DEPARTMENT OF AGRICULTURE, FISHERIES AND FORESTRY and ANTHONY ENGLISH
[2010] AATA 216
•29 March 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 216
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/2515
GENERAL ADMINISTRATIVE DIVISION ) Re DEPARTMENT OF AGRICULTURE, FISHERIES AND FORESTRY Applicant
And
ANTHONY ENGLISH
Respondent
DECISION
Tribunal Senior Member R W Dunne Date29 March 2010
PlaceAdelaide
Decision The Tribunal varies the decision under review.
..............................................
R W DUNNE
(Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – Exceptional Circumstances Relief Payment (ECRP) – whether receipt of income maintenance affects rate of ECRP – whether overpayment of ECRP has occurred and a debt is due to the Commonwealth – whether the debt is recoverable or should be waived or written-off – special circumstances conceded – decision under review varied
Farm Household Support Act 1992 ss 6(1), 8A(1), 24A
Social Security Act 1991 ss 8(1), 17(1), 23(1), 1068, 1068B, 1173, 1174, 1237AADGraham v Baker (1961) 106 CLR 340
Parrett v Secretary, Department of Family and Community Services (2002) 124 FCR 299
Mills v Meeking (1990) 169 CLR 214
Bermingham v Corrective Services Commission (NSW) (1988) 15 NSWLR 292
Tinkler v Federal Commissioner of Taxation (1979) 29 ALR 663
Barry v Repatriation Commission (1993) 29 ALD 670Re Drake and Minister for Immigration and Ethnic Affairs (No.2) (1979) 2 ALD 634
REASONS FOR DECISION
29 March 2010 Senior Member R W Dunne introduction
1. Mr Anthony English (“respondent”) was granted Exceptional Circumstances Relief Payment (“ECRP”) under the Farm Household Support Act 1992 (“FHS Act”), with effect from 18 April 2007. In July 2006, his wife suffered injuries in the course of her employment and she has been receiving income maintenance payments from WorkCover since then. Between April 2007 and December 2007, Mr English was paid ECRP at varying rates due to Mrs English’s fluctuating rate of income maintenance. On 28 December 2007, he received arrears of ECRP of $4,175.83 for the period from 15 July 2007 to 18 December 2007.
2. In January 2008, the applicant (“Centrelink”) reviewed the way Mrs English’s income maintenance was treated in the calculation of Mr English’s rate of ECRP. Subsequently, Centrelink identified an overpayment of $5,000.41 for the period from 15 July 2007 to 15 January 2008, which overpayment it was decided was a debt to be recovered from Mr English. He requested a review of this decision and an Authorised Review Officer affirmed it on the basis that Mrs English’s income maintenance extinguished all her own notional entitlement to ECRP and the “excess” amount would be used to reduce her husband’s entitlement to ECRP on a dollar for dollar basis. The respondent applied to the Social Security Appeals Tribunal (“SSAT”), which set aside the decision under review and sent the matter back to Centrelink with appropriate directions. The respondent has applied to this Tribunal for review of the decision of the SSAT and the directions made by it.
3. Ms Martine Welfare (from Centrelink Legal Services and Procurement Branch) appeared for the respondent and Mr English was represented by Mr Michael Roder SC, of counsel. Pursuant to s 37 of the Administrative Appeals Tribunal Act 1975, the Tribunal received into evidence the T documents (Exhibit A1), together with a witness statement of Mrs English (including annexures) dated 6 October 2009 and a chronology of events (Exhibit R1).
issues for the tribunal
4. The issues for the Tribunal are as follows:
(a)How should the income maintenance received by the respondent’s wife be treated for the purpose of determining the rate of ECRP payable to the respondent?
(b)Has the respondent been overpaid ECRP and, if so, in what amount?
(c)If the respondent has been overpaid ECRP, is there a debt due to the Commonwealth and in what amount?
(d)If there is a debt due to the Commonwealth, should any part be waived or written off?
legislation
5. The legislation relevant to this application for review is found in the FHS Act and the Social Security Act 1991 (“SS Act”). The objects of the FHS Act in relation to ECRP are set out in s 6(1) of that Act and read:
“6 Objects of exceptional circumstances relief payment and farm help income support
Object of exceptional circumstances relief payment
(1) The object of exceptional circumstances relief payment is:
(a) to provide financial assistance to persons who:
(i) are farmers; and
(ii) are in exceptional circumstances; and
(iii)are experiencing difficulty in meeting living expenses; and
(b) to provide financial assistance to persons who:
(i)carry on a small business, gross income from which has been significantly reduced because of the effect of exceptional circumstances on farm enterprises, or on farmers, farm enterprise workers, or their families; and
(ii) are experiencing difficulty in meeting living expenses.
