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

McKenzie and Secretary, Department of Social Services (Social services second review) [2018] AATA 396 (6 March 2018)
Division:GENERAL DIVISION
File Number: 2017/2788
Re:Anthony McKenzie
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member D K Grigg
Date:6 March 2018
Place:Brisbane

The Tribunal affirms the decision under review.
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Member D K Grigg
CATCHWORDS
SOCIAL SECURITY – Newstart Allowance – date of effect of determination – whether section 43(6) of the Administrative Appeals Tribunal Act 1975 applies – decision under review affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975
Social Security Act 1991
Social Security (Administration) Act 1999
CASES
Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409
Otter Gold Mines Ltd v Australian Securities Commission (1997) 26 AAR 99
REASONS FOR DECISION
Member D K Grigg
6 March 2018
INTRODUCTION AND CLAIM HISTORY

On 18 November 2014 Mr McKenzie applied for the Newstart Allowance (“NSA”).[1]
[1] Exhibit 1, T Documents, T4, pages 25-29, Newstart Allowance online claim form completed by Mr McKenzie dated 18 November 2014.
The rates at which people (who are not permanently blind) are paid NSA is determined using the Benefit Rate Calculator B at the end of section 1068[2] of the Social Security Act 1991 (Cth) (“Act”) and is affected by, among other things, a person’s income and the value of their assets.[3] The maximum basic rate payable varies depending upon a person’s family situation.
[2] Section1068, Social Security Act.
[3] Section643), Act.
In December 2014 Mr McKenzie provided the Department of Social Services (“Centrelink”) with:
(a)information regarding his windscreen business that he commenced in 2012. Mr McKenzie informed Centrelink that his business was continuing but that he was only working in the business, fitting windscreens, 2 hours per week;[4] and
(b)his business’ profit and loss statement for the period between 1 October 2014 and 15 December 2014 which indicated he had made a net income of $2,067.00;[5]and
(c)a declaration that his business assets including 'vehicle, tools/stock' amounted to $6,000;[6] and
(d)his business income tax return for the 2013/2014 financial year to the Department which reported $12,035 as Blackwater Windscreens’ net income for that year.[7]
[4]          Exhibit 1, T Documents, T5, pages 30-35, Business details form dated 15 December 2014.
[5]          Exhibit 1, T Documents, T6, pages 36-38, Profit and loss statement dated 15 December 2014.
[6]           Exhibit 2, Secretary’s Statement of Facts and Contentions dated 10 November 2017, Attachment A.
[7]           Exhibit 2, Secretary’s Statement of Facts and Contentions dated 10 November 2017, Attachment B.
On 22 December 2014 Centrelink decided to grant Mr McKenzie NSA from 18 November 2014. The amount of NSA granted, $813.48, was based, in part, on Mr McKenzie having a fortnightly income of $462.88.[8] The notice sent to Mr McKenzie also provided that if he disagreed with the assessment “it was important to ask for a review within 13 weeks of being notified about the decision”.
[8] Exhibit 3, T1, pages 1-8, Centrelink notice dated 22 December 2014.
Between 18 November 2014 and 11 July 2016 Mr McKenzie’s NSA was calculated in accordance with the financial information provided by Mr McKenzie in December 2014. That is, it was calculated on the basis that his net asset value was $6,000 and his net income per annum was $12,035. During this period Mr McKenzie was sent numerous notices advising him that the fortnightly income of $462.88 was used to calculate his NSA.[9] The notices dated 8 May 2015, 6 July 2015, 3 November 2015, 31 March 2016 specifically advised that Centrelink’s records showed that Mr McKenzie’s net income per annum was $12,035 and his business assets totalled $6,000. The notices also stated “If any of the above details are incorrect, please contact us as soon as possible”.[10]
[9] Exhibit 3, T2-T15, pages 9-47, Centrelink notices dated 29 December 2014, 23 January 2015, 29 January 2015, 23 February 2015, 7 April 2015, 8 May 2015, 6 August 2015, 3 November 2015, 8 February 2016, 14 March 2016, 16 May 2016 and 14 June 2016.
