Mr Nikola Naumoski and Secretary, Department of Education, Employment and Workplace Relations
[2013] AATA 214
[2013] AATA 214
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/2073
Re
Mr Nikola Naumoski
APPLICANT
And
Secretary, Department of Education, Employment and Workplace Relations
RESPONDENT
DECISION
Tribunal Deputy President RP Handley
Date 11 April 2013 Place Sydney Decision Summary: The decision under review is set aside and the matter remitted to the Respondent to recalculate the applicable income maintenance period with directions that the expenditure found to be reasonable in the circumstances of this case, set out in paragraph 55 of the statement of reasons, be taken into account in reducing the income maintenance period.
........................................................................
Deputy President RP Handley
CATCHWORDS
SOCIAL SECURITY – New Start Allowance – Whether income maintenance period should be applied – Severe financial hardship – Unavoidable or reasonable expenditure – Termination payment – Leave payment – Period to which the payment relates – Redundancy payment – Reasonable costs of living – The decision under review is set aside and the matter remitted to the Respondent.
LEGISLATION
Social Security Act 1991 ss 1068-G7; 1068B-D18; 19C
CASES
Bazzi and Department of Family and Community Services [2000] AATA 794
Goldfinch and Department of Family and Community Services [2000] AATA 837
Guerriero and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 797
REASONS FOR DECISION
Deputy President RP Handley
Mr Naumoski has applied for the review of a decision of the Social Security Appeals Tribunal (SSAT) affirming a decision of an authorised review officer and delegate of the Secretary of the Department of Education, Employment and Workplace Relations (the Department) to refuse Mr Naumoski’s claim for newstart allowance as a result of an ‘income maintenance period’ (IMP) applied following Mr Naumoski’s receipt of a termination payment on the cessation of his employment.
BACKGROUND
Mr Naumoski, who is aged 59, was born in Macedonia. He states that he left school at the end of year 8 and has no formal educational qualifications. He migrated to Australia at the age of 19, arriving on 26 October 1972. Mr Naumoski was divorced from his first wife in 1985 and their house was transferred to her as part of the property settlement. Mr Naumoski and his second wife were married on 7 March 1990 and have one child aged 14. Until December 2011, they lived in rented accommodation.
Mr Naumoski was employed by BlueScope Steel (and its predecessors) from 27 October 1972, the day after he arrived in Australia, until 29 October 2011, when he was made redundant. He has never had any English language tuition and says his limited English was learnt ‘on the job’. On 1 November 2011, he received a gross termination payment of $155,204.84, comprising:
·$130,455 redundancy payment for 155 days;
·$22,269.25 long service leave for 95 days; and
·$2,480.59 annual leave for 10 days.
On 28 November 2011, Mr Naumoski contacted Centrelink about claiming a disability support pension. Subsequently, on 9 December 2011, he lodged a claim for newstart allowance.
On 14 December 2011, Mr and Mrs Naumoski completed the purchase of a three bedroom villa for $255,000. Mr Naumoski used his termination payment together with $133,552 drawn down from his superannuation entitlements to pay for the house and furnishings.
On 22 December 2011, a Centrelink officer decided that an IMP should be applied in respect of Mr Naumoski’s claim for newstart allowance from 1 November 2011 until 2 June 2014. The matter was referred to an authorised review officer for review who varied the IMP so that it ended on 12 May 2014. On 14 April 2012, after a further review, the SSAT affirmed the authorised review officer’s decision. On 24 May 2012, Mr Naumoski applied to the Tribunal for a review of the SSAT decision.
THE RELEVANT LEGISLATION
Section 1068-G7AH of the Social Security Act 1991 (the Act) states:
1068-G7AH If:
(a) a person's employment has been terminated; and
(b) the person receives a termination payment (whether as a lump sum payment, as a payment that is one of a series of regular payments or otherwise);
the person is taken to have received ordinary income for a period (the income maintenance period) equal to the period to which the payment relates.
The following definitions appear in s 1068B-D18:
"leave payment" includes a payment in respect of sick leave, annual leave, maternity leave and long service leave, but does not include:
(a) an instalment of parental leave pay; or
(b) dad and partner pay.
