Ergin and Secretary, Department of Education, Employment and Workplace Relations

[2009] AATA 740

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 740

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/4015

GENERAL  ADMINISTRATIVE  DIVISION		)
Re		EROL ERGIN

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr B H Pascoe, Senior Member  

Date25 September 2009

PlaceMelbourne

Decision The Tribunal varies the decision under review to the extent of finding that the applicant is subject to an income maintenance period for the period from 27 March 2009 to 20 August 2009.

(sgd) B.H. Pascoe

Senior Member

SOCIAL SECURITY –newstart allowance – income maintenance period – redundancy and termination payment – severe financial hardship – unavoidable or reasonable expenditure – past expenditure not unavoidable or reasonable – part of period waived.

Social Security Act 1991

REASONS FOR DECISION

25 September 2009 Mr B H Pascoe, Senior Member  

1.      This is an application to review a decision of the Social Security Appeals Tribunal (SSAT) of 24 July 2009, which affirmed a decision of the respondent to apply an income maintenance period to the applicant’s entitlement to newstart allowance from 27 March 2009 to 3 April 2010. 

2.      At the hearing the applicant, Mr E. Ergin, was unrepresented and appeared by telephone.  The respondent was represented by Mr D. Perdon, a legal services officer with Centrelink. 

3.      There is no dispute as to the facts of this case.  Mr Ergin’s prior employment with Cadbury Schweppes was terminated on 27 March 2009.  He received a lump sum termination payment of $51,729 comprising:

Redundancy  38 weeks               $36,846

Payment in lieu of notice              4 weeks                   $3874

Annual leave  1.5 weeks                   $1869

Long service leave  9.5 weeks                   $9140

Pursuant to s 1068-G7AH of the Social Security Act 1991, where a person receives an employment termination payment, that person is taken to have received ordinary income for a period equal to the period to which the payment relates (the income maintenance period) and commencing on the day on which the payment is made.  The initial decision was to apply an income maintenance period to 3 April 2010.  Prior to this hearing, the respondent conceded that there was a small error in the calculation and the correct end date of the period should be 31 March 2010. 

4.      The primary argument of Mr Ergin was that he was in serious financial difficulties, had been unable to find a job and was reduced to sleeping in his car with no ability to pay rent or other necessary living expenses.  He confirmed his evidence to the SSAT that he had received a net $46,000 from the redundancy payment which had been spent as to:

Repaying debt               $20,000

Living expenses                $6000

Holiday in Bali                   $8000

Gambling losses            $12000

Mr Ergin said that he had not had a holiday in some nine years and, in March 2009, decided to have a good holiday before finding another job.  Unfortunately, on his return, he realised that jobs had become hard to find and, to date, had been unsuccessful in obtaining work other than a small amount of casual work.  He acknowledged that he had been foolish to lose money gambling but this was now behind him.  Mr Ergin maintained that he had been a good worker, earning good money in his employment and that his special circumstances should allow payment of newstart allowance to allow him to survive until he was able to obtain work. 

5.      Under s 1068-G7AM, part or all of the income maintenance period can be waived If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies to the person…  It was accepted by the respondent and this Tribunal that Mr Ergin is in severe financial hardship.  It was further accepted that he had incurred unavoidable and reasonable expenditure of $27,898 to the date of this decision made up of:

Loan repayments     $20,000

Car Registration             $560

Living costs                   $7338

$27,898

Pursuant to s 19C(6), living costs are capped at the amount of the newstart allowance that would have been payable if the income maintenance period had not applied.  In this case it would have been $564.50 per fortnight for 13 fortnights.  Given the terms and intention of the legislation, it is not possible to regard the expenditure on gambling and an expensive holiday as unavoidable or reasonable expenditure.  It may be regarded as irresponsible to allow a person to exhaust their available funds on such expenditure and then provide funds from government revenue to make up for their lack of foresight and prudence. 

6.      Given the foregoing, it is appropriate to exercise the discretion provided by s 1068-G7AM to determine that part of the income maintenance period does not apply relative to the unavoidable and reasonable expenditure.  The method of doing so is not prescribed but it would appear that an appropriate method would be to reduce the period by a calculation of the proportion of the net termination expended on unavoidable and reasonable expenditure over the total termination payment.  Such calculation is as follows:

Unavoidable and reasonable expenditure

Loan Repayments  $20,000

Car Registration  $560

Living Costs - 11 fortnights at $564.50               $6209

$26,769

Net Termination Payment  $46,000

Balance to be taken into account  $19,231
Income Maintenance Period

based on termination payment  53 weeks

Income Maintenance period to be waived

$26,769 / $46,000 of 53 weeks = 31 weeks

Balance of income maintenance period   22 weeks

Income maintenance period expires    20 August 2009

7.      Given the foregoing, the appropriate decision of this Tribunal should be that the decision under review should be varied to the extent of finding that Mr Ergin is subject to an income maintenance period from 27 March 2009 to 20 August 2009. 

I certify that the seven [7] preceding paragraphs are a true copy of the reasons for the decision herein of
Mr B H Pascoe, Senior Member

Signed:         Cassie Renfrew
  Clerk

Date of Hearing  22 September 2009
Date of Decision  25 September 2009
Advocate for the Applicant       Self-Represented
Advocate for the Respondent   Mr D. Perdon