1068-A1, 1068-G7AG, 1068-G7AH, 1068-G7AKA,
1068-G7AQ, 1068-G7AM, 1068-G7AR, 1072

SECONDARY MATERIALS

Guides to Social Policy Law: Social Security Guide, Department of Social Services, version 1.261 – Instruction 4.3.4.40

REASONS FOR DECISION

Member I Fletcher

26 February 2020

DECISION UNDER REVIEW

1. The decision under review is the decision of the Social Security & Child Support Division of the Administrative Appeals Tribunal (the AAT1) on 20 May 2019 to affirm that an Income Maintenance Period (IMP) applies to the Applicant's claim for Newstart Allowance.

   MATERIALS BEFORE THE TRIBUNAL

2. At the Hearing, the Administrative Appeals Tribunal (the Tribunal) received the following documents into evidence:

   ·

   Applicant’s Submission in Response, undated, received by the Tribunal on

   
   

   9 October 2019 (Exhibit A1);

   ·a copy of Smart Salary Transaction Report for the period 7/2/2018 - 19/5/2018, dated 2/9/2019 (Exhibit A2);

   ·

   a copy of additional Receipts – AAAC and School, received by the Tribunal on

   
   

   29 August 2019 (Exhibit A3);

   ·

   a copy of the Department of Justice Cessation of Employment letter, dated

   
   

   25 February 2019 (Exhibit A4);

   ·a copy of a Lease quote and contract page from Smart Leasing, received by the Tribunal on 01 August 2019 (Exhibit A5);

   ·a copy of St George Finance Limited tax invoice, dated 28 May 2018, received by the Tribunal on 01 August 2019 (Exhibit A6);

   ·evidence of advice of 56 week income maintenance period, received by the Tribunal on 29 July 2019 (Exhibit A7);

   ·

   a note regarding additional income of $1565, received by the Tribunal on

   
   

   29 July 2019 (Exhibit A8);

   ·a note regarding assessing reasonable costs of living, received by the Tribunal on 29 July 2019 (Exhibit A9);

   ·a note regarding Reasonable and Unavoidable Expense – Tax, received by the Tribunal on 29 July 2019 (Exhibit A10);

   ·the Respondent’s Statement of Facts, Issues and Contentions with an attachment A and attachment B, dated 3 September 2019 (Exhibit R1);

   ·Documents provided to the Respondent by the Applicant, received by the Tribunal on 22 August 2019 (Exhibit R2); and

   ·

   Section 37 T documents T1-T13 (pp 1-302), received by the Tribunal on

   
   

   19 December 2019 (Exhibit R3).

   ISSUES

3. The issues to be decided in this application are whether:

   (a)the Applicant was subject to an IMP and if so, what the period of the IMP was; and

   (b)the Applicant was suffering severe financial hardship because of unavoidable and/or reasonable expenditure such that the IMP should be waived.

   BACKGROUND

4. On 7 February 2018, Ms Tara Burdekin (the Applicant) ceased employment with the Western Australian Department of Justice after being made redundant (T4, p 43).

5. On 22 February 2018, the Applicant received a gross payment of $90,280.91, which comprised of the following (T4, pp 42 - 44):

Type of payment	Gross amount ($)	Period covering number of working weeks
Redundancy	$74,358.66	52
Annual leave	$2,936.28	3
Long service leave	$12,385.55	9
Leave loading	$100.42	0
Other	$500	0
Total	$90,280.91	64

1. On 1 November 2018, the Applicant lodged a claim for Newstart Allowance

   
   

   (T4, pp 35-41). In support of the claim, she provided documents, including but not limited to, a statement from the Commonwealth Bank indicating that she had $102.02 in credit as at 5 November 2018 (T4, p 48).

2. On 17 November 2018, the Department of Human Services (the Department) sent a notice to the Applicant notifying her that she would be paid Newstart Allowance from

   
   

   25 May 2019 (T6, pp 76 - 78). This was on the basis that an IMP had been applied to the redundancy and leave entitlements received by the Applicant.

3. On 18 December 2018, the Applicant sought review of the decision, and provided evidence of unavoidable and or reasonable expenditure in an attempt to have the IMP waived (T7, pp 79-243).