[10] Exhibit 3, T7, pages 19-23, Centrelink notice dated 8 May 2015; T8, pages 24-28, Centrelink notice dated 6 July 2015; T10, pages 31-32, Centrelink notice dated 3 November 2015; T12, pages 39-41, Centrelink notice dated 31 March 2016.
On 20 March 2016 the rate of NSA was adjusted due to consumer price indexation and took effect from 1 July 2016.[11]
[11] Exhibit 2, Secretary’s Statement of Facts and Contentions dated 10 November 2017, paras 35-36.
On 12 July 2016 Centrelink decided to cancel Mr McKenzie’s NSA due to his failure to report relevant information.[12]
[12] Exhibit 2, Secretary’s Statement of Facts and Contentions dated 10 November 2017, Attachment D.
Centrelink records indicate that on 5 October 2016 Mr McKenzie contacted Centrelink to reinstate his NSA.[13] On 7 October 2016 Mr McKenzie re-applied for the NSA noting his net business income and assets was $0.00.[14] The NSA was granted from 5 October 2016 on the basis of this updated financial information.[15]
[13]         Exhibit 1, T Documents, T10, page 88, Centrelink record.
[14]         Exhibit 1, T Documents, T7, pages 39-43, Newstart Allowance online claim form completed by Mr McKenzie dated 7 October 2016; T10, page 55, Centrelink record.
[15]         Exhibit 1, T Documents, T7, pages 39-43, Newstart Allowance online claim form completed by Mr McKenzie dated 7 October 2016; T10, page 55, Centrelink record.
On 11 October 2016, Mr McKenzie contacted Centrelink and advised “that he has not earnt any money through self-employment in the past 12 months and is no longer operating the business”.[16]
[16] Exhibit 2, Secretary’s Statement of Facts and Contentions dated 10 November 2017, Attachment E.
On 1 November 2016 Mr McKenzie contacted Centrelink requesting information regarding whether his NSA had been calculated correctly since 18 November 2014 because he had not earned any income and yet the calculations had continued to take into account the income information provided in December 2014.[17] Centrelink determined that Mr McKenzie had not notified of his change in income since December 2014. Mr McKenzie said he thought he had when he reported nil self-employment and that the information should have been updated when he claimed superannuation under hardship. The matter was then referred to an Authorised Review Officer (“ARO”).[18]
[17] Exhibit 1, T Documents, T10, page 90, Centrelink record.
[18] Exhibit 1, T Documents, T10, page 91, Centrelink record.
The appeal to the ARO was unsuccessful.[19]
[19] Exhibit 1, T Documents, T8, pages 44-48, Authorised Review Officer’s Decisions and Notes dated 6 December 2016.
Mr McKenzie then lodged an application for review with the Social Services and Child Support Division (“SSCSD”) of this Tribunal. The SSCSD affirmed the ARO’s decision on 11 April 2017.[20]
[20] Exhibit 1, T Documents, T2, pages 7 – 9, SSCSD’s Decision and Reasons for Decision dated 11 April 2017.
Mr McKenzie has sought a review of the SSCSD’s decision by this Tribunal.[21]
[21] Exhibit 1, T Documents, T1, pages 1 – 6, Application for Second Review of a Decision dated 11 May 2017.
ISSUES FOR DETERMINATION
The following issues have to be determined:
(a)Whether Mr McKenzie was given notice of the decisions regarding the calculation of his NSA;
(b)whether Mr McKenzie can be paid an increased rate of NSA earlier than 1 November 2016;
(c)whether the Tribunal’s discretionary power to otherwise order, contained in section 43(6) of the Administrative Appeals Tribunal Act 1975 (“AAT Act”) permits the Tribunal to backdate the effect of its decision to a date prior to that determined by the date effect provisions contained in the Social Security (Administration) Act 1999 (“Administration Act”); and, if yes
(d)whether the discretionary power should be exercised.
DATE OF EFFECT OF FAVOURABLE DETERMINATION RESULTING FROM REVIEW
