Davies and Secretary, Department of Social Services (Social services second review)
[2018] AATA 2303
•19 July 2018
Davies and Secretary, Department of Social Services (Social services second review) [2018] AATA 2303 (19 July 2018)
Division:GENERAL DIVISION
File Number: 2017/6201
Re:Lindsay Davies
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Member D K Grigg
Date:19 July 2018
Place:Brisbane
The decision under review is varied to the extent that the income maintenance is correctly calculated from 1 December 2016 to 27 April 2017.
......................[Sgd]..................................................
Member D K Grigg
CATCHWORDS
SOCIAL SECURITY – farm household allowance – income maintenance period – whether severe financial hardship – decision under review is varied.
LEGISLATION
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
Farm Household Support Act 2014 (Cth)SECONDARY MATERIALS
Guide to Social Security Law (2016) Cth)
REASONS FOR DECISION
Member D K Grigg
19 July 2018
BACKGROUND AND CLAIM HISTORY
This matter concerns Mr Davies, a beef cattle farmer from Ubobo, and his application for farm household allowance (“FHA).
Until 7 November 2016 Ms Hamilton, Mr Davies’ partner since 2014, had been employed with the Department of Human Services (“DHS”). However, on 7 November 2016, her employment was terminated. As a result of the termination, Ms Hamilton was paid $21,312.03 in redundancy payments, leaving an after-tax payment of $14,083.03.[1] Ms Hamilton challenged the termination of her employment and lodged a claim in the Fair Work Commission. The matter never proceeded to a hearing as Ms Hamilton and the Department of Human Services entered into a settlement agreement pursuant to which Ms Hamilton received a further payment $3,593.79 from the DHS.[2]
[1] Exhibit 1, T Documents, T5, pages 107 – 108, Employment separation certificate dated 28 November 2016.
[2] Exhibit 1, T Documents, ST1, page 12, Settlement agreement.
On 1 December 2016 Centrelink determined that an income maintenance period applied to Mr Davies between 1 December 2016 to 6 April 2017.[3]
[3] Exhibit 1, T Documents, T19, page 189, Centrelink record.
On 9 December 2016, Mr Davies made a claim for farm household allowance (“FHA”).[4] Farm household allowance is payable pursuant to the Farm Household Support Act 2014 (“FHS Act”) and is intended to improve the financial situation of farmers who need financial assistance.[5] The FHS act sets out the requirements that must be met in order for a farmer to qualify for the FHA.
[4] Exhibit 1, T Documents, T4, pages 63 – 103, Farm household allowance claim dated 5 December 2016; T19,
page 195, Centrelink record.
[5] Farm Household Support Act 2014, section 3.
As part of his FHA claim, Mr Davies provided Centrelink with copies of the taxation estimate and tax return for the 2015 – 2016 financial year for himself and his partner, Ms Hamilton. Those documents indicated that Mr Davies’ taxable income for the year ended 30 June 2016 was $23,879 and that Ms Hamilton’s taxable income was $56,915.[6]
[6] Exhibit 1, T Documents, T4, pages 78 – 103, Taxation estimates and returns for Mr Davies and Ms Hamilton for
the 2015 – 2016 financial year
On 27 January 2017 Ms Hamilton then lodged a claim for consideration under hardship requesting that her termination payment, paid in November 2016, be disregarded in determining her hardship claim. Ms Hamilton indicated in her hardship claim that:[7]
(a)they were unable to sell one of their properties because it was only worth $215,000 and they owed $326,000 in mortgage repayments;
(b)they were behind in their mortgage repayments for three months;
(c)she had used all of the termination payment she received to cover their debts and general living expenses;
(d)they had no income because Mr Davies had been admitted to hospital and at that stage his discharge date was unknown;
(e)they had approximately $10,000 of medical expenses to date;
(f)she recently had a car accident and had no vehicle; and
(g)they have overdue medical bills and other bills.
[7] Exhibit 1, T Documents, T5, pages 104 – 108, Claim for consideration under hardship dated 27 January 2017.
On 9 March 2017 Centrelink advised Mr Davies that it had made a decision that his claim for FHA was not able to be paid because the total income he received was above the income test limit.[8]
[8] Exhibit 1, T Documents, T6, pages 109 – 110, Letter from Centrelink to Mr Davies dated 9 March 2017.
Ms Hamilton provided a statement to Centrelink on 5 April 2017 and advised that:[9]
(a)Mr Davies had damaged his tibia and ankle and had been referred to a surgeon in Brisbane for more procedures and operations which will include the involvement of a plastic surgeon;
(b)as a result of Mr Davies condition further medical expenses will be involved;
(c)Mr Davies is still unable to work and Ms Hamilton is receiving carers allowance to support him;
(d)they have had to borrow money from Mr Davies’ parents to survive;
(e)they need Mr Davies farm allowance claim to be granted and back paid so they can continue to pay their debts, upcoming medical expenses, and everyday living expenses;
(f)they have incurred extensive damage to their fences from the flood and are unable to afford to pay anyone to repair it.
