Frketic and Secretary, Department of Family and Community Services
[2005] AATA 721
•29 July 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 721
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2005/152
GENERAL ADMINISTRATIVE DIVISION ) Re PAUL JOSEPH FRKETIC Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal REAR ADMIRAL A R HORTON AO Date29 July 2005
PlaceSydney
Decision The decisions to apply a Newstart Allowance activity test breach rate reduction of 24% for 26 weeks commencing on 6 December 2004 and an activity test non-payment period of 8 weeks commencing on 26 January 2005 are affirmed.
[sgd] Rear Admiral A R Horton A O
Member
CATCHWORDS
SOCIAL SECURITY – Newstart Allowance – activity test breach rate reduction applied in November 2003 – requirement to renegotiate Preparing for Work Agreements and Job Search Plans – applicant sought an amendment to agreement in order to effect loan –proposed amendment not agreed - applicant failed to sign revised agreement on 5 November 2004 and 22 December 2004 – second and third breaches in two years – rate reduction period and non-payment period applied – decision affirmed
LEGISLATION
Social Security Act 1991 (Cth) sections 593, 601, 604, 605, 606, 607, 625, 626, 644AA, 644AB, 644AE, 630A
CASE LAW
Re Long and Department of Family and Community Services [2000] AATA 33
Re Smith and Secretary, Department of Employment, Education, Training and Youth Affairs (1997) 48 ALD 391
REASONS FOR DECISION
29 July 2005 REAR ADMIRAL A R HORTON AO 1. This is an application to the Administrative Appeals Tribunal (“the Tribunal”) to review a decision of the Social Security Appeals Tribunal (“the SSAT”) of 27 January 2005 which affirmed a decision of an Authorised Review Officer (“ARO”) on 11 January 2005 to apply a 24% activity test breach rate reduction period and a 100% activity test breach non-payment period to the Newstart Allowance (“NSA”) payable to Paul Joseph Frketic (“the Applicant”). The original decisions by Centrelink in this matter were respectively made on 22 November 2004 and 5 January 2005.
2. At a hearing before me on 20 June 2005, Mr Frketic was self represented. Mr James Larcombe, an advocate of the Centrelink Legal Services Branch represented the Secretary, Department of Family and Community Services (“the Respondent”). The Tribunal took into evidence the T documents provided by the Respondent pursuant to section 37 of the Administrative Appeals Tribunal Act1975, a letter from Mr Frketic to the Respondent dated 6 May 2005 (Exhibit A1), an extract from the JobNetwork Service Guarantee (Exhibit A2), the Respondent’s Statement of Facts and Contentions dated 3 June 2005 (Exhibit R1), a Preparing for Work Agreement dated 13 November 2004 (Exhibit R2), a Customer Declaration Form for Newstart Allowance dated 13 November 2003 (Exhibit R3) and a letter in response to Exhibit A1 from Centrelink dated 31 May 2005 (Exhibit R4).
BACKGROUND
3. Mr Frketic purchased a fibro cottage at Chester Hill in 1986. Except for the initial few months after purchase, the property was let until 1995. The home has subsequently been vacant, with Mr Frketic living in the garage on the property, or in his father’s residence. In 1996, Mr Frketic sought to sell the property by tender, but was unable to do so, as Bankstown City Council would not issue a Building Certificate because of the need for internal repairs. Those repairs were subsequently carried out, but no further attempt has been made to sell the property.
4. In 1998, Mr Frketic attended a building exposition during which the matter of asbestos in fibro homes was highlighted. He has since not been prepared to place the house on the market on the basis that it would be inappropriate to do so given the presence of asbestos, but has sought, through various channels, including Council and the Land and Environment Court, to obtain a loan which would permit him to demolish the house and then sell the land, the proceeds from which would enable him to repay the loan and other debts. In the matter before me, Mr Frketic has sought to obtain a loan through Centrelink by the inclusion of a specific clause in the Preparing for Work Agreements (“PFWA”) in respect of NSA, the inclusion of which has been denied by Centrelink as being inappropriate.