"period to which the payment relates" means:
(a) if the payment is a leave payment--the leave period to which the payment relates; or
(b) if the payment is a termination payment and is calculated as an amount equivalent to an amount of ordinary income that the person would (but for the termination) have received from the employment that was terminated--the period for which the person would have received that amount of ordinary income; or
(c) if the payment is a termination payment and paragraph (b) does not apply--the period of weeks (rounded down to the nearest whole number) in respect of which the person would have received ordinary income, from the employment that was terminated, of an amount equal to the amount of the termination payment if:
(i) the person's employment had continued; and
(ii) the person received ordinary income from the employment at the rate per week at which the person usually received ordinary income from the employment prior to the termination.
"redundancy payment" includes a payment in lieu of notice, but does not include a directed termination payment within the meaning of section 82-10F of the Income Tax (Transitional Provisions) Act
"termination payment" includes:
(a) a redundancy payment; and
(b) a leave payment relating to a person's employment that has been terminated; and
(c) any other payment that is connected with the termination of a person's employment.
Section 1068-G7AM states:
1068-G7AM If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies to the person, the Secretary may determine that the whole, or any part, of the period does not apply to the person.
Note 1: For in severe financial hardship see subsection 19C(2) (person who is not a member of a couple) and 19C(3) (person who is a member of a couple).
Note 2: For unavoidable or reasonable expenditure see subsection 19C(4).
Note 3: If an income maintenance period applies to a person, then, during that period:
(a) the allowance claimed may not be payable to the person; or
(b) the amount of the allowance payable to the person may be reduced.
Section 19C states relevantly:
Application of definitions in this section
(1) The definitions in this section relate to:
(a) ordinary waiting periods; and
(b) liquid assets test waiting periods; and
(c) seasonal work preclusion periods; and
(d) income maintenance periods.
Meaning of in severe financial hardship: person who is not a member of a couple
(2) …
(3) A member of a couple who makes a claim for parenting payment, austudy payment, special benefit, disability support pension, carer payment or one of the following allowances:
(a) newstart allowance;
(b) partner allowance;
(c) mature age allowance;
(d) sickness allowance;
(e) youth allowance;
is in severe financial hardship if the value of the couple's liquid assets (within the meaning of subsections 14A(1) and (2)) is less than twice the fortnightly amount at the maximum payment rate of the payment, benefit, pension or allowance that would be payable to the person:
(f) if the person's claim were granted; and
(g) in the case of a person to whom an income maintenance period applies, if that period did not apply.
Note: For maximum payment rate see subsection (8).
Meaning of unavoidable or reasonable expenditure
(4) Unavoidable or reasonable expenditure, in relation to a person who is serving a liquid assets test waiting period or is subject to a seasonal work preclusion period, or a person to whom an income maintenance period applies, includes, but is not limited to, the following expenditure:
(a) the reasonable costs of living that the person is taken, under subsection (6) or (7), to have incurred in respect of:
(i) if the person is serving a liquid assets test waiting period--that part of the period that the person has served; or
(ii) if the person is subject to a seasonal work preclusion period--that part of the period that has expired; or
(iii) if an income maintenance period applies to the person--that part of the period that has already applied to the person;
(b) the costs of repairs to, or replacement of, essential whitegoods situated in the person's home;
(c) school expenses;
(d) funeral expenses;
(e) essential expenses arising on the birth of the person's child or the adoption of a child by the person;
(f) expenditure to buy replacement essential household goods because of loss of those goods through theft or natural disaster when the cost of replacement is not the subject of an insurance policy;
(g) the costs of essential repairs to the person's car or home;
(h) premiums in respect of vehicle or home insurance;
(i) expenses in respect of vehicle registration;
(j) essential medical expenses;
(k) any other costs that the Secretary determines are unavoidable or reasonable expenditure in the circumstances in relation to a person.
However, unavoidable or reasonable expenditure does not include any reasonable costs of living other than those referred to in paragraph (a).
(5) The reasonable costs of living of a person include, but are not limited to, the following costs:
(a) food costs;
(b) rent or mortgage payments;
(c) regular medical expenses;
(d) rates, water and sewerage payments;
(e) gas, electricity and telephone bills;
(f) costs of petrol for the person's vehicle;
(g) public transport costs;
(h) any other cost that the Secretary determines is a reasonable cost of living in relation to a person.
