Crem and Secretary, Department of Social Services (Social services second review)
[2019] AATA 5520
•20 December 2019
Crem and Secretary, Department of Social Services (Social services second review) [2019] AATA 5520 (20 December 2019)
Division:GENERAL DIVISION
File Number(s): 2019/2867
Re:Secretary, Department of Social Services
APPLICANT
Peter CremAnd
RESPONDENT
DECISION
Tribunal:Ms S Taglieri SC, Member
Date:20 December 2019
Place:Hobart
The Tribunal sets aside the decision under review and in substitution decides that
Mr Crem should be treated as a member couple in the relevant period............................[sgd]...................................
Ms S Taglieri SC, Member
Catchwords
SOCIAL SECURITY – age pension – rate – member of a couple – section 24 discretion - pooling of assets – special reasons for exercising discretion – relevance of available savings and cash resources – whether absence of financial hardship
Legislation
Social Security Act 1991
Sex Discrimination Act 1984
Racial Discrimination Act 1975
Disability Discrimination Act 1992Age Discrimination Act 2004
Cases
Kazmierczak and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2010) FCA 1084
Boscolo v Secretary, Department of Social Services 1999 FCA 106
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Drake v Minister for Immigration & Ethnic Affairs [1979] AATA 179
Cocks v Centrelink [2000] FCA 1248
McDonald v Director-General of Social Security (1984) 1 FCR 354Briginshaw v Briginshaw [1983] HCA 34
REASONS FOR DECISION
Ms S Taglieri SC, Member
20 December 2019
This application by the Secretary, Department of Social Services (the Secretary) comes before the Tribunal on a second tier review and concerns a question of whether Mr Crem, who is a recipient of an age pension, should at the relevant time[1], not be treated as a member of a couple pursuant to the discretion available in s 24 of the Social Security Act 1991 (the Act).
[1] 14 November 2018, as referred to in Authorised Review Officer decision, T documents.
A brief and uncontentious summary of the history of the application before the Tribunal is as follows. Mr Crem was granted age pension on 27 February 2015. On 5 June 2018, he notified Centrelink that he had married. The evidence before the Tribunal includes a copy of a solemnised marriage certificate from the British Embassy Manilla, which evidences that on 23 May 2018, Mr Crem married Mr Jemboy Sincero Madrid.[2]
[2] T10, p 56, T documents.
On 9 October 2018, it was determined that Mr Crem should be paid a single rate of age pension, the Secretary’s delegate being satisfied that the discretion pursuant to s 24 of the Act should apply. At this time, Mr Madrid was still living in the Philippines.
On 12 November 2018, Mr Crem notified Centrelink that Mr Madrid was arriving in Australia on 20 November 2018. On 13 November 2018, the Department determined that the rate of age pension payable to Mr Crem was to be reduced to the partnered rate.[3]
[3] T17, pp 128-129, T documents.
Mr Crem was aggrieved by the decision referred to in the previous paragraph and applied for a review to an authorised review officer (ARO). On 31 January 2019, the ARO affirmed the earlier decision that the rate of age pension to be paid to Mr Crem was to be at a partnered rate. The ARO’s reasoning for taking this decision focussed on an interpretation of s 24 of the Act, which required all other means of support to be exhausted before the available discretions should be exercised.[4]
[4] T3, p 9, T documents.
Mr Crem made application to the Social Security and Child Support Division (SSCSD) of the Tribunal. Following a hearing before the SSCSD, it was determined that the discretion pursuant to s 24 of the Act should be exercised, meaning Mr Crem should receive payment of his age pension at the single rate.
The Secretary was aggrieved by the decision of the SSCSD and sought a further review. On 23 October 2019 the Tribunal conducted a hearing at which the Secretary was represented by Counsel, Mr Sparkes, and Mr Crem represented himself.
EVIDENCE BEFORE THE TRIBUNAL
The Tribunal received into evidence unopposed the entirety of the Tribunal Documents (T documents) comprising 131 pages. The Tribunal also received additional evidence from Mr Crem, essentially constituting documents verifying various expenditures and treatments in relation to medical conditions from which he suffered. The documentary exhibits were marked as R1 to R4. The Tribunal also had regard to Mr Crem’s Statement of Facts, Issues and Contentions dated 10 September 2019, with attachments evidencing expenditures and financial transactions.