5. Mr Frketic was granted NSA on 13 November 2003. Because he had not met the requirements of the activity test as defined in a Newstart Activity Agreement as required under sections 593 and 601 of the Social Security Act 1991 (“the Act”), this allowance was suspended on 19 November 2003 and an 18% activity test breach rate reduction pursuant to sections 626 and 644AA of the Act applied. Whilst Mr Frketic does not agree with that decision, it is not in contention. On 22 November 2004 an activity test breach rate reduction of 24% was applied, this being related to a failure by Mr Frketic to sign a new PFWA, and reflecting the second breach in two years. On 5 January 2005, a further activity test breach led to the imposition of a non-payment period in respect of NSA of eight weeks. The latter decisions are the matters before me.
EVIDENCE
6. Born in Australia in 1963 of Croatian parents, Mr Frketic completed schooling to year 12. He undertook training to qualify as an engineering and survey draftsman from 1982 until 1984, subsequently being employed by the Water Board until 1993, initially in that capacity but also in computing. For various periods he studied electrical engineering at TAFE, and computing at the University of Technology; he did not complete these courses. In December 1993, Mr Frketic traveled to Croatia, where he studied language and culture. He was accepted into the Franciscan Order as a novice, studying in that order until returning to Australia in 1995 because of his mother’s illness. She passed away later that year.
7. As noted above, Mr Frketic purchased a property in 1986, which has been empty since 1996. It is this property that he will not place on the market, nor let, nor live in, due to the presence of asbestos, his plan being to obtain a loan in order to demolish the house so that he can sell the land, repaying the loan from the proceeds of that sale. He referred to an engineering report in respect of water in the soil and asbestos “creep” and is quite adamant that exposure to asbestos disease is a real issue. His concern at the dangers of living in close proximity to asbestos is heightened because his mother died of an asbestos related disease, and because on one occasion his neighbour had sandblasted his home, leading to a likelihood of asbestos dust settling on Mr Frketic’s property.
8. Since his return from Croatia in 1995, Mr Frketic has lived in the garage at the rear of his property, or with his father until November 2003 when the latter moved to a nursing home. His father died in April this year. Mr Frketic has not undertaken paid work since his return from Croatia, initially indicating to me that was by his choice. In 1996 he commenced a course in nursing at the University of Technology, but failed second semester. In 2004 he completed an AutoCAD course, funded by Centrelink. No employment has resulted from that course. He has been living on his savings, augmented at various times by NSA. When eligible for, and receiving NSA, and satisfying his activity test requirements, which occurred in various periods in 2004, he did not find any suitable employment. However, he further stated that he was not prepared to take the job of another person.
9. In seeking to obtain a loan to enable him to demolish his house at Chester Hill, Mr Frketic saw that no such loan would be agreed by any bank, but he firmly believed there was logic in his belief that the local Council should fund such a loan to enable the removal of the contaminated house. A further issue is that he is presently in debt to the Council for overdue rates in the order of $7,000 (and has refused to cut the grass on his property thus incurring a further debt to the Council, who on one occasion arranged for cutting to take place), and the provision of a loan would also lead to this debt being paid off. Council did not accept his proposition and accordingly Mr Frketic appealed to the Land and Environment Court, which found that the matter was outside the authority of the Court and dismissed the application. Mr Frketic gave evidence that this decision was subsequently upheld by the Court of Appeal. Mr Frketic now seeks to have Centrelink finance a loan, and to do so, he seeks to have a clause inserted in the PFWAs.
10. By way of further background, Mr Frketic referred to a PFWA agreement dated 17 September 2004, prepared by WorkDirections at Fairfield, his Job Network member, which had been ruled through and on which he had directed a referral to an alternate document signed that day at Centrelink, further stating “…Documents to remain in effect until such time as funds have been secured for demolition/living expenses, at which time Centrelink assistance will no longer be required”. That document was completed on 8 October 2004. Centrelink considered invoking a breach penalty in respect of a perceived delay in entering into a Job Search Plan (with WorkDirections) as part of the PFWA, and Mr Frketic was so advised.