[9] Exhibit 1, T Documents, T9, pages 115 – 116, Statement of Ms Hamilton dated 5 April 2017.
On 3 March 2017 Ms Hamilton was granted a Carer Payment because of the care she was providing Mr Davies. The amount of Carer Payment she received was calculated on the basis that Mr Davies and Ms Hamilton had a combined income of $40,771.44.[10]
[10] Exhibit 1, ST2, page 18, Letter from Centrelink to Ms Hamilton dated 3 March 2017.
On 8 March 2017 Centrelink advised Ms Hamilton that the amount of Carer Payment she received was calculated on the basis that she and Mr Davies had a combined income of $4,857.82.[11]
[11] Exhibit 1, ST2, page 21, Letter from Centrelink to Ms Hamilton dated 8 March 2017.
On 19 April 2017 Centrelink advised Mr Davies that his claim for FHA had now been granted with effect from 7 April 2017.[12]
[12] Exhibit 1, T Documents, T 10, pages 117 – 119, Letter from Centrelink to Mr Davies dated 19 April 2017.
Mr Davies applied for a review of Centrelink’s decision not to pay him FHA between 1 December 2016 and 6 April 2017, by an Authorised Review Officer (“ARO”).
The review by the ARO was unsuccessful on the grounds that an income maintenance period applied for the period 1 December 2016 to 6 April 2017 and because his financial hardship was not considered to have been caused by unavoidable expenditure.[13]
[13] Exhibit 1, T Documents, T 11, pages 120-125, Decision of ARO and notes dated 19 May 2017.
On 8 June 2017 Mr Davies lodged an application for review with the Social Services and Child Support Division (“SSCSD”) of this Tribunal. Mr Davies stated in his application that:[14]
(a)he and his partner were and still are in financial hardship;
(b)he had not worked since his injury in December 2016; and
(c)he had been in hospital again since 31 May 2017 and did not know when he would be able to work again.
[14] Exhibit 1, T Documents, T 12, pages 126- 128, Application for review to AAT1 dated eight June 2017.
In September 2017 Mr Davies provided the AAT1 with copies of the following additional material:
(a)medical expense documents:
• an invoice dated 14 March 2017 from Dr Birch, plastic surgeon, for $500;[15]
[15] Exhibit 1, T Documents, T14, page 132, Dr Birch Invoice dated 14 March 2017
• an invoice dated 20 February 2017 from QML Pathology for $59.50;[16]
[16] Exhibit 1, T Documents, T14, page 135, QML Invoice dated 20 February 2017.
• a pharmacy invoice dated 28 February 2017 showing approximately $25.00 was due;[17]
• a receipt dated 3 February 2017 from QML Pathology confirming a payment of $92.60;[18]
• an anaesthetist invoice dated 4 January 2017 for $500.00;[19]
• an invoice from Central Queensland mobility dated 2 December 2016 for $49;[20]
• a dentist’s invoice dated 7 February 2017 for dentures for Mr Davies totalling $2,200;[21]
• x-ray invoice dated 6 February 2017 four $43.40;[22]
• Rockhampton private hospital invoice dated 29 November 2016 for $200;[23]
(b)bank statements of both Mr Davies and Ms Hamilton:
• an overdraft cheque account of Mr Davies with the balance of -$36,673.20 with $3,326.80 available as of 6 April 2017;[24]
• an access savings account of Mr Davies and Ms Hamilton showing $511.44 was available as at 6 April 2017;[25]
[17] Exhibit 1, T Documents, T14, page 136, Pharmacy Invoice dated 28 February 2017.
[18] Exhibit 1, T Documents, T14, page 137, QML receipt dated 3 February 2017.
[19] Exhibit 1, T Documents, T14, page 138, Invoice of Dr Snow dated 4 January 2017.
[20] Exhibit 1, T Documents, T14, page 139, Central Queensland mobility Invoice dated 2 December 2016.
[21] Exhibit 1, T Documents, T14, page 140, Dentist’s Invoice dated 7 February 2017.
[22] Exhibit 1, T Documents, T14, page 141, X-ray Invoice dated 6February 2017.
[23] Exhibit 1, T Documents, T14, page 143, Rockhampton private hospital Invoice dated 29 November 2016.
[24] Exhibit 1, T Documents, T 15, page 157, Commonwealth Bank statement of Mr Davies for the period ended 6
April 2017.
