McCafferey and Secretary, Department of Social Services (Social security)
[2025] ARTA 764
•29 April 2025
McCafferey and Secretary, Department of Social Services (Social security) [2025] ARTA 764 (29 April 2025)
Applicant: Dr McCafferey
Respondent: Secretary, Department of Social Services
Chief Executive Centrelink
Tribunal Numbers: 2024/MP002769, 2024/MP002770 & 2024/M192351
Tribunal: General Member N Foster
Place:Brisbane
Date:29 April 2025
Decision:The Tribunal varies the decisions under review so that recovery of 50% of the total amounts of Dr McCafferey’s debts of parental leave pay and child care subsidy are waived with effect from 29 April 2025.
Statement made on 29 April 2025 at 8:37am
CATCHWORDS
SOCIAL SECURITY – Paid Parental Leave and Child Care Subsidy – work test – paid work – PhD student on scholarship with university listed as employer – attendance, research and other expectations – reconsideration of PPL after CCS application made – PhD study not paid work as employee and PPL debt established – CCS activity test – period of no study while having second child – leave from course of study not a requisite activity and CCS debt established – recovery of debts – CCS debts unavoidable after erroneous grant of PPL – delay in Centrelink’s review procedure – current pregnancy and financial and personal circumstances – administrative error – assets, income and capacity to repay – debts waived in part – decision under review varied
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information pursuant to subsection 16(2AB) of the Child Support (Registration and Collection) Act 1988.
Statement of Reasons
BACKGROUND
This review is about whether Dr McCafferey has recoverable debts of parental leave pay and child care subsidy.
The parental leave pay decisions
On 1 March 2019 Dr McCafferey claimed parental leave pay in relation to her child, [Child 1]. On 15 May 2019 the government agency now known as Services Australia (Centrelink) granted parental leave pay to Dr McCafferey, who subsequently received payments for [Child 1] in respect of the period 18 April 2019 to 21 August 2019.
On 17 March 2021 Dr McCafferey again claimed parental leave pay, this time in relation to her child, [Child 2]. On 13 May 2021 Centrelink again granted parental leave pay to Dr McCafferey, paying her for the period 26 April 2021 to 27 August 2021.
On 22 October 2024 Centrelink raised parental leave pay debts against Dr McCafferey in the amounts of $13,109.80 for the period 18 April 2019 to 21 August 2019 and $13,726.86 for the period 26 April 2021 to 27 August 2021. These debts were raised on the basis that Dr McCafferey did not satisfy the work test for parental leave pay because she was a PhD student at [University] and was not undertaking paid work. Dr McCafferey requested a review of these debts and, in separate decisions dated 7 November 2024, an authorised review officer affirmed Centrelink’s decisions.
The child care subsidy decisions
Following the births of her children, Dr McCafferey was paid child care subsidy by way of fee reduction. In calculating the amount of Dr McCafferey’s child care subsidy, Centrelink assessed her as being eligible for 100 hours of subsidy per fortnight.
On 10 October 2022 Centrelink raised debts of child care subsidy against Dr McCafferey on the basis that she had previously only been eligible for 24 hours of subsidy per fortnight, rather than 100 hours per fortnight. These debts were in the amounts of $2,201.62 for the 2019–20 year and $9,872.24 for the 2020–21 year.
Dr McCafferey requested a review and in August 2024 an authorised review officer directed that Centrelink reassess Dr McCafferey’s entitlement to child care subsidy during the period 7 April 2019 to 2 February 2022. In doing so, Centrelink decided on 30 August 2024 to raise another child care subsidy debt against Dr McCafferey, this time in the amount of $5,602.43 for the 2021–22 year. Although the authorised review officer in their formal decision of 3 September 2024 set aside the child care subsidy debts for the 2019–20 and 2020–21 years, Centrelink later decided on 5 September 2024 that a child care subsidy debt of $1,928.82 still existed for the 2020–21 year.