11. On 23 October 2004, Centrelink wrote to Mr Frketic requiring him to meet with WorkDirections on 5 November 2004 in order to negotiate a new Job Search Plan, a letter Mr Frketic believed he had received. (I note a second letter two days later, requiring an interview on the 9 November 2004). Mr Frketic told me that he could not understand why such an interview was necessary, given that in his view a PFWA and hence Job Search Plan already existed. Two days later, Centrelink revoked the decision to impose a breach penalty in respect of the September matter with WorkDirections, and I note a file entry of that date which states that Mr Frketic had signed the PFWA (which I assume referred to the Centrelink document of 17 September 2004), and further implies that the injection of a “certain clause” by Mr Frketic into the agreement might be acceptable.
12. That clause, as a proposed amendment by Mr Frketic to the Job Search Plan, and as confirmed in evidence by him, states :
“This agreement will remain in effect until such time as funds are secured: for demolition of my asbestos house and for living expenses until settlement (sale) of resulting block of land, or expiry of general terms and conditions of this contract – whichever is the sooner”.
13. In the event, Mr Frketic attended the interview on 5 November, but refused to sign the Job Search Plan without inclusion of the amending clause. The same situation occurred in respect of a later interview on 22 December 2004, Mr Frketic again refusing to sign the Job Search Plan until his amending clause was included. Acting on advice from the Department of Employment and Workplace Relations (“DEWR”) (recorded by the ARO at T49 p130) which has responsibility for monitoring the provision of Commonwealth Government employment services, and following discussions with Mr Frketic, Centrelink considered the proposed clause to be unacceptable. Accordingly, and as Mr Frketic had not signed an agreement on either occasion when requested, Centrelink invoked the two activity test breaches and the resultant rate reduction penalty in the first instance and a non payment period in the second.
14. In speaking of his proposed amendment to the Job Search Plan, Mr Frketic stated that he believed such a clause to be imperative in order to open up the option of a loan and that it would save Centrelink money as it would place a finite end date on social security payments. His plan once he had obtained the necessary loan funds, was to demolish the house, sell the land, pay off his creditors and return to live in Croatia. When asked why a PWFA he signed in August 2004 contained no amendment in the manner now proposed, nor had he apparently sought an amendment to the standard format, he replied that at that time he had not thought out the options for the demolition of his property.
15. Mr Frketic sought review by an ARO of these two decisions. At T49 p116, the ARO’s case notes of 6 January 2005 record that in discussions:
“Mr Frketic stated he did not want to sign a Preparing for Work Agreement unless it included a clause stating that the PFWA would only remain in effect until he secured funds to demolish his house. He stated that he wanted the PFWA to ‘clearly define” how long he would require Centrelink assistance. Mr Frketic stated if this clause was included he may be able to obtain a grant from Centrelink to demolish his house. I explained to Mr Frketic that the PFWA only remained in force while he was receiving Newstart Allowance or he was required to negotiate another agreement and that Centrelink did not offer grants to people to demolish their homes”.
This explanation in the ARO case notes of his rationale for proposing such an agreement accords with that given to me in evidence by Mr Frketic.
16. On 6 May 2005, Mr Frketic wrote to the Respondent (Exhibit A1) outlining his debts and seeking financial assistance, not the NSA, in order that he could proceed to demolish the house and subsequently sell the land. A response from Centrelink of 31 May 2005 (Exhibit R4) re-affirmed the earlier advice that Centrelink could not assist him in the manner he proposed, there being no provision in the Act to allow an income support payment to be treated as a loan.