…”
6. The qualification for ECRP for farmers is set out in s 8A(1) of the FHS Act, and reads:
“8A Qualification for exceptional circumstances relief payment
Qualification—farmers
(1)A person is qualified for exceptional circumstances relief payment in respect of a period if:
(a) the period begins on or after 1 October 1994; and
(b) throughout the period:
(i) the person:
(A) is a farmer; and
(B)contributes a significant part of his or her labour and capital to the farm enterprise; and
(C)derives a significant part of his or her income from the farm enterprise; and
(E) is an Australian resident; and
(ii)an exceptional circumstances certificate issued in respect of the person has effect.
…”
7. Section 24A of the FHS Act sets out how the rate of ECRP is worked out for farmers. In the case of Mr English, s 24A relevantly reads:
“24A Rate of exceptional circumstances relief payment—how worked out for farmers
(1)The fortnightly rate at which exceptional circumstances relief payment is payable to a person who qualifies for the payment under subsection 8A(1) is the sum of the following rates:
(a) the fortnightly rate at which:
…
(ii)if the person is not of youth allowance age—newstart allowance would be payable to the person if he or she were entitled to receive newstart allowance;
(b)if the person is a member of a couple and the partner allowance rate in relation to the person’s partner exceeds the income support payment rate in relation to the person’s partner—the fortnightly rate that is the difference between those rates.
(1A) For the purposes of subsection (1):
income support payment rate, in relation to a person’s partner, means the fortnightly rate at which that partner is receiving one (if any) of the following payments:
(a) social security pension;
(b)a social security benefit (except newstart allowance or youth allowance);
(d)a pension under Part II, III or IV of the Veterans’ Entitlements Act 1986.
partner allowance rate, in relation to a person’s partner, means the fortnightly rate at which:
(a) that partner is receiving partner allowance; or
(b)partner allowance would be payable to that partner if that partner were entitled to receive partner allowance.
…
(4)For the purposes of calculating a rate referred to in subsection (1) for a person, for a fortnight all or part of which falls during the period:
(a)beginning at the start of 1 July 2007; and
(b)ending at the end of 30 June 2009, or, if a later day is prescribed, at the end of that later day (the closing day);
disregard the off-farm salary and wages of the person, or if the person is a member of a couple, the off-farm salary and wages of the person and the person’s partner, in the amount worked out under subsections (5) and (6).
(5)Except in a case to which subsection (6) applies, for a fortnight which falls in whole or in part in a particular financial year, disregard the lesser of:
(a)the total amount of off-farm salary and wages of the person or, if the person is a member of a couple, of the person and the person’s partner, for the fortnight; and
(b)the amount worked out using the following formula:
where:
amount previously disregarded in that financial year means the total amount of off-farm salary and wages of the person or, if the person is a member of a couple, of the person and the person’s partner, already disregarded in calculating a rate referred to in subsection (1) for the person for fortnights that fall in whole or in part in that financial year, because of a previous application, or previous applications, of this subsection and subsection (4).
number of days remaining in that financial year means the number of days in the period beginning at the start of the fortnight, and ending at the end of 30 June in that financial year.
(6)If the closing day is not 30 June, then for a fortnight which falls in whole or in part in the period beginning at the start of the immediately preceding 1 July and ending at the end of the closing day, disregard the lesser of:
(a)the total amount of off-farm salary and wages of the person or, if the person is a member of a couple, of the person and the person’s partner, for the fortnight; and
(b) the amount worked out using the following formula:
where:
amount previously disregarded in the period means the total amount of off-farm salary and wages of the person or, if the person is a member of a couple, of the person and the person’s partner, already disregarded in calculating a rate referred to in subsection (1) for the person for fortnights that fall in whole or in part in the period, because of a previous application, or previous applications, of this subsection and subsection (4).
number of days remaining in the period means the number of days in the period beginning at the start of the fortnight, and ending at the end of the closing day.
(7)A person’s off-farm salary and wages are salary and wages that are not earned from work that is in any way related to a farm enterprise in respect of which the person or, where the person is a member of a couple, the person’s partner, is a farmer.”
8. In determining entitlement to ECRP, certain provisions of the SS Act are relevant. Section 8(1) contains definitions of “income” and “ordinary income” for social security purposes. The definitions read:
“8 Income test definitions
(1) In this Act, unless the contrary intention appears:
…
income, in relation to a person, means:
(a)an income amount earned, derived or received by the person for the person’s own use or benefit; or
(b) a periodical payment by way of gift or allowance; or
(c) a periodical benefit by way of gift or allowance;
but does not include an amount that is excluded under subsection (4), (5) or (8).