Pursuant to section 123(3)(a) the Administration Act, when a determination is made about the rate of a social security payment, such as NSA, that determination continues in effect until, relevantly here, a further determination is made under section 78. Section 78 provides that if the Secretary is satisfied that the rate at which a social security payment is being, or has been, paid is less than the rate provided for, the Secretary must determine that the rate is to be increased to the rate provided for by the Social Security law and specify the last mentioned rate in the determination. A determination made under section 78 is referred to in the Administration Act as a “favourable determination”.[22]
[22] Section 108, Administration Act.
Pursuant to section 109(2) of the Administration Act, which is relevant here, favourable determinations take effect on the day on which an application for review of the decision is made if:
(a)a decision (the original decision) is made in relation to a person's social security payment; and
(b)a notice is given to the person informing the person of the original decision; and
(c)more than 13 weeks after the notice is given, the person applies to the Secretary, under section 129, for review of the original decision; and
(d)the favourable determination is made as a result of the application for review.
Was Mr McKenzie Given Notice of The Decision Made On 20 March 2016: section 109(2)(b) of the Administration Act?
Between November 2014 and July 2016 Mr McKenzie’s rate of NSA was increased 5 times to reflect changes to the CPI pursuant to section 1190 of the Act.[23] The last relevant increase took effect from 1 July 2016. Where the rate of payment has been adjusted in this way, pursuant to subsection 109(7) of the Administration Act, the Applicants are deemed to have been given notice of the determination and the increased rate.
[23] Exhibit 2, Secretary’s Statement of Facts and Contentions dated 10 November 2017, paras 35-36.
Therefore, section 109(2)(b) of the Administration Act is satisfied.
Date Mr McKenzie applied for a review of the decision made on 20 March 2016.
Centrelink records indicate that Mr McKenzie first made contact with Centrelink regarding reinstatement of his NSA on 5 October 2016 and provided updated financial information on 7 October 2016. The date of effect of his NSA reinstatement was 5 October 2016.
This means that Mr McKenzie’s request for a review of Centrelink’s decision regarding the rate of pay, was more than 13 weeks after the date the last increase took effect on 1 July 2016.
Therefore, section 109(2)(c) of the Administration Act is satisfied.
Conclusion
Pursuant to section 109(2) of the Administration Act, the decisions made regarding the rate of NSA payable to the Applicant continued in effect under subsection 123(3) of the Administration Act until 11 July 2016 when the NSA was cancelled.
This means that, pursuant to section 109(2)(d) of the Administration Act, subject to the Tribunal’s discretionary power considered below, Mr McKenzie cannot be paid arrears of NSA to a date earlier than 5 October 2016.
This is unfortunate for Mr McKenzie because, despite the Secretary’s submission that Mr McKenzie had not informed Centrelink that he had no income until October 2016, the records indicate that he did in fact notify Centrelink of this fact on 23 occasions between 12 January 2015 and 15 June 2016: -
(a)on 12 January 2015 Mr McKenzie reported via the internet that he earned “no income” between 30 December 2014 and 12 January 2015;[24]
[24]         Exhibit 1, T Documents, T10, page 61, Centrelink record.
(b)on 10 March 2015 Mr McKenzie reported via the internet that he earned “no income” between 27 January 2015 and 9 March 2015;[25]
[25]         Exhibit 1, T Documents, T10, page 65, Centrelink record.
(c)on 24 March 2015 Mr McKenzie reported via the internet that he earned “no income” between 10 March 2015 and 23 March 2015;[26]
[26]         Exhibit 1, T Documents, T10, page 66, Centrelink record.
(d)on 7 April 2015 Mr McKenzie reported via the internet that he earned “no income” between 24 March 2015 and 6 April 2015;[27]
[27]         Exhibit 1, T Documents, T10, page 67, Centrelink record.
(e)on 20 April 2015 Mr McKenzie reported via the internet that he earned “no income” between 7 April 2015 and 20 April 2015;[28]
[28]         Exhibit 1, T Documents, T10, page 68, Centrelink record.
(f)on 4 May 2015 Mr McKenzie reported via the internet that he earned “no income” between 21 April 2015 and 4 May 2015;[29]
