Isitt and Secretary, Department of Social Services (Social services second review)
[2015] AATA 592
•14 August 2015
Isitt and Secretary, Department of Social Services (Social services second review) [2015] AATA 592 (14 August 2015)
Division GENERAL DIVISION File Number
2014/6547
Re
Julie Isitt
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Deputy President, Dr Christopher Kendall
Date 14 August 2015 Place Perth The decision under review is set aside. The matter is remitted to Centrelink to reassess the amount of Carer Payment payable to Mrs Isitt in accordance with these reasons.
.......................[sgd].................................................
Deputy President, Dr Christopher Kendall
CATCHWORDS
SOCIAL SECURITY - carer payment - pension income test - amending legislation from 20 September 2009 – calculations under current and transitional rules for pension income test - effect of error on part of Applicant in reporting correct income - Decision under review set aside - matter remitted to Centrelink for re-assessment
LEGISLATION
Social Security Act 1991 (Cth) – 1064(1) – 1064-A1 – 1064-A2 – 1064-41 – clause 146 of Schedule 1A – clause 146(1) of Schedule 1A
Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009 – Schedule 10
CASES
McEvoy and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 1038
Naunton and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] AATA 169
Stewart and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2001] AATA 871
SECONDARY MATERIALS
Guide to Social Security Law – Section 5.1.8.40
Explanatory Memorandum, Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009
REASONS FOR DECISION
Deputy President, Dr Christopher Kendall
14 August 2015
INTRODUCTION
Clause 146 of Schedule 1A of the Social Security Act 1991 (the Act”) provides that a person who was receiving a pension under the income test arrangements in force before 20 September 2009 will continue to be paid under those previous arrangements until the person’s rate under the current income test would be equal to, or greater than, the rate payable under the previous arrangements. Once the person’s rate is determined to be greater under the current arrangements, the person continues to be assessed under those arrangements and cannot elect to revert to the previous arrangements.
This appeal concerns whether the Carer Payment payable to Mrs Julie Isitt can continue to be paid under the 2009 transitional arrangements.
Mrs Isitt has applied to this Tribunal for a review of a decision of the Social Security Appeals Tribunal (“the SSAT”) made on 3 December 2014, affirming a decision made by a Centrelink Authorised Review Officer (“ARO”) of the Department of Human Services (“the Department”) made on 28 October 2014. The ARO affirmed the decision of the Department to calculate Mrs Isitt’s rate of Carer Payment under the current income test and not under the transitional income test arrangements.
FACTS
Mrs Isitt has been in receipt of Carer Payment since 14 July 2009 (T18 at 57).
On 20 September 2009, as a result of Federal Budget changes, the Department implemented changes to the pension income test and made certain transitional rules.
The transitional rules were implemented to ensure that no pensioner who had been receiving a pension on 20 September 2009 was worse off as a result of the introduction of the post-20 September 2009 pension Income Test. In effect, the transitional rules apply if the pensioner was entitled to a higher rate under the transitional rules compared to the new rules implemented on 20 September 2009. Since 20 September 2009, when pensioners report their income, pensioners who have been paid the transitional rate have been assessed under both the transitional rate as it was on 19 September 2009 and the new rate from 20 September 2009. When the rate of Carer Payment is higher under the transitional rate, the pensioner stays on that rate. When the rate of Carer Payment is the same or higher under the current income test, the pensioner’s rate of Carer Payment is then calculated permanently thereafter according to the current rate (T12 at 31).
Mrs Isitt was receiving Carer Payment on 20 September 2009. As such, from that date, she received the transitional rate in relation to her Carer Payment (T3 at 9 and T12 at 31). Her income was, however, assessed under both the current income test and the test as it was on 19 September 2009. As long as her rate of Carers Pension remained higher under the old test, she would continue to be calculated under the transitional/old income test.
Mrs Isitt’s rate of Carer Payment was calculated taking into account her income from self employment and her husband’s employment income (T12 at 32).
On 24 June 2014, Mrs Isitt advised Centrelink that the income from her husband’s employment was $970. It had been $1,908 for the two previous fortnights (T12 at 32).
On 8 July 2014, Mrs Isitt advised the Department that from 1 April 2014 to 30 June 2014, her own income from her sole trader self-employment was ‘zero’ because her business had incurred a loss of $83 in that period. The Department agreed that Mrs Isitt’s income was $0 with an overall loss of $83 for the quarter ending 30 June 2014 (T7 at 20 and T12 at 32).
Using the information provided by Mrs Isitt, the Department calculated that with effect from 1 July 2014 (applying the new rules), Mrs Isitt’s basic rate of carer payment was $378.58 per fortnight. The Department concluded that it would only have been $369.38 per fortnight under the previous income test arrangements in operation before 20 September 2009.
Based on this information, the Department calculated that from 1 July 2014, Ms Isitt’s rate of Carer Payment should no longer be calculated under the previous income test arrangements. Instead, it should be calculated pursuant to the current income test arrangements (T19 at 77-78) (the “Original Decision”) because, the Department concluded, the current test resulted in a higher rate of payment to Mrs Isitt.