Dr McCafferey requested a further review and on 14 October 2024 an authorised review officer decided that the debt for the 2020–21 year could not be reviewed again. On 18 October 2024 an authorised review officer affirmed Centrelink’s decision in relation to the debt for the 2021–22 year. In doing so, the authorised review officer found that Dr McCafferey was only eligible for 24 hours of subsidy per fortnight in the period 10 April 2021 to 27 February 2022 as she had stopped studying to have a baby.
The Tribunal applications
Dr McCafferey applied to the Tribunal on 3 December 2024, with separate applications being recorded in relation to her various debts. These applications were heard together on 26 March 2025, with Dr McCafferey and her partner and representative, [Dr A], appearing by video. After receiving additional documentation from both Dr McCafferey and Centrelink, the Tribunal made its decision.
CONSIDERATION
Are there debts of parental leave pay?
As at 2019 and 2021, section 31 of the Paid Parental Leave Act 2010 (the PPL Act) required a person to satisfy a work test in order to be eligible for parental leave pay. This work test was set out in section 32 of the PPL Act and relevantly required the person to have performed qualifying work for a period of 295 consecutive days in the 392 days immediately before their child was born. The meaning of qualifying work was defined in section 34 of the PPL Act and included paid work. This latter term was defined in section 35 of the PPL Act, with subsection 35(1) relevantly stating:
People other than self‑employed
(1) A person performs paid work on a day if, on that day, the person performs work (whether as an employee, a contractor or otherwise and whether or not in Australia) for another entity for remuneration or other financial benefit.
Dr McCafferey told the Tribunal that she verbally informed Centrelink that she was a PhD student when she applied for parental leave pay in both 2019 and 2021. With her initial claim for this payment, she was uncertain whether she would be eligible as she could not get a straight answer from Centrelink officers. She was instead encouraged to apply for parental leave pay to have her situation formally assessed. She indicated in both of her claim forms that she was working for [University] because the forms required her to list an employer. She also believed at the time that she was working for [University] given that she had a three-and-a-half year contract with the university, was paid to perform work at one of its laboratories, had a boss there and had expectations about her work performance that had to be met. When she had a baby, her scholarship also went on pause, which was the equivalent of taking leave from an employer.
[Dr A] submitted to the Tribunal that Dr McCafferey’s status as a PhD student very much felt to her like employment. For example, if there was conflict between PhD students at the laboratory, Dr McCafferey was expected to take the matter to her boss. There was also very little difference between the work of a PhD student and a graduate student in the laboratory. Despite the terms of Dr McCafferey’s contract, she was also expected to work long hours and to be at the laboratory five days per week.
At the direction of the Tribunal, Dr McCafferey provided additional documentation after the hearing. This material included information about her PhD requirements as set out on the [University] website. In particular, Dr McCafferey highlighted a passage stating that “Full-time enrolment requires the student to devote at least 4 days each week to the pursuit of their study program and related activities, including [University] Doctoral program, supervisory meetings and other research activities”. The course requirements also stated that a full-time student was entitled to take leave, including up to 12 months of maternity, parental and adoption leave. In accompanying written submissions, Dr McCafferey likened the status of a PhD candidate to an apprentice in that a PhD candidate is “employed”, must report to a boss, is learning a trade and is expected to show up to work each day. Dr McCafferey also noted that PhD candidates did not merely study but contributed to research papers, presented at conferences and taught new students. In light of these similarities, she questioned why PhD candidates were treated differently to apprentices for the purpose of parental leave pay.
In determining whether Dr McCafferey was eligible for parental leave pay for [the children], the Tribunal is mindful that subsection 35(1) of the PPL Act requires her to have been performing work as an employee, contractor or otherwise for another entity for remuneration or financial benefit. As set out in the hearing documents, Dr McCafferey was granted parental leave pay after lodging claims in which she stated that she was working for [University]. Notwithstanding this, Centrelink computer documents dated 3 May 2019 and 9 April 2021 indicate that Centrelink was aware that Dr McCafferey was a scholarship holder and was not directly employed by the university. Dr McCafferey had also provided Centrelink with details of her enrolment status as a PhD student, and with details of her scholarship, on 15 May 2019. It was not until late 2024 – when an authorised review officer was looking at Dr McCafferey’s eligibility for child care subsidy – that her eligibility for parental leave pay was revisited. In October 2024 Centrelink retrospectively determined that Dr McCafferey had never satisfied the work test for parental leave pay and raised two debts against her.