The issue for the Tribunal is whether Mr Naumoski is in severe financial hardship because he incurred unavoidable or reasonable expenditure. If so, should the Secretary’s discretion be exercised to determine that the whole or part of the applicable IMP does not apply? In particular, in Mr Naumoski’s case, at issue is whether, in the circumstances, the purchase of a house and new furniture/furnishings was a reasonable and unavoidable expense.
THE APPLICANT’S EVIDENCE
Mr Naumoski
Mr Naumoski provided a statutory declaration dated 12 October 2012 and gave oral evidence at the hearing with the assistance of a Macedonian interpreter. He said he has no formal trade or educational qualifications and had no language tuition on arriving in Australia in 1972, commencing work at the Port Kembla Steelworks on the day after arriving. He worked there until he was retrenched in October 2011, mainly working with those in the Macedonian community. What English he learned, he learned on the job. He cannot read or write English. Although their supervisors spoke English, it was not unusual for other workers to informally translate their instructions to the rest of them.
Mr Naumoski stated that when he was retrenched, the letter he received from BlueScope Steel gave particulars of the money he was to be paid on ceasing work, but he did not receive any warning about the need to live off this money and, to the best of his recollection, it did not enclose any information from Centrelink about the termination payment. He was not given any information in Macedonian. His manager encouraged him to take the redundancy package because Mr Naumoski was not in good health and his manager needed healthy workers.
Mr Naumoski said he knew something was organised for retrenched BlueScope workers at Unanderra but he did not know that Centrelink was anything to do with it. He never received any information in Macedonian from Centrelink until May 2012, after his claim for newstart allowance had been rejected.
Mr Naumoski said he thought he was doing the right thing by buying a house using his redundancy payment and his superannuation. He saw this as his one chance to provide for his family before he retired. One of the managers at his work, ‘Milco’, asked him whether he was going to buy a house and relax, knowing that Mr Naumoski had been renting a long time. Mr Naumoski does not know whether Milco had any experience in dealing with Centrelink. Mr Naumoski was not aware that he would be required to live off his termination payment for a long time. Since his application for benefits has been rejected, he and his wife have lived off charity, for example, from St Vincent de Paul, the Salvation Army, two local churches and friends.
Mr Naumoski said he has a number of medical problems: he has had a stroke, which causes him difficulties walking, he suffers from diabetes, high blood pressure and high cholesterol and has had a lot of damage to his pancreas. (A letter from Dr Leonard Harvey, Consultant Physician, dated 15 February 2012, states that Mr Naumoski:
... has a past medical history of type II diabetes, chronic pancreatitis, cerebro vascular disease with a stroke four years ago which resulted in a right hemiparesis. He suffers from hypertension. ... There are concerns about the control of his blood pressure and his diabetes.
A later letter from Dr Harvey dated 25 May 2012 says that the stroke Mr Naumoski suffered “left him with right sided weakness”.) Mr Naumoski said that when he had money he took medication for his various conditions. Now he cannot afford this. He has lost 45 kgs since he left work.
Mr Naumoski said one of his friends advised him to go to Centrelink when he had run out of money. His recollection of his dealings with Centrelink in late 2011 and early 2012 was poor and contradicted Centrelink’s computerised records. He said he always went to Centrelink offices with his wife on whom he relied to help him. He asked for an interpreter at the Centrelink office in Wollongong but was told none was available. He remembered speaking with a Macedonian lady at the Wollongong office on one occasion who told him that he was not entitled to a benefit because he had money in the bank.
Mr Naumoski was asked about various withdrawals from his Credit Union Australia (CUA) account made at automatic teller machines at the Dapto Leagues Club and the Wests Leagues Club. He explained that a number of these were loans to his cousin which were repaid soon afterwards. He also made withdrawals to pay for dinner for him and his wife.