Mrs Isitt disagreed with this assessment, arguing, in effect, that she had made an error when reporting her husband’s true income. She argued that she would be “worse off” under the current income test once the correct figures were used for calculating her income.
On 15 September 2014, Mrs Isitt requested a review of the Original decision (T19 at 73).
On 28 October 2014, an Authorised Review Office affirmed the Original Decision (T12 at 30). The ARO held that the decision to calculate Mrs Isitt’s rate of Carer Payment from 1 July 2014 under the current income test was correct. The effect was that Mrs Isitt would no longer be assessed according to the transitional rules from 1 July 2014.
On 5 November 2014, Mrs Isitt applied to the SSAT for review of the ARO’s decision (T3 at 9).
On 3 December 2014, the SSAT affirmed the ARO‘s decision of 28 October 2014. ‘
On 11 December 2014, Mrs Isitt applied to this Tribunal for a review of the SSAT decision.
ISSUE
The issues to be decided in this application for review is whether Mrs Isitt’s rate of Carer Payment must now be calculated using the current income test rules.
LEGISLATION
Amendments to the Social Security Act 1991 (Cth) (the “Act”) resulting from the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009 (the “Amendment Act”) came into effect on 20 September 2009.
Section 1064(1) of the Act states that the rate of Carer Payment is to be calculated in accordance with the Rate Calculator at the end of the section.
Section 1064-A1 in Part 3.2 of the Act provides the relevant methodology for calculating the rate of Carer Payment.
Where two people are members of a couple, when calculating the rate of Carer Payment, Section 1064-A2 of the Act provides that :
… they will be treated as pooling their resources (income and assets) and sharing them on a 50/50 basis (see points 1064-E2 and 1064-G2 below). They will also be treated as sharing expenses (eg for rent) on a 50/50 basis (see section 1070V).
Section 1064-E2 of the Act further provides:
If a person is a member of a couple, add the couple's ordinary incomes (on a yearly basis) and divide by 2 to work out the amount of the person's ordinary income for the purposes of this Module.
Clause 146 of Schedule 1A (Savings and Transitional Provisions) of the Act provides:
(1) This clause applies if:
(a)on 19 September 2009 a person was receiving one of the following payments:
(i) age pension;
(ii) disability support pension;
(iii) wife pension;
(iv) carer payment;
(v) bereavement allowance;
(vi) widow B pension;
(vii) special needs pension;
(viii) service pension (except carer service pension);
(ix) income support supplement; and
(b) either:
(i)the person continues (without a break) to receive one of those payments (whether or not of the same sort as the one the person received on that day);
…
(2)This clause has effect for the purposes of working out the rate of one of the social security pensions described in paragraph (1)(a) for the person for a day (the relevant day) after 19 September 2009 under point 1064-A1, 1065-A1 or 1066-A1, or under section 796 so far as one or more of those points are relevant because of that section.
The reason for, and effect of, the transitional arrangements is explained in section 5.1.8.40 (“Pension Reform – Transitional Arrangements”) of the Guide to Social Security Law as follows:
The transitional arrangements refer to provisions in the social security legislation that allow a person whose pension is affected by changes made to pensions from 20 September 2009 to have their pension assessed under the pension rules that applied before 20 September 2009 plus an increase ($20.20 a fortnight for singles, $20.30 per fortnight for couples combined), or the rules that applied from that date, whichever provides a higher rate of payment.
Where a person has been paid under the transitional arrangements, and those arrangements have ceased to apply to the person (because they do not a provide a higher rate of payment than if their pension were assessed under the relevant pension rate calculator), the person's pension cannot ever again be paid under the transitional arrangements, except where they have been a 'respite care couple'
EVIDENCE
Mrs Isitt was unrepresented before this Tribunal. She provided verbal evidence on three occasions but did not provide written submissions.
The Tribunal was provided with a detailed Statement of Facts, Issues and Contentions dated 8 April 2015, a set of T-Documents which included documents relevant to Mrs Isitt’s Centrelink file (numbered T-1 to T18) and Centrelink Calculation Assessment documents which Mrs Isitt requested from the Department during hearings before this Tribunal.
SSAT Hearing
Much of the evidence relevant to this Tribunal was summarised by the SSAT during hearings before it on 3 December 2014. That evidence was summarised (T3 at 8-11 at paras 14-21) by the SSAT as follows:
14. Mrs Isitt told the Tribunal that according to her calculations she is not better off under the current income test arrangements, and she would like to continue to be assessed under the previous arrangements. Mrs Isitt said she understands the Centrelink system very well and knows “how it all works", including the additional income test free area of $24.60 a fortnight for each of her children.
15. Mrs Isitt told the Tribunal that she is self-employed as a sole trader subcontracted to Salmat to supervise the home delivery of catalogues, but her expenses tend to be greater than her income of about $300 a week. The balance sheet she prepared for Centrelink at the end of the 2013/2014 financial year shows that in the period 1 April 2014 to 30 June 2014 the enterprise made a loss of $83. Mrs Isitt said she used to make about $35,000 a year but Salmat has gradually reduced her areas of responsibility.