…
ordinary income means income that is not maintenance income or an exempt lump sum.
…”
9. In circumstances where entitlement to ECRP is affected by a “compensation affected payment”, s 1173 and/or s 1174 of the SS Act will apply. They relevantly read:
“1173 Effect of periodic compensation payments on rate of person’s compensation affected payment
(1) If:
(a) a person receives periodic compensation payments; and
(b)the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and
(c)the person receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;
the rate of the person’s compensation affected payment in relation to that day or those days is reduced in accordance with subsection (2).
(2)The person’s daily rate of compensation affected payment is reduced by the amount of the person’s daily rate of periodic compensation.
…
(4) If:
(a) a person receives periodic compensation payments; and
(b)at the time of the event that gave rise to the entitlement of the person to compensation, the person was qualified for, and was receiving, a compensation affected payment; and
(c)the person receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;
the periodic compensation payments are to be treated as ordinary income of the person for the purposes of this Act.
1174Effect of periodic compensation payments on rate of partner’s compensation affected payment
(1)If:
(a)a person receives periodic compensation payments; and
(b)the person is a member of a couple; and
(c)the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and
(d)the person is qualified for a compensation affected payment in relation to a day or days in the periodic payments period but, solely because of the operation of this Part, does not, or would not, receive the payment; and
(e)the person’s partner receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;
the amount (if any) by which the daily rate of periodic compensation payable to the person exceeds the daily rate of the compensation affected payment for which the person is qualified in relation to a day or days in the periodic payments period (the excess amount) is to be treated as ordinary income of the person’s partner for the purpose of the calculation of the amount of the compensation affected payment referred to in paragraph (e).
(2)The reference in subsection (1) to a daily rate of periodic compensation is a reference to the amount worked out by dividing the total amount of the periodic compensation payments referred to in paragraph (1)(a) by the number of days in the periodic payments period.
(3)For the purposes of subsection (1):
(a)the amount that would, apart from this section, be the amount of the partner’s ordinary income in relation to the day or days referred to in paragraph (1)(e) is to be increased by the excess amount; and
(b)the increased amount is to be taken to be the amount of the partner’s ordinary income in relation to that day or those days, as the case may be.
10. “Compensation affected payment” is defined in s 17(1) of the SS Act and reads:
“17 Compensation recovery definitions
(1) In this Act, unless the contrary intention appears:
compensation has the meaning given by subsection (2).
compensation affected payment means:
(aa) an age pension; or
(a) a disability support pension; or
(b) a parenting payment; or
(c) a social security benefit; or
(e) a disability support wife pension; or
(f) a carer payment; or
(g) a special needs disability support pension; or
(h) a special needs disability support wife pension; or
(i) mature age allowance; or
(j) mature age partner allowance; or
(k) a former payment type; or
(l) any of the following:
…”
11. “Social security benefit” is referred to in s 17(1) of the SS Act. It is defined in s 23(1) to read:
“23 General definitions
(1) In this Act, unless the contrary intention appears:
…
social security benefit means:
(aa) widow allowance; or
(aab) youth allowance; or
(aac) austudy payment; or
(a) newstart allowance; or
(c) sickness allowance; or
(d) special benefit; or
(e) partner allowance; or
(ea) a mature age allowance under Part 2.12B; or
(f) benefit PP (partnered); or
(g) parenting allowance (other than non-benefit allowance).
…”
12. Where income maintenance payments are received by the partner of an ECRP recipient, s 1068, Module G applies. The relevant provisions of s 1068 of the SS Act read:
“Partner income excess
1068-G10 If:
(a) a person is a member of a couple; and
(b)the person’s partner is not receiving a social security pension, a service pension, income support supplement or a rehabilitation allowance; and
(c)the partner’s ordinary income exceeds the partner income free area for the partner;
then:
(d) the person has a partner income excess; and
(e)the person’s partner income excess is the amount by which the partner’s ordinary income exceeds the partner income free area.
Partner income reduction
1068-G11If a person has a partner income excess, the person’s partner income reduction is an amount equal to 60% of the part of the partner’s ordinary income that exceeds the partner income free area.
Example:
Facts:Susan’s partner Colin has an ordinary income of $800. Assume that the partner income free area under point 1068-G9 is $640.