The question of whether a PhD candidate in receipt of a scholarship is eligible for parental leave pay has previously been the subject of a number of applications to the Social Services & Child Support Division of the former Administrative Appeals Tribunal (AAT1), the equivalent of the current first-level Tribunal review. Although the AAT1’s decisions were not publicly reported, those that the current Tribunal has read consistently found that a PhD student in receipt of a scholarship was not eligible for parental leave pay. In particular, the AAT1 found that participation in a PhD program was not paid work for the purpose of parental leave pay given that it was not work as an employee (or otherwise) for another entity. In addition, the AAT1 decisions cited a June 2014 departmental report about parental leave pay[1] that specifically stated that PhD students were not intended to be eligible for the payment. In particular, this report stated, at page 57:
An activity that is not done for financial reward or gain, including study, does not meet the definition of paid work under the PPL work test. The exclusion of study from eligibility for the PPL work test is supported by the Productivity Commission’s view that a critical prerequisite for PLP eligibility is a genuine attachment to the labour market prior to the birth. As such, receipt of a scholarship by a PhD student does not currently count as paid work for the purposes of PLP.
[1] Paid Parental Leave scheme Review Report, Department of Social Services, June 2024:
The evidence before the current Tribunal indicates that Dr McCafferey was not formally employed by [University] while a PhD candidate. While she undertook duties at a laboratory that were similar to those of someone who was a worker, she was enrolled as a student and the income that she received was a scholarship, not remuneration for employment with the university. In such circumstances – and in line with previous case law in relation to PhD students – the Tribunal finds that Dr McCafferey was not undertaking paid work as defined in subsection 35(1) of the PPL Act. It follows that she did not satisfy the work test for parental leave pay in either 2019 or 2021.
Where a person has been paid more parental leave pay than they should have received, they have a debt to the Commonwealth under section 167 of the PPL Act. As Dr McCafferey was not eligible for parental leave pay in 2019 or 2021, the Tribunal finds that she has debts to the Commonwealth under section 167 of the PPL Act in the amounts calculated by Centrelink.
Are there debts of child care subsidy?
Under Part 1 of Schedule 2 to the A New Tax System (Family Assistance) Act 1999 (the FA Act), the amount of child care subsidy paid to a person depends on a range of factors, including the number of hours of subsidy that they are eligible for under the activity test. To satisfy the activity test, a person must be engaged in recognised activity, such as paid work or approved study. Where a person is a low-income earner, they will automatically be entitled to at least 24 hours of subsidy per fortnight. However, where a person and their partner each undertake more than 48 hours of recognised activity in a fortnight, the person will be eligible for the maximum subsidy of 100 hours per fortnight.
In Dr McCafferey’s case, the hearing documents indicate that she was initially assessed as being eligible for 100 hours of child care subsidy during the 2020–21 and 2021–22 years on the basis that she and [Dr A] were each undertaking study of more than 70 hours per fortnight. However, when Dr McCafferey’s record was updated by Centrelink in August 2024 to reflect that she was only undertaking this study from 28 February 2022, this left a gap where she was not recorded as undertaking requisite activity for the period 10 April 2021 to 27 February 2022. This meant that she was only eligible for 24 hours of subsidy per fortnight as a low-income earner for that period. As a result, Centrelink calculated that Dr McCafferey had been overpaid child care subsidy in the amounts of $1,928.82 for the 2020–21 year and $5,602.43 for the 2021–22 year.
