David Burke and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2012] AATA 768
•5 November 2012
[2012] AATA 768
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/1879
Re
David Burke
APPLICANT
And
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
RESPONDENT
DECISION
Tribunal Ms A F Cunningham (Senior Member)
Date 5 November 2012 Place Hobart
The decision under review is affirmed.
........................................................................
Senior Member
SOCIAL SECURITY – age pension – amending legislation from 20September 2009 – transitional provisions – decision under review affirmed
Social Security Act 1991, ss 55, 1064-A1, 1064-E1, 1073AA, 1073AB, Clause 146 of Schedule 1A
Social Security and other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009
REASONS FOR DECISION
Ms A F Cunningham (Senior Member)
5 November 2012
The applicant, David Burke is in receipt of an age pension paid pursuant to the provisions of the Social Security Act 1991 (the Act). He is currently 68 years of age. Mr Burke seeks the review of a decision made by a Centrelink officer which determined that his age pension would no longer be paid pursuant to the transitional arrangements which were introduced when the legislation was changed on 20 September 2009.
It is Mr Burke's contention that if his age pension continues to be assessed under the new rules introduced on 20 September 2009 and the further amendments which applied from 1 July 2011, he will be disadvantaged in that his rate of age pension will be less under the new rules when he ceases his part-time employment. Mr Burke contended that had he been made aware of the implications of the new legislation, he would have made appropriate decisions regarding his working arrangements in advance.
ISSUES AND SUBMISSIONS
The issue for the Tribunal to determine is whether Mr Burke's rate of age pension continued to be subject to the transitional arrangements set out in Clause 146 of Schedule 1A of the Act from 29 September 2011.
Mr Burke represented himself at the hearing. The Secretary was represented by Mr Brian Sparkes. The T Documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were received into evidence together with the annexures attached to the Secretary’s Statement of Facts and Contentions, explanatory material regarding the New Work Bonus Scheme, calculations of Mr Burke's age pension both under the transitional and the new rules for periods prior to 29 September 2011, and a one page extract from a letter received by Mr Burke from Centrelink.
Mr Burke does not dispute that he received information regarding the changes to the legislation which suggested that he would not be disadvantaged by the new rules and that his pension would be assessed under the transitional rules if the rate of pension assessed under the new rules was a lesser amount. He referred to a sentence in the one page extract from a letter received from Centrelink which read "if you are thinking of taking up work you should talk to us about how this might affect your transitional rate." Mr Burke submitted that the sentence did not apply to his circumstances because he was already in part-time employment. He argued that Centrelink would have been aware of this fact and that it would have been more helpful to him had the letter addressed his particular circumstances.
Mr Burke stated that he did not agree with the decision of the Social Security Appeals Tribunal which he contended contained some inaccuracies and did not adequately address the issues. It was explained to Mr Burke that the AAT in conducting a hearing de novo, would consider all of the material before it in order to arrive at the correct or preferable decision.
LEGISLATION
The changes that were made as from 20 September 2009 to the Pension Income Test contained in the Act, were made pursuant to the Social Security and other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009. As a result of the changes, transitional provisions contained in Schedule 1A of the Act were implemented to apply to pension assessments for people who were receiving a part rate of pension before 20 September 2009.
The transitional provisions are contained in Clause 146 of schedule 1A, which includes reference to age pension. Subsection 5 of Clause 146 provides as follows:
“Subclause (3) does not apply for working out the rate of a social security pension of the person for the relevant day if the relevant day is after a day for which one of the following conditions was met:
a) the amount worked out for the day under subclause (4) (in a previous application of this clause) was less than or equal to the person’s provisional annual payment rate, apart from this clause, for a social security pension described in paragraph (1)(a)”
The provisional annual payment rate is defined in subsection 3. Under Clause 146 a person in receipt of age pension would not be subject to the new rates for payment unless the calculated rate was greater than that calculated under the transitional provisions. Mr Burke's age pension was paid pursuant to the transitional arrangements from 20 September 2009 until 29 September 2011 when the calculation under the new rules assessed a higher rate for the fortnight ended 12 October 2011 than would have been payable under the transitional rules.