[25] Exhibit 1, T Documents, T 15, page 152, Commonwealth Bank statement of Mr Davies for the period ending 6
April 2017.
The SSCSD rejected Mr Davies’s claim and affirmed the ARO’s decision on 27 September 2017.[26]
[26] Exhibit 1, T Documents, T2, pages 4 – 8, SSCSD’s Decision and Reasons for Decision dated 27 September
2017.
In October 2017 Mr Davies entered into a financial improvement agreement with Centrelink. A Financial Improvement Agreement is a planning tool used to help people achieve financial self-reliance.[27]
[27] Exhibit 1, T Documents, T 16, pages 183 – 184, Farm household allowance financial improvement agreement
form dated 28 September 2017.
In November 2017 Mr Davies applied to Centrelink for an advance payment of $500.[28]
[28] Exhibit 1, T Documents, T 17, pages 185 – 186, Application for advance payment dated 20 November 2017.
Mr Davies has sought a review of the SSCSD’s decision by this Tribunal.[29]
[29] Exhibit 1, T Documents, T1, pages 1- 3, Mr Davies’s Application for Review dated 16 October 2017.
ISSUES FOR DETERMINATION
The issues for determination are whether:
(a)an income maintenance period was applicable to Mr Davies FHA claim; and, if yes,
(b)the income maintenance period imposed (between 1 December 2016 and 6 April 2017) was correct; and, if yes
(c)the income maintenance period can be reduced on the basis that Mr Davies is in severe financial hardship as a result of incurring unavoidable or reasonable expenditure.
LEGISLATIVE BACKGROUND
The legislation relevant to this matter is contained in the Social Security Act 1991 (Cth) (the “Act”), Social Security (Administration) Act 1999 (Cth) (“the Administration Act”) and the FHS Act.
Pursuant to the FHS Act, the Act applies in relation to how to calculate a person’s benefit rate to a FHA based on a person’s “ordinary income” and their partner’s ordinary income.[30]
[30] See sections 23(1), 643, and 1068 of the Act and sections 91 and 93 of the FHS Act.
“Income” and “ordinary income” are defined in section 8 of the Act to mean, relevantly:
Income - “an income amount earned, derived or received by the person for the person's own use or benefit”.
Ordinary income - “income that is not maintenance income or an exempt lump sum”
Module G of section 1068 of the Act sets out how the income test is applied. Pursuant to section 1068-G7:
1068-G7 Subject to points 1068-G7AF to 1068-G7AR (inclusive), if:
(a) a person's employment has been terminated; and
(b) as a result the person is entitled to a lump sum payment from the person's former employer;
the person is taken to have received the lump sum payment on the day on which the person's employment was terminated
Section 1068-G7AH provides that where:
(a) a person's employment has been terminated; and
(b) the person receives a termination payment (whether as a lump sum payment, as a payment that is one of a series of regular payments or otherwise);
the person is taken to have received ordinary income for a period (the income maintenance period ) equal to the period to which the payment relates.
Section 1068-G7AQ provides the following relevant definitions:
"redundancy payment" includes a payment in lieu of notice, but does not include a directed termination payment within the meaning of section 82-10F of the Income Tax (Transitional Provisions) Act 1997.
"termination payment" includes:
(a) a redundancy payment; and
(b) a leave payment relating to a person's employment that has been terminated; and
(c) any other payment that is connected with the termination of a person's employment.
“Leave payment” is defined in section 1068-G7AR as including “a payment in respect of sick leave, annual leave, maternity leave and long service leave”.
DOES AN INCOME MAINTENANCE PERIOD APPLY TO MR DAVIES?
The answer is Yes. Ms Hamilton’s redundancy payment received when she was terminated is a “termination payment” as defined by the Act (see above). That payment is taken to have been ordinary income received over a period to which the payment relates (the income maintenance period). Further, the amount received from the settlement is also considered a “termination payment” because it is an “other payment that is connected with the termination” of Ms Hamilton’s employment. That the settlement monies should be taken into account in the calculation of the income maintenance period was not in dispute.
WHAT SHOULD THE INCOME MAINTENANCE PERIOD HAVE BEEN?
In accordance with section 1068-G7AH of the Act, the income maintenance period is equal to the period to which the person's termination payment relates.
Section 1068-G7AQ of the Act defines period to which the payment relates to mean:
(a) if the payment is a leave payment--the leave period to which the payment relates; or
(b) if the payment is a termination payment and is calculated as an amount equivalent to an amount of ordinary income that the person would (but for the termination) have received from the employment that was terminated--the period for which the person would have received that amount of ordinary income; or
(c) if the payment is a termination payment and paragraph (b) does not apply--the period of weeks (rounded down to the nearest whole number) in respect of which the person would have received ordinary income, from the employment that was terminated, of an amount equal to the amount of the termination payment if:
(i) the person's employment had continued; and
(ii) the person received ordinary income from the employment at the rate per week at which the person usually received ordinary income from the employment prior to the termination.