In summary, the documents tendered by Mr Crem demonstrate that he suffers from sleep apnoea, glaucoma, Dupuytren’s contracture, cervical spondylosis, kidney issues, and osteoporosis. He has incurred considerable expenditure in relation to dental treatment and medical reviews for the above conditions. The documents also convey that Mr Crem had incurred expenditure relating to Mr Madrid’s dental treatment, travel and visa applications.
At the hearing before the SSCSD, Mr Crem had given oral evidence and provided documentation in relation to his personal assets and income and those of Mr Madrid. Exhibit R3 confirmed information previously given concerning the financial position of both Mr Crem and Mr Madrid, but also provided additional verification. Mr Crem has contributed funds to improve the impoverishment of Mr Madrid and his family, including meeting dental expenses for Mr Madrid’s mother.
During the hearing, discussion ensued between the parties and the Tribunal concerning the financial circumstances of Mr Crem and his partner and whether Mr Sparkes sought to cross-examine Mr Crem. The Tribunal observed that Mr Crem appeared to be misunderstanding the Secretary’s position in relation to how he had expended savings and financial resources. Upon enquiry Mr Sparkes confirmed that the Secretary’s position was not that Mr Crem had unreasonable expenditures or had wasted his financial resources. The Tribunal invited the parties to confer to determine whether they could reach agreement as to relevant financial facts or indicate whether Mr Crem was to be cross-examined.
As a result of the parties conferring, Mr Sparkes announced and Mr Crem confirmed the following agreed facts:
(a)At 8 July 2018 and November 2018, Mr Crem had $167,000 in cash assets (part of this including superannuation moneys which were available for him to draw upon).
(b)At 8 January 2019, Mr Crem had $120,000 in cash assets available to him, this being at the date of the SSCSD review.
(c)On 14 October 2019, Mr Crem had $66,377 in available cash assets. In addition, he had sole ownership of his principle place of residence in Deloraine and a property in the Philippines which he had bought in August 2019.
(d)At November 2018, Mr Crem was receiving approximately $2,000 per month from a superannuation income stream which ceased in April 2019.
(e)Mr Crem receives an age pension of $690.70 per fortnight and has done so since at least the date of the ARO’s decision.[5]
(f)Mr Crem’s expenditure on reasonable living expenses is now in excess of his income, but it is not known by how much precisely it exceeds income.
(g)In November 2018, Mr Crem’s expenditure exceeded income due to the cost of travel to and from the Philippines.
[5] Noting that the decision of the SSCSD of 11 April 2019 was stayed.
CONTENTIONS OF THE PARTIES
There was agreement that Mr Crem was a member of the couple at all times from the date that he and Mr Madrid married. Further, the Secretary conceded that because of Mr Madrid’s personal and socio-economic circumstances, he had no financial resources, income or capital which he could contribute to a pool of assets or contribute to the support of Mr Crem and himself. The Secretary appeared to accept that Mr Madrid had impoverished socio-economic circumstances, no realistic prospects of earning material income in the Philippines and that his lifestyle is essentially a subsistence one. In respect of Mr Madrid’s position to derive income and support in Australia, the Secretary concedes that he is not lawfully entitled to work due to his visa status and accordingly cannot contribute income to the couple’s support and expenditure.
The Secretary relies on the policy guidance contained in the Social Security Guides[6] (Guides), referred to extensively in the written contentions filed by the Secretary dated 14 August 2019. The Secretary contends that in all the circumstances of Mr Crem’s case there is no special reason warranting the exercise of discretion under s 24 of the Act. The Secretary agrees that the rationale and purpose of the discretion in s 24 is that referred to Kazmierczak and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs.[7] However, it asserts that inability for Mr Crem and Mr Madrid to pool resources, nonetheless, does not warrant a conclusion that there were special reasons warranting the exercise of discretion in this case. Essentially, the Secretary relies on evidence that there is no financial difficulty experienced by Mr Crem, which weighs against the exercise of discretion.
[6] T4, pp 22 – 30 of the T docs.
[7] (2010) FCA 1084 at [38] to [42].
