Goonewardena and Secretary, Department of Social Services (Social services second review)

Goonewardena and Secretary, Department of Social Services (Social services second review) [2017] AATA 1281 (14 August 2017)
Division:GENERAL DIVISION
File Number: 2016/5557
Re:Winston Goonewardena
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Miss E A Shanahan, Member
Date:14 August 2017
Place:Melbourne

The Tribunal affirms the decisions under review.
........................[sgd]................................................
Miss E A Shanahan, Member
SOCIAL SECURITY – pensions allowances benefits – disability support pension – partner’s redundancy payment – income stream purchase – failure to advise – debt arising – statutory interpretation – decisions as to rate of disability support pension and debt raised affirmed
Legislation
Social Security Act 1991
Social Security (Administration) Act 1999
Social Services and Other Legislation Amendment Act 2014
Cases
Re Callaghan and Secretary, Department of Social Services (1996) 2 SSR 125
Clifford and June Callaghan and Secretary, Department of Social Security [1996] AATA 413
Beadle and Director-General of Social Security (1984) 6 ALD 1
REASONS FOR DECISION
Miss E A Shanahan, Member
14 August 2017

Mr Goonewardena qualified for disability support pension (DSP) on 7 March 2003. His rate of payment for pension has always been assessed taking into account his wife’s earnings as determined by the Social Security Act 1991 (the Act). Mrs Goonewardena ceased work on 26 September 2014, having accepted a voluntary redundancy. On 7 October 2014 Mrs Goonewardena lodged a claim for Newstart allowance which was initially approved but suspended on 21 October 2014 and backdated to 9 October 2014, due to her receipt of a lump sum termination payment of $73,741.
Mrs Goonewardena then made a claim for Carer allowance. This was granted with effect from 19 November 2014. Mrs Goonewardena purchased an account based income stream from Catholic Super on 19 December 2014 (income stream).
Mr Goonewardena was advised by Centrelink on two occasions that he could transfer to an aged pension but did not accept these offers.
By letter dated 15 October 2015, Centrelink notified Mr Goonewardena that his disability support pension from 15 October 2015 onwards was to be paid at the rate of $80.49 and from 13 November 2015 at the rate of $81.75 per fortnight, based on a combined annual income of $4,723.24. On 12 November 2015 Mr Goonewardena was advised that he had been overpaid his DSP entitlements by the sum of $948.11, this arising from the purchase by Mrs Goonewardena of an income stream on 19 December 2014.
Mr Goonewardena requested review of both decisions and on 29 January 2016 an authorised review officer (ARO) affirmed both decisions. Mr Goonewardena then lodged an application for review to the Administrative Appeals Tribunal, Social Service and Child Support Division (AAT Tier 1). On 7 September 2016 the AAT Tier 1 affirmed the decisions under review. Mr Goonewardena applied for review by the General Division of the Administrative Appeals Tribunal on 18 October 2016 (AAT Tier 2). His claim was based essentially on his own interpretation of the legislation.
At the hearing Mr Goonewardena was self-represented and Ms Ailsa Bramley, Senior Government Lawyer, appeared for the Secretary, Department of Social Services (the Secretary). The Tribunal was provided with the documentation filed pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (the T-Documents). Mr Goonewardena gave evidence before the Tribunal.
BACKGROUND TO THE APPLICATION
Mr Goonewardena injured his back at work in 1996 and has not worked since. He qualified for the disability support pension as of 7 March 2003. His rate of DSP payment has always been assessed taking into account his wife’s earnings in accordance with s 1064-A2 of the Act. This provides that members of a couple are treated as sharing their resources. Mrs Goonewardena worked for the Australian Tax Office (ATO) and accrued superannuation benefits.
On 26 September 2014 Mrs Goonewardena accepted a redundancy package from the ATO. Mrs Goonewardena had been employed by the ATO from 2 July 1990 and on termination received a payment of $73,905.41. This payment was contributed to by an in lieu of notice payment $5,996.17; annual leave owing $6,240.51; long service leave of $3,562.48; and a redundancy payment covering a period of 48 weeks of $57,563.19 (T3, page 32). This information is enclosed in the Employment Separation Certificate for Mrs Goonewardena.
Despite the payment of the redundancy package, Mrs Goonewardena lodged a claim for Newstart allowance on 7 October 2014. Mrs Goonewardena’s termination payment was paid to her on 9 October 2014. Based on this payment an income maintenance period of 303 days was calculated to commence on 9 October 2014 and terminate on 15 December 2015. During that period Mr Goonewardena’s fortnightly DSP was payable at a reduced rate as the income disqualification limit for a partnered disability support recipient was then $2,860.00 per fortnight.
The redundancy payment also impacted on Mrs Goonewardena’s application for Newstart allowance and the previously approved application was reversed although the subsequent claim for Carer allowance was approved with effect from 19 November 2014.
The documentation in relation to the file 2016/5557 said to relate to the debt owed by Mr Goonewardena, (T29, Centrelink) records Mrs Goonewardena’s contact with Centrelink on 15 July 2014 and 12 August 2014. These in-office meetings were clearly made with reference to her impending termination of employment and are listed on both dates as being a discussion regarding the eligibility for Carer’s payment, pensions and income tests, deeming provisions, the income maintenance period, superannuation, defined benefit pensions and income streams.
The Financial Information Service of Centrelink initially provided Mrs Goonewardena with four calculations, based on different scenarios. These included a fully defined pension, calculations with a 50 per cent defined pension and a 50 per cent account based pension, the third with 100 per cent account based pension and the fourth option with a fully defined pension with a redundancy payment. Mrs Goonewardena’s later consultation with the Financial Information Service on 12 August 2014 resulted in further calculations being made based on Mr Goonewardena’s rate of DSP and aiming to achieve a maximum rate of Newstart allowance for Mrs Goonewardena. The figures revealed that the maximum rate for retention of the DSP for Mr Goonewardena and Newstart allowance for Mrs Goonewardena was for her to preserve her superannuation and serve her income maintenance period. Calculations were also made for the situation where Mrs Goonewardena took the full superannuation pension and both she and Mr Goonewardena took out or shifted to the aged pension. Mr Goonewardena was to turn 65 in June 2015 and Mrs Goonewardena 61 in January 2015.
