Frowis and Secretary, Department of Employment and Workplace Relations and Anor

[2007] AATA 1751

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1751

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  T2007/30   

GENERAL ADMINISTRATIVE  DIVISION

)           &  T2007/31

Re

FRANK FROWIS (T2007/30)
  Applicant

And

SECRETARY, DEPARTMENT OF EMPLOYMENT & WORKPLACE RELATIONS

  1st Respondent

SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES & INDIGENOUS AFFAIRS

  2nd Respondent

AND

MARIE ELENA FROWIS (T2007/31)

  Applicant

SECRETARY, DEPARTMENT OF EMPLOYMENT & WORKPLACE RELATIONS

  Respondent

DECISION

Tribunal Ms A F Cunningham (Senior Member)

Date11 September 2007

PlaceHobart

Decision The Tribunal affirms the decision under review and dismisses the appeal.

..............................................

Senior Member

CATCHWORDS

Social Security entitlements - mature age allowance, partner allowance - aged pension - assets limit exceeded - decision under review affirmed

Social Security Act 1991

Re Secretary, Department of Social Security and Langton (1993) 31 ALD 579

REASONS FOR DECISION

11 September 2007 Ms A F Cunningham (Senior Member)   

1. The applicants have sought the review of a decision made by the Social Security Appeals Tribunal (SSAT) dated 18 December 2006, which affirmed a Centrelink decision of 21 August 2006 to cancel Mr Frowis' mature age allowance and Mrs Frowis' partner allowance and a decision of 3 October 2006 to pay Mr Frowis a reduced rate of aged pension due to the value of Mr and Mrs Frowis' assets. 

Issues

1. The issues for the Tribunal to decide are the value of the applicants' assets, whether the applicants are entitled to be paid mature age allowance and partner allowance and what rate of age pension is Mr Frowis entitled to receive.

Evidence

1. Mr and Mrs Frowis attended the hearing and gave oral evidence.  The Tribunal was informed that Mr and Mrs Frowis agreed with the facts as outlined in the Secretary' Statement of Facts and Contentions.  A summary of the relevant facts is as follows:

• Mr and Mrs Frowis were granted mature aged allowance and partner allowance on 16 March 2001.

• On 12 June 2006 Mr Frowis completed a transfer to assets age pension form which included an income and assets review.  On 21 July 2006 Mrs Frowis completed a Centrelink income and assets review form.

• On 10 August 2006 the Australian Valuation Office (AVO) conducted an assessment of Mr and Mrs Frowis' property at 9 Havelock Street, Goodwood, and determined the market value of the property at $185,00.00.

• On 18 August 2006 the AVO assessed Mr and Mrs Frowis' property at 1 Norfolk Crescent, Primrose Sands, as having a market value of $140,000.00.

• On 21 August 2006 a Centrelink officer determined that the applicant's assets were over the allowable threshold for their respective payments and made a decision to cancel Mr Frowis' and Mrs Frowis' partner allowance.

• On 25 August 2006 Mr Frowis a Centrelink statement and outlined that he            wished to dispute the valuation given to the Primrose Sands property.  He stated that he believed the true value to be $80,000.0.

• On 8 September 2006, the AVO completed another valuation of the property at 1 Norfolk Crescent, Primrose Sands and valued the property at $125,00.00.

• On 13 September 2006, the Centrelink original decision maker (ODM) advised the applicants that although the new valuation had been applied to the Primrose Sands property their assets still exceeded the allowable threshold for allowance payments.  The ODM concluded that Mr Frowis was entitled to an age pension rate of $271.60 per fortnight effective from 3 September 2006. 

• At the applicants' request the decision to cancel their allowance payments and reduce Mr Frowis' age pension was reviewed by an Authorised Review Officer on 7 November 2006 and affirmed.  On 18 December 2006 the SSAT affirmed the decision of the ARO. 

1. In their letter to the AAT seeking a review of the SSAT's decision Mr and Mrs Frowis contend that:

• The asset test is unfair and discriminates against those who have saved.

• There is no phase-in period; pensions are discontinued overnight without warning or consultation.

• Appeal processes only look into policies rather than the real issues at hand.

• Property exemption for Primrose Sands should be granted due to family ownership (property is only in wife's name)

• Provision in the Act for asset rich and cash poor not granted.

• Wife has lost her allowance and is not entitled to job search although not of pension age.

1. Mr Frowis informed the Tribunal that the valuations of the properties as assessed by the AVO were not in dispute.   Mr Frowis stated that he had obtained a valuation of the Primrose Sands property from Mr Banks who assessed the value at around $140,00.00.  This valuation accords with the AVO valuation of 18 August 2006 but is $15,00.00 in excess of the revised valuation of the AVO on 8 September 2006, the figure adopted by the respondent in its calculations for allowance entitlements.

2. There was no dispute that the applicants principal home is the one in which they reside at 14 Dewbay Court, Claremont.  Accordingly it is an exempt asset pursuant to the provisions of 1118(1) of the Social Security Act 1991 (the Act). That section states that in calculating the value of a persons assets for the purposes of the Act, if the person if a member of a couple the value of any right or interest in one residence that is the principal home of the person, is disregarded.