In the Statement of Facts, Issues and Contentions at [40], the Secretary accepts that financial difficulty is a “relevant, but not determinative, consideration”, however Mr Sparkes emphasised that the overall financial situation of Mr Crem could not be ignored in this case. Because he had readily available funds at his disposal to meet necessary expenditure, this was not a case where the exercise of discretion was warranted.
Some potential discretionary expenditure incurred by Mr Crem was identified in the Secretary’s written contentions. It was suggested there was lack of proof or explanation of other expenditures.[8] These contentions were not pressed at the hearing and, in any event, the documents referred to at [8] above satisfy the Tribunal that Mr Crem’s expenditure was reasonable and common for a married person in his circumstances.
[8] [45] and [46] of the Respondent’s Statement of Facts, Issues and Contentions, 11 September 2019.
Mr Crem’s contentions were somewhat confusing, but the Tribunal has distilled them to be as follows:
(a)In his circumstances, he cannot pool financial resources with Mr Madrid (who has none).
(b)It is more expensive rather than less for he and Mr Madrid to live as a couple under one roof, particularly because of expenditure related to travel, accommodation, visa requirements and his and Mr Madrid’s medical and dental treatments.
(c)The expectation that he should diminish his savings/resources to meet the shortfall between income and expenditure was unfair and/or discriminatory because others were not expected to do so. By way of example, he pointed to the terms of the Guides referring to persons separated due to imprisonment or disability who received payment at a single person’s rate.
(d)Due to his age, type of residence and health/medical conditions, he would have increased expenditure for which he needed a savings buffer.
(e)That as a person entering into a residential age care facility, he would be entitled to retain $49,000.
It was also clear from Mr Crem’s oral submissions that he had a strong moral responsibility to maintain Mr Madrid and to ease the impoverished conditions his family experienced.
EVALUATION OF EVIDENCE AND COMPETING CONTENTIONS
The Tribunal is satisfied that Mr Crem was, at the relevant time, a member of a couple. In view of the Secretary’s concessions at [13], the agreed facts at [12] and the unchallenged evidence relied upon by Mr Crem,[9] the Tribunal is also satisfied that Mr Crem had an inability to pool resources with Mr Madrid at the relevant time. In short, there was a practical inability for Mr Madrid to contribute to the couple’s expenditure and requirements of living.
[9] Referred to at [8] to [10] of these reasons.
The Tribunal is also satisfied that Mr Crem has used savings and other personal resources to meet the shortfall between expenditure for the couples living needs and his income.
Despite the depletion of savings as described in [20], the use of savings and resources to pay out his former partner and contribute to Mr Madrid’s family’s well-being, Mr Crem still had about $120,000 in cash resources available to him at about the time the decision under review was made.[10]
[10] Agreed fact at [12] of these reasons.
The Federal Court of Australia has established clear guidance that binds this Tribunal in relation to the application of the discretion in s 24 of the Act. In Boscolo v Secretary, Department of Social Services 1999, the Court said the circumstances overall should be unusual, uncommon, abnormal or exceptional, but this did not mean that the case had to be markedly different from the usual run of cases or unique.[11]
[11] Boscolo v Secretary, Department of Social Services 1999 FCA 106 at [18].
In Kazmierczak the Court endorsed the approach of focussing upon an inability to pool resources, this being capable of distinguishing the case from the accepted norm that partnered couples usually could enjoy economies of scale and share living costs.[12]
[12] At [38] to [42] of Kazmierczak.
The decisions of the Federal Court, which canvass the s 24 discretion, do not place any particular emphasis on the Guides. Instead, they refer to the body of case law dealing with what is meant to constitute special circumstances. Despite this, it is in my view clear that the purpose of the s 24 of the Act, as explained in the statement in the Explanatory Memorandum to the Social Security Legislation Amendment Bill (No 4) 1991 is relevant, given established principles of statutory interpretation, including the need to interpret provisions by reference to their purpose and in context.[13]
[13] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [78].
The Explanatory Memorandum states:
There is justification in paying a higher rate to an unpartnered person than to a member of a couple if both members of the couple are living together. This justification is based on the premise that the unpartnered person does not enjoy the same economies of shared living costs as does the member of a couple in those circumstances. If the economies of scale are not available to the member of the couple because he or she is living apart from his or her partner because, for example, of the illness of one or both members of the couple, then each would face similar living costs as an unpartnered person.