Application: Colin’s ordinary income exceeds the partner income free area. He therefore has a partner income excess under point 1068-G10 of:
$800 - $640 = $160
Susan’s partner income reduction under point 1068-G11 is therefore:
60% x $160 = $96”
background
13. The factual background to this case is not in dispute and can largely be taken from the reasons for decision of the SSAT. Mr English has been in partnership with his father, operating a vineyard in the Riverland, a drought affected area, since 1976. His wife became a member of the partnership about 15 years ago. She was injured at work for International Meat Processors and there have been many disputes about her entitlement to income maintenance and the level of income maintenance payable. Subsequent to sustaining her injury, International Meat Processors went out of business. Mrs English is now at risk of having her income maintenance payments ceased altogether under the new rules for long-term income maintenance recipients. She has tried to secure alternative employment, but without success.
14. In its decision, the SSAT found that Mrs English’s income maintenance was “income” and “ordinary income” under s 8 and for the purposes of the Benefit Rate Calculator in s 1068B and s 1068, Module G of the SS Act. In these circumstances, Mrs English had ordinary income in excess of her income free area and ss 1068-G10 and 1068-G11 applied to reduce Mr English’s rate of ECRP by 60 percent, not 100 percent or dollar for dollar, of the amount known as the “partner income excess”.
15. The SSAT made the following findings. Mrs English’s income maintenance was “off-farm salary and wages” within the meaning of s 24A(7) of the FHS Act. The expression “salary and wages” is limited to income earned from employment. Income maintenance is not money “earned from work”; it is compensation for incapacity to work. Mrs English was not entitled to have the first $20,000 of her income maintenance ignored under s 24A(4) of the FHS Act. The SSAT also made the finding that the income maintenance was a payment under a scheme of compensation under State law and so was “compensation” within the definition in s 17(2) of the SS Act. ECRP does not fall within the definition of “compensation affected payment” in s 17(1). It does not appear in the list of payments in the definition of “compensation affected payment” and, in particular, is not a “social security benefit”, as referred to in paragraph (c) of that definition. In other words, the SSAT was not prepared to read into the definition of “compensation affected payment”, in s 17(1) of the SS Act, the term ECRP when that term does not appear in the list of payments in the definition. The SSAT concluded that the compensation recovery provisions in s 1174 of the SS Act do not apply to recipients of ECRP and the applicant’s calculation of Mr English’s rate of ECRP, by relying upon that section, was incorrect.
the applicant’s argument
16. In relation to the question of whether Mrs English’s income maintenance was “off-farm salary and wages” within the definition in s 24A(7) of the FHS Act, Ms Welfare said that the applicant’s position was consistent with the view expressed by the SSAT. She contended that “salary and wages” is different from that of income maintenance. Salary and wages are earned from employment, whereas income maintenance is a compensatory payment where there is an inability to work. It follows that Mr English is not entitled to have the first $20,000 of his wife’s income maintenance disregarded when the rate of his ECRP is calculated.
17. As to determining Mr English’s rate of ECRP and how Mrs English’s income maintenance affects that rate, Ms Welfare contended that s 24A(1) of the FHS Act requires two amounts to be calculated, namely:
(a) Mr English’s notional rate of Newstart Allowance; and
(b)the extent to which Mrs English’s “partner allowance rate” exceeds her “income support payment rate”.
Mr English’s rate of ECRP will be the sum of these two amounts. Newstart Allowance and Partner Allowance fall within the definition of “compensation affected payment” in ss 17(1) and 23(1) of the SS Act and compensation affected payments are required to be reduced under s 1173 and/or s 1174 of the SS Act. In calculating the notional rate of these payments, any compensation received by Mrs English must be taken into account (vide paragraph 4.13.1.40 of the Guide to Social Security Law (“Guide”). Section 24A(1) has the result that the rate of ECRP payable to partnered recipients is equivalent to the combined rate of Newstart Allowance and Partner Allowance, with no add-on payments.
the respondent’s argument
18. In relation to the meaning of the expression “off-farm salary and wages” in s 24A(7), Mr Roder argued that the SSAT was wrong in the conclusion it reached. He contended that the expression can be given an extended meaning to include workers’ compensation payments made in lieu of such off-farm salary and wages. Alternatively, in looking at s 24A(7) of the FHS Act, he contended that Parliament omitted to deal with the case of income maintenance payments to an injured worker who was earning salary and wages at the time of the injury. Parliament would not have wanted to have disadvantaged Mr English in such a way because of his wife’s work related injury.
19. As to the rate of Mr English’s rate of ECRP, Mr Roder submitted that the SSAT’s decision was plainly supported by the relevant provisions of the FHS Act and the SS Act. ECRP is not a “compensation affected payment” within the meaning of s 17(1) of the SS Act and, accordingly, s 1173 of the SS Act does not apply. Section 1173(2) only applies if a person “receives or claims a compensation affected payment” in the relevant period. Neither Mr English nor his wife ever received a compensation affected payment. The compensation recovery provisions in the SS Act do not apply to Mr English’s ECRP.
consideration
How should the income maintenance received by the respondent’s wife be treated for the purpose of determining the rate of ECRP payable to the respondent?