16. Mrs Isitt said the reason she reported lower wages for her husband in June 2014 was because his earnings had also decreased, but in his case it was due to a health issue that has now been resolved. Mrs Isitt also said that her husband’s earnings figure of $970 advised to Centrelink on 24 June 2014 may in fact be wrong. The Tribunal asked for more details.
17. Mrs Isitt explained that she usually reports all their earnings accurately to Centrelink but she encounters certain difficulties with it. For example, her husband’s payslip is sent from Sydney and so doesn’t arrive until a week after his pay is deposited into their account. Mrs Isitt therefore uses a tax calculator to estimate his gross earnings for Centrelink purposes. Another difficulty is that her husband’s pay week finishes on a Wednesday but Centrelink’s pay week finishes on a Tuesday. Mrs Isitt said she tries to get the income figures as close as she can, using her calculators, but doesn’t "worry about a few dollars”. She said that if the reported earnings in one fortnight were only, say, $800 when the payslip subsequently shows that $1,000 were earned, then Mrs Isitt will simply add $200 to the earnings reported for the following fortnight. In this way, Mrs Isitt said, it “all balances out”, but she tries as far as possible to report earnings as accurately as she can.
18. The Tribunal asked about the earnings figure of $970 advised to Centrelink on 24 June 2014. Mrs Isitt said it is possible the figure should have been $1,041, consisting of $670 she paid her husband from her Salmat earnings and $371 gross from his own earnings. Mrs Isitt extrapolated the gross figure from his net income figure of $367 received in their bank account. Mrs Isitt explained that due to family tax benefit considerations she sometimes attributes her income to her husband. In this way, her personal income for family tax benefit part B does not exceed the relevant limit. Mrs Isitt said there are obvious advantages in arranging her finances this way and it is “all legal”.
Having reviewed this and the relevant legislation, the SSAT summarised as follows:
20. The Tribunal understood Mrs Isitt’s difficulties in reporting earnings to Centrelink accurately but considered that there are options available to her, especially in view of the relatively sophisticated understanding of Centrelines rules and procedures she expressed to the Tribunal. It is open to Mrs Isitt, for example, to discuss with Centrelink the possibility of changing her pension payday in order to make it easier to report her husband's earnings correctly, it may also be an option to request an electronic copy of her husband’s payslip rather than waiting a week for a paper copy. Failing that, it is open to Mrs Isitt to ascertain her husband’s gross wage per hour, keep an exact record of the hours he works in any week and calculate an accurate figure for his gross income in this manner. In any event, it is up to Mrs Isitt to comply with her obligation to inform Centrelink accurately about earnings, rather than rely, however well-intentioned, on what appear to be rough estimates rather than facts.
21. The Tribunal took into account Mrs Isitt’s contention that, in hindsight, her reporting of her husband’s income on 24 June 2014 may have been inaccurate, but concluded that the responsibility lies with her. It is clear from the evidence that from 1 July 2014, based on the information she herself supplied to Centrelink, Mrs Isitt’s basic rate of carer payment was calculated to be $378.58 a fortnight under the current income test arrangements and $369.38 under the previous arrangements. Although the difference is marginal, nevertheless the rate calculated under the current arrangements is greater than the rate under the previous arrangements. It follows then that the effect of clause 146 of Schedule 1A of the Act is that the rate of Mrs Isitt’s carer payment must be calculated from 1 July 2014 in accordance with the current pension income test arrangements. Any retrospective adjustments to Mrs Isitt’s combined income may result in an under- or overpayment of carer payment for a period but will not alter the fact that the application of the current income test, in her particular circumstances, is correct according to the legislation.
In hearings before this Tribunal, Mrs Isitt asked that her pension be calculated under the transitional income assessment test because, in her words, she is “better off” under that system.
Mrs Isitt also stressed that she had, through innocent mistake, reported her husband’s income inaccurately to the Department. She further explained that when she advised the Department of this, she was advised that even if an error had been made, she would still be assessed under the new system as, under the current legislation, there was “no going back” once a calculation based on her figures revealed that she was better off under the new system. To Mrs Isitt, who at all times attempted to correct any errors she may have made, this seemed unfair.
Mrs Isitt also argued before this Tribunal that, even applying the “incorrect” amounts provided by her, Centrelink had incorrectly calculated her overall income. To support this contention, Mrs Isitt requested a copy of Centrelink’s Assessment Documents in relation to her case so that she could prove that the assessment amount of $378.58 had been incorrectly calculated.
The Department agreed to this request and provided the following information:
The Administrative Appeals Tribunal has requested the calculations for the decision made by the department on 1 July 2014 to calculate Mrs Isitt’s rate of Carer Payment from 1 July 2014 using the current pension income test and not the Pension Reform Transitional Arrangements of 19 September 2009.