3. The applicants own two other properties namely that at 9 Havelock Street, Goodwood and at 1 Norfolk Crescent, Primrose Sands which cannot be considered as their principal home.  These properties meet the definition of "asset" in section 11(1) of the Act as "property or money (including property or money outside Australia". 

4. Whilst the Act does not specify the method by which an asset is to be valued, the current market value has been accepted as an appropriate method (Re Secretary, Department of Social Security and Langton (1993) 31 ALD 579.

5. Documentary evidence of the valuations was tendered and the Tribunal accepts the valuations of the AVO of $185,00.00 for 9 Havelock Street, Goodwood as 10 August 2006 and $125,000.00 for 1 Norfolk Crescent, Primrose Sands at 6 September 2006. 

6. Details of the applicants assets were provided in their Income and Asset Review Forms which were included in the T Documents tendered in evidence at the hearing.  The applicants did not dispute the findings of the ARO when conducting his review on 21 August 2006 as to the value of the applicants assets being as follows:

   1000 Telstra shares  $3,590  9 Havelock Street, Goodwood  $185,000  1 Norfolk Crescent, Primrose Sands           $125,000  House contents  $8,000  Mitsubishi  $2,000  Honda integra  $4,000  Total assessable assets  $327,950 ($163,795 each)

Mature Age Allowance

1. Section 660YCJ(1) states that:

   "A mature age allowance is not payable to a person if the value of the person's assets is greater than the person's asset value limit".

The assets value limit details are contained in a Table in sub-section 2.  The asset limit in Mr Frowis' case is $114,500.00.  Mr Frowis' share of the applicants' assets is $163,795.00.  The provisions of section 660YCJ do not permit the exercise of a discretion and clearly state that mature age allowance is not payable if the assets value limit is exceeded.  This is clear in Mr Frowis' case and accordingly the Tribunal finds that the decision to cancel his mature age allowance was correct. 

Partner Allowance

1. Section 771HF(1) states that

   "A partner allowance is not payable to a person if the value of the person's assets exceeds the person's assets value limit. 

   Note:  the value of the person's assets is only half the combined value of the person's assets and the assets of the person's partner"..

2. The table in sub-section 2 sets that limit at $114,500.00.  Mrs Frowis' share of the combined assets of herself and her husband at $163,795.00 clearly exceeds this limit.  Accordingly the Tribunal finds that the decision to cancel her partner allowance was correct. 

Age Pension

1. Section 55 of the Act states that a person's aged pension rate is to be worked out using the pension rate calculator at the end of section 1064.  Module G contains the method to calculate the effect of a person's assets on the maximum payment rate. 

2. The respondent submitted the following calculations:

   Step 1            Value of the Applicant's assets     $163.795      

   Step 2            Assets value limit  $114,500 (section 1064-G3)

   Step 3-5        Assets excess  $49,295 (sections 1064-G5 &   1064-G7)

   Step 6            Reduction for assets  $3,485 (section 1064-G4)

3. Step 10 of 1064-A1 requires the reduction for assets ($3,485) to be subtracted from the maximum payment rate to determine the asset reduced rate of pension. This figure is contained in Note C of Attachment 3 containing the currents rate of pension and is $10,847.20 for the married rate.  The figure of $7,362.00 is arrived at when the reduction for assets amount of $3,485.00 is deducted from the maximum rate of age pension of $10,847.0.

4. The above calculations were not the subject of dispute at the hearing of the appeal and the Tribunal affirms the SSAT's decision that Mr Frowis is entitled to a reduced rate of age pension in the sum of $7,362.0 per annum.

5. Whilst it may be the applicants desire to maintain the Claremont property as their principal home and retain their other properties for the purpose of deriving income (in the case of the Goodwood property) and for the ultimate benefit of their children, the object of the Social Security legislation is to provide assistance to those in need.  The Act sets out the provisions for entitlement and requires assessment of an applicant's total income and asset resources.  The intention is that entitlements are only paid to those persons who meet the income and assets tests so that the limited resources available are paid on an equitable basis to those most in need.  Whilst the Tribunal has some sympathy for the applicants' position which has arisen due to the fairly rapid increase in property values over recent years, the provisions of the Act apply throughout the nation where property values vary considerably.  The Tribunal has no discretion to depart from the legislation which takes account of all assets and income owned and derived by members of a couple irrespective of individual ownership.  Nor is a discretion afforded to enable the Tribunal to make any adjustment where a couple is regarded as "asset rich but income poor".

6. For the above reasons and in accordance with the legislation governing the payment of the allowances which are the subject of this review, the Tribunal affirms the decision under review and dismisses the appeal. 

I certify that the 19 preceding paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham (Senior Member)

Signed:  R Hunt (Administrative Assistant)

Date/s of Hearing  1 August 2007
Date of Decision  11 September 2007
Solicitor for the Applicant          Applicants' in person
Solicitor for the Respondent     Ms Allison Devine, Centrelink Legal Services