20. The FHS Act is an Act with a particular purpose. The object in relation to ECRP is set out in s 6(1)(a) of the FHS Act. Essentially, it is to provide financial assistance to farmers who are in exceptional circumstances and are experiencing difficulty in meeting living expenses. A rate at which ECRP is payable to a person who qualifies for the payment under s 8A(1) is set out in s 24A(1) of the FHS Act. For the purpose of calculating a rate of ECRP for a person, s 24A(4) requires that the off-farm salary and wages of the person, or if the person is a member of a couple, the off-farm salary and wages of the person and the person’s partner, shall be disregarded. The amount off-farm salary and wages that can be earned outside a farm enterprise and disregarded is $20,000 in a financial year. It is noted that the concession of $20,000 to ECRP recipients was increased from $10,000 on 25 September 2007. The expression “off-farm salary and wages” is defined in s 24A(7) to mean salary and wages not earned from work that is in any way related to a farm enterprise in respect of which the person or, where the person is a member of a couple, the person’s partner, is a farmer. In Mr English’s case, his wife was injured at work in the course of earning salary and wages at International Meat Processors which, had she been earning them at the relevant time, would had fallen within the amount capable of being disregarded under s 24A(4).
21. For the applicant, it has been argued that “salary and wages” is a different concept to income maintenance. The expression is limited to income from employment. Income maintenance is not money earned from work; it is a compensatory payment where there is an inability to work. This was the approach taken by the SSAT. Mr Roder submitted that the SSAT took an unduly narrow and literal approach to the concept of off-farm salary and wages. The SSAT reasoned that, as income maintenance payments are not salary and wages, they do not come within the provisions of s 24A(7) and Mrs English is not, therefore, entitled to have the first $20,000 of her income maintenance ignored under s 24A(4) of the FHS Act. Mr Roder argued that Mrs English suffered a workplace injury earning off-farm salary and wages. The income maintenance payments were received in lieu of those off-farm salary and wages. The consequence of this was to reduce Mr English’s ECRP from $775.60 per fortnight to as little as $136.20 per fortnight (Exhibit R1, T3 at page 163). Tangentially, Mr Roder made the point that, as sick leave constitutes salary and wages (Graham v Baker (1961) 106 CLR 340), it follows that if Mrs English was injured, but her injury was not compensable and she received sick pay for eight weeks, her family would be approximately $600 per fortnight better off than if it was a compensable injury and she received income maintenance payments instead. Having regard to the objects of the FHS Act, the Tribunal finds it difficult to believe that Parliament, at least if it had adverted to it, would have intended that someone in the position of Mrs English (and her family) would be that much worse off because her injury was compensable.
22. In Parrett v Secretary, Department of Family and Community Services (2002) 124 FCR 299 it was necessary for the Federal Court (Madgwick J) to consider the operation of the FHS Act and the meaning of “farmer” in determining eligibility for a restart re-establishment grant. The learned judge examined the scope of the “purposive” approach mandated by s 15AA of the Acts Interpretation Act 1901. In doing so, he referred to the comments made by Dawson J in Mills v Meeking (1990) 169 CLR 214, where that judge said at page 235:
“ ‘… if the literal meaning of a provision is to be modified by reference to the purposes of the Act, the modification must be precisely identifiable as that which is necessary to effectuate those purposes and it must be consistent with the wording otherwise adopted by the draftsman [or woman]. [A section such as s 15AA] requires a court to construe an Act, not to rewrite it, in the light of its purposes.’…”
Madgwick J then went on to say (at pages 308-309):
“In relation to such consistency, the question of ‘reading words into’ an Act needs to be understood. As D C Pearce and R S Geddes state in their valuable Statutory Interpretation in Australia (5th ed, 2001), p 40:
‘… courts can never literally read words into legislation as part of a process of interpretation. The phrase ‘reading words into legislation’ should be understood for what it is; nothing more than a metaphor for implying words in legislation, to give effect to its underlying purpose or object.’
In Bermingham v Corrective Services Commission (NSW) (1988) 15 NSWLR 292 at 302 McHugh JA (adopting the approach of Lord Diplock in Wentworth Securities Ltd v Jones [1980] AC 74 at 105-106) suggested certain necessary conditions for ‘[construing] a statute with the effect that certain words appear in the statute’ (per Spigelman CJ in R v Young (1999) 46 NSWLR 681 at 687) although Parliament did not put them there, and thereby justifying even a ‘strained’ construction. That suggestion has become authoritative in Australia: see Pearce and Geddes, pp 41-42. McHugh JA said that those conditions were (at 302):
‘First, the court must know the mischief with which the Act was dealing. Secondly, the court must be satisfied that by inadvertence Parliament has overlooked an eventuality which must be dealt with if the purpose of the Act is to be achieved. Thirdly, the court must be able to state with certainty what words Parliament would have used to overcome the omission if its attention had been drawn to the defect.’