4. On 19 February 2019, an Authorised Review Officer (ARO) of the Department varied the decision under review (T9 pp 244 - 256). The ARO found the IMP to have been incorrectly applied, noting the correct period as being from 22 February 2018 to 15 May 2019. The ARO was satisfied that the Applicant had unavoidable and reasonable expenditure in the amount of $74,057.47, but noted that $16,223.44 of the termination payment remained, which meant that the Applicant was not in severe financial hardship due to those expenses alone.

5. On 28 February 2019, the Applicant sought review of the decision by the AAT1 (T11, pp 260 - 265). The Applicant provided further evidence in support of the application that is summarised in Exhibit R1 in attachment A and attachment B.

6. On 20 May 2019, the AAT1 affirmed the decision under review (T2, pp 5 - 8). The AAT1 generally agreed with the Department's determination of what it considered to be unavoidable and reasonable expenditure, with the exception of the allowance of $10,409.46 for the payout of the Applicant's lease on her motor vehicle, and $2,599.00 for the purchase of an expensive Miele washing machine.

7. On 28 May 2019, an Application for Review of Decision was lodged in the General Division of the Administrative Appeals Tribunal (the AAT2) (T1, pp 1 - 4).

8. On 20 January 2020 the Tribunal heard the matter. The Applicant gave sworn evidence in person, and the Respondent was represented in person by Mr Burgess from Spark Helmore Lawyers.

   RELEVANT LEGISLATION

9. The relevant legislation to this application is contained in the Social Security Act 1991 (Cth) (the Act).

10. Section 1068-G7AH of the Act states that if a person's employment has been terminated and the person receives a termination payment, the person is taken to have received ordinary income for a period (IMP) which is equal to the period to which the payment relates.

11. Section 1068-G7AQ of the Act states that a ‘termination payment’ includes a redundancy payment, leave payment relating to the termination of employment, and any other payment that is connected with a person's termination of employment. Section

    
    

    1068-G7AR of the Act further states that ‘leave payment’ includes a payment in respect of sick leave, annual leave, maternity leave and long service leave.

12. Section 1068-G7AKA of the Act states that where s 1068-G7AH applies, provided that the person is not subject to a liquid assets test waiting period, the IMP commences on the date the person is paid the termination payment.

13. Section 1068-G7AM of the Act states:

    If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies to the person, the Secretary may determine that the whole, or any part, of the period does not apply to the person.

    Note 1:For in severe financial hardship see subsection 19C(2) (person who is not a member of a couple) and 19C(3) (person who is a member of a couple).

    Note 2: For unavoidable or reasonable expenditure see subsection 19C(4)

    Note 3:If an income maintenance period applies to a person, then, during that period:

    (a)the allowance claimed may not be payable to the person; or

    (b)the amount of the allowance payable to the person may be reduced.

14. In a situation where a person is not a member of a couple and a claim is made for Newstart Allowance, s 19C(2) of the Act states that a person is in severe financial hardship:

    ...If the value of the person's liquid assets (within the meaning of subsection 14A(1)) is less than 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.

15. Section 19C(8)(b) of the Act states that, in relation to Newstart Allowance, that the maximum payment rate ‘…means the rate worked out at Step 4 of the Method Statement in Module A of the applicable rate calculator’. The relevant Method Statement and rate calculator for Newstart Allowance is found at s 1068-A1 of the Act.

16. The term ‘liquid assets’ is defined in s 14A(1) of the Act as follows:

    Social security benefit liquid assets test definitions

    (1) For the purposes of Parts 2.11, 2.11A, 2.12, 2.14 and 2.23A and Division 3A of Part 3 of the Administration Act:

    "liquid assets", in relation to a person, means the person's cash and readily realisable assets, and includes:

    (a)the person's shares and debentures in a public company within the meaning of the Corporations Act 2001; and

    (b)amounts deposited with, or lent to, a bank or other financial institution by the person (whether or not the amount can be withdrawn or repaid immediately); and

    (c)amounts due, and able to be paid, to the person by, or on behalf of, a former employer of the person;

    but does not include

    ...