Mr Naumoski said he started looking for a house at the time he was about to stop work. The house he bought, a 3 bedroom townhouse in Albion Park Rail, was the cheapest available and cheaper than units that were for sale. He and his wife also purchased new furniture for the house because the furniture they had had in their rented house was old. After his application for social security benefits was refused, he put the townhouse on the market at the price recommended by the real estate agent. (According to the settlement statement, the purchase price of the townhouse was $255,000. A copy of a Ray White advertisement for the property, filed at the Tribunal on 20 November 2012 shows a sale price of $289,000.)
Mr Naumoski said that, initially, he was told by Centrelink that he would have to wait four years to receive a social security benefit, but the SSAT reduced this to two years.
Mrs Naumoska
Mrs Naumoska said because she was receiving family tax benefits for her son, she knew she had to inform Centrelink of her husband having received a redundancy payment. She therefore went to the Centrelink office in Warrawong who told her that she should go to the office in Wollongong where they could deal with this information. At the Wollongong office, she and her husband spoke with a Macedonian lady called ‘Lefta’ who asked why they had spent all the money. They were then referred to another Centrelink officer. Mrs Naumoska said that they visited the Wollongong Centrelink office five or six times and a Macedonian interpreter was never provided. She spoke with the Centrelink officers because her English is better than her husband’s.
Mrs Naumoska said she asked for money to help them survive. She had never asked for social security benefits before. They were sent to see a social worker at Shellharbour and this was the first time that an interpreter was provided. The situation was explained to her and, acting on the advice given, Mrs Naumoska phoned the Illawarra Legal Centre at Warrawong where she spoke to Mr Turton on 22 May 2012.
Mrs Naumoska said her daughter passed away in May 2011 at the age of 36, leaving her very depressed. She cried every day. When her husband received his redundancy payment, they talked with their friends and relatives about what to do with the money. They all said that after 35 years renting, Mr and Mrs Naumoski should buy a house. Mrs Naumoska said she did not know of any Government rules about the use of such money or that they had to tell Centrelink before they bought a house. Nobody ever advised her to be careful about how her husband’s termination payment was spent and that they would have to live on it. Other Macedonian families who received redundancy payments already had at least one house and they used the money to help their children.
Having lived with old furniture, Mrs Naumoska wanted to buy new furniture for their house. And because she had been depressed, she wanted to go out – so they went to clubs, but this was not for gambling. Mrs Naumoska acknowledged that while at the clubs, she loaned money to relatives when they asked, but this money was repaid soon after. She said she also purchased a computer for their son, which he needed for his High School work.
Mrs Naumoska said she wanted to buy a house to avoid having to keep on renting and dealing with the rent continually being increased and being told to move out when the owner wanted possession of the property. She last worked in 2007 when she stopped work to care for her daughter before she passed away. Now, even though she would like to work, she needs to stay at home and care for her husband who is sick: she described him as being “half a man”. She can no longer leave him alone. On several occasions, she has been out shopping and has come home to find him on the floor having fallen. Sometimes he falls and hits his head.
Mrs Naumoska said when she first went to Centrelink, at a time when she and her husband still had about $20,000 in the bank, a lady there secretly advised her to spend the rest of the money and then Centrelink would have to give them social security benefits. Mrs Naumoska said their bank statements show how the money was spent, for example on an expensive bed and bedding for their son that would last. She knew that when she and her husband were receiving social security benefits, they would not be able to afford such purchases.
Documentary Evidence
The Applicant has provided the Tribunal with the following documents: documents relating to Mr and Mrs Naumoski’s house purchase (including CUA and superannuation fund statements); a copy of the real estate agent’s advertisement for the sale of the house; copies of medical reports from Dr Harvey, dated 15 February 2012 and 25 May 2012; and an undated report from the St Vincent de Paul Society, faxed on 16 October 2012. The St Vincent de Paul Society report lists assistance provided to Mr and Mrs Naumoski between April and September 2012, including food hampers and food, petrol, telephone and electricity vouchers.
In addition, the Applicant has provided statutory declarations from two BlueScope Steel employees stating that meetings organised about retrenchments in 2011 were conducted in English with no Macedonian interpreter present. One of the employees recalled “people from Centrelink” being present at one of the meetings but because no Macedonian interpreter was present, he did not understand what was said “as my English is not good” and no information in Macedonian information was handed out. The Applicant also provided statutory declarations from two local community workers, one employed by the Macedonian Welfare Association and the other by the Cringila Cooperative, who, while having had contact with Centrelink, denied any contact from Centrelink in relation to the BlueScope Steel retrenchments or of being provided with information in either English or Macedonian to explain the effect of termination payments on possible Centrelink entitlements.
