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

This matter concerned an appeal by Mr Marchant against a decision by the Secretary, Department of Social Services, regarding the calculation of his compensation preclusion period for the purposes of receiving an age pension. The Administrative Appeals Tribunal was required to determine whether Mr Marchant was subject to a compensation preclusion period, if that period had been correctly calculated by Services Australia, and whether special circumstances existed to waive the preclusion period.

The Tribunal considered the provisions of Part 3.14 of the *Social Security Act 1991* (Cth), which stipulate that a person receiving a lump sum compensation payment for personal injury, including a component for economic loss, is subject to a preclusion period. This is based on the principle that compensation received for lost earnings should be used for living expenses before taxpayer-funded income support is provided. The Act defines compensation to include payments made wholly or partly in respect of lost earnings or capacity to earn, with 50% of a lump sum payment generally considered the compensation component. The length of the preclusion period is calculated by dividing the compensation part of the lump sum by the relevant income cut-out amount.

In this instance, Mr Marchant received a lump sum compensation payment of $2,800,000 on 25 August 2000, following an injury sustained on 1 May 1995. The Tribunal found that the economic loss component of this payment was $1,400,000. With an income cut-out amount of $543.63, the compensation preclusion period was calculated to commence on 2 February 1997, the day after his periodic payments ceased, and end on 9 June 2046. The Tribunal was not satisfied that special circumstances existed under section 1184K of the Act to justify waiving this preclusion period.

Consequently, the Tribunal affirmed the decision under review.