17. Mr Frketic spoke of an issue he had with Centrelink whereby he was not accorded access to the personal page messaging system which would enable a prospective employer to communicate directly with him. He referred me to Exhibit A2, an extract of the Job Network Service Guarantee. He stated that he sought confirmation of access in any PFWA, but in cross examination, he could not recall whether he had raised the matter at interviews to prepare a Job Search Plan. In fact, he had raised the issue that employers should be given “access/ability to message a job seeker” via this system in his request for an ARO review dated 3 December 2004 (T39 p85).
SUBMISSIONS
18. Mr Frketic took the Tribunal through a series of points of concern that he had recorded in a notebook. Most of the points repeated details that had arisen in evidence, or were by way of correction or objection to statements or case notes of the Respondent. For example, he objected to the wording in a file note of 19 November 2003 wherein it is stated ”A/N has wasted so much time in this matter at the office and personally is just playing a game”. A further file note of 5 May 2004 expresses the concerns of a Job Network Provider at the time being wasted in responding to emails and faxes from Mr Frketic, whereas he sees these communications as necessary. But in essence, Mr Frketic reiterated his view that a loan would enable him to demolish his house and settle his debts, which in turn would negate his need for further support payments and hence be of financial benefit to the Commonwealth. The insertion of the amendment that he sought at interviews in late 2004 would expedite and formalize such an arrangement.
19. The Respondent submitted that the Statement of Facts and Contentions adequately identified the Secretary’s views. The last signed agreement was on 6 August 2004, and Mr Frketic had refused to sign later agreements, which had been called for under the provisions of section 605(2) of the Act. Centrelink letters of 23 October 2004 and 7 December 2004 required interviews to negotiate new agreements; whilst Mr Frketic had attended, he had not signed the required agreements. The Respondent contended that the terms set out in these PFWAs were reasonable, and thus Mr Frketic was in contravention of subsections 607(1)(b)(iii), (c) and (d).
20. The Respondent submitted that the breaches thus incurred by Mr Frketric must be dealt with in the manner prescribed in section 625 of the Act, which refers to activity test penalties for failure to meet the conditions of Newstart Activity Agreements, the resultant penalties of rate reduction and non-payment periods being applied for what were second and third breaches respectively under the provisions of the relevant sections of the Act.
21. As to the unacceptable proposal by Mr Frketic to have the additional clause inserted in a new PFWA, the Respondent referred to the decision in Re Smith and Secretary, Department of Employment, Education, Training and Youth Affairs (1997) 48 ALD 391, contending that the Tribunal suggested that “the weight of negotiating power is with the Secretary and does not provide the job seeker with power to unilaterally impose terms…”, and the intent of section 606 of the Act is to allow the Secretary to ensure that terms of an agreement are appropriate. Citing Re Long and Department of Family and Community Services [2000] AATA 33, the Respondent opined that the manner of Mr Frketic’s refusal on a number of occasions to sign an agreement indicated that refusal would persist in the future.
LEGISLATION AND CONSIDERATION
22. Section 593 of the Act relevantly states:
”Qualification for newstart allowance593(1) Subject to sections 596, 596A, 597 and 598, a person is qualified for a newstart allowance in respect of a period if:
(a) the person satisfies the Secretary that:
(i) throughout the period the person is unemployed;
ii)…; and
(b) in the case of a person to whom subparagraph (a)(i) applies—throughout the period, or for each period within the period, the person:
(i) satisfies the activity test; and
(ii) …
(c) if subsection 604(1) applies to the person, at all times (if any) during the period when the person is not a party to a Newstart Activity Agreement, the person is prepared to enter into such an agreement; and
(d) if subsection 604(1) applies to the person, at all times during the period when the person is a party to a Newstart Activity Agreement, the person is prepared to enter into another such agreement instead of the existing agreement; and
(e) if the person is required by the Secretary to enter into a Newstart Activity Agreement in relation to the period, the person enters into that agreement; and
(f) while the agreement is in force, the person satisfies the Secretary that the person is taking reasonable steps to comply with the terms of the agreement; and
Note: See subsection (2A) on taking reasonable steps.