The Tribunal was provided with Australian Bureau of Statistics statistical information for the Wollongong local government area showing that of those residents born overseas, those born in the Former Yugoslav Republic of Macedonia are the second largest group after those born in the UK. I accept that, as Mr Turton stated:
It is a matter of public record that BHP sponsored the migration of a large number of Macedonian workers to migrate to Australia in the 1960s and 70s, and that these workers received a limited education in English on their arrival. It is also a matter of public record that most of them like the Applicant had not the benefit of a formal education. It was these same workers who were being retrenched when the Port Kembla Steelworks started to downsize its workforce.
THE RESPONDENT’S EVIDENCE
Bahar Yalcin, a Customer Service Officer at Centrelink’s Wollongong office in December 2011, provided a statement dated 23 January 2012, although a covering letter from the Respondent’s legal representative and the content of the statement itself indicates that this should have read 23 January 2013. Ms Yalcin also gave oral evidence at the hearing.
Ms Yalcin said she met Mr and Mrs Naumoski on 9 December 2011 when they came into the Wollongong office for Mr Naumoski to submit a claim for disability support pension (DSP) and a Low Income Health Care Card. She went through the claim form with them to ensure the form was complete and the required documents had been provided. She noticed that they had had large sums of money in a bank account at certain points of time. In oral evidence, Ms Yalcin explained remembering that the payout was “massive” because she mainly deals with customers from a low socio-economic background. Mrs Naumoska explained that her husband had been made redundant and due to his health could no longer work.
Ms Yalcin said she has dealt with about five customers who have been made redundant by BlueScope Steel. She is aware that selected Centrelink staff went to BlueScope to explain about the availability of social security payments.
Ms Yalcin said that in her interview with Mr and Mrs Naumoksi, the majority of the time she spoke with Mrs Naumoska who was relaying the information to her husband in Macedonian. Mrs Naumoska was very shocked when Ms Yalcin explained that because of the money they had in the bank, they might be subject to a waiting period when Mr Naumoski’s claim for DSP was processed. Ms Yalcin said neither Mr nor Mrs Naumoski asked for an interpreter or said that they did not understand what she was saying, and “I didn’t need an interpreter because I could understand exactly what they were saying”.
Ms Yalcin said she subsequently dealt with Mr Naumoski’s claim for newstart allowance and was the original decision-maker on the application, refusing the claim because of the applicable waiting period. Since both Mr and Mrs Naumoski were upset at her decision and asked for a review, she fast-tracked the appeal to the authorised review officer who changed the end date of the waiting period from 2 June 2014 to 12 May 2014.
In cross-examination, Ms Yalcin acknowledged that she had been provided with a copy of the Tribunal documents in about September 2012 and that she had read the relevant documents before preparing her statement. Despite seeing as many as 30 Centrelink customers a day, she said she had no difficulty recalling that Mrs Naumoska had replied “oh yes” when Ms Yalcin told her that Centrelink staff had given talks about upcoming redundancies at BlueScope Steel.
Documentary Evidence
The respondent also provided the Tribunal with a statement from Immanuel Creagh dated 8 January 2013. Mr Creagh is the ‘Region Manager’ for the Department of Human Services for the Illawarra. He stated that when the BlueScope Steel redundancies were announced in August 2011 he was the Australian Government Local Co-ordinator for government support. A dedicated hotline was provided for workers requiring information and advice and Department of Human Services staff attended the BlueScope job centre on a regular basis to provide such information and advice. Mr Creagh said a number of seminars for BlueScope workers were also conducted. All seminars were conducted in English and so far as he is aware, there was no request to provide an interpreter. He also stated that:
The Illawarra Multicultural Services Officer made contact with a broad range of community groups including the Macedonian Services association on 31 August 2011, regarding support for BlueScope workers.
He did not detail the nature of that contact, including whether it was by phone or otherwise.
