CHARLES AND LYNETTE STEWART AND SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2010] AATA 871

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 871

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/2321

GENERAL ADMINISTRATIVE DIVISION		)
Re		CHARLES and LYNETTE STEWART

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Mr R G Kenny, Senior Member

Date5 November 2010

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

.................[Sgd].............................

Senior Member

CATCHWORDS

SOCIAL SECURITY – Benefits and entitlements - Disability support pension – Amendments to legislation to introduce new rates of pension - Transitional provisions for calculating rate of pension – Comparison of rate under new and old rules – Recipients not protected by transitional rules once a more favourable rate was calculated under the new rules – Use of Explanatory Memorandum and Guide to Social Security Law – Decision under review affirmed.

Acts Interpretation Act 1990 (Cth)1 s 15AB
Social Security Act 1991 (Cth) – ss 117, 1064, Sch 1A

Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009 (Cth)

Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82
Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634

Re Pennell and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 787

REASONS FOR DECISION

5 November 2010 Mr R G Kenny, Senior Member    

BACKGROUND

1.      Charles and Lynette Stewart have been in receipt of disability support pension since September 1995 and February 2001, respectively.  This is a form of income support payable under the terms of the Social Security Act 1991 (Cth) (“the Act”). The rate of payment is determined in accordance with the Pension Rate calculator A in s 1064 of the Act[1]. In 2009, the Act was amended[2] to provide for an increase in the rate of pension of $10.15 per fortnight and also the income test taper rate from 40 cents in the dollar to 50 cents in the dollar.  Transitional provisions were also enacted to protect existing pensioners from a reduction in their rate of pension[3].  Those pensioners were to remain under the transitional arrangements until they were no longer worse off under the new rules.  Mr and Mrs Stewart were paid under the transitional arrangements but, in the fortnight 2 January to 15 January 2010, they earned no income and no income was declared by them.  On 2 January 2010, a Centrelink delegate determined that, because they had no income, the new rate was more favourable to them than under the transitional arrangements for that fortnight.  That rate was continued thereafter even though income was earned by them subsequently.  On 17 March 2010, an authorised review officer affirmed the decision to no longer pay disability support pension to Mr and Mrs Stewart under the transitional arrangements.  On 20 May 2010, that decision was affirmed by the Social Security Appeals Tribunal (“SSAT”). 

[1] See s 117 of the Act.

[2] See the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009 (the amending Act)

[3] See Schedule 1A of the Act.

ISSUES AND SUBMISSIONS

2.      It is not in dispute that Mr and Mrs Stewart are qualified to receive the disability support pension.  It is the rate of that payment which is in issue. 

3. For the respondent, Bob Hamilton submitted that, generally, the new rules included a provision to protect existing pensioners. However, he conceded that Mr and Mrs Stewart were worse off under them. Nevertheless, he submitted that the Act made it clear that, once the rate of the disability support pension paid to a person under the new rules was greater than what it would be under the transitional arrangements, the person was no longer worse off under the new rules and a return to payment under the transitional arrangements rate was not open. In Mr and Mrs Stewart’s case, he submitted, the full disability support pension was paid to them in the fortnight when no income was declared by them and, as a result, it exceeded the rate that would be paid under the transitional arrangements. Therefore, he submitted, the rate under the transitional arrangements could no longer be the basis for their disability support pension payments in subsequent fortnights after Mr Stewart returned to work.

4. Mr Stewart submitted that the decision was unfair to him and his wife because the higher rate of payment in the fortnight 2 January to 15 January 2010 only came about because he was not working at that time. This was because he was responsible for driving a school bus and, because of the vacation period, he did not work in that fortnight. He submitted that, when his normal work and income resumed, the application of the new rules disadvantaged them because the rate they received was then less than that under the transitional arrangements. He estimated that they were some $70 each per fortnight worse off because of the decision and that this was not in accordance with the intention of the Act to prevent disadvantage to pensioners by the rule changes. Mr Stewart submitted that the materials sent by Centrelink did not fully explain the operation of the new rules and were misleading in that they declared that existing pensioners would not be worse off under them. He submitted that a fairer system would have been for the change in the pension rate to have been introduced in a staged manner rather than for the change to occur in a single payment period.

CONSIDERATION

5. The income test for various pensions including the disability support pension was changed with effect from 20 September 2009. An effect of the amendments was to increase the income taper test from 40% to 50%. This meant that, once income exceeded a particular threshold, the amount of disability support pension was reduced by 50 cents in the dollar rather than by 40 cents in the dollar. Where a person was in receipt of disability support pension as at 19 September 2009, as Mr and Mrs Stewart were, transitional arrangements were made for them in the Act.[4]  This was that, where a person’s rate would be higher when calculated under the old rules i.e. pre 20 September 2009, than it would be when calculated under the new rules, the higher rate was to continue under the transitional arrangements. 

[4] See cl 146(2)-(5) of Schedule 1A of the Act.

6.      The explanatory Memorandum[5] to the Amending Act includes the following:

Transitional arrangements will apply for existing pensioners affected by the new income test changes to ensure current payment rates are maintained in real terms, and that those pensioners also benefit from a pension increase.

[5] For use of the Explanatory Memorandum in interpreting the Act, see Acts Interpretation Act 1990 (Cth)1 s 15AB.

7.      A letter sent to Mr and Mrs Stewart included a similar comment:

People receiving a pension at 19 September 2009 will not be disadvantaged due to these changes.

8.      Clearly, Mr and Mrs Stewart have been disadvantaged by the 2009 amendments.  The rate of their respective disability support pensions has decreased.  This occurred because they earned no income in the fortnight 2 January to 15 January 2009.  For that fortnight, the rate was calculated under the new rules and this was greater than it was previously.  Mr Stewart then returned to work.  A comparison between the rate under the new and the old rules after he returned to work would show that he was worse off under the new rules.  The decision under review was made on the basis that, once a higher rate had been calculated under the new rules, there could be no return to the old rules under the transitional arrangements.  The Explanatory Memorandum refers to this:

Existing part-time pensioners will transition to the new arrangements at the point the new arrangements provide a higher rate of pension[6].

[6] At page 72.

9.      It also explains that the intention of the transitional arrangements is to ensure that, once the rate calculated under the new rules is higher than it was before the new rules applied, “the person’s rate cannot be determined again under the transitional arrangements”[7]. That is also stated in para 5.1.8.40 of The Guide to Social Security Law (“the Guide”)[8]. 

[7] At page 77.

[8] For use of the Guide to assist in the interpretation of the Act, see Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 at 639-645 and Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82 at 86.

10. The parts of the Explanatory Memorandum and Centrelink material which declare that a pensioner will not be worse off under the 2009 amendments are misleading. In the circumstances facing Mr and Mrs Stewart, they were disadvantaged. When the Explanatory Memorandum and Centrelink material, including the Guide, are read as a whole, it becomes clear that a single payment at the higher rate under the new rules prevents a return to the earlier payment. Unfortunately for Mr and Mrs Stewart, this is the direct effect of cl 146(5)(a) of Sch 1A of the Act. I am bound to apply the terms of the Act which admits no discretion to vary that outcome[9].

[9] See also Re Pennell and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 787.

DECISION

11.     The Tribunal affirms the decision under review.

I certify that the preceding 11 paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member

Signed: ...........................[Sgd]..................................................

Kate Slack, Research Associate

Date of Hearing:  26 October 2010
Date of Decision:  5 November 2010
The Applicants were self-represented
For the Respondent   Mr Bob Hamilton, Departmental advocate