(g) …
Note 2: the activity test is set out in section 601.
Note 3: for Newstart Activity Agreement see sections 604 to 607.
593(2A) For the purposes of paragraph (1)(f) or (2)(f), a person is taking reasonable steps to comply with the terms of a Newstart Activity Agreement unless the person has failed to comply with the terms of the agreement and:
(a) the main reason for failing to comply involved a matter that was within the person's control; or
(b) the circumstances that prevented the person from complying were reasonably foreseeable by the person.
593(2B) The Secretary must not determine that a person has failed to take reasonable steps to comply with the terms of a Newstart Activity Agreement unless the Secretary:
(a) is satisfied that the terms of the agreement were intended to assist the person over time in gaining employment or undertaking study or training
(b) …”
23. Subsection 604(1) of the Act provides that a person may be required to enter into a Newstart Activity Agreement. Subsection 605(2) provides for the Secretary to require a person who has entered into a Newstart Activity Agreement to enter into another such agreement instead of the existing one, and subsection 605(3) requires the Secretary to give a person notice of the requirement; and the place and time at which the agreement is to be negotiated. Section 606 of the Act proscribes the activities and terms of a Newstart Activity Agreement, that it may be varied in negotiation with the person, can be reviewed from time to time, and must be approved by the Secretary (that is through his or her delegated authority).
24. Section 607 of the Act refers to failure to negotiate and states:
“607(1) If:
(a) a person has been given notice under subsection 605(3) of a requirement to enter into a Newstart Activity Agreement; and
(b) because the person did not:
(i) attend the negotiation of the agreement; or
(ii) respond to correspondence about the agreement; or
(iii) agree to the reasonable terms of the agreement proposed by the Secretary;
or for any other reason, the Secretary is satisfied that the person is unreasonably delaying entering into the agreement;then:
(c) the Secretary may give the person notice that the person is being taken to have failed to enter the agreement; and
(d) if the notice is given—the person is taken to have so failed.Note: refusal to enter a Newstart Activity Agreement disqualifies a person for newstart allowance—see paragraph 593(e).
607(2) A notice under paragraph (1)(c) must:
(a) be in writing; and
(b) set out the reasons for the decision to give the notice; and
(c) include a statement describing the rights of the person to apply for the review of the decision”
25. In the event that the circumstances envisaged in section 607(1) are found to exist, then the provisions of section 625 come into play. This section refers to penalties for failure to comply and states:
“625(1) Subject to subsection (2), if:
(a) a person is required to enter into a Newstart Activity Agreement in order to qualify, or to continue to qualify, for a newstart allowance; and
(b) the person fails to enter into Newstart Activity Agreement (the failure);a newstart allowance is not payable to the person because of the failure.
625(1A) If a newstart allowance becomes payable to the person after the time it ceases to be payable under subsection (1), then:
(a) if the failure is the person's first or second activity test breach in the 2 years immediately before the day after the failure—an activity test breach rate reduction period applies to the person; or
(b) if the failure is the person's third or subsequent activity test breach in the 2 years immediately before the day after the failure—an activity test non-payment period applies to the person.”
It follows that the provisions of subsections 644AA, 644AB, 644AE and 630A apply in respect of calculation of activity test breach rate reduction and non-payment periods, and the commencement date of any relevant period.
26. On 6 August 2004, a PFWA and Job Search Plan, as components of a Newstart Activity Agreement, was apparently drawn up between Centrelink and Mr Frketic. On the evidence before me, Mr Frketic also signed a PFWA with Centrelink on 8 October 2004, (albeit there was an issue in respect of an alternate draft agreement with the Job Network Provider, WorkDirections Australia) and that would therefore be the last occasion on which such an agreement was signed. Subsection 605(2) of the Act provides for Centrelink to require a person to enter into a new agreement if required, and in September 2004, Mr Frketic was advised of the need to attend an interview with WorkDirections Australia in order to negotiate a new Job Search Plan. For reasons that do not require further comment by me, Centrelink considered the imposition of a breach penalty at that time but did not proceed to implement such a penalty.
