Metcalfe and Secretary, Department of Family and Community Servic Es

[2004] AATA 95

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 95

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N02/1764

GENERAL ADMINISTRATIVE DIVISION		)
Re		LINETTE METCALFE

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal MS N BELL

Date4 February 2004

PlaceSydney

Decision The decision under review is affirmed.

[sgd]  Ms N Bell, Member

CATCHWORDS

SOCIAL SECURITY - family assistance benefits – method of calculation changed - overpayment of family tax benefit - right of Commonwealth to recover overpayment - whether any part of overpayment attributable solely to Commonwealth error - whether recovery would cause severe financial hardship - whether special circumstances exist for waiving overpayment – decision affirmed.

A New Tax System (Family Assistance) (Administration) Act 1999 sections 20(3), 71(2) 97, 101

Beadle v  Director General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

4 February 2004 MS N BELL           

1.      Linette Metcalfe (“the Applicant”) has two children in respect of whom she receives Family Tax Benefit (“FTB”), a benefit that was introduced on 1 July 2000 to replace Family Payment.

2.      In approximately October 2000 the Applicant began to receive maintenance payments through the Child Support Agency (“the CSA”).  The payments varied in amount over the months to June 2001, and included an amount for arrears.   The total maintenance income received by the Applicant for the 2000/2001 financial year was $16,691.

3.      The CSA relayed information as to the amounts of maintenance received by the Applicant to Centrelink.   Centrelink calculated the rate of her FTB payments on the basis of that information, initially using a method which calculates a payee’s entitlement to FTB on the basis of the amount the person is entitled to receive in maintenance.

4.      After some discussion with the Applicant in November 2000, Centrelink altered its method of calculating the rate of payment of her FTB. The new method uses a formula that identifies payments received in the last month, together with monies received in the current month, and estimates the payee’s entitlement for the remainder of the financial year.

5.      A reconciliation conducted by Centrelink at the end of the 2000/2001 financial year showed that the Applicant had been overpaid $2,629.05.  Pursuant to a transitional provision in the legislation allowing for waiver of recovery of the first $1,000 of any debt arising from the new system of FTB payments, recovery of $1,000 of the Applicant’s alleged debt was waived, reducing the amount of the debt to $1,629.05;

6.      I accept the Applicant’s evidence that:

§She had no or very little input into the method by which her rate of payment of FTB was calculated by Centrelink and went to some trouble to ensure that Centrelink was aware of her maintenance payments;

§She was given very little information by Centrelink; 

§Her only income is parenting payment single, child disability allowance, FTB and maintenance, totalling $1,534.28 per month;

§She pays rent of $240 per week, has car repayments of $33 per week and is paying off a visa card debt.  She is currently repaying the overpayment debt at the rate of $20 per fortnight; and

§She has numerous and usual expenses associated with raising 2 children alone.

7.      The Applicant accepts that she was overpaid in the amount calculated by Centrelink but considers that the overpayment arose due to a breakdown in communication between the CSA and Centrelink.  She did all she could to ensure that Centrelink was aware she was in receipt of maintenance payments and was given no opportunity to advise of the detail of those payments.  She considers it unfair that, with no input from her, Centrelink overpaid her and she must now repay that overpayment.

8.      The Respondent, represented by both Mr George Lozynsnky and Mr Andrew Zhang, when asked how the overpayment arose, explained that, from July 2000 to approximately October 2000, the CSA and Centrelink did not update the information about the Applicant’s maintenance payments on their respective systems.  Document T46, the authorised Review Officer’s notes, explains this and records the review officer’s own view that there had been an administrative error.

9. Section 71(2) of the A New Tax System (Family Assistance) (Administration) Act 1999 (“the Act”) provides that an amount paid to a person in excess of an amount that should have been paid is a debt due to the Commonwealth.  The overpayment made to the Applicant is therefore a debt.  The question remains whether or not it should be recovered.

10. Section 97 of the Act provides that the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error if the overpayment was received in good faith and the person would suffer severe financial hardship if it were not waived.

11.     There has been no suggestion that the Applicant did not receive the overpayment in good faith.

12.     As to the question of error, it is clear that the Respondent has the power to calculate payments of FTB on the basis of estimates made by the Secretary (section 20(3)) if information about the amount of maintenance income is not available.  Document T 46 notes that the major part of the overpayment was generated in the period 1 July to 5 October 2000 during which period the Applicant was paid at the maximum rate of FTB. The note reads:

“The staff member explained that in the case of some single customers, when the new family tax benefit system was introduced, Centrelink did not have data about these customers maintenance and so the code TXC indicates the ‘temporary conversion’ of data to the new system.  I asked the staff member what action would have been taken in relation to these cases and she stated that from memory, no particular action was taken unless the customer came in for an interview or contacted Centrelink and the staff member could then follow up the current position re maintenance.  The data could also be updated if the customer contacted the CSA about the child support and they could then provide us with updated information.  It wold [sic] appear in this case that the customer was paid the maximum rate for a period because the maintenance data had not been updated on her record.”

13. The Respondent, through its representatives, argued that the fault lies with the CSA for not providing it with updated information. I note that the CSA is a Commonwealth agency and that section 97 refers to “an administrative error made by the Commonwealth” and not to such an error made only by Centrelink or by the Secretary.

14. Notwithstanding the power of the Secretary, pursuant to section 20(3) of the Act, to make an estimate, I consider that it is implied that such an estimate must be a reasonable one. It is doubtful that a rate of maintenance income assessed a full year earlier (see page 1 of exhibit R1) would yield a reasonable estimate. In the Applicant’s case it was some $9,000 under the annualised maintenance entitlement calculated in October 2000.

15. In order for the Applicant to attract the benefit of waiver under section 97 of the Act, I must also find that she would suffer severe financial hardship if the debt were not waived. The circumstances described by the Applicant do not persuade me that she would so suffer. Exhibit A3, the Applicant’s list of income and expenditure, shows that she lives frugally, providing for her children with outgoings of $738 weekly and with an income of all social security and maintenance payments of $725 weekly. She does, however, have savings of $3,900, which she keeps in reserve for her children’s needs. There is no doubt that her circumstances as a single mother are difficult but her financial hardship, if the debt were to continue to be recovered, would not be severe. For this reason section 97 cannot apply to relieve her of repayment of the debt.

16. Section 101 of the Act provides for the waiver of the recovery of a debt where, amongst other things, there are special circumstances that make it desirable to do so. In addition to her difficult financial circumstances, the Applicant gave evidence of her son’s Attention Deficit Disorder and her mother being in remission from cancer. Although unfortunately I do not consider these circumstances to be unusual or exceptional (Beadle v Director General of Social Security (1984) 6 ALD 1). It follows that the relief provided by section 101 of the Act is not available to the Applicant.

decision

17.      The decision under review is affirmed.

I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell  

Signed:         Guy Moloney
  Associate

Date/s of Hearing   21 November 2003
Date of Decision   4 February 2004
Counsel for the Applicant          Linette Gai Metcalfe (self represented)
Counsel for the Respondent     George Lozynsky and Andrew Zhang