Mr Goonewardena said in his evidence that he informed Centrelink of his wife’s income stream purchase within 14 days as required and would have done so in person at the Fountain Gate Centrelink office. The documentation does not reveal any record of this having occurred. Mrs Goonewardena informed Centrelink of her income stream purchase on 29 September 2015.
Mr Goonewardena had been notified by letter of 21 October 2014 of the need to advise Centrelink of any change in his income, which was stated to be $5.00 per annum. He was required to respond within 14 days. Mr Goonewardena had told the AAT Tier 1 that he tended not to read letters Centrelink sent him from beginning to end.
As there was no response to this letter Mr Goonewardena’s DSP was paid at a higher rate than would have been paid had his wife’s income been taken into account. As a result an overpayment of $948.11 over the period from 19 December 2014 until 14 October 2015 had occurred and thus a debt was incurred.
Centrelink had sent Mr Goonewardena two Transfer to Age Pension forms. The first of which was dated 13 April 2015 the second 18 May 2015. Both were returned signed by Mr Goonewardena declaring that he did not want to transfer to the aged pension. These letters also contained questions regarding superannuation, savings accounts, and public sector employee income but he had ticked the “not relevant” box.
On 23 August 2015 a further letter was sent to Mr Goonewardena requesting information regarding his wife’s allocated pension by completing a current Centrelink schedule for your income stream products. A response was requested by 13 September 2015. The information was provided on 29 September 2015 and a new rate of DSP was calculated. Mr Goonewardena was advised on 15 October 2015, that based on the couples then combined annual income of $4,723.24 from the income stream, his DSP was reduced and a debt incurred.
There followed an internal review and a review by the AAT Tier 1, both of which affirmed the decisions under review and have led to Mr Goonewardena’s application for review by the General Division of the Administrative Appeals Tribunal.
RELEVANT LEGISLATION
The Social Services and Other Legislation Amendment Act 2014 (Amendment Act) came into effect on 1 January 2015. Schedule 11 of the Amendment Act, amended the definition of income and ordinary income as provided in s 8(1) of the Social Security Act 1991 (the Act).
Of particular relevance to this matter is s 48(2). Subsections (1) and (2) state:
48   Application provisions
(1) The amendments made by Part 1 apply in relation to working out the ordinary income of a person in relation to days occurring on or after 1 January 2015.
(2) However, if:
(a)a person was receiving an income support payment immediately before 1 January 2015; and
(b)either:
(i) an asset‑tested income stream (long term), that is an account‑based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994, was being provided to the person immediately before 1 January 2015; or
(ii) an asset‑tested income stream (long term), that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993) provided under a contract that meets the standards determined in an instrument under subparagraph 1099DAA(1)(b)(ii) of the Social Security Act 1991, was being provided to the person immediately before 1 January 2015; and
(c)     since the start of that day:
(i)     the person has been continuously receiving an income support payment; and
(ii)     that asset‑tested income stream (long term) has been provided to the person;
then the amendments made by Part 1 do not apply in relation to the person (the primary beneficiary) and that asset‑tested income stream (long term).
The Act defines income as follows:
8 Income
(1)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 …
Section 3B of the Act provides further clarification and states:
3B Definitions—simplified outline
Section 1064 of the Act provides that the rate of DSP is to be worked out in accordance with the rate calculator of that section.
Section 1064-A2 provides that members of a couple are treated as sharing resources on a 50/50 basis. Section 1064-E2 provides that the members of a couple have their income calculated by halving their combined income and that where an income maintenance period applies, it applies to both members of the couple.
Module F of s 1064 addresses the allowance of certain payments to a person or their partner to be treated as ordinary income. Section 1064-F5 states:
If:
(a)a person’s employment has been terminated; and
(b)the person receives a termination payment (whether as a lump sum payment, as a payment that is one of a series of regular payments or otherwise);
the person is taken to have received ordinary income for a period (the income maintenance period) equal to the period to which the payment relates.
Section 1064-F14 defines the relevant terms as:
1064 F14In this Module:
leave payment includes a payment in respect of sick leave, annual leave, maternity leave and long service leave, but does not include:
(a)an instalment of parental leave pay; or
(b)dad and partner pay.
termination payment includes:
(a)a redundancy payment; and
(b)a leave payment relating to a person’s employment that has been terminated; and
(c)any other payment that is connected with the termination of a person’s employment.
The Act provides for the discretion to reduce income maintenance period in the presence of severe financial hardship or unavoidable or reasonable expenditure. These do not apply in this matter.
To ascertain whether the debt incurred by Mr Goonewardena is recoverable requires consideration of whether the savings provision of the Amending Act are applicable to Mrs Goonewardena’s account based income stream purchased on 19 December 2014.
Part 1 of Schedule 11 of the Amending Act extended the deeming provisions contained in s 1076 of the Act to account based superannuation income streams. These were such that s 48 of the Amending Act provisions were not applicable to a person receiving an income support payment immediately before 1 January 2015.
Section 48(4) of the Amending Act states:
(4)     In this item:
income support payment has the meaning by subsection 23(1) of the Social Security Act 1991.
Section 23 of the Act provides that:
23Dictionary
(1)In this Act, unless the contrary intention appears:
...
income support payment means a payment of:
(a)     a social security benefit; or
(aa)   a job search allowance; or
(b)     a social security pension; or
(c)     a youth training allowance; or
(d)     a service pension; or
(e)     income support supplement.
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).
social security pension means:
(a)     an age pension; or
(b)     a disability support pension; or
(c)     a wife pension; or
(d)     a carer payment; or
(e)     a pension PP (single); or
(ea)   a sole parent pension; or
(f)     a bereavement allowance; or
(g)     a widow B pension; or
(i)     a mature age partner allowance; or
(k)     a special needs pension.
SUBMISSIONS
Mr Goonewardena provided written submissions to both tiers of the Administrative Appeals Tribunal. He maintained he responded to the letter of 21 October 2014 and had also advised Centrelink that his wife had purchased an income stream on 19 December 2014. Mr Goonewardena had no proof that he had provided these responses but argued that Centrelink was very busy at the time given it was the Christmas/New Year period and they may have misplaced his response.
Mr Goonewardena submitted that both the reduction in his DSP payment amounts and the debt incurred had arisen from Centrelink’s failure to apply the Act fairly. He relied on the definition of ordinary income provided in s 8 of the Act, which he interpreted as meaning his wife’s termination payment was not ordinary income. As she had left the employment of the ATO on 26 September 2014 the redundancy payment in his opinion did not amount to earnings from employment.
It was further submitted that differentiating between the DSP and the Age Pension with respect to the effect Mrs Goonewardena’s purchased income stream was unfair. Mr Goonewardena said he had wished to activate the grandfathering clause of the Amendment Act but this had been rejected as Mrs Goonewardena’s Carers allowance was not included in the definition of either a social security benefit or a social security pension as required under s 48 of the Act.
Mr Goonewardena objected strongly to having had his two applications heard together before the AAT Tier 1 review. He had requested two separate hearings as his disabilities prevented him from participating for any length of time. The Tribunal notes that the AAT Teir 1 hearing was conducted by telephone. Mr Goonewardena attended in person for the hearing before this Tribunal.
The Respondent
Ms Bramley provided a Statement of Facts and Contentions on behalf of the Secretary, addressing in detail the relevant legislation and Mr Goonewardena’s social security records, in particular those arising since 2014. Ms Bramley expanded on the definition of income and the differences between income support payments, benefits and pension, all of which are relevant to this determination. In addition the question of special circumstances and waiver of the debt was addressed with reference to the Administrative Appeals Tribunal decision in Clifford and June Callaghan and Secretary, Department of Social Security [1996] AATA 413 where the term knowingly was considered to be [at 48] ... actual knowledge, rather than constructive knowledge, in relation to the ... making a false statement or representation or ... failing or omitting to comply with a provision of the Act.
The expression special circumstances was also considered in Beadle and Director-General of Social Security (1984) 6 ALD 1 and interpreted to mean circumstances that are unusual, uncommon or exceptional.
The Secretary contended that there was no evidence that Mr Goonewardena’s circumstances could be considered special and therefore attract waiver of part or all of the debt.
TRIBUNAL’S DELIBERATIONS
Evidence before the Tribunal
Mr Goonewardena has been receiving DSP payments since 2003, having been injured in 1996. Given the seven year interval between the injury and receipt of DSP, it seems more likely than not that he would have been subject to a preclusion period arising from workers’ compensation payments and would therefore be cognisant of the effects of such payments on qualification for the DSP.
It is clear that Mrs Goonewardena sought advice regarding the effect of her planned purchase of an income stream and the redundancy package she expected to receive on both her and Mr Goonewardena’s eligibility for social security pensions, benefits and allowances. Her consultation with the Finance Information Service of Centrelink took place well before her termination on 26 September 2014. In July and early August 2014 she was provided with six different options as to how to structure her redundancy payments and her planned income stream purchase and was provided with what is called a ROI. The Tribunal is not privy to the department’s abbreviations but considers it likely to mean a Record of Interview/or Information.
It appears on the documentary evidence, although not contended by either party, that Mrs Goonewardena sought and received financial information with respect to the most beneficial, in terms of social security payments and eligibility, method of structuring her redundancy and superannuation benefit derived from 24 years of employment with the ATO. She also requested information regarding the impact of these measures on Mr Goonewardena’s DSP.
It appears, albeit as analysed retrospectively, that Mrs Goonewardena selected the option described as:
Her preserving her super and serving out her income maintenance period. This shows PTR (partner) will get max rate of DSP and cus (customer) max rate of NSA.
The file entry indicates that had Mr Goonewardena opted to transfer to the aged pension as of 15 June 2015, he would probably have been exempted from the effect of Mrs Goonewardena’s termination payment on his level or rate of payment of pension.
Mr Goonewardena’s application for review was based on his interpretation of the Act and the Amendment Act and in particular the definition of income. The Tribunal has not been informed of his familiarity with the Act or the extent of his reading of the Act but considers it probable that he accessed the Act via the Department’s internet site. The Act came into force in 1991 after some years of drafting. It was hailed as being the first Act of the Australian Parliament drafted in so-called plain English. It has been amended on numerous occasions reflecting the policy changes of the political parties holding Government throughout the life of the Act. The 1991 Act did not provide for the impact of the compulsory superannuation guarantee legislated in 1992. The Amendment of 1 January 2015, reflects the near universality of Australian workers’ superannuation cover providing for a retirement income stream.