Below are the calculations for the entitlement period from 25 June 2014 to 8 July 2014. This period is split into 3 calculation periods due to changes in income and income free amounts. The periods are:
25 June 2014 to 29 June 2014;
30 June 2014 only; &
1 July 2014 to 8 July 2014.
Entitlement Period 25 June 2014 to 8 July 2014
Period 25 June 2014 to 29 June 2014
Transitional Rate
New Rate
Combined Fortnightly Income
1216.97
Combined Fortnightly Income
1216.97
Income Free Amount
240.00
Income Free Amount
276.00
Excess Income (combined)
976.97
Excess Income (combined)
940.97
Excess Income (Single) [x 0.5]
488.48
Excess Income (Single) [x 0.5]
470.48
Income reduction rate [x 0.4]
195.39
Income reduction rate [x 0.5]
235.24
Transitional Fortnightly Max Rate
575.60
Transitional Fortnightly Max Rate
635.30
Fortnightly Rate after Income Reduction
380.21
Fortnightly Rate after Income Reduction
400.06
Fortnightly transitional increase
20.20
Fortnightly transitional increase
NA
Total Fortnightly Rate
400.41
Total Fortnightly Rate
400.06
Rate for Period [6 days x 28.60 {daily rate}]
143.00
Rate for Period [6 days x 28.57 {daily rate}]
142.87
Period 30 June (only)
Transitional Rate
New Rate
Combined Fortnightly Income
1081.36
Combined Fortnightly Income
1081.36
Income Free Amount
240.00
Income Free Amount
276.00
Excess Income (combined)
841.36
Excess Income (combined)
805.36
Excess Income (Single) [x 0.5]
420.68
Excess Income (Single) [x 0.5]
402.68
Income reduction rate [x 0.4]
168.27
Income reduction rate [x 0.5]
201.34
Transitional Fortnightly Max Rate
575.60
Transitional Fortnightly Max Rate
635.30
Fortnightly Rate after Income Reduction
407.33
Fortnightly Rate after Income Reduction
433.96
Fortnightly transitional increase
20.20
Fortnightly transitional increase
NA
Total Fortnightly Rate
427.53
Total Fortnightly Rate
433.96
Rate for Period [1 day x 30.53 {daily rate}]
30.53
Rate for Period [1day x 30.99 {daily rate}]
30.99
Period 1 July 2014 to 8 July 2014
Transitional Rate
New Rate
Combined Fortnightly Income
1081.36
Combined Fortnightly Income
1081.36
Income Free Amount
248.00
Income Free Amount
284.00
Excess Income (combined)
833.36
Excess Income (combined)
797.36
Excess Income (Single) [x 0.5]
416.68
Excess Income (Single) [x 0.5]
398.68
Income reduction rate [x 0.4]
166.67
Income reduction rate [x 0.5]
199.34
Transitional Fortnightly Max Rate
575.60
Transitional Fortnightly Max Rate
635.30
Fortnightly Rate after Income Reduction
408.93
Fortnightly Rate after Income Reduction
435.96
Fortnightly transitional increase
20.20
Fortnightly transitional increase
NA
Total Fortnightly Rate
429.13
Total Fortnightly Rate
435.96
Rate for Period [8 days x 30.65 {daily rate}]
245.20
Rate for Period [8 days x 31.14 {daily rate}]
249.12
Period 25 June 2014 to 8 July 2014
TOTAL
418.73
TOTAL
422.98
The comparison of rates for period 25 June 2014 to 8 July 2014 show that for this period Mrs Isitt’s rate of payment under the current pension income test was higher than the Transitional Rate.
ANALYSIS
Should Mrs Isitt’s rate of Carer Payment be calculated under the current pension income test provisions?
Until the issues relevant to this matter arose, the amount of Mrs Isitt’s Carer Payment was assessed pursuant to the income test arrangements in force before 20 September 2009.
On 24 June 2014 and 8 July 2014, Mrs Isitt reported income amounts for both her husband and herself during a specific period.
The Department assessed Ms Isitt’s financial using both the previous income test and the current income test. This dual assessment is required by Clause 146 of Schedule 1A of the Act.
The evidence before the SSAT revealed that under the previous income test in operation before 20 September 2009, Mrs Isitt’s rate of Carer Payment was calculated as $369.38 per fortnight (T12 at 32).
The evidence before the SSAT revealed that under the current income test in operation after 20 September 2009, Mrs Isitt’s rate of Carer Payment was calculated as $378.58 per fortnight (T12 at 32).
From the above, it was evident to the SSAT that the current income test provides Mrs Isitt with a higher rate of Carer Payment.
In new evidence before this Tribunal, it was demonstrated that during the specific period, under the previous income test in operation before 20 September 2009, Mrs Isitt’s rate of Carer Payment was calculated as $418.73 per fortnight.
Applying this new evidence, under the current income test in operation after 20 September 2009, Mrs Isitt’s rate of Carer Payment was calculated as $422.98 per fortnight.
In explaining the discrepancy in these two calculations, the Department advised the Tribunal:
The Department was advised that the ARO decision dated 28 October 2014 only referred to the basic rate of carer payment and was exclusive of supplements. The attached calculations for the two rates of payment are inclusive of any relevant supplements (eg energy, pension) payable to Ms Isitt during the period. These supplements are calculated and assessed by Centrelink’s computer systems.
Regardless of which calculation is relied on, it is clear to the Tribunal that once the numbers Mrs Isitt provided the Department are used, it is clear that Mrs Isitt is better off under the new Income Test.
The Tribunal does not accept, on the evidence, that the Department erred in applying the figures supplied by Mrs Isitt.
This does not mean, however, that Mrs Isitt should now be assessed under the new income test rules.