17. The relevant provisions relating to the meaning of unavoidable and reasonable expenditure in the context of an IMP and where a person is not a member of a couple are found at ss 19C(4) to (6) of the Act.

18. Instruction 4.3.4.40 of the Guides to Social Policy Law: Social Security Guide, Department of Social Services (the Guide), is also relevant in that it explains how the hardship provisions for the IMP apply.

    CONSIDERATION

    Is the Applicant subject to an IMP and if so, what is the length of the IMP?

19. Sections 1068-G7AG and 1068-G7AH of the Act state that on termination of employment where certain lump sum and leave payments are made they are taken as ordinary income for a period (the IMP) equal to the period to which the payments relate.

20. Section 1068-G7AKA of the Act states that the maintenance period must be applied from the day the termination payment was received by the Applicant.

21. The Applicant received lump sum and leave payments as outlined by the Employment Separation Certificate from the employer dated 21 February 2018 (T4, pp 42 - 44).

22. In the letter from the Department of Justice dated 25 February 2019 the employer gave a detailed breakdown of how each of the amounts was calculated and is as follows

    
    

    (Exhibit A4):

    (a)the redundancy payment was calculated using both her average and current salary over 52 weeks. This equated to 260 days.

    (b)the annual leave was calculated using current salary working full time at 38.43 hours. The leave balance was 10 days.

    (c)the long service leave was calculated using current salary, 8.6 weeks, full time at 38.43 hours. This equated to 43 days.

23. The total period was 313 days which equated to 62.6 ‘working’ weeks based on a five day week.

24. Centrelink determined that the IMP was a 64 week period commencing 22 February 2018 and ending 15 May 2019 (T4, p 44).

25. After examining the letter from the employer, the Tribunal disagrees with Centrelink’s finding that a 64 week IMP should apply. Rather it should be 63 weeks (see above at [28]) which is only a marginal reduction in the IMP of one week. This means that the IMP ended on 8 May 2019.

26. The gross termination payment of $90,280.91 that was paid to the Applicant on
    22 February 2018 was a termination payment (the termination payment) pursuant to
    s 1068-G7AQ of the Act (T4, p 42).

27. The Tribunal considers that the gross termination payment should be used to calculate the IMP, as opposed to the net termination payment received by the Applicant, given that the termination payment is considered to be ordinary income. Specifically, this is because
    s 1072 of the Act defines ordinary income as ‘the person's gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A’.

28. The Respondent submitted that the liquid assets waiting test period pursuant to s 598 of the Act does not apply to the Applicant as she had less than the maximum reserve of $5,000 in liquid assets on the day she claimed Newstart Allowance (see also s 14A of the Act).

    Was the Applicant in severe financial hardship on the date of the claim for Newstart Allowance?

29. The definition of ‘severe financial hardship’ for a person who is not a member of a couple is found at s 19C(2) of the Act (see above at [19]). The maximum payment rate of Newstart Allowance payable to the Applicant, pursuant to the rate calculator found at
    s 1068-A1 of the Act, was $610.80, calculated as follows (T6, p 76):

Newstart Allowance	$595.10
Plus Energy Supplement	$9.50
Plus Pharmaceutical Allowance	$6.20
Total	$610.80

1. The Tribunal considers the Applicant satisfied the ‘severe financial hardship’ test at the time of her claim for Newstart Allowance, noting that she had liquid assets of $102.02
   (T4, p 48), this is less than her maximum payment rate of $610.80 using the appropriate rate calculator in the Act (see above at [34]) and therefore was under severe financial hardship by definition.

   Was the Applicant in severe financial hardship due to unavoidable and/or reasonable expenditure as at the date of the claim?