The Secretary referred the Tribunal to the Guide to Social Security Law. The Tribunal is not bound to apply the Guide but it may, and it should, apply it in exercising its discretion unless it is unlawful or “tends to produce an unjust decision”.[31]
[31] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 645.
The Guide sets out at section 4.3.4.10 that where a person’s employment has ceased the length of an income maintenance period is calculated by adding together:
(1) the number of weeks (or days) that the leave payments represent, and
(2) the number of weeks that the portion of the termination payment based on the employee's wage (e.g. 2 weeks redundancy payment for every year of service) represents, and
(3) the number of weeks that the portion of the termination payment NOT based on the employee's gross wage (e.g. a gratuity payment) represents. This is obtained by dividing that portion of the termination payment by the relevant weekly wage…and then rounding down this figure to a whole week figure. A 5 day working week is used.
Ms Hamilton received her termination payment in one instalment. Pursuant to the Act, the income maintenance period commenced in this instance on the day the termination payment was made which was 1 December 2016.[32]
[32]Section 1068G7AKA of the Act; Exhibit 3, Commonwealth Bank statement of Ms Hamilton for the period ending 18 February 2017.
Applying Section 1068-G7AKB the income maintenance period for the second termination payment, that is the settlement amount, commences the day after the end of the first period.
The Secretary calculated that the income maintenance period here is 21.39 weeks, calculated as follows:[33]
• 5 weeks of payment in lieu of notice totalling $5,989.65;[34]
• 12.61 weeks of long service leave totalling $14,342.63,
• 0.78 weeks of annual leave totalling $937.20,
• 3 weeks of settlement monies totalling $3,593.79,
[33] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 11 May 2018.
[34]The five weeks payment to Ms Hamilton in lieu of notice comprises part of the termination payment received for the purposes of section 1068-G7AQ of the Act
This means that the income maintenance period ought to be between 1 December 2016 to 27 April 2017. The SSCSD calculated the period to end on 6 April 2017 as it did not take the settlement monies into account.
The calculation of the income maintenance period was not in dispute.
CAN THE INCOME MAINTENANCE PERIOD BE REDUCED?
Pursuant to section 1068-G7AM of the Act, the Secretary may, at its discretion, determine that the whole, or any part, of the income maintenance period does not apply to the person if satisfied that:
(a)a person is in “severe financial hardship”; and
(b)they are in severe financial hardship because they have incurred unavoidable or reasonable expenditure during the income maintenance period applies to the person.
When the person is a member of a couple, as Mr Davies is, “severe financial hardship” is defined in section 19C(3) of the Act as follows:
“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”.
The “maximum payment rate” in this case means the rate calculated in accordance with Step 4 of the Method Statement of Module A of the applicable rate calculator.[35]
[35] Section 19C(8)(b) of the Act.
Therefore, if Mr Davies’ and Ms Hamilton’s liquid assets, which includes cash,[36] total more than twice the fortnightly payment rate of farm household allowance that would be payable to the Applicant if the Applicant's claim was granted, and if the income maintenance period did not apply, they cannot be considered to be in severe financial hardship, and no discretion to reduce or waive the income maintenance period will arise.[37]
[36] Section 14A(1) of the Act.
[37] Secretary, Department of Education, Employment and Workplace Relations and Ergin [201O] FCA 1438.
In this case, the maximum payment rate was $477.40.[38] Therefore, Mr Davies’ and Ms Hamilton’s liquid assets would have to be less than $954.80.
[38] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 11 May 2018, para 47.
At the hearing, it was accepted by Ms Hamilton and Mr Davies that the total of their liquid assets during the income maintenance period was never less than $954.80 and that they cannot be considered to be in “severe financial hardship” as defined by the Act.
While the Tribunal can understand Ms Hamilton’s argument that they did not spend the money they had even though they had expenses because they needed it to live, there is no discretion that can be exercised in this case.
DECISION
The decision under review is varied to the extent that the income maintenance is correctly calculated from 1 December 2016 to 27 April 2017.
I certify that the preceding 45 (forty - five) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg
........................[Sgd]................................................
Associate
Dated: 19 July 2018
Date of hearing: 10 July 2018 Advocate for the Applicant: Ms Sharon Hamilton Advocate for the Respondent: Ms Jacky Vetter Solicitors for the Respondent: Department of Human Services
Key Legal Topics
Areas of Law
-
Administrative Law
-
Statutory Interpretation
Legal Concepts
-
Appeal
-
Statutory Construction
-
Remedies
0
0
0