Mrs Isitt contends that she may have made an error when reporting her husband’s income. She believes that if the “correct” amount is used, the calculation will be such that she is not, in fact, better off under the current income test rules. This means that, going forward, Mrs Isitt is to be assessed under the new income test.
The SSAT found, and the Department argued before this Tribunal, that even if this were true (and the Department did not dispute before this Tribunal that Mrs Isitt may in fact have made a mistake), the legislation does not allow that mistake to be corrected.
In this regard, the Department directed the Tribunal to the decision in McEvoy and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 1038.
The facts in McEvoy were summarised by Senior Member Dunne as follows:
6.… Mrs McEvoy’s husband is employed and his earnings impact on her Carer Payment.
7.In giving her evidence, Mrs McEvoy said that her husband’s normal base salary placed them below the income threshold, such that her Carer Payment would not be affected by the income test. However, if he was required to work extra shifts under his workplace agreement, the extra income would place them over the income threshold and her Carer Payment would be reduced. She said she telephoned Centrelink on 18 August 2009 to ascertain whether any additional earnings her husband received would affect her entitlement to Carer Payment. If it would, her husband would not have undertaken the overtime. She was told that, unless her rate of Carer Payment was reduced to zero for six consecutive fortnights, her payment would not be cancelled.
8.Mrs McEvoy said that she was not told about the transitional provisions and the likelihood that she could come under the new assessment rules. Mr Parker, for the respondent, asserted that she had been sent a letter regarding the changes, but Mrs McEvoy vehemently denied that she had received such a letter. She said that, had she received the letter, she would have read it and contacted Centrelink to enquire about the issue.
Do the transitional provisions apply to the applicant immediately after 20 September 2009?
10.In 2009, changes were made to the way the Carer Payment rate was determined. The changes took effect from 20 September 2009 and included transitional provisions inserted into Schedule 1A of the Act as clauses 146 to 149. Under clause 146(1), the transitional provisions would apply if, on 19 September 2009, a person was receiving one of the Social Security pensions referred to in the clause, including Carer Payment. As Mrs McEvoy was receiving Carer Payment on 19 September 2009, the transitional provisions in Schedule 1A applied to her immediately after 20 September 2009.
11.Whether Mrs McEvoy’s Carer Payment would be affected would depend on whether her husband’s income, in the future, placed them over the relevant income threshold.
In analysing these facts and the legislation in question, the Tribunal in McEvoy concluded:
12.I have no reason to believe that, in giving her evidence, Mrs McEvoy was not a witness of truth. According to that evidence, in August 2009, her husband was asked to undertake a “reasonable amount” of overtime under his workplace agreement. I accept that she contacted Centrelink to ascertain whether the additional overtime earnings would affect her Carer Payment. I also accept that she was incorrectly advised that, provided certain conditions were satisfied, her Carer Payment would not be reduced or cancelled. I accept further that she was not informed about the transitional provisions, about the possibility that the new rules under the amended legislation might apply and that she did not receive the letter from Centrelink to indicate that the assessment rules had changed. Clearly, had she known about the changes and been aware that her husband’s additional income would have placed them over the higher income threshold for her Carer Payment entitlement, her husband would have refused the extra overtime to maintain their income below the old income threshold.
13.It appears that, in the fortnight ended 9 November 2009, her husband’s income was above $2,274 and Mrs McEvoy’s Carer Payment was calculated under the transitional provisions, resulting in a nil rate payable under the old income test rules. As this was equal to, and was no worse than, the rate calculated under the new rules, she was transferred so that her rate was calculated, from that point onwards, under the new rules. In the fortnight ended 23 November 2009, the rate of payment was also calculated under the amended legislation. For this fortnight, Mr McEvoy’s income was at a level that precluded Mrs McEvoy from Carer Payment under the new rules. Mrs McEvoy’s payment rate was also calculated to be zero in the fortnight ended 7 December 2009.
14.Mrs McEvoy’s complaint was that she was not advised of the transitional provisions and of the change to the threshold amount. Notwithstanding this, given the level of Mr McEvoy’s income in the fortnight ended 9 November 2009, Mrs McEvoy would be precluded from payment under the new provisions and her payment rate for that fortnight would be nil. On the evidence and having regard to the transitional provisions contained in Schedule 1A of the Act, I am satisfied that Mrs McEvoy’s Carer Payment in the fortnights ended 9 November 2009, 23 November 2009 and 7 December 2009 have been correctly calculated.
15.The changes to the pension system that are contained in Schedule 1A of the Act contain transitional provisions that apply to allow pension payments (including Carer Payment) to be assessed under old and new income test rates. If the old rate produced a better result, the pension payments would be assessed under that rate until the new rate produced an equal or better outcome. In Mrs McEvoy’s case, her Carer Payment entitlement had been transferred to the new income test rules because an equal or better outcome had been reached.