It is stated in the Explanatory Memorandum of the amendments to the Social Security Act that:
“The intention of subclause 146(5) is to ensure that, once a person’s provisional annual payment for a day is higher by reference to the rate and income test rules which exist apart from the rules inserted into Schedule 1A by this measure, the person’s rate cannot be determined again by the rules in Schedule 1A. This is to ensure that a person can only benefit from the transitional arrangements for a continuous period directly following 20 September 2009. Once a person no longer benefits from the transitional arrangements, their rate is to be determined by the rate and income test rules that will apply to people who begin receiving a social security pension described in subclause 146(1) on a day that is after 19 September 2009”.
On 1 July 2011 legislative changes were made to the work bonus rules in sections 1073AA and 1073AB of the Act increasing the amount that an eligible pensioner could earn from employment before it affected their pension rate. From 1 July 2011, the first $250 fortnightly employment income would not be assessed nor counted under the pension income test. Further, pensioners were able to accrue any unused amounts of the $250 fortnight exemption in an "employment income concession bank" up to a maximum of $6500. The income bank amount offsets future employment income from the pension income test.
Section 55 of the Act provides the calculation of the rate of age pension. Section 1064-A1 of the act provides a Method Statement for working out a person’s maximum payment rate. Section 1064-E1 of the Act provides a Method Statement for working out the effect of a person’s ordinary income on the person’s maximum payment rate. The terms “income” and “ordinary income” are defined in subsection 8(1) of the Act.
CONSIDERATION AND FINDINGS
Since September 2009 Mr Burke has worked on a casual basis with Graham Family Trust Funerals and as required, regularly declared his income to Centrelink. Mr Burke said that he was not aware that calculations of his pension entitlements under both of the transitional arrangements and the new rules were undertaken automatically. He did not dispute the accuracy of the calculations which are detailed in the Secretary's Statement of Facts and Contentions. I find that Mr Burke's pension entitlements were correctly calculated in accordance with the methods prescribed in the Act.
As outlined above, following the introduction of the new rules in September 2009 Mr Burke continued to be paid under the transitional arrangements which assessed his rate of age pension at a higher rate than that payable under the new rules. However due to a number of factors, which included a nil earning rate during a period when Mr Burke was overseas from 29 September 2011, his rate of age pension calculated under the new rules was higher than under the transitional arrangements. The effect of Clause 146 is that the transitional arrangements cease to apply.
Whilst Mr Burke may not be disadvantaged at present by having his age pension calculated under the new rules, he argues that he will receive a lesser rate of age pension under the new rules once he ceases work.
There is no provision in the Act however, which provides for a reversion to assessment under the old income test rules once the transitional provisions no longer apply. In Mr Burke's case, this occurred on 29 September 2011 when it was assessed that his rate of age pension would be higher under the new rules than under the transitional rules.
Mr Burke states that he relied on the information forwarded by Centrelink which suggested that he would not be disadvantaged as a result of the changes. He understood that his pension entitlement would be calculated under the transitional arrangements but was not made aware that once his pension was calculated under the new rules, reversion to the transitional rules was no longer available.
I agree that the claims made in the Centrelink material and parts of the Explanatory Memorandum stating that a pensioner will not be worse off under the 2009 Amendments is somewhat misleading. I am however obliged to apply the terms of the Act, and specifically Clause 146 of schedule 1A which affords no discretion to depart from the stated meaning as contained in that provision. For these reasons I find that the decision under review which determined that Mr Burke's rate of age pension from 29 September 2011 was to be assessed under the new rules and not the transitional arrangements was correct. Accordingly the decision under review is affirmed.
I certify that the preceding 18 (eighteen) paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham (Senior Member) [Sgd]
Administrative Assistant
Dated: 5 November 2012
Date(s) of hearing 24 October 2012 Applicant In person Solicitors for the Respondent Mr B Sparkes, Program Litigation and Review Branch
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