SUBMISSIONS
Mr Turton, for the Applicant, noted that the Act is beneficial legislation and that in determining what is ‘reasonable expenditure’ for the purposes of s 19C(4), the particular circumstances of the person must be taken into account. He pointed to the size of the Macedonian community in the Illawarra and to the Applicant’s evidence indicating that the Respondent failed to approach local Macedonian community organisations in relation to the BlueScope Steel retrenchments. He submitted that Mr Naumoski was not notified of the effect any termination payment he received might have on his entitlement to social security benefits. He also submitted that the evidence raises serious questions about the level of Mr Naumoski’s understanding in his dealings with Centrelink.
In relation to Mr Naumoski’s expenditure, Mr Turton submitted that his purchase of a house was on the advice of his family and friends, noting that it was even suggested by his manager, Milco, at work. It should not be considered unreasonable in Mr Naumoski’s circumstances. Similarly, his purchase of new furniture should also be considered reasonable, including the purchase of air conditioning. Mr Turton did not dispute that some of the expenditure might not be regarded as reasonable, for example, expenditure at the Leagues clubs.
Mr Turton also asked the Tribunal to take into consideration Mr Naumoski’s frail health, noting that he has lost 45 kgs since ceasing work, the fact that he is currently unable to afford necessary medication for treatment of his medical conditions, that he has tried to sell his house without success, and that he and Mrs Naumoska have been totally reliant on charity for their support for some considerable time.
Ms Maclean, for the Respondent submitted that Mr Naumoski’s expenditure on a house and furniture was not reasonable, noting that he had failed to make any enquiries about whether such expenditure might affect his future entitlement to social security benefits. Mr Naumoski had been renting a house for many years and would have been able to afford to continue to do so. It was reasonable to expect that he should have checked with Centrelink prior to spending all of the termination payment he received from his employer.
Ms Maclean noted that Mrs Naumoska’s understanding of English is considerably better than her husband’s and her evidence suggests that she felt entitled to spend their money to make a home, knowing of others who own one or more properties. Mrs Naumoska acknowledged that she had been secretly advised that she should spend the remainder of the money they had in the bank in order to become eligible for social security payments.
Ms Maclean said the Respondent therefore submits that any financial hardship suffered by Mr and Mrs Naumoski is not the result of any unavoidable or unreasonable expenditure. Moreover, most of Mr Naumoski’s termination payment is not lost but merely tied up in an asset.
Ms Maclean also pointed to Mr Creagh’s evidence of the steps taken by Centrelink to provide information to workers made redundant by BlueScope Steel, notwithstanding that there is no legal obligation to do so.
DISCUSSION
The issue to be determined is whether the Tribunal is satisfied that Mr Naumoski is in severe financial hardship because he has incurred unavoidable or reasonable expenditure and whether, if so, the Secretary’s discretion in s 1068-G7 of the Act should be exercised to determine that the whole or part of the IMP should not be applied.
The Applicant claims to have been in severe financial hardship from 27 February 2012 when the balance of funds in his bank account fell below $878.80 (the maximum fortnightly rate of newstart allowance payable to the Applicant from December 2011). The SSAT (14 April 2012) accepted that Mr Naumoski did not have any liquid assets and was in severe financial hardship and this was not in issue in the Tribunal proceedings. I am satisfied from Mr and Mrs Naumoski’s evidence, as well as, for example, from the report provided by the St Vincent de Paul Society as to the charitable support provided to Mr and Mrs Naumoski, that they are in severe financial hardship and have been since February 2012. The issue in dispute, therefore, is whether the severe financial hardship is as a result of unavoidable or reasonable expenditure and, if so, whether the IMP should be reduced.
The Respondent referred me to three decisions in which the issue of whether particular expenditure was reasonable expenditure was discussed: Bazzi and Department of Family and Community Services [2000] AATA 794 (Bazzi); Goldfinch and Department of Family and Community Services [2000] AATA 837 (Goldfinch); and Guerriero and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 797 (Guerriero). In my view, it seems clear that all three cases were decided on their particular facts which are distinguishable from those in the present case. The Tribunal in Bazzi noted that on the one hand, s 19C(4) purports to use an objective test of reasonableness, but on the other hand requires the decision-maker to have regard to the particular (and therefore subjective) circumstances of the person. Subparagraph 19C(4)(k), which allows the Secretary to treat as unavoidable or reasonable expenditure “any other costs that the Secretary determines are unavoidable or reasonable expenditure in the circumstances in relation to a person”, makes this abundantly clear. It should also not be forgotten that the Act is beneficial legislation, and s 19C(4) is a non-exclusive list of unavoidable or reasonable expenditure.
