Gary Fagen and Secretary, Department of Social Services
[2015] AATA 260
•27 April 2014
[2015] AATA 260
Division GENERAL ADMINISTRATIVE DIVISION File Number
2014/4498
Re
Gary Fagen
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Prof R McCallum AO, Member
Date 27 April 2014 Place Sydney The decision under review is affirmed.
...........................[sgd].............................................
Prof R McCallum AO, Member
CATCHWORDS
SOCIAL SECURITY – Pension Bonus Scheme – whether valid application for registration for PBS – late application – whether circumstances permit exercise of discretion to allow late application – accruing member – work test – failure to meet work test for final period – decision affirmed
LEGISLATION
Social Security Act 1991 (Cth) ss 23(5A), 43, 92H(1), 92H(3). 92H(4), 92H(5), 92H(6), 92U
CASES
Polchow and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 224
Pidun and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 228
Mann and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 412
REASONS FOR DECISION
Prof R McCallum AO, Member
27 April 2014
INTRODUCTION
Mr Gary Fagen, the applicant, reached the pensionable age of 65 on 19 December 2008. Instead of immediately claiming the age pension, Mr Fagen continued his employment until he retired on 17 April 2013.
Mr Fagen and his wife did not inquire about the age pension until November 2013 when they visited a Centrelink office. Mr Fagen then applied for, and received the age pension.
During their inquiries with Centrelink, Mr Fagen learned for the first time about the Pension Bonus Scheme (PBS), and on 4 December 2013 he applied to be registered as a participant in the PBS. His registration was refused, so Mr Fagen sought review from an Authorised Review Officer, and then from the Social Security Appeals Tribunal, but to no avail. Mr Fagen has now appealed to this Tribunal.
THE PENSION BONUS SCHEME
The PBS enabled persons who continued working after pensionable age to obtain a lump sum bonus once they received the age pension. The purpose of the scheme was to reward persons who continued working after pensionable age because their employment added to the nation’s productivity and because their delay in taking up the age pension saved the Commonwealth Government money. The PBS applied to those persons who reached pensionable age on or after 1 July 1998. However, the Australian Government decided to wind up the PBS, and so it ceased to apply to persons who qualified for the age pension on or after 20 September 2009.
The relevant legislation covering the PBS is found in Part 2.2A of the Social Security Act 1991 (Cth) (“the SS Act”). However, these provisions need to be read together with ss 17, 21, 22, and 23 of the Social Security (Administration) Act 1999 (Cth).
The PBS is a complex scheme, however, it is clearly explained by Senior Member Fice in Polchow and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 224 at [6]-[19].
For present purposes, it is essential to appreciate that there are two steps which a person must take to obtain the lump sum bonus under the PBS. First, they must register to be participants in the PBS. Second, after undertaking periods of work, they must apply to claim the lump sum bonus. The matter before me simply concerns the first step, that is the process of registration to participate in the PBS.
THE ISSUES BEFORE THE TRIBUNAL
There are two issues before me. First, did Mr Fagen validly apply to be registered as a participant in the PBS on 4 December 2013, pursuant to s 92H(1)(a) of the SS Act?
The second issue is whether I am able to exercise a discretion to admit Mr Fagen to the PBS as a late applicant pursuant to s 92H(3) and related provisions of the SS Act?
WAS MR FAGEN’S APPLICATION FOR REGISTRATION A VALID APPLICATION?
The first issue which I am required to decide is whether Mr Fagen made a valid application to register to be a participant in the PBS on 4 December 2013. The timing of registrations is governed by s 92H of the SS Act. In relation to Mr Fagen’s application, the relevant provision is s 92H(1) of the SS Act. It relevantly provides:
“(1)If a person’s date of qualification for the age pension occurs on or after 1 July 1998:
(a) the person must lodge an application during the period that begins 13 weeks before the person’s date of qualification for the age pension and ends 13 weeks after that date; ...”