   Unavoidable expenses

   The Tribunal agrees with the ARO and AAT1 that the following expenses were unavoidable, pursuant to s 19C(4) of the Act (T9, p 248):

Description	Date	Amount
Arrears to Synergy	23.02.2018	$221.10
Arrears to Kleenheat	23.02.2018	$304.31
Arrears to Telstra	23.02.2018	$633.09
Finalisation of car lease (St George)	29.05.2018	$10,409.46
31.08.2018	$607.68
Disc brake pads (Burson Auto Parts)	27.02.2018	$63.79
Replacement car key (Rockingham Powersports)	02.03.2018	$40.39
Car repairs (Jamie)	11.04.2018	$1,220.00
Washing machine (Miele)	01.05.2018	$2,599.00
Certified copy of birth certificate (Magistrates	04.05.2018	$49.00
Court)
Licence and motor injury policy renewal for car	29.05.2018	$217.60
plate 1GIL361	30.10.2018	$224.80
iPhone repairs	22.06.2018	$130.00
Veterinary treatment	25.07.2018	$155.00
24.09.2018	$180.00
Fridge and freezer	11.09.2018	$1,280.00
Vacuum cleaner repairs	07.10.2018	$28.95
Transfer to person to repay debt	23.02.2018	$1,500.00
Rent arrears	02.03.2018	$8,868.00
Coles MasterCard debt	07.03.2018	$11,104.68
ANZ Banking Group Ltd debt	07.03.2018	$5,778.07
TOTAL		$45,614.92

1. In addition, the Tribunal acknowledges the Respondent’s opinion that further expenses can be assessed as unavoidable, including:

Description	Date	Amount
Income tax (T4, p 42)	22.02.2018	$5,177.00
Washing machine instillation (Exhibit R1, Attachment A)	02.05.2018	$80.00
School expenses: (Exhibit R1, Attachment A) ·    Amylyn Vance, imported clothing allowance (27.02.2018) $115 ·    Amylyn Vance, imported educational program allowance (27.02.2018) $235 ·    Jacob Vance, imported clothing allowance (27.02.2018) $115 ·    Jacob Vance, imported educational program allowance (27.02.2018) $235 ·    Amylyn Vance, CentrePay payment (22.02.2018) $9.01 ·    Amylyn Vance, Year 10 River Cruise (30.10.2018) $55 ·    Amylyn Vance, English Excursion (09.05.2018) $6.00 ·    Amylyn Vance, Year 11 Health Book (27.02.2018) $22 ·    Amylyn Vance, Year 10 Drama Excursion (26.02.2018) $24	Various	$816.01
Licence and motor injury policy renewal for car plate 1GIL361 (Exhibit R1, Attachment A)	26.02.2018 30.10.2018	$217.60 $224.80
Replacement tyres (Tyre Power) (Exhibit R1, Attachment A)	09.07.2018	$285.00
TOTAL		$6,800.41

1. Therefore, in total, the Tribunal accepts that the Applicant's unavoidable expenses for the period 22 February 2018 to 1 November 2018 were $52,415.33.

2. The Respondent has contended that the following expenses incurred by the Applicant cannot be included in the calculation of her unavoidable expenditure:

Description	Cost	Date	Reason
Four iPads (The Good Guys) (T8, p 107)	$1,896.95	28.04.2018	Further information is required to determine why the Applicant was required to purchase four iPads, in circumstances where she only has two dependent children.
Account withdrawal (T8, p 170)	$7,000	22.02.2018	The Applicant reports that the money was withdrawn to pay various personal debts, however there is no independent evidence to verify same.
Utility bills for Jamie Wray (Attachment ( (Attachment A)	$487.56	Various	Someone else's costs of living do not constitute an unavoidable expense on the
(Exhibit R1, Attachment A)	Applicant's part.
Television and sound bar (The	$1,510.10	24.02.2018	These are not expenses which are unavoidable and/or reasonable.
Good Guys) (T8, p 154)
Registration and other costs related to the Applicant's motorcycle	$482.30	Various
(1FN665) and boat
(AC903)
Car towing (AAAC) (Exhibit R1, Attachment A)	$1,013.50	02.05.2018	Whilst such costs may be unavoidable, the Applicant's conduct which caused them to arise was not.
Repayment of  fines  (Exhibit R1,    Attachment A)	$475	Various
Any other expense for which there is insufficient proof of purchase or which falls outside the relevant period

1. At the Tribunal hearing, the Applicant explained that there were not four iPads but two iPads and a Samsung tablet. However, the Applicant acknowledged that these were not reasonable expenses.

2. Likewise, the Applicant agreed that there was no evidence to prove the $7,000.00 was withdrawn to repay various personal debts, and it was not possible to pay someone else’s utility bill.