16.Mr Parker submitted that, pursuant to clause 146(5) of Schedule 1A, where the transitional provisions do not result in the provision of a higher rate than the rate under the amended legislation, Mrs McEvoy’s Carer payment cannot ever again be paid under the transitional provisions. I accept that this submission is correct. It follows that, in Mrs McEvoy’s case, the transitional provisions applied to her at any time after the first day of the fortnight ended 23 November 2009. Her rate of Carer Payment for the whole of the fortnight ended 7 December 2009 and thereafter, therefore, fell to be determined under the new rules, without recourse to the transitional provisions. The Act does not provide for reversion to assessment of Carer Payment rate under the old income test rules once the transitional provisions no longer apply.
17.In a communication to the Tribunal before the hearing, Mrs McEvoy said “all we want is to go back on to the old threshold and we would be happy”. I am bound to apply the provisions of the Act as they are enacted and have no power to provide relief which is outside the operation of the relevant provisions.
18.The circumstances in which Mrs McEvoy and her husband now find themselves are most regrettable and I sympathise with them. On the material provided to me, they have apparently been given mistaken advice by Centrelink officers on more than one occasion. They have suffered a significant loss of income as a result of the changes made to the calculation of the Carer Payment. Mrs McEvoy is unable to work herself because of her severely disabled son and she believes that she has been treated unfairly by Centrelink.
The Department also drew to the Tribunal’s attention the Explanatory Memorandum for the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009, regarding the amendments to the pension income test and the transitional arrangements. The Explanatory Memorandum states:
The intention of subclause 146(5) is to ensure that, once a person's provisional annual payment for a day is higher by reference to the rate and income test rules which exist apart from the rules inserted into Schedule 1A by this measure, the person's rate cannot be determined again by the rules in Schedule 1A. This is to ensure that a person can only benefit from the transitional arrangements for a continuous period directly following 20 September 2009. Once a person no longer benefits from transitional arrangements, their rate is to be determined by the rate and income test rules that will apply to people who begin receiving a social security pension described in subclause 146(1) on a day that is after 19 September 2009.
The Tribunal also contended that the intention of the transitional arrangements is to ensure that, once the rate calculated under the current income rules is higher than it was before the current income rules applied, “the person’s rate cannot be determined again under the transitional arrangements”.
The Tribunal was also referred to Stewart and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 871, wherein Senior Member Kenny recognised that the applicants had been disadvantaged by the 2009 amendments in that the rate of their respective disability support pensions had decreased following calculation of income earned in a fortnight following a fortnight in which no income had been earned.
In Stewart Senior Member Kenny explained:
4.Mr Stewart submitted that the decision was unfair to him and his wife because the higher rate of payment in the fortnight 2 January to 15 January 2010 only came about because he was not working at that time. This was because he was responsible for driving a school bus and, because of the vacation period, he did not work in that fortnight. He submitted that, when his normal work and income resumed, the application of the new rules disadvantaged them because the rate they received was then less than that under the transitional arrangements. He estimated that they were some $70 each per fortnight worse off because of the decision and that this was not in accordance with the intention of the Act to prevent disadvantage to pensioners by the rule changes. Mr Stewart submitted that the materials sent by Centrelink did not fully explain the operation of the new rules and were misleading in that they declared that existing pensioners would not be worse off under them. He submitted that a fairer system would have been for the change in the pension rate to have been introduced in a staged manner rather than for the change to occur in a single payment period.
…
8.Clearly, Mr and Mrs Stewart have been disadvantaged by the 2009 amendments. The rate of their respective disability support pensions has decreased. This occurred because they earned no income in the fortnight 2 January to 15 January 2009. For that fortnight, the rate was calculated under the new rules and this was greater than it was previously. Mr Stewart then returned to work. A comparison between the rate under the new and the old rules after he returned to work would show that he was worse off under the new rules. The decision under review was made on the basis that, once a higher rate had been calculated under the new rules, there could be no return to the old rules under the transitional arrangements. The Explanatory Memorandum refers to this:
Existing part-time pensioners will transition to the new arrangements at the point the new arrangements provide a higher rate of pension.
9.It also explains that the intention of the transitional arrangements is to ensure that, once the rate calculated under the new rules is higher than it was before the new rules applied, “the person’s rate cannot be determined again under the transitional arrangements”. That is also stated in para 5.1.8.40 of The Guide to Social Security Law (“the Guide”).
10.The parts of the Explanatory Memorandum and Centrelink material which declare that a pensioner will not be worse off under the 2009 amendments are misleading. In the circumstances facing Mr and Mrs Stewart, they were disadvantaged. When the Explanatory Memorandum and Centrelink material, including the Guide, are read as a whole, it becomes clear that a single payment at the higher rate under the new rules prevents a return to the earlier payment. Unfortunately for Mr and Mrs Stewart, this is the direct effect of cl 146(5)(a) of Sch 1A of the Act. I am bound to apply the terms of the Act which admits no discretion to vary that outcome.
The Tribunal was also referred to Naunton and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] AATA 169. This case also concerned the rate of age pension payable to the respondents, Leslie and Elisabeth Naunton, and whether their pension could continue to be paid under the 2009 transitional arrangements.
In Naunton, Senior Member Dunne wrote as follows:
2.The respondents, Leslie and Elisabeth Naunton are a married couple and have been in receipt of age pension since prior to the introduction of the legislative changes on 19 September 2009.
