Hazelwood and Comcare
[2000] AATA 820
•14 September 2000
DECISION AND REASONS FOR DECISION [2000] AATA 820
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q1999/1329
GENERAL ADMINISTRATIVE DIVISION )
Re NATALIE HAZELWOOD
Applicant
And COMCARE
Respondent
DECISION
Tribunal Miss WJF Purcell (Senior Member)
Date14 September 2000
PlaceBrisbane
Decision The Tribunal sets aside the decision under review and remits the matter to the respondent for reconsideration in accordance with the direction that it pay the applicant's Higher Education Contribution Payments incurred in relation to a Graduate Diploma in Legal and Justice Studies Course.
(Sgd) WJF Purcell
Senior Member
CATCHWORDS
HECS debt – paid upfront – whether payment should be considered a cost of a rehabilitation program the applicant undertook after her medical discharge from the navy
Higher Education Funding Act 1988 ss 39, 57
Safety Rehabilitation and Compensation Act 1988 ss 37
Higher Education Funding Bill 1988
Hull v Comcare (1999) AATA 766
REASONS FOR DECISION
Miss WJF Purcell (Senior Member)
This is an application for review of a decision of a Delegate of the Military Compensation and Rehabilitation Service of 15 October 1999 [T81/164], which affirmed a decision of 23 February 1999 not to pay any Higher Education Contribution (HECS) payments in relation to a Graduate Diploma in Legal and Justice Studies Course.
The evidence before the Tribunal comprised the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the T documents), together with exhibits tendered by the parties. The applicant, who gave oral evidence, was represented by Mr A Harding, and Mr Polin of Counsel appeared for the respondent (Comcare).
The applicant who is 29 years of age, was medically discharged from the Royal Australian Navy on 29 August 1996. The history of this application is set out very clearly in Comcare's section 37 Statement at T2/3-4 which reads as follows:
"The applicant was appointed an officer in the Royal Australian Navy on 7 March 1994.
The applicant was medically discharged from the Royal Australian Navy on 29 August 1996 due to her conditions of seasickness, inversion injury of the left ankle, soft tissue injury of the right ankle, right muscular shoulder problem, and right shoulder pain. During the course of her service, claims for compensation were accepted for right ankle injury, and left ankle injury.
In the period following discharge, the applicant worked as a courier driver and a security officer. On 20 October 1998 she applied to Comcare for rehabilitation support, to enable her to redirect her career towards the intelligence field.
The respondent referred the applicant to Work Directions Australia, an approved rehabilitation provider. In its initial assessment, the rehabilitation provider advised that the applicant had a clear vocational goal of becoming an intelligence officer. For this purpose, the rehabilitation provider recommended that the applicant be sponsored by the respondent to undertake a Graduate Diploma in Legal and Justice Studies at the Queensland University of Technology.
The applicant commenced studies in the Graduate Diploma of Legal and Justice Studies at the Queensland University of Technology on 22 February 1999.
On 23 February 1999 the respondent determined that the applicant would be sponsored in tertiary studies towards the qualification of Graduate Diploma in Legal and Justice Studies, as part of her rehabilitation program. The determination stated that during the period of the one year course, the applicant would be entitled to fortnightly incapacity payments, and reimbursement of the following costs:
(a)up to $500 per annum towards the costs of textbooks; and
(b)any compulsory subject, student union or administration fees.
The determination clearly stated that the respondent would not pay any Higher Education Contribution Scheme (HECS) payments.
In addition, the respondent later agreed to reimburse the applicant for the following costs, incurred in the course of undertaking her studies:(a)costs of internet access;
(b)costs of attending a workshop held by the Australian Institute of Professional Intelligence Officers held on 21 May 1999;
(c)costs of attending the Australian Institute of Professional Intelligence Officers' national conference in Sydney (including travel and accommodation costs).