Even so, although a strained construction can be justified
‘the words which actually appear in the statute must be reasonably open to such a construction. Construction must be text based (Young at 687 per Spigelman CJ).’
In accordance with these principles, s 15AA must be applied.” (Emphasis added)
23. Mr Roder submitted that there are two different approaches to the process of statutory interpretation, both of which Madgwick J (in Parrett) accepted could apply. One is that an extended meaning is simply given to the words themselves being interpreted. If that is not possible, words can be read into the legislation which are not there. This is what Madgwick J referred to with the words “with certainty” when he was referring to the third test of McHugh JA in Bermingham v Corrrective Services Commission (NSW) (1988) 15 NSWLR 292. Madgwick J made the point that the precise formulation “with certainty” would be a very difficult thing for anyone to say. His conclusion was that Parliament, if it had turned its mind to the matter, would have sought to deal with the eventuality arising in Mr Parrett’s case and used words of a form which covered that eventuality.
24. In looking at the statutory context of ECRP and “off-farm salary and wages”, it is difficult to find any logical basis for treating Mr English and his family worse off under the FHS Act because Mrs English sustained a workplace injury in the course of earning off-farm salary and wages. Accepting that income maintenance payments are not literally wages, might not an extended definition of “salary and wages”, in the context of the FHS Act, be expanded and read to include a substitute for those salary and wages? In Tinkler v Federal Commissioner of Taxation (1979) 29 ALR 663, the Full Federal Court made observations about the nature of workers’ compensation payments. In that case, Mrs Tinkler suffered personal injury in a motor car accident. Her injuries prevented her from working and, as a result, she suffered “a loss of income in the capacity of employee by reason of the injury” and she received fortnightly compensation payments under the Motor Accidents Act (1973) (Vic). She disclosed the payments in her taxation return, contending they were not income. The Full Federal Court analysed the decision of Jenkinson J in the Supreme Court of Victoria (at first instance) and said (at pages 668 – 669):
“In the Supreme Court, Jenkinson J, held that the relevant receipts were income according to ordinary concepts and thus assessable income of the appellant by virtue of the provisions of s 25(1)(a) of the Income Tax Assessment Act 1936. His Honour’s judgment has been reported ((1978) 22 ALR 654). The essence of his decision was that, upon analysis of the provisions of the Act under which they were made, the payments represented a statutory substitute, pro tanto, and subject to some adjustments, for the wages lost by the appellant. It followed, in his Honour’s view, that the payments were income pursuant to s 25 of the Income Tax Assessment Act. It can be said at once that, subject to the effect of the provisions of s 25(2) of the Act to which detailed reference is subsequently made, we are in agreement with his Honour’s analysis of the nature of the relevant payments and the reasons which he gave for that analysis. Once it was held that, upon analysis, the 22 payments were, to adopted the words of Fullagar J in FC of T v Dixon (1952) 86 CLR 540 at 568, a substitute for—the equivalent, pro tanto, of—part of the wages which would have been earned if the accident had not take place, it followed, as Jenkinson J held, that they were assessable income under s 25(1)(a) of the Income Tax Assessment Act: see also FC of T v Smith (1979) 10 ATR 301; 29 ALR 586.” (Emphasis added)
25. In Barry v Repatriation Commission (1993) 29 ALD 670, O’Loughlin J had to deal with the definition of “income” under the Veterans’ Entitlements Act 1986 (Cth). He observed (at pages 675 – 676):
“The tribunal found that the fortnight payments constituted “earnings” that were derived by the appellant for his own use and benefit; it came to that decision by relying on two Full Court decision: Tinkler v FCT (1979) 29 ALR 663 and Commissioner of Taxation v Inkster (1989) 24 FCR 53; 89 AKR 137; 20 ATR 1516. It recognised that both cases were concerned with the meaning of the word “income” for the purpose of the Income Tax Assessment Act 1936 (Cth) but it nevertheless concluded that the rationale of those cases could properly be applied to the relevant provisions of the Veterans’ Entitlements Act. In Tinkler’s case compensatory payments that had been paid to an injured plaintiff were held to be assessable income as they were a substitute for part of the wages that the plaintiff would have earned but for his accident. In Commissioner of Taxation v Inkster Payments of compensation that were received by an injured workman after his retirement were still held to be ‘income’ even though there was no loss of income for which those payments were intended as a substitution.