3.On 26 June 2012 the Social Security Appeals Tribunal (SSAT) set aside a decision made by a Centrelink Authorised Review Officer (ARO) and substituted a decision that the respondents’ rate of age pension was to continue to be assessed under the transitional arrangements in clauses 146 of schedule 1A of the Social Security Act 1991 (The Act). The Secretary has appealed the decision of the SSAT contending that it did not take account of employment income in the sum of $394.18 for the period 20 January 2012 to 2 February 2012 or the effect that work bonus had in the rate calculation under the new rules.
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11.Attached to the Secretary’s Statement of Facts and Contentions were numerous attachments which included relevant legislation, extracts from the Guide to the Social Security Law, Explanatory Memorandum to the Social Security and Other Legislation Amendment (Pension Reform and other 2009 Budget Measures) Bill 2009, rate calculations, payment summaries, pension rate calculator, work bonus calculation and transitional rate calculation, work bonus information, pension reform information and notices sent by Centrelink to the respondents with respect to the proposed legislative changes.
12.The respondents did not dispute receipt of the notices however they contended that they had been misled by the information provided and did not consider that the changes had been accurately explained. In a letter dated 9 September 2009 it is stated :
“You do not have to do anything about these changes unless Centrelink contacts you. Transitional arrangements have been put in place to make sure that customers are not disadvantaged by the new rules. Centrelink has calculated that your pension payment would be at 20 September 2009 under both the new rules and the transitional rules and is paying you at the higher rate ..."
13.The respondents maintain that they have in fact been disadvantaged by the amending legislation in that following further calculations which took account of casual employment income earned, their age pension rate is now calculated pursuant to the new rules and is now at a lower rate than that previously paid.
14.The respondents contended that if they had received more accurate information about the effect of the amending legislation they would have made different arrangements, for instance, not accept the few days’ casual work offered to Mrs Naunton which has had a detrimental effect on their joint rate of age pension in the sum of approximately $100 per fortnight. It was Mr Naunton’s evidence that he consulted Centrelink officers on a number of occasions regarding the proposed amending legislation and said that they also had difficulty in understanding the true impacts of the transitional arrangements. Mr Naunton contended that he was misled by Centrelink staff who informed him that low earnings would have no impact on their rate of pension until January 2012.
15.There was no dispute and the Tribunal accepts that Mr and Mrs Naunton were both in receipt of age pension on 19 September 2009. Their rate of age pension was subject to the transitional arrangements in clause 146 of schedule 1A of the Act and the work bonus provisions contained in the 2009 and 2011 amendments. For the period 20 January 2012 to 2 February 2012, the respondents’ rates of age pension were calculated having regard to Mrs Naunton’s employment income of $394.18. In the previous fortnight no employment income was earned.
16.The respondents advised that they did not dispute the Secretary's calculations under both the transitional arrangements and the new rules which took account of Mrs Naunton’s $394.18 casual earnings and the impact of the work bonus provisions. Under the new rules the employment income was disregarded because of the impact of the work bonus provisions and so did not affect the rate of pension. The work bonus provisions introduced in 2009 allowed for half of up to the first $500 of employment income earned in a fortnight to be disregarded under the income test for pensioners over the age pension age in addition to the usual income free test area. The more generous 2011 work bonus provisions provided for the accrual of any unused $250 per fortnight work bonus in an "employment income concession bank" up to a maximum of $6500 which could be used to offset future implement (sic) income. However under the transitional arrangements that income was not disregarded, as worked (sic) bonus was not available and so the income was relevantly considered which affected the rate assessed. The evidence provided shows that under the transitional rules the rate assessed was $11.22 per fortnight and under the new rules a slightly higher rate of $13.28 per day.
17.As a consequence, the respondents’ respective age pensions were calculated under the traditional rules as set out in clause 146 of schedule 1A of the Act until 19 January 2012 and under the new rules from 20 January 2012. This was because the rate of age pension under the new rules was greater than the rate assessed under the transitional arrangements. The respondents asked that the original decision be reviewed as they believed they were disadvantaged by the approach taken by Centrelink contrary to the advice that they had received that they would not be disadvantaged by the new rules.
18.It was submitted by Mr Sparkes that the purpose of the transitional provisions was to ensure that a person would not be disadvantaged by the amending legislation on the date of the changeover in that they would continue to be paid at the old rate if it was higher than the rate calculated under the new provisions. Mr Sparkes said this is evident from the Explanatory Memorandum which states that the range of savings and transitional provisions allow pensioners who will be affected by changes to the Social Security law to transition smoothly to the new arrangements. The effect of clause 146 of schedule 1A is that a person in receipt of age pension on 19 September 2009 can continue to have their rate of age pension assessed under the transitional arrangements until such time as the new rules provide an equal or higher rate. Once a higher rate is achieved under the new rules, the transitional arrangements cease to apply and can never apply again regardless of the circumstances.
19.There is no provision in the Act which provides for a reversion to assessment under the old income test rules once the transitional provisions cease to apply. This has been recognised in a number of Tribunal decisions….