In Cocks v Centrelink,[14] O’Loughlin J also focussed on the inability to pool assets as the policy behind s 24 of the Act. He discussed a number of cases of the Tribunal which took a similar focus, but the content of the Guides were not referred to at all.
[14] [2000] FCA 1248.
This squarely raises the question of what role the Guides have in determining the outcome of cases considered under s 24. In Drake v Minister for Immigration & Ethnic Affairs,[15] then President of the Tribunal, Brennan J on remittal from the Federal Court provided principles of widespread application when he stated as follows:
The general practice will require the Tribunal to determine whether the policy is lawful, not in order to supervise the exercise by the Minister of his discretion, but in order to determine whether the policy is appropriate for application by the Tribunal in making its own decision on review.
The policy which guides the exercise of a discretionary administrative power may rightly seek to achieve an objective of public significance, and a balance may have to be struck between the achieving of that objective and the interests of an individual. In this respect, the making of a discretionary administrative decision is to be distinguished from the making of a curial decision.
Although the Tribunal ought not, indeed cannot, deprive itself of its freedom to give no weight to a Minister's policy in a particular case, there are substantial reasons which favour only cautious and sparing departures from Ministerial policy, particularly if Parliament has in fact scrutinized and approved that policy.
If the Tribunal, in reviewing a decision made in pursuit of a lawful administrative policy, consciously departed from that policy, it would nullify not only the policy made by the repository of the discretionary power, but also any mechanism of surveillance which the relevant statute permits or provides. To depart from Ministerial policy thus denies to Parliament its ability to supervise the content of the policy guiding the discretion which Parliament created. On some occasions, reasons may be shown to warrant departure from Ministerial policy; for example, where the intervention of new circumstances has clearly made a policy statement obsolete.
[15] [1979] AATA 179.
Approaching the content and application of the Guides, in accordance with the instructive statements of Brennan J, leads to the following observations. The Guides are structured in a way that provides an explanation of the purpose of s 24. The explanation conveys that the discretion is available in cases where the partnered social security recipient is still required to meet means and income tests before being eligible for any payment from the “public purse”.
The Guides then provide that all the circumstances of the recipient must be taken into account and three questions are to be considered. It is of significance, in my view, that the Guides merely identify considerations as part of the assessment of all the circumstances. One of the three questions is – “is there financial difficulty as a result of the couple’s circumstances?”
Expressed in the manner it is, the third question does not impose a mandatory pre-condition of financial difficulty for exercise of the discretion. Instead, it identifies financial difficulty as a potentially relevant consideration of the overall circumstances to be taken into account. This is entirely consistent with the purpose of s 24 in the context of the system of social security provided for by the Act.
Further, the Guides contain a section headed “Is there financial difficulty as a result of the couple’s circumstances?”[16] This section of the Guides refers to the financial situation as a consideration, as distinct from a pre-requisite, and in this context the notion of readily available funds from assets when compared to expenditure is mentioned. The terms of the Guides are entirely consistent with the object of the system of social security provided for under the Act.
[16] T4, p 24 of the T-documents.
Accordingly, I do not consider the Guides to be unlawful or beyond the reach or scope of the objects of the legislation to which they refer. They merely identify considerations that may be relevant to the facts of individual cases, but they do not prescribe that financial difficulty is a pre-condition to the exercise of the discretion.
The Tribunal needs to be satisfied that the circumstances involved in Mr Crem’s case overall can be regarded as unusual, uncommon, abnormal or exceptional, but this does not mean that the case has to be markedly different from the usual run of cases or unique.[17]
[17] Boscolo v Secretary, Department of Social Services 1999 FCA 106.
Inability to pool resources is an important consideration as it triggers the availability of the discretion. However, inability to pool resources alone is not solely determinative; otherwise the terms of the statute would expressly state so rather than use the wider and more open term, “special reasons”.
In the decision below, the member of the SCSSD referred to the Guides and stated that they had regard to the case law giving guidance to the discretion in s 24.[18] They then concluded that while the Tribunal should for the sake of consistency follow departmental policy, it is not bound to do so if the policy is inconsistent with or overreaches the legislation.[19] The members of the SSCSD took the view that the Guides went beyond the legislation, in that they sought to impose a requirement that the person must be in financial difficulty as a result of the couple’s circumstances, before the discretion in s 24 could be exercised. The Tribunal below did not explain or provide reasoning for its view.