3. The Applicant accepted that the television and sound bar was not a reasonable or unavoidable expense, and likewise with the car towing cost that arose from her car being impounded as a result of her driving without a motor licence.

   Reasonable expenses

4. The Tribunal agrees with the Respondent’s contention that the Applicant's reasonable costs of living for the period 22 February 2018 to 1 November 2018, being the date she lodged her claim for Newstart Allowance, would be the equivalent of the amount payable to her had the IMP not been imposed for that period, pursuant to s 19C(6)(c) of the Act (that is, $610.80 x 18 fortnights = $10,994.40).

5. The Respondent further contended that the calculation of the Applicant's reasonable costs of living by the ARO and the AAT1 is inaccurate, because it allowed reasonable costs for the full term of the IMP. The Respondent put the case that reasonable costs of living cannot exceed the amount of Newstart Allowance that would have been payable to the Applicant during that part of the IMP that had already applied: see s 19C(4)(a)(iii) and
   s 19C(6)(c) of the Act.

1. The Tribunal considered the cause of the Applicant's severe financial hardship at the time of her claim for Newstart Allowance, meaning that its consideration must be limited to the Applicant's reasonable costs of living that had actually been incurred, rather than those anticipated for the duration of the IMP.

2. Pursuant to ss 19C(5) and 19C(6)(c) of the Act, the Tribunal agrees with the Respondent’s contention that the Applicant's reasonable costs of living cannot exceed $10,994.40, and the figure is to cover all expenses incurred by the Applicant, including but not limited to:

   (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 Applicant's vehicle;

   (g)public transport costs; and

   (h)any other cost that the Respondent (or the Tribunal on review) determines is a reasonable cost of living in relation to the Applicant.

3. The Tribunal considers the figure of $10,994.40 takes into account expenses such as the following, which the Applicant has sought to be included separately in the calculation of her unavoidable and reasonable expenditure:

   (a)regular payments to Synergy;

   (b)regular payments to Kleenheat;

   (c)regular payments to Telstra;

   (d)payments to Uber;

   (e)expenditure for assorted car cleaning, auto and tool items, and detergent;

   (f)expenditure for food items from Woolworths; and

   (g)amounts paid for assorted home, gift, clothing, jewellery, handbags, cosmetics, hardware, stationery and pet items from Target, Bunnings, Kmart, Spotlight, Thingz, Red Dot, Cash Converters, Salvos Stores, Vinnies, Best and Less, Good Samaritan, Colette, Lovisa, the Reject Shop, Priceline, Lush, Rivers, Matrix, Riot, Rebel and Red Kite (T7, pp 199 - 243).

4. The Tribunal further considers that an additional allowance cannot be made for the reasonable costs of living for the Applicant's dependents, particularly in circumstances where she was in receipt of Family Tax Benefit and child support payments during the IMP (Exhibit R1, Attachment B).

   Total amount of unavoidable and/or reasonable expenditure

5. The Tribunal considers that the Applicant's unavoidable and/or reasonable expenditure at the time of her claim for Newstart Allowance was in total, $63,409.73.

6. When subtracting the unavoidable and/or reasonable expenditure figure from the Applicant's total liquid assets at the start of the IMP (that is, $90,280.91 - $63,409.73), the Applicant is left with $26,871.18. As this amount exceeds the amount required to meet the severe financial hardship test ($610.80), the discretion to determine that an IMP does not apply and cannot be exercised pursuant to s 1068-G7AM of the Act (see also Instruction 4.3.4.40 of the Guide).

   CONCLUSION

7. The Tribunal affirms the decision of the Social Security & Child Support Division of the Administrative Appeals Tribunal on 20 May 2019 that an income maintenance period applies to the Applicant's claim for Newstart Allowance.

I certify that the preceding 50 (fifty) paragraphs are a true copy of the reasons for the decision herein of Member I Fletcher

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

Associate

Dated: 26 February 2020

Date(s) of hearing:	20 January 2020
Applicant:	In person
Counsel for the Respondent:	Mr Ashley Burgess
Solicitors for the Respondent:	Sparke Helmore Lawyers