Mrs Goonewardena’s consultation with FIS Centrelink is indicative of her knowledge of the impact of her planned purchase of an income stream and her redundancy package on both her and her husband’s eligibility for social security benefits, allowances and pensions.
While Mr Goonewardena has argued that the s 8 definition of income should apply to all social security claims, s 3B of the Act entitled Definitions – simplified outline clearly states that many other sections in this part contain the actual definitions relating to a particular topic. Section 3B also refers to s 23 which clearly defines the relevant definition of income, support payment, social security benefit and social security pension and by omission excludes the Carer’s allowance. While the NSA was included as a social security benefit Mrs Goonewardena’s initial acceptance for NSA had been negated after her termination payment was revealed on 9 October 2014. As a result Mrs Goonewardena was not in receipt of a relevant income support payment as defined in the Act.
The Tribunal determines that while the Act is somewhat cumbersome, the definition of income as it applies to the facts in this matter is clear and the decisions at both the internal review and the AAT Tier 1 are affirmed.

I certify that the preceding 43 (forty‑three) paragraphs are a true copy of the reasons for the decision herein of Miss E A Shanahan, Member

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Associate
Dated: 14 August 2017

Date of hearing: 8 May 2017

Applicant: In person

Advocate for the Respondent: Ms Ailsa Bramley - FOI and Litigation Branch, Department of Human Services

[2017] AATA 1281

14 August 2017

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Appeal

Jurisdiction

Standing

Date of hearing:	8 May 2017
Applicant:	In person
Advocate for the Respondent:	Ms Ailsa Bramley - FOI and Litigation Branch, Department of Human Services