It is clear from ss 23(5A) and 43 of the SS Act that Mr Fagen’s date of qualification for the age pension was his 65th birthday, being 19 December 2008. Therefore, for Mr Fagen’s application for registration to be valid, it had to be made within the period commencing 13 weeks before, and ending 13 weeks after his 65th birthday. As his application for registration occurred almost five years after his 65th birthday, I find that Mr Fagen’s application for registration was invalid.
My interpretation of s 92H(1) is confirmed by the existing case law; see, Pidun and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 228; see also, Peter Sutherland and Alan Amforth, Social Security and the Family Assistance Law (Sydney, the Federation Press, 3rd ed, 2013) p 239.
In the respondent’s written statement of facts and contentions, it argued that Mr Fagen could have validly registered to participate in the PBS in December 2013, long after his 65th birthday, if he had met the work test (see [41] – [48]). In my view, this argument is misconceived, and it did cause me some confusion during the hearing.
LATE REGISTRATION
The second issue is whether I am able to exercise a discretion to admit the applicant to the PBS as a late applicant, pursuant to s 92H(3) and related provisions of the SS Act.
Section 92H(3) of the SS Act does permit me to allow Mr Fagen to register for the PBS as a late applicant, as I stand in the shoes of the Secretary. However, this discretion is governed by s 92H(4) which relevantly provides:
“(4)The Secretary must not make a decision to extend the period within which a person must lodge an application unless, if it were assumed that the person had been a member of the pension bonus scheme throughout the pre-application period:
(a) ...
(b) both:
(i) the person would have been an accruing member for some or all of the pre-application period; and
(ii) the person would have passed the work test for each test period that is applicable to the person.”
In Mr Fagen’s circumstances, the pre-application period runs from the date of his 65th birthday which was 19 December 2008, until 4 December 2013. It will be recalled that this is the date on which he lodged his application to be registered to participate in the PBS (see s 92H(5) of the SS Act).
Mr Fagen gave sworn evidence and I found him to be a truthful witness.
Mr Fagen said that he did not know about the PBS until he met with a Centrelink employee in November 2013.
The respondent accepts that Mr Fagen would have been an accruing member for at least some of the pre-application period; see the respondent’s statement of facts and contentions at [50]. Thus Mr Fagen meets subpara (i).
The remaining question which I am required to decide is whether Mr Fagen passed the work test for each test period throughout the pre-application period? For the purposes of late registrations, the essence of the work test is set out in s 92H(6) of the SS Act. In Mann and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 412, Senior Member Britton helpfully explains the work test as follows at [13]:
“The work test
13. The method of determining a “test period” is set out in s 92H(6) and requires the following sequence of steps to be taken:
(a) identify the overall accruing period, which is that part of the pre-application period for which, if it were assumed that the person had been a member of the pension bonus scheme throughout the pre-application period, the person would have been an accruing member of the scheme;
(b) if the overall accruing period is 365 days or less-the overall accruing period is the only test period;
(c) if the overall accruing period is longer than 365 days-each of the following periods is a test period:
(i) the full-year period beginning at the start of the overall accruing period;
(ii) if 2 or more succeeding full-year periods are included in the overall accruing period-each of those full-year periods;
(iii) the remainder (if any) of the overall accruing period.”
Section 92U of the SS Act further provides that to pass the work test for a full year, he must undertake gainful employment for at least 960 hours per year.
It is common ground that Mr Fagen satisfied the work test for the four years beginning on his 65th birthday on 19 December 2008 and ending on 19 December 2012. This is because he worked for at least 960 hours in each of these annual periods of employment.
In relation to his final period of work from 19 December 2012 to 4 December 2013, the question remains whether he passed the work test for this period.
This period from 19 December 2012 to 4 December 2013 was just short of one year. To pass the work test, even on a pro rata basis, Mr Fagen would have had to have worked for approximately 920 hours. Mr Fagen’s final period of employment was from 19 December 2012 to 17 April 2013, being for 17 weeks and 1 day. It is common ground between the parties that the applicant’s pay slips show that he was paid for 600 hours of work during this period, but 600 hours is a long way short of 920 hours.