Turning to the facts of this case, I am satisfied that at the time Mr and Mrs Naumoski entered into a contract to purchase their house in November 2011, neither of them were aware that Mr Naumoski’s termination payment might affect his entitlement to social security benefits. Mr Naumoski’s understanding of English is limited and while Centrelink may have tried to make BlueScope Steel workers who were being made redundant aware of their social security entitlements and the effect of any termination payments on such entitlements, I am not satisfied that this came to Mr Naumoski’s attention.
It is unfortunate that no steps were taken to cater for the specific needs of workers from Macedonia and their families given the significant size of the Macedonian community in the Illawarra. If, as Mr Creagh states, the Illawarra Multicultural Services Officer within Centrelink made contact with a broad range of community groups, the evidence of the Applicants’ witnesses indicates it was not successful. It is not clear what the nature of that contact was and there is no evidence of any information being provided to the Macedonian community in their own language, whether verbally or in written form.
Whilst in hindsight it would have been prudent for Mr Naumoski to contact Centrelink about his entitlement to social security benefits before purchasing a house, in the circumstances it is understandable that he did not do so. Neither he nor Mrs Naumoska had any understanding of social security payments having never needed to rely on such payments in the past. Their only exposure to social security payments was in relation to an entitlement to claim family tax benefits for their son. Mrs Naumoska said she was aware that she needed to contact Centrelink about the termination payment received by her husband in case this affected her and her son’s entitlements to this payment. The first contact made appears to have been on 28 November 2011 when Mr and Mrs Naumoski attended Centrelink’s Warrawong office on which occasion they enquired about Mr Naumoski making a claim for disability support pension and were asked to attend the Centrelink Wollongong office for an interview.
It appears that the first time that Mr and Mrs Naumoski were told of the possibility of an IMP being applied as a result of Mr Naumoski’s termination payment was on 9 December 2011. This happened during the course of an interview with Ms Yalcin at Centrelink’s Wollongong office when Mr Naumoski’s claim for DSP was discussed and Ms Yalcin also suggested that he should apply for newstart allowance. Even then it appears that it was only the possibility of such an IMP being applied that was mentioned by Ms Yalcin who spoke with Mrs Naumoska in English. Despite it being clear that Mr Naumoski did not understand what was being discussed since Mrs Naumoska was passing on information to him, it appears that Ms Yalcin did not offer to arrange for an interpreter to assist them. In my view, it is not good enough for Ms Yalcin to say that an interpreter was not required because she could understand what Mrs Naumoska was saying and because Mr and Mrs Naumoski did not ask for an interpreter. It should have been clear to Ms Yalcin that Mr and Mrs Naumoski had no understanding of the social security system, that the principal customer, Mr Naumoski, had limited English and did not understand what was being discussed, and that this raised an obligation on her part to at least offer to have an interpreter present.
Mr and Mrs Naumoski completed the purchase of their home on 14 December 2011. It was on that day that Centrelink wrote to Mr Naumoski requesting further information in relation to his claim for DSP. On 22 December 2011, Mr and Mrs Naumoski attended Centrelink’s Wollongong office again and were informed by Ms Yalcin that she had decided to apply an IMP in respect of Mr Naumoski’s claim for newstart allowance. A letter was sent to him on that day confirming this. Because Mr and Mrs Naumoski were obviously upset by this outcome, Ms Yalcin immediately referred the matter to an authorised review officer for a review.
On 19 January 2012, the authorised review officer varied the end date of the IMP from 3 June 2014 to 12 May 2014 but otherwise affirmed the decision to apply an IMP. At that time, Mr and Mrs Naumoski still had about $20,000 in the bank. Mrs Naumoska’s evidence is that she was secretly advised by a Centrelink officer to spend their available funds because then