[18] [16] - [17] of the SSCSD decision.
[19] [17] of the SSCSD decision.
Availability of the exercise of the discretion exists in the context of the purpose of the social security system, where its recipients are subjected to relatively less favourable financial circumstances. Accordingly, the recipient’s personal finances are relevant, as is the overall financial situation in which the recipient is in. Therefore, in my view, there is no excess of reach or power in the Guides when they refer to financial difficulty as a consideration involving:
1if there is inability to provide accommodation and the basic necessities of life;
2being left without adequate means of support; or
3that income and readily available funds from all sources should be taken into account.
In my view, the terms of the Guides do not provide an absolute or mandatory requirement that financial difficulty must exist before the discretion pursuant to s 24 can be exercised. Rather, they identify questions that need to be considered. However, those questions are not expressed to be exhaustive or individually determinative, including the question concerning financial difficulty.
Before exercising the discretion in s 24, the Tribunal must be satisfied that there are special reasons in the circumstances of Mr Crem’s case overall, including those affecting him by virtue of his spouse’s circumstances. The Guides are instructive but not binding on the Tribunal and in every given case, the Tribunal must be satisfied that the discretion should only be applied to address an unfair, inequitable or unjust anomaly arising if the social security recipient is treated as a member of a couple.
Whilst it is true that Mr Madrid is unable to pool financial resources with Mr Crem, this alone in my view does not make Mr Crem’s circumstances unusual, uncommon or abnormal. The authorities are littered with cases of examples where one member of a couple provides the bulk or all of financial resources for support of the couple. Further, the capacity for economies of scale available to a couple exists in Mr Crem’s case while Mr Madrid is in Australia and resides with him in the home at Deloraine.
Although Mr Crem’s financial resources are diminishing since the decision was taken to treat him as a member of a couple, the diminution does not appear to be because he is treated as partnered and he has continued to support himself, Mr Madrid and also Mr Madrid’s family. The contention referred to at paragraph 17(e) of the reasons above may be relevant to Mr Crem’s diminishing financial resources and the decision under review. However, Mr Crem did not make any submissions associating the contention to a matter relevant to the determination to be made by the Tribunal.
Mr Crem has had regular income from his age pension of approximately $690 per fortnight and $2000 per month from his superannuation income stream. It is an agreed fact and I find that Mr Crem’s expenditure at the relevant time was in excess of this regular income, there is no evidence about the size of the shortfall.[20] It is also an agreed fact and I find that the excess expenditure over income at the relevant time was due to travel costs to and from the Philippines, which is not a recurring expense while Mr Madrid lives in Australia.
[20] Agreed fact at [12](f) of these reasons.
The reasoning of the SSCSD members focused on rejecting the Secretary’s contention that the availability of cash savings and resources in the circumstances of Mr Crem’s case did not prevent the exercise of discretion. At [21] of the reasons, there appears to be an acceptance that savings and cash resources were needed in the future for expenditure to support Mr Madrid, and this was likely to significantly deplete Mr Crem’s finances. However, there was no evidence before the Tribunal in relation to what the expenses would be. Similarly on this review, there was evidence of anticipated additional medical costs but no evidence about the nature, amount and likelihood of them.
Even if it were accepted that Mr Crem will need to incur significant medical expenses for his conditions and nursing home fees as he ages, this is not unusual or uncommon in the aging population.
The reasoning of the members of the SSCSD at [22] appears to have elevated the absence of ability to pool resources to a level of being solely determinative of whether the discretion should be exercised in all the circumstances before it. This, in my view, is contrary to the meaning given to “special reasons” by the authorities discussed above.
I expressly enquired of Mr Crem what he contended the factors were that constituted special reasons in his case. Ultimately, his submissions distilled to a simple proposition. Although he had the finance and ability to support himself and his partner on a partnered rate, he considered it was unfair and discriminatory that he should rely on savings and superannuation in order to do so, when in the future he may require the savings/superannuation for his own potential or presently unforeseen expenses on medical treatment, health, nursing homes and otherwise.