While Dr McCafferey did not contend that she was studying or working in the period 10 April 2021 to 27 February 2022, she told the Tribunal that this was because she had paused her PhD studies to have [Child 2]. During this period, she was also receiving parental leave pay, which Centrelink has since sought to recover. Although the Tribunal is mindful that leave from paid work is a requisite activity for the purpose of child care subsidy,[2] leave from a course of study is not. As such, given that Dr McCafferey was not undertaking a requisite activity in the period 10 April 2021 to 27 February 2022, the Tribunal finds that she was only eligible for 24 hours of subsidy per fortnight.
[2] See subclause 12(3) of Schedule 2 to the FA Act and section 25 of the Child Care Subsidy Minister's Rules 2017
Where a person is paid more child care subsidy than they were entitled to receive, the overpayment is a debt due to the Commonwealth under section 71C of the A New Tax System (Family Assistance) (Administration) Act 1999 (the FAA Act). As Dr McCafferey was overpaid child care subsidy during the 2020–21 and 2021–22 years, the Tribunal finds that she has debts to the Commonwealth under section 71C in the amounts calculated by Centrelink.
Should the debts be recovered?
In seeking that recovery of Dr McCafferey’s debts be waived in full, [Dr A] highlighted the confusion that existed around whether she was eligible for parental leave pay as a PhD student. [Dr A] contended that Dr McCafferey had fully disclosed her circumstances to Centrelink and had trusted the system to determine her eligibility correctly. When her claims were approved, she and [Dr A] spent the parental leave pay they received – which they genuinely needed at the time – assuming that the payments were correct. [Dr A] submitted that it was particularly unfair for Centrelink to now seek recovery of this parental leave pay so many years after the fact, likening it to an employer unreasonably seeking the return of wages long after the money had been spent. [Dr A] also noted that all of Dr McCafferey’s debts were related and that, because she was erroneously granted parental leave pay, she had incurred child care subsidy debts that she was unable to avoid. On this latter point, Dr McCafferey told the Tribunal that, had she been aware at the time that she was entitled to fewer hours of child care subsidy per fortnight, she would have used less child care.
[Dr A] also contended that recovery of Dr McCafferey’s debts was unfair because of the unreasonable responses of Centrelink, and its ongoing miscommunications and mistakes, throughout the review process. In particular, [Dr A] highlighted that Dr McCafferey had been contesting her debts for three years and had to get her local Member of Parliament to progress the review after Centrelink took no action for almost two years. Then, whenever Centrelink appeared to make decisions in Dr McCafferey’s favour, a debt would be increased or a new one raised. This culminated in the situation in late 2024 when a Centrelink manager informed [Dr A] that the debts originally raised by Centrelink were indeed wrong all along but that debts that were three times larger were going to be raised instead, debts which Dr McCafferey could not yet appeal. Centrelink then continued to contact Dr McCafferey about debt recovery while the family was on holiday overseas and after she had arranged to deal with the matter upon her return to Australia. [Dr A] said that the three years of dealings with Centrelink had caused Dr McCafferey an immense amount of stress and that it had now reached the stage that any contact from Centrelink had a triggering effect on her.
When asked by the Tribunal about her current circumstances, Dr McCafferey advised that she is due to have another baby in June this year. She works as [an occupation] at [Employer 1] and has an income of $105,000 per annum. Although recovery of the debts under review is meant to be on hold, she has been making debt repayments to Centrelink of $400 per month. [Dr A] is currently doing unpaid work for a start-up company in the [work] sector for which he is receiving shares. He also has the prospect of future paid employment via a contract with [Employer 2]. The couple has combined savings of around $100,000, which they intend to use as a deposit for a home. They each have a student loan debt of $30,000 and a credit card bill of $3,000 to $5,000, which they repay each month. Their rental accommodation costs $4,302 per month, the cost of which they share with Dr McCafferey’s mother, [Ms B], who has lived with them since June last year.