27. Subsequently, Mr Frketic attended interviews on 5 November 2004 and 22 December 2004, having been notified of the requirement to do so in accordance with the provisions of subsection 605(3) of the Act. On both occasions, he sought to have an amendment in respect of securing funds as in paragraph 12 above inserted in the agreement. Such an amendment was refused by Centrelink, and Mr Frketic refused to sign the agreement. Accordingly, and in accordance with the provisions of subsection 607(2), Mr Frketic was informed following each interview (22 November 2004 and 5 January 2005) of his failure to enter an agreement. Such notice can be given pursuant to subsections 607(1) (b) (iii) in respect of failure to agree to reasonable terms of a proposed agreement as proposed by the Secretary, or if the Secretary is satisfied that the person “is unreasonably delaying entering into an agreement”.
28. Mr Frketic does not deny his refusal to sign the agreements proposed initially on 5 November 2004 and then on 22 December 2004. His expectation that the amendment he seeks should be supported by Centrelink - it was not considered acceptable to DEWR and in turn Centrelink - seemingly stems from the fact that all other avenues to a loan facility to enable him to demolish his house and clear his debts, had failed. Yet the advice to him on at least two occasions has been that Centrelink could not enter into such a loan agreement.
29. The Decision Statement of the ARO of 11 January 2005 notes that whilst Mr Frketic was complying with his activity tests, he had not entered into a formal agreement and hence faced possible breach recommendations. Notwithstanding, and irrespective of the informal advice provided him, or perhaps in spite of that advice, Mr Frketic was not prepared to sign an agreement being properly sought by the Respondent. It must follow that he was acting in contravention of the law as prescribed in subsection 605(2) and section 606 of the Act. It bears noting that in spite of quite significant professional qualifications, Mr Frketic has not worked since 1996, his evidence being that this has been by his own choice. His evidence was contradictory in that whilst he spoke of seeking employment, he also stated he was not prepared to take the job of another person.
30. In reaching this conclusion I have regard to the decision in Smith (supra) where at 48, and in referring to Case Management Activity Agreements under the Employment Services Act 1994, the Tribunal sees that “the act of entering….such agreements need not be entirely consensual in that the job seeker’s consent is not required”. In this matter, section 607(1)(b)(iii) requires Mr Frketic to “agree to the reasonable terms of the agreement proposed by the Secretary” . He has made no representation that he had objection to any proposals that may have been put to him by Centrelink during the negotiations on 5 November 2004 and 22 December 2004, but his refusal to sign the revised agreement was on the basis that an amendment he thinks necessary, which in my view seems inappropriate in the context of a Newstart Activity Agreement, has not been accepted by the Respondent. The decision not to sign the revised agreement was entirely his choice. Without his signature to an agreement, he cannot have entered into the agreement as required.
31. In the circumstances, I can but affirm the decision to impose a 24% activity test breach rate reduction period commencing on 6 December 2004 for a second breach, and to apply an activity test non-payment period commencing on 26 January 2005 for a third breach. In my view, these penalties have been correctly calculated and imposed in accordance with the relevant subsections of the Act, as hitherto referred to, and are based on the breaches having occurred within a period of two years following the imposition of an activity test breach rate reduction period in November 2003. Finally, I make no comment on the matter raised by Mr Frketic in respect of the Job Network Service Guarantee and access to the messaging system, that being an internal matter for Centrelink and outside the terms of this application for review.
32. The decision is affirmed.
I certify that the 32 preceding paragraphs are a true copy of the reasons for the decision herein of Rear Admiral A R Horton AO, Member
Signed: L Feely
AssociateDate of Hearing 20 June 2005
Date of Decision 29 July 2005
Representative for the Applicant Self-representedAdvocate for the Respondent Mr James Larcombe
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