On 22 June 1999 the applicant requested reconsideration of the decision dated 23 February 1999 not to reimburse costs incurred under the HEC scheme. The applicant had paid her HECS liability for first semester 1999, in the sum of $1,383.00, up front.
An Authorised Delegate affirmed the decision not to reimburse the applicant for HECS contributions on 15 October 1999.
REASONS FOR REVIEWABLE DECISION
On 11 May 1999, Defence Compensation Instruction No 40 was issued, which provided guidance to decision makers to determine when retraining may be funded under s 37(3) of the Safety Rehabilitation and Compensation Act 1988 as a means of securing suitable employment for a recipient of compensation benefits.
This instruction clearly states, in paragraph 42, that "HECS fees are not payable under section 37". This instruction arises from the fact that HECS fees are an amount which may become payable at some stage in the future after completion of a person's studies, and they are not a rehabilitation "cost" which arises presently in getting a person successfully rehabilitated.
Consequently the delegate was satisfied that, while the applicant was being sponsored by the Respondent to undertake the Graduate Diploma in Legal and Justice Studies, she was not entitled to reimbursement of any costs incurred under the HEC scheme.
Accordingly, the delegate affirmed the decision that no HECS payments should be made a part of the applicant's rehabilitation program."
The applicant gave evidence, which I accept, that as a result of discussions with Ms Bronwyn Peters, her rehabilitation counsellor at Work Directions Australia, and Mr Alan Phillips, her rehabilitation co-ordinator at the Department of Defence (the Department), she gained the impression that the policy on HECS was vague and unclear. Mr Phillips told her that he had to advise her that HECS was not going to be paid. Further discussions indicated that Mr Phillips had sought to clarify the issue with others, and that it was not definite that HECS would not be paid.
On 19 February 1999 Mr Phillips forwarded to the applicant a note in the following terms:
"Natalie,
As discussed, this is the legal opinion which says we don't pay HECS as a "future liability".
It would seem to indicate that if you took the upfront fees option and provided a receipt it would be regarded as a "current cost" and be reimbursed.
Cheers Alan 19/2" ["Exhibit A2"]
Mr Phillips attached a copy of a letter of advice from Ms K Stallard of Barker Gosling Lawyers dated 15 February 1999, which reads in part as follows:
"It is open for interpretation that section 37(4) includes any costs incurred by an employee in carrying out the rehabilitation program even though HEC payments are a liability which may not become payable during the time when the actual rehabilitation program is being conducted. Certainly, Mr Justice Einfeld could not discount a wide interpretation of the term "costs" in which case, HEC payments, if they ultimately become due, could arguably become a liability for the rehabilitation authority.
In accordance with your instructions, I have drafted paragraphs which may be inserted into a letter to be sent to employees who have requested payment of tertiary expenses as part of a rehabilitation program. This is designed to inform them that the rehabilitation authority will not be liable to pay these future expenses. I attach these draft paragraphs for your approvalAttachment
Paragraphs to be inserted into the Rehabilitation Authority's standard letter sent to employees who request payment of tertiary education expenses as part of a rehabilitation program
Whilst it has been agreed to pay the costs associated with completion of your course, please note that we will not pay any Higher Education Contribution (HEC) payments which may become payable at some stage in the future after completion of your studies.
HEC payments are not rehabilitation costs which arise presently in getting you successfully rehabilitated. Your HEC liability is an amount which may become payable by you at some time in the future depending on your financial position. These payments are recouped in the future so that they are affordable by you at that time when your earning capacity has increased."
In his letter of 23 February 1999 the delegate, Mr Phillips, incorporated these draft paragraphs, without alteration, as the final paragraphs of his Reasons for Decision.
The provision of rehabilitation programs is covered by section 37 of the Safety, Rehabilitation and Compensation Act 1988 (the Act) which provides:
"SECT 37
Provision of rehabilitation programs37. (1) A rehabilitation authority may make a determination that an employee who has suffered an injury resulting in an incapacity for work or an impairment should undertake a rehabilitation program and, where the authority so determines, it may make arrangements with an approved program provider for the provision of a rehabilitation program for the employee.