[Dr A] told the Tribunal that [Ms B] started having health issues in 2023 and was diagnosed with terminal [cancer] in May 2024. She is currently undergoing treatment to prolong her life expectancy, which is likely to be 12 months. Although [Ms B] is able to mobilise, dress herself and go to the toilet, she still requires a lot of care and assistance in and outside of the home. [Ms B]’s health issues have placed a significant burden on the family’s time and finances and have exacerbated the emotional distress that Dr McCafferey has experienced throughout the last three years during her dealings with Centrelink. Dr McCafferey told the Tribunal that her mental health continues to be significantly affected and that she is under the care of a psychologist.
In written submissions after the hearing, Dr McCafferey stated that she had worked extremely hard to get to where she was in her career and that there had been many financial and mental struggles along the way. Although she and [Dr A] have savings now, this was not all due to Centrelink assistance but, rather, was due to how they chose to live in difficult times. She noted that their combined income was not over $60,000 per annum until 2024 and that they had lived very frugally. Were she to repay her debts to the Commonwealth, it would have a big impact on the family’s finances and morale. As it is, given that she will be taking maternity leave again soon and [Dr A]’s job contract is uncertain and they have increased expenses (including in relation to her mother), the next 12 months were already going to be hard financially.
The PPL Act and FAA Act provide that, in limited situations, recovery of debts can be waived – or, in other words, permanently not recovered. Under section 195 of the PPL Act and section 97 of the FAA Act, recovery of debts arising from administrative error must be waived if three requirements are met. First, the debt (or some particular portion of it) must be solely due to administrative error by the Commonwealth. Secondly, the person must have received the incorrect payments in good faith. Thirdly, the person must suffer severe financial hardship if recovery of their debt were not waived.
As discussed at the hearing, waiver on the grounds of administrative error is not open in Dr McCafferey’s case given her financial position. Although severe financial hardship is not defined in the legislation, the case law indicates that it goes beyond merely difficult or straitened financial circumstances and involves financial suffering of a severe or extreme nature – see Stubbs and Secretary, DFaCS [2003] AATA 729. Given the evidence at the hearing about Dr McCafferey’s level of income and assets and her current capacity to make debt repayments in instalments, the Tribunal finds that she would not suffer severe financial hardship if recovery of her debts were not waived. It follows that recovery of Dr McCafferey’s debts cannot be waived under section 195 of the PPL Act or section 97 of the FAA Act.
The more relevant non-recovery provisions are those related to waiver in special circumstances. In this regard, section 199 of the PPL Act states as follows:
Waiver of debts – special circumstances
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false or misleading statement or representation; or
(ii) failing or omitting to comply with a provision of this Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt (or part); and
(c) it is more appropriate to waive the debt (or part) than to write off the debt (or part).
Section 101 of the FAA Act provides for waiver of recovery of debts of child care subsidy on identical grounds.
With regard to the first requirement for waiver, the Tribunal is satisfied that Dr McCafferey’s debts were not due to knowingly false statements or omissions on her or any other person’s part. While mindful that Dr McCafferey advised in both parental leave pay claims that she was employed by [University], the Tribunal accepts that this was not a deliberately false statement on her part. In any case, the Tribunal is satisfied that Dr McCafferey elsewhere disclosed that she was a PhD student and that Centrelink was aware of this state of affairs when parental leave pay was granted to her on each occasion. The Tribunal thus finds that the first requirement for waiver under section 199 of the PPL Act and section 101 of the FAA Act is met.
With regard to the second requirement for waiver, courts and tribunals have been reluctant to define the meaning of special circumstances. Even so, it is generally accepted that for such circumstances to exist, there will need to be something that distinguishes a person’s matter from the ordinary or usual case – see Angelakos v Secretary, DEWR [2007] FCA 25. As the wording of the legislation makes clear, the special circumstances must also be something other than financial hardship alone.