In his oral evidence, Mr Fagen stated that he worked as a project officer in the Properties Department at Macquarie University from 2010 to 17 April 2013. He said he was on a salary and that he was never paid for over time. The pay slips which are before this Tribunal provide that the applicant is paid for a 70 hour fortnight which included one rostered day off (RDO).
Mr Fagen said that he usually commenced work at 7:00 am and finished at 4:00 pm with one hour for lunch – that is, he worked approximately 8 hours per day.
He stated that his work involved overseeing renovations and other building projects. At times he may have had nine to 12 projects, but some may have simply concerned the laying down of carpet or painting. He had to work around the needs and demands of professors, faculties and students. He said he often came in on weekends, for on occasion he was required to be present when materials were delivered. Mr Fagen said that if he attended the University on a Saturday the minimum time he worked was four hours.
Mr Fagen said that he did not kept records of the overtime which he had worked. He added that the University did not keep these records. .
Mr Fagen said that the summer break period was his busiest time because apart from summer school activities, there were less students and more opportunities to complete projects. Mr Fagen stated that the summer period from December 2012 to February 2013 was a busy period. Finally, Mr Fagen said that after his retirement on 17 April 2013, he did not undertake any other work whatsoever.
Mr Peter Squibb gave sworn evidence over the telephone. Mr Squibb said that he was the applicant’s supervisor at Macquarie University. He said that Mr Fagen’s actual working hours were from 7:30 am to 4:00 pm, but that often the applicant commenced work earlier at 6:30 am to organise projects.
Mr Squibb said that Mr Fagen came in on weekends on numerous occasions. He said that no records were kept of extra hours worked. It was a “gentleman’s agreement”.
When asked to estimate Mr Fagen’s hours, Mr Squibb said that he estimated them at 75 to 80 hours a fortnight. On occasion, a person had to work on their RDO, and if so they lost that RDO.
Mr Squibb stated that the summer period from December 2012 to February 2013 was a busy time to supervise projects. He said that the University did shut down for a week at Christmas, but if there was work to be done, they worked. He said he recalled he and Mr Fagen working four or five times during that break.
In relation to the hand over period at the time of Mr Fagen’s retirement, Mr Squibb said that Mr Fagen did not work less hours.
When asked how many weekends did Mr Fagen work, Mr Squibb said two or three a year. He was not pressed on whether he meant weekends where both Saturdays and Sundays were worked.
I am prepared to find that during this final period of employment from 20 December 2012 to 17 April 2013, Mr Fagen worked 80 hours per fortnight, being a total of 688 hours. However, these hours are still more than 220 hours short of compliance with the work test for this final period.
In Mann, Senior Member Britton spoke about the work test in the following words. The Senior Member said at [17]:
“...[Section] 92H(4)(b) imposes a mandatory requirement that the work test be passed for each test period. The Act does not confer a discretionary power to waive that requirement in special circumstances.”
I agree with Senior Member Britton, and accordingly I find that Mr Fagen failed to pass the work test for the final period of the pre-application period. As I do not possess discretionary powers to disregard this failure, Mr Fagen cannot obtain late registration to participate in the PBS.
I appreciate that Mr Fagen did not know about the PBS until he spoke with a Centrelink employee in November 2013. Had he known of the PBS at the time of his 65th birthday, he could have registered 13 weeks before or 13 weeks after this date, and ordered his affairs so as to receive the lump sum bonus. If he had found out about the PBS at the date of his retirement on 17 April 2013, he could have sought, and probably would have obtained, late registration in the PBS. I sympathise with his disappointment.
DECISION
The decision under review is affirmed.
I certify that the preceding 40 (forty) paragraphs are a true copy of the reasons for the decision herein of Prof R McCallum AO, Member .....................[sgd]..................................................
Associate
Dated 27 April 2014
Date of hearing 16 March 2015 Applicant In person Solicitors for the Respondent Department of Human Services
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