Brennan J sounded a warning note in Read’s case; he said at CLR 71; ALR 663; ALD 269:
The definition of ‘income’ in the Act falls to be construed in its unique context and care must be exercised in applying decisions on the meaning of “income” in other statutes or in other jurisdictions.
Later at CLR 73; ALR 665; ALD 270 he added:
There are radical differences between the provisions of the Incoxne [sic] Tax Assessment Act and the Social Security Act, to be accounted for by a variety of historical, political and administrative factors, and those differences must often be incongruous in their concurrent operation.
With these cautions in mind, I agree with the tribunal that these two cases add support to the conclusion that the compensation payments were properly taken into account in determining the question of the appellant’s entitlement to a service pension.”
26. The findings of the Federal Court in Tinkler and Barry come very close to being analogous to the concepts being dealt with in the present case with salary and wages. As Mr Roder put it, when the scheme of the FHS Act and the observations referred to in the Federal Court in Tinkler and Barry are analysed, Mrs English’s income maintenance payments may be viewed as a substitute for her salary and wages and take on the character of those salary and wages. Mr Roder’s primary submission was that an ambulatory definition should be given to the expression “salary and wages” in all the circumstances of the case, with the view that the reference to off-farm salary and wages would be intended to exclude such things as trust distributions, dividends and all other items that might be off-farm income, but not salary and wages. Alternatively, he submitted that, having regard to the matters referred to in Parrett (supra), if it was considered necessary to read words into the legislation and that to do so would be within the mischief contemplated by the FHS Act, s 24A(7) should be read so that it applies to off-farm salary and wages not related to a farm enterprise “or income maintenance payments paid to an injured worked in lieu of off-farm salary or income”.
27. The Tribunal has given full consideration to Mr Roder’s submissions and agrees with the force of those submissions. However, the Tribunal prefers to adopt the alternative submission so that, adopting the approach taken by Madgwick J in Parrett (supra), it can be said “with certainty” that Parliament, if it had turned its mind to the matter, would have provided that the definition of “off-farm salary and wages” in s 24A(7) of the FHS Act should have had added to it the italicised words which follow, in which case the definition would read:
“(7) A person’s off-farm salary and wages are salary and wages that are not earned from work that is in any way related to a farm enterprise in respect of which the person or, where the person is a member of a couple, the person’s partner, is a farmer or income maintenance payments paid to the person or the person’s partner as an injured worker in lieu of off-farm salary and wages or income.”
28. As to determining Mr English’s rate of ECRP and whether the compensation recovery provisions in s 1173 and s 1174 of the SS Act are to be taken into account, Ms Welfare’s approach (on behalf of the applicant) was to treat ECRP as if it were a “compensation affected payment” within the meaning of ss 17(1) and 23(1) of the SS Act. Pursuant to the combined effect of these provisions, both Newstart Allowance and Partner Allowance are “compensation affected payments”. In calculating the notional rate of these payments, any compensation received by Mrs English would be taken into account. In support of this contention, Ms Welfare referred to the terms of paragraph 4.13.1.40 of the Guide. More specifically, as the Tribunal understood it, Ms Welfare submitted that ECRP must, in accordance with s 24A(1)(a)(ii) of the FHS Act, be calculated by reference to the rate at which Newstart Allowance and Partner Allowance would be payable if the person and his or her partner were qualified for those payments. Newstart Allowance is worked out by applying, amongst other provisions of the SS Act, s 1068, Module G. This requires a consideration of the person’s ordinary income, as well as the partner’s ordinary income, in order to determine the person’s ECRP rate. She contended that, when these provisions of the SS Act are read with the FHS Act, the ordinary income of the person or partner for the purposes of Module G would, unless there were a contrary intention, include moneys received by the person or the partner, and therefore ordinary income would include compensation payments for workplace injuries. Given this approach, ss 1173 and 1174 apply in determining Mr English’s rate of ECRP, meaning that Mrs English’s income maintenance payments would be taken into account.
29. Clearly, the question that arises is whether it was the intention in the FHS Act that ECRP would be subject to the compensation recovery provisions in the SS Act. Ms Welfare says that s 24A(1) seeks to put an ECRP recipient in the same position as they would be, in terms of payability, if they were qualified for Newstart Allowance. Newstart Allowance is a “compensation affected payment” which is required to be reduced under the compensation recovery provisions in ss 1173 and 1174 of the SS Act. In its reasons, when considering the applicability of s 1174, the SSAT was not prepared to read the ECRP into the definition of “compensation affected payment” in s 17(1) of the SS Act when that term was not there. The fact that Newstart Allowance is a compensation affected payment does not automatically make ECRP a compensation affected payment. The SSAT opined that s 17(1) needed to expressly include it.