In Dr McCafferey’s case, her parental leave pay debts have arisen from two separate claims, made two years apart, in relation to which she disclosed that she was a PhD student in receipt of a scholarship. Centrelink’s records also indicate that, notwithstanding Dr McCafferey’s indication in her claim forms that she was working for [University], the university itself had advised Centrelink on each occasion that she was a scholarship holder and was not on its payroll. Despite having the necessary information in its possession to conclude that Dr McCafferey was not eligible for parental leave pay, Centrelink twice erroneously decided to grant the payment to her. Not only was this repeated administrative error but the initial incorrect grant decision led to Dr McCafferey claiming parental leave pay a second time. In incorrectly granting the payment again, Centrelink not only doubled the amount of parental leave pay that Dr McCafferey now owes to the Commonwealth, in addition, the payment of parental leave pay resulted in Dr McCafferey incurring debts of child care subsidy related to the activity test. In the view of the Tribunal, the nature of Centrelink’s repeated errors – and the magnitude of their consequences – makes recovery of the large sums that she now owes to the Commonwealth manifestly unfair.
This conclusion is only reinforced when other aspects of Dr McCafferey’s case are also taken into account. As indicated by the hearing papers, Dr McCafferey’s path to the Tribunal has been a long and circuitous one. After initially requesting a review of child care subsidy debts raised against her in October 2022, the first formal review by an authorised review did not occur until September 2024. There were then a series of new or revised decisions, including an authorised review officer’s decision in Dr McCafferey’s favour that Centrelink later decided was wrong, as well as the raising of the two large debts of parental leave pay that, to Dr McCafferey and [Dr A] at least, seemingly came out of nowhere. While recognising that Centrelink is obliged to make the decisions that it determines are correct under the law, the Tribunal understands how the protracted and unpredictable nature of Dr McCafferey’s dealings with Centrelink can have adversely affected her mental health. The Tribunal is also mindful that Dr McCafferey remains under considerable psychological and emotional stress, having to provide care and support for her terminally ill mother, while also being pregnant again. Given this combination of factors, the Tribunal considers that the circumstances of Dr McCafferey’s case are markedly different from the usual run of debt matters and make waiver of at least some portion of her debts desirable. The second requirement for waiver is therefore met.
With regard to the final requirement, the Tribunal is satisfied that recovery of Dr McCafferey’s parental leave pay debts cannot be written off. Under section 193 of the PPL Act and section 95 of the FAA Act, recovery of a debt can only be written off – or temporarily not recovered – if a specific set of circumstances apply, such as the debt is not legally recoverable or the person’s whereabouts are unknown. As none of these requirements are met in Dr McCafferey’s case, the Tribunal finds that waiver is more appropriate than write off and that the final requirement for waiver is also satisfied.
Taking these matters into account, the Tribunal concludes that the discretion in section 199 of the PPL Act and section 101 of the FAA Act should be exercised so that recovery of at least some portion of Dr McCafferey’s debts should be waived. In determining the extent of this waiver, the Tribunal is mindful that Dr McCafferey has been overpaid more than $34,000 in public funds and that, according to the hearing papers, less than $1,000 of this sum had been repaid as at 20 December 2024. Given the evidence about the income and asset position of Dr McCafferey and her partner – which, it should be observed, is better than many applicants in Centrelink debt matters – the Tribunal is satisfied that she has the capacity to make ongoing debt repayments in instalments. Even so, in light of the special circumstances cited above and bearing in mind the significant contribution that the Commonwealth has played in the overpayments that have occurred, the Tribunal considers that an appropriate balancing of the parties’ competing interests would be to waive recovery of 50% of the total amounts of the debts under review. Such an outcome will significantly reduce the burden of repayment on Dr McCafferey going forward while still allowing a significant sum of taxpayer funds to be recovered. This waiver will take effect from the date of the Tribunal’s decision.
DECISION
The Tribunal varies the decisions under review so that recovery of 50% of the total amounts of Dr McCafferey’s debts of parental leave pay and child care subsidy are waived with effect from 29 April 2025.
| Date of hearing: | Wednesday, 26 March 2025 |
| Representative for the Applicant: | [Dr A] |
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