In my view, Mr Crem’s submission is flawed as the difference between the single and partnered rates of pension is not causing the need for him to use his savings and superannuation resources. In addition, the airfares and travel expenses to and from the Philippines, which it is agreed is responsible for the shortfall between income and expense, will not be incurred when Mr Madrid resides with Mr Crem in Australia.
Mr Crem claimed it was discriminatory that he is expected to erode savings before the discretion was exercised to treat him other than partnered, when other groups of persons did not.
One might feel a degree of sympathy for the sentiments of unfairness to which Mr Crem refers, as it would appear the members of the SSCSD did. However, the cases of separations of couples because of imprisonment or disability/illness are the subject of express provisions in the Act. For some reason, Parliament saw fit to identify these cases for particular treatment. Further, no discrimination exists because discrimination is not tantamount to treating persons differently or less favourably. For discrimination to exist contrary to law, the less favourable treatment needs to be because of an expressly stated attribute, for example race, gender or age,[21] which is not the case in the facts before me.
[21] Relevant statutes are Sex Discrimination Act 1984, Racial Discrimination Act 1975, Disability Discrimination Act 1992, Age Discrimination Act 2004.
During the hearing, I enquired of Counsel for the Applicant, whether he could direct me to any authorities of the Federal Court or Tribunal which addressed the approach to be taken in weighing and evaluating various considerations and circumstances when determining whether there are special reasons.
The Applicant subsequently filed written submissions on 29 October 2019.These were provided to Mr Crem with an invitation for him to provide a submission in response. The Applicant’s further submissions did not address what approach should be taken to weighing various relevant considerations, but provided further authorities in which the absence of financial difficulty weighed significantly against the exercise of the discretion in s 24 of the Act.
On 6 November 2019, Mr Crem provided written submissions in response to those of the Applicant dated 29 October 2019. They largely repeated submissions already made with varying emphasis and context.
I consider that the ARO gave undue emphasis to the consideration on absence of financial difficulty when determining whether the discretion available in s 24 should be exercised in this case. The SSCSD were mistaken in concluding that the Guides were beyond power or reach. They appear to have been unduly focussed on the existence of an inability to pool resources between Mr Crem and Mr Madrid.
Ultimately, I am not persuaded that the discretion afforded under s 24 of the Act should be exercised in this case. Mr Crem’s overall financial position is a relevant consideration in this case, as is the fact that he can access economies of scale while Mr Madrid lives with him in Deloraine. At such times, although Mr Madrid has no capacity to pool resources to contribute to the maintenance of the home and daily living, Mr Crem can afford to meet their living expenses and does not incur travel and airfare costs to spend time with Mr Madrid in the Philippines. I am not satisfied that the erosion of savings argued by Mr Crem is related to him being treated as a member of a couple.
In arriving at the view that I have, I am conscious that I should only set aside the decision under review if satisfied that it was incorrect or that another decision is preferable. Although there is no onus on Mr Crem to persuade me,[22] I need to be comfortably satisfied that there should be an exercise of discretion for a special reason[23]. I am not so satisfied for the reasons given above.
[22] McDonald v Director-General of Social Security(1984) 1 FCR 354 at 358.
[23] Briginshaw v Briginshaw [1983] HCA 34.
I am satisfied that while Mr Crem and Mr Madrid reside together in Australia, there are no special reason(s) on the evidence before me and taking all relevant circumstances into account. I set aside the decision made by the SSCSD for reasons other than those expressed by the ARO. This means that Mr Crem is to be paid at the partnered rate from
14 November 2018.As Mr Madrid returned to the Philippines on 4 September 2019,[24] on the basis of the reasoning I have given it may be appropriate to exercise the discretion afforded by s 24 of the Act from that time due to the physical separation of the spouses, the additional costs of travel between Australia and the Philippines and the inability to utilise economies of scale capable of being achieved when living under one roof. I do not pre-empt a further decision by the Applicant, but simply highlight that the reasons for setting aside the decision of the SSCSD, changed when Mr Madrid returned to the Philippines.
[24] Respondent’s Facts and Contentions, 11 September 2019.
...............................[sgd]..................................
Associate
Dated: 20 December 2019
Date(s) of hearing: 23 October 2019 Counsel for the Applicant: Mr Brian Sparkes Respondent: In person
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