30. Although the Tribunal is of the view that s 1174 is the more appropriate provision where there is a couple, Mr Roder’s analysis appears to focus on the applicability of s 1173 of the SS Act. That section only applies if a person receives or claims a compensation affected payment in relation to the period to which the compensation payment relates. The manner in which it applies depends upon whether the person was receiving a compensation affected payment prior to the event that gave rise to the entitlement to compensation. In the present case, neither Mr English nor his wife ever actually received a compensation affected payment. Thus, there is no basis upon which s 1173 can operate, if the section applies at all.
31. Having considered the approaches taken by the SSAT, by Ms Welfare and by Mr Roder, the Tribunal is of the view that the proper analysis of the question is whether s 1174 of the SS Act applies to Mr English’s entitlement to ECRP. In the Tribunal’s opinion, ECRP does not fall within the definition of “compensation affected payment” in s 17(1) and s 23(1) of the SS Act. It does not appear in the specific payments listed in s 17(1) and is not one of the payments or allowances comprising a “social security benefit” in s 23(1). Although the fortnightly rate of ECRP is based upon an assumption that the ECRP recipient is entitled to receive Newstart Allowance, this does not change the character of ECRP so that it is dealt with, like Newstart Allowance, under the compensation recovery provisions in the SS Act. Ms Welfare pressed the Tribunal with the view that paragraph 4.13.1.40 of the Guide supported her submissions. The Tribunal is cognisant of the requirement to give weight to policy factors in maintaining consistency in decision-making (Re Drake and Minister for Immigration and Ethnic Affairs (No.2) (1979) 2 ALD 634). However, the Tribunal is of the view that there are cogent reasons for not applying the Guide in the present case as an injustice to Mr English would result.
Has the respondent been overpaid ECRP and, if so, in what amount?
The Tribunal has found that Mrs English’s income maintenance payments fall within the definition of “off-farm salary and wages” in s 24A(7) of the FHS Act. In these circumstances, the amount of Mrs English’s income maintenance payments, up to the amount of $20,000 during the relevant period, are to be disregarded in determining Mr English’s rate of ECRP. It is the Tribunal’s understanding that, if this procedure is followed, the amount of overpayment of ECRP of $5,000.41 for the period from 15 July 2007 to 15 January 2008 will be reduced to nil or wholly extinguished.
If the respondent has been overpaid ECRP, is there a debt due to the Commonwealth and in what amount?
33. Given the Tribunal’s understanding expressed in paragraph 30, there should be no debt due to the Commonwealth arising from the overpayment to Mr English of his ECRP. If this understanding is incorrect and a debt due to the Commonwealth remains, Ms Welfare has conceded that the position of Mr and Mrs English in relation to the overpayment constitutes “special circumstances” under s 1237AAD of the SS Act. Given this concession, and if the circumstances require it, any debt arising from the overpayment of Mr English’s ECRP during the period from 15 July 2007 to 15 January 2008 will be waived on the basis that the Secretary (as the applicant) will be satisfied that the requirements of s 1237AAD of the SS Act have been complied with.
conclusion
34. For the reasons outlined above, the Tribunal’s conclusions in relation to this application for review are as follows:
(a)In determining the respondent’s rate of ECRP, his wife’s income maintenance payments, during the period from 15 July 2007 to 15 January 2008, constitute “off-farm salary and wages” for the purposes of s 24A(7) of the FHS Act.
(b)The income maintenance payments of the respondent’s wife should be treated as “income” and “ordinary income” under the SS Act to reduce the respondent’s rate of ECRP by 60 percent, not 100 percent or dollar for dollar of the amount known as the “partner income excess”.
(c)The compensation recovery provisions in s 1173 and s 1174 of the SS Act do not apply in determining the respondent’s rate of ECRP under the FHS Act.
(d)Following the conclusions made in paragraphs (a) to (c) above, to the extent that there is any debt due to the Commonwealth arising from the overpayment to the respondent of his ECRP, the position of the respondent in relation to the overpayment constitutes “special circumstances” under s 1237AAD of the SS Act.
decision
35. The Tribunal varies the decision under review as set out in the conclusions detailed in paragraph 32 of these reasons.
I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member R W Dunne
Signed: .............J Coulthard..........................................
AssociateDate of Hearing 10 November 2009
Date of Decision 29 March 2010Advocate for the Applicant Ms M Welfare
Centrelink Legal Services and Procurement Branch
Counsel for the Respondent Mr M Roder
Solicitor for the Respondent Welfare Right Centre (SA) Inc
0
9
0