20.…
21.It is not clear from the calculations contained in the SSAT's decision how it assessed the effect of Mrs Naunton's employment income of $394.18 for the period 20 January 2012 to 2 February 2012. It found that there was no change in the amount of ordinary income of Mr and Mrs Naunton between 4 January 2012 and 31 January 2012 and concluded that the rate of pension calculated by reference to the 2009 transitional provisions in January 2012 and February 2012 was higher than the rate calculated by reference to the current income test. Notably there is no reference to the effect of the work bonus on the rate calculation under the new rules.
22.This Tribunal is not bound by any findings of previous decision makers for the review conducted by the AAT is a de novo review of the decision taking into account all of the evidence available. As previously stated, the respondents do not dispute the Secretary’s calculations. The Tribunal finds that it correctly took account of Mrs Naunton’s earnings for the period 20 January 2012 to 2 February 2012 and the work bonus provisions resulting in a higher rate of age pension assessed under the new rules.
23.Unfortunately for Mr and Mrs Naunton, once the rate assessed results in a higher payment under the new rules, reversion to the transitional rules is no longer available. As the Act permits no discretion to vary that outcome, I must accordingly set aside the decision of the SSAT and substitute it with the decision that the transitional arrangements in clause 146 of schedule 1A to the Act no longer apply to the respondents from 20 January 2012.
The Department contended in relation to Mrs Isitt that the legislation and relevant jurisprudence is such that even if Mrs Isitt has provided the incorrect information, there is nothing the Department can do to assist her once a calculation had been made on the basis of that incorrect information and her income is found to have exceeded what it would have been under the new test. In other words, they cannot allow her to correct her mistake.
The Department argued:
24.It is clear that the current income test provides Ms Isitt with a higher rate of Carer Payment.
25.Therefore, in accordance with section 1064-A1 and clause 146 of Schedule 1A of the Act, the Secretary contends that Ms Isitt’s rate should be calculated using the current income test.
26.At the SSAT hearing Ms Isitt gave, inter alia, evidence that she may have made an error when reporting her husband’s income and that she sometimes encountered difficulties with reporting her husband’s income accurately (T3, p10).
28.It has also been recognised in a number of Tribunal decisions that the Act does not provide for a reversion to assessment under the old income test rules once the transitional arrangements no longer apply – i.e. once a higher rate of pension is achieved under the current income test, the transitional arrangements cease to apply and can never apply again regardless of the circumstances (see Naunton; Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] AATA 169 and the cases referred to in paragraphs 19 and 20 therein).
29.Section 5.1.8.40 of the Guide also states that where a “where a person has been paid under the transitional arrangements, and those arrangements have ceased to apply to the person (because they do not provide a higher rate of payment than if their pension were assessed under the relevant pension rate calculator), the person’s pension cannot ever again be paid under the transitional arrangements, except where they have been a ‘respite care couple’”.
30.Ms Isitt is not part of a ‘respite care couple’ and therefore this exception does not apply.
31.It is unfortunate that Ms Isitt may have made an error when reporting her husband’s income. However, there is no discretion under the Act for the Tribunal to re-assess a person’s rate of pension and vary that rate.
32.The Secretary therefore contends that Ms Isitt cannot go back to being paid under the transitional arrangements and must continue to be assessed under the current pension income test.
The Tribunal does not agree with this assessment of the impact and scope of the legislation as it applies to the facts specific to Mrs Isitt. Nor does it agree that the cases cited by the Department stand for the proposition that if incorrect financial information is used to calculate income, nothing can be done to correct this mistake even when it is evident that the “numbers” in question are in fact wrong.
The case law relied on by the Department and outlined above references factual scenarios in which the correct financial information had been provided.
Unlike here, there is no suggestion in any of the case law to which the Department refers to suggest that the applicants had provided the incorrect information and had attempted to correct their mistake by supplying the correct financial information.
The Tribunal has been asked to accept that once an error has been made (however innocently), nothing can be done to rectify it, with the result that the new income test applies thereafter.
Were the Tribunal to accept this line of argument, it would effectively mean that if the Department itself made an error with the result that applicants were thereafter assessed under the new income test, nothing could be done to assist applicants who were prejudiced by a Departmental mistake.
The Tribunal does not accept that this was the intention of the legislature when the new income test was introduced.
The Department was advised by Mrs Isitt that she had made an error. She sought to correct it and argues that if this correction is made she will continue to be assessed under the transitional income test. The Tribunal does not know, based on the evidence, whether this will actually prove to be the case. It does not, however, need to determine whether this is the case. This is an assessment that can and should be made by the Department once it is provided with what Mrs Isitt claims are her correct financial figures.
In the circumstances, this is what the Department should do. The jurisprudence requires it to do so. To find otherwise would result in situations that would be both unfair and clearly not intended by the legislature.
DECISION
The decision under review is set aside. The matter is remitted to Centrelink to reassess the amount of Carer Payment payable to Mrs Isitt in accordance with these reasons.
I certify that the preceding 68 (sixty-eight) paragraphs are a true copy of the reasons for the decision herein of Deputy President, Dr Christopher Kendall. ................[sgd D Brodie]....................................................
Administrative Assistant
Dated 14 August 2015
Date of hearing 9 July 2015 Applicant In person Representative of the Respondent Ms S Yik Long Solicitor for the Respondent Australian Government Solicitor
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