[29]         Exhibit 1, T Documents, T10, page 69, Centrelink record.
(g)on 18 May 2015 Mr McKenzie reported via the internet that he earned “no income” between 5 May 2015 and 18 May 2015;[30]
[30]         Exhibit 1, T Documents, T10, page 70, Centrelink record.
(h)on 1 June 2015 Mr McKenzie reported via the internet that he earned “no income” between 19 May 2015 and 1 June 2015;[31]
[31]         Exhibit 1, T Documents, T10, page 72, Centrelink record.
(i)on 15 June 2015 Mr McKenzie reported via the internet that he earned “no income” between 2 June 2015 and 15 June 2015;[32]
[32]         Exhibit 1, T Documents, T10, page 73, Centrelink record.
(j)on 29 June 2015 Mr McKenzie reported via the internet that he earned “no income” between 16 June 2015 and 29 June 2015;[33]
[33]         Exhibit 1, T Documents, T10, page 74, Centrelink record.
(k)on 13 July 2015 Mr McKenzie reported via the internet that he earned “no income” between 30 June 2015 and 13 July 2015;[34]
[34]         Exhibit 1, T Documents, T10, page 75, Centrelink record.
(l)on 27 July 2015 Mr McKenzie reported via the internet that he earned “no income” between 14 July 2015 and 27 July 2015;[35]
[35]         Exhibit 1, T Documents, T10, page 76, Centrelink record.
(m)on 10 August 2015 Mr McKenzie reported via the internet that he earned “no income” between 28 July 2015 and 10 August 2015;[36]
[36]         Exhibit 1, T Documents, T10, page 77, Centrelink record.
(n)on 24 August 2015 Mr McKenzie reported via the internet that he earned “no income” between 11 August 2015 and 24 August 2015;[37]
(o)on 7 September 2015 Mr McKenzie reported via the internet that he earned “no income” between 25 August 2015 and 7 September 2015;[38]
(p)on 21 September 2015 Mr McKenzie reported via the internet that he earned “no income” between 8 September 2015 and 21 September 2015;[39]
(q)on 5 October 2015 Mr McKenzie reported via the internet that he earned “no income” between 22 September 2015 and 5 October 2015;[40]
(r)on 19 October 2015 Mr McKenzie reported via the internet that he earned “no income” between 6 October 2015 and 19 October 2015;[41]
(s)on 2 November 2015 Mr McKenzie reported via the internet that he earned “no income” between 20 October 2015 and 2 November 2015;[42]
(t)on 16 November 2015 Mr McKenzie reported via the internet that he earned “no income” between 3 November 2015 and 16 November 2015;[43]
(u)on 30 November 2015 Mr McKenzie reported via the internet that he earned “no income” between 17 November 2015 and 30 November 2015;[44]
(v)on 6 June 2016 Mr McKenzie submitted updated income and assets information;[45] and
(w)on 15 June 2016 Mr McKenzie reported via the internet that he earned “no income” between 31 May 2016 and 13 June 2016.[46]
[37]         Exhibit 1, T Documents, T10, page 78, Centrelink record.
[38]         Exhibit 1, T Documents, T10, page 79, Centrelink record.
[39]         Exhibit 1, T Documents, T10, page 80, Centrelink record.
[40]         Exhibit 1, T Documents, T10, page 81, Centrelink record.
[41]         Exhibit 1, T Documents, T10, page 82, Centrelink record.
[42]         Exhibit 1, T Documents, T10, page 83, Centrelink record.
[43]         Exhibit 1, T Documents, T10, page 84, Centrelink record.
[44]         Exhibit 1, T Documents, T10, page 85, Centrelink record.
[45]         Exhibit 1, T Documents, T10, page 86, Centrelink record.
[46]         Exhibit 1, T Documents, T10, page 87, Centrelink record.
These records show that Mr McKenzie consistently provided Centrelink with his income information and yet Centrelink made no adjustments. The Secretary submitted that this was because it would have been recorded as only relating to personal income and not his business income. However, the Tribunal considers that that is an administrative error on Centrelink’s part because:
(a)Mr McKenzie’s business was as a sole trader, his business was not incorporated and not a separate legal entity – therefore his earnings from his business were his personal earnings;
(b)there is no supporting documentation from Centrelink to indicate that the web forms used by Mr McKenzie showed that he was still reporting business income; and