(2) A rehabilitation authority shall not make arrangements with an approved program provider who is not approved by Comcare under section 34.
(3) In making a determination under subsection (1), a rehabilitation authority shall have regard to:(a) any written assessment given under subsection 36 (8);
(b) any reduction in the future liability to pay compensation if the program is undertaken;
(c) the cost of the program;
(d) any improvement in the employee's opportunity to be employed after completing the program;
(e) the likely psychological effect on the employee of not providing the program;
(f) the employee's attitude to the program;
(g) the relative merits of any alternative and appropriate rehabilitation program; and
(h) any other relevant matter.
(4) The cost of any rehabilitation program provided for an employee under this section shall be paid by the relevant authority in relation to that employee.
(5) Where an employee is undertaking a rehabilitation program under this section, compensation is not payable to the employee under section 19 or 31 but:(a) if the employee is undertaking a full-time program-compensation is payable to the person of an amount per week equal to the amount per week of the compensation that would, but for this subsection, have been payable under section 19 if the incapacity referred to in that section had continued throughout the period of the program; or
(b) if the employee is undertaking a part-time program-compensation is payable to the employee of such amount per week as the relevant authority determines, being an amount not less than the amount per week of the compensation that, but for this subsection, would have been payable to the employee under this Act and not greater than the amount per week of the compensation that would have been payable under paragraph (a) if the employee had been undertaking a full-time program.
(6) An employee who is entitled to receive compensation under subsection (5) during a period is not entitled to receive rehabilitation allowance under the Social Security Act 1991 during that period.
(7) Where an employee refuses or fails, without reasonable excuse, to undertake a rehabilitation program provided for the employee under this section, the employee's rights to compensation under this Act, and to institute or continue any proceedings under this Act in relation to compensation, are suspended until the employee begins to undertake the program.
(8) Where an employee's right to compensation is suspended under subsection (7), compensation is not payable in respect of the period of the suspension."
Section 41 of the Act provides:
"SECT 41
Rehabilitation authorities to comply with guidelines 41.(1) Comcare may prepare and issue to rehabilitation authorities guidelines in relation to the performance or exercise by those authorities of their functions or powers under this Part.
(2) A rehabilitation authority shall comply with any guidelines issued under subsection (1)."
The applicant submits that Comcare made a determination under Section 37(1) of the Act to approve a rehabilitation program, from which HECS, as a cost of the program, was excluded. HECS is an essential cost of the program undertaken by the applicant, namely her University studies. Under the HECS legislation, a person is not able to be enrolled as a student unless he or she agrees to participate in the HECS program. It is a condition of enrolment therefore, that a student must incur a HECS liability as part of participation in the University Course. The fact that another party, in this case the Commonwealth, may assume responsibility for meeting a cost, does not change its essential character as a cost. She relies on Hull v Comcare (1999) AATA 766.
The applicant maintains also that once Comcare has made a determination under section 37(1) of the Act, agreeing to an employee undertaking a rehabilitation program, it must meet the costs of that program in accordance with section 37(4) of the Act, there is no discretion. The HECS fees are such a cost.
Comcare argues that by its determination on 23 February 1999 it proposed a rehabilitation plan. The plan was a sponsorship through the Course, limited to the terms of the sponsorship, which indicated specifically that it would not extend to cover payments of HECS fees. It was for the applicant, at this stage, to decide whether or not she wished to agree to participate in the program. The applicant thereafter having agreed to participate in the program, the respondent was thereafter obliged pursuant to section 37(4) of the Act to pay the proper costs of that program. The HECS fees having been specifically excluded, were not a proper cost of the program therefore. The decision in Hull v Comcarecan be distinguished, in that the Tribunal in that case, considered that the proposed rehabilitation program was at best ambiguous, and that HECS fees had not been excluded specifically as they have in this matter.
Comcare submits also, that the question is whether the HECS fee is a part of the plan, a cost of the rehabilitation program; it is not a question of whether it is a "cost" under section 37(4) of the Act. Once a program is determined, the costs must be paid; there is no discretion. Comcare, it submits, can limit the extent of the sponsorship of the program, and it is obliged then to pay the costs of the program in accordance with section 37(4) of the Act.
On the applicant's evidence, she had never been told that the HECS fees would be regarded as "costs" if they were paid up-front; only that the opinion from Barker Gosling seemed to indicate that it would be regarded as a "current cost" and be reimbursed. The factual scenario is quite different from that prevailing in the matter of Hull. In any event, in my view, the applicant's subjective sentiments are of no great relevance when one looks at the terms of the determination, and the relevant legislation.
The HECS fee was introduced by the Higher Education Funding Bill 1988. In the course of his Second Reading Speech, on 3 November 1988, the Minister for Employment, Education and Training, Mr Dawkins said, at Hansard p2402, in part as follows:"To help finance the substantial expansion in the funding of higher education that was announced in the Budget, the Bill makes provision for the establishment of the higher education contribution scheme (HECS). HECS will apply to study in award courses undertaken in higher education institutions from 1 January 1989. People who benefit from participation in higher education will be required to make a small contribution towards the cost of their study. The scheme will replace the existing higher education administration charge (HEAC) which required a payment by students on enrolment. The key features of the contribution scheme are; an annual course charge of $1,800 per year of equivalent full-time study for study in award courses; pro rata charges according to the actual proportion of an equivalent full time load being undertaken; payment arrangements based upon personal capacity to pay; and a choice between lump sum payment with a 15 per cent discount at the time of enrolment each semester or payment through the taxation system once a person's taxable income reaches $22,000; that is, around the level of average earnings in the Australian work force.
If people choose to pay through the taxation system, the required annual repayments of HECS liability, once the scheme is fully operational, will be: nothing for personal taxable incomes below $22,000; one per cent of personal taxable income for incomes of $22,000 to $24,999. Two percent of personal taxable income for incomes of $25,000 to $34,999; three per cent of personal taxable income for incomes of $35,000 or more; and no further payment once debts are discharged. These repayment rates will be halved for the current financial year in view of the introduction of the scheme on 1 January 1989.
The annual course charge, the outstanding debt and the personal taxable income levels above which payment is required will be indexed to keep pace with inflation. These arrangements will ensure that those paying the charge will pay the same amount in real terms, regardless of how long they take to do so."
And at p 2403:
"All students who are liable under the scheme will be offered a choice of payment arrangements each semester. They may choose to pay their liabilities in a lump sum directly to the institution, in which case a discount of 15 per cent will apply. Alternatively, they may ask the Commonwealth to pay their contribution to the institution and agree to repay the Commonwealth through the taxation system."
The Higher Education Funding Act 1988 (the HECS Act) as far as is relevant, provides:
Division 2 - Imposition and payment of contributions
39 Requirement to pay contributions(1) An institution shall, in respect of each semester, require each contributing student who is undertaking a designated course of study at the institution on the census date in respect of that course of study in respect of that semester to pay to the institution in respect of that semester a contribution, ascertained in accordance with this section, towards the cost of the provision of that course of study.
(2) Each institution shall determine, in accordance with guidelines issued by the Minister, in respect of each designated course of study that may be undertaken at the institution in a year to which this Chapter applies, a standard student load that represents an equivalent full time student unit.
…
Division 3 - Discharge by Commonwealth of students' liabilities for contributions
57 Commonwealth to discharge students' liabilities(1) Where a student in relation to a course of study at an institution is liable to pay a contribution to the institution in respect of that course of study in respect of a semester, the following provisions of this section apply.
(2) If the student has made a payment in respect of the contribution in accordance with subparagraph 41(1)(a)(i) and has complied with subparagraph 41(1)(a)(ii), the Commonwealth shall, as a benefit to the student, pay to the institution an amount equal to the remainder (if any) of the contribution in discharge of the student's liability to pay that remainder of the contribution.
(3) If the student has not made a payment in respect of the contribution in accordance with subparagraph 41(1)(a)(i) but has complied with paragraph 41(1)(b) and section 41B, the Commonwealth shall, as a benefit to the student, lend to the student an amount equal to the unpaid part of the contribution and apply the amount so lent in making a payment to the institution in discharge of the student's liability to pay the unpaid part of the contribution.
(3A) If the student has not:
(a) made a payment in respect of a contribution in accordance with subparagraph 41(1)(a)(i); or
(b) complied with paragraph 41(1)(b);
but the student has:
(c) made a payment in respect of the contribution in accordance with paragraph 41(1A)(a) (the student payment); and
(d) complied with section 41B;
the Commonwealth must, as a benefit to the student:
(e) lend to the student an amount worked out using the formula in sub-subparagraph 41(1A)(c)(i)(A) (the formula amount) and apply the amount so lent in making a payment to the institution in partial discharge of the studentís liability to pay the unpaid part of the contribution; and
(f) pay to the institution, in discharge of the remainder of the studentís liability, an amount (the discount amount) worked out using the following formula:Contribtuion payable by - {Student + Formula}
Student for course {payment amount}
In my view HECS fees should be regarded as a student's current liability, and not as a future liability. Section 39 of the HECS Act, provides that a contributing student undertaking a course on the census date is required to pay to the institution/University, a contribution, ascertained by using the formula set out in the Section. The contribution towards the cost of the provision of that Course of Study, may be paid by the student direct to the University, and thus the student receives the 15% discount; or if the student has not made the payment, the Commonwealth will, as a benefit to the student, lend the amount of the payment to the student, and make the payment, to the University in discharge of the student's current liability. The Commonwealth recovers the debt then, through the taxation system, when the student's taxable income reaches a level above which payment is required.
The quantum of the HECS fees is known to the student at the time of enrolment. It is not some nebulous figure to be ascertained in the future. The University requires a student undertaking a course on the census date, to pay the contribution. Comcare, by its determination, purported to limit the costs of the rehabilitation program, by excluding HECS fees, on the basis that they were not "rehabilitation costs" which arise in the present, in the process of successful rehabilitation. Comcare regarded them as an amount which might become payable at some time in the future. I consider that Comcare's view is flawed. A student may defer repayment of his or her loan to the Commonwealth, by electing to pay through the taxation system. The loan however, is incurred at the time the Commonwealth agrees to pay to the University the student's HECS fees. It is a current liability and the student continues to be indebted to the Commonwealth until the loan in discharged.
In my view, when Comcare makes a determination that an injured employee should undertake a rehabilitation program, which includes a course of study at a University or other Institution, the payment of HECS fees must be included in the rehabilitation program. In this matter, the applicant was liable to pay HECS fees in relation to a Graduate Diploma in Legal and Justice Studies Course, and such fees should have been included in Comcare's determination made pursuant to Section 37(1) of the Act.
For these reasons the Tribunal sets aside the decision under review and remits the matter to the respondent for reconsideration in accordance with the direction that it pay the applicant's Higher Education Contribution Payments incurred in relation to a Graduate Diploma in Legal and Justice Studies Course. The respondent will pay the applicant's costs and disbursements as agreed or failing agreement, to be taxed by the Deputy Registrar of the Tribunal.
I certify that the 19 preceding paragraphs are a true copy of the reasons for the decision herein of Miss WJF Purcell (Senior Member
Signed: .....................................................................................
AssociateDate/s of Hearing 23 June 2000
Date of Decision 14 September 2000
Solicitor for the Applicant Mr A Harding
Counsel for the Respondent Mr N Polin
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