(c)the definition of “income” set out in the Centrelink notices sent to Mr McKenzie (which advises recipients of what information must be reported as income) included personal earning and net profit from a business. Therefore, it is reasonable to assume that when a recipient reports no income it is a reference to the income as described in Centrelink’s notices which incorporated any income earned from a business.
It is reasonable for Mr McKenzie to have assumed that when he declared no “income” that this would have been taken into account by Centrelink. Mr McKenzie says that when he received notices he either did not understand them or did not read them and simply assumed his NSA was being calculated correctly based on the information he had provided.
Unfortunately for Mr McKenzie the fact that this error was made by Centrelink does not assist him because he did not request a review of Centrelink’s calculations until more than 13 weeks after 1 July 2016. As set out above, the legislation does not allow for the arrears to be back dated to a date earlier than 5 October 2016.
THE TRIBUNAL’S DISCRETIONARY POWER
The only possible way in which Mr McKenzie can be paid arrears for the period 18 November 2014 and 12 July 2016 is if the Tribunal has the power to make a different order under section 43(6) of the AAT Act.
SECTION 43(6) OF THE AAT ACT
Pursuant to section 43(1) of the AAT Act, the AAT has the power to affirm, vary, set aside, make a decision in substitution of, or remit a decision under review. The AAT “stands in the shoes of the decision-maker and, on the material before it, makes the ‘correct or preferable’ decision” see Drakev Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409 at 419 per Bowen CJ and Deane J.
The Full Federal Court in Otter Gold Mines Ltd v Australian Securities Commission (1997) 26 AAR 99 said at 106:
‘When reviewing an administrative decision under s 43(1) the AAT stands in the place, and is empowered to exercise all of the relevant powers and discretions, of the decision-maker in respect of the decision under review. The AAT hears the matter de novo in the light of the evidence placed before it.’ (my emphasis)
Section 43(6) of the AAT Act then goes on to provide for what happens if a decision of a decision-maker is varied or substituted:
(6)A decision of a person as varied by the Tribunal, or a decision made by the Tribunal in substitution for the decision of a person, shall, for all purposes (other than the purposes of applications to the Tribunal for a review or of appeals in accordance with section 44), be deemed to be a decision of that person and, upon the coming into operation of the decision of the Tribunal, unless the Tribunal otherwise orders, has effect, or shall be deemed to have had effect, on and from the day on which the decision under review has or had effect.
(my emphasis)

In these circumstances, under the Administration Act, the effect of the decision to pay the NSA arrears to Mr McKenzie can only be dated back to the date he applied for a review of the decision, 5 October 2016. Standing in the “shoes of the decision-maker” the ‘correct or preferable’ decision was made.
Section 43(6) of the AAT Act only applies where the Tribunal is:[47]
(a)varying a decision; or
(b)substituting a decision.
[47] See Thompson and Secretary, Department of Social Services [2017] AATA 1638, at [21]-[22].
As the decision under review was correct under the legislation, there is, in effect, no decision to vary or substitute. Therefore, section 43(6) of the AAT Act does not apply here.
DECISION
The decision under review is affirmed.

I certify that the preceding 35 (thirty -five) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg

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Associate
Dated: 6 March 2018

Date of hearing: 20 February 2018

Applicant: By Phone

Advocate for the Respondent: Ms Julia Driver

Solicitors for the Respondent: Department of Human Services

[2018] AATA 396

6 March 2018

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Appeal

Jurisdiction

Procedural Fairness

Statutory Construction

Date of hearing:	20 February 2018
Applicant:	By Phone
Advocate for the Respondent:	Ms Julia Driver
Solicitors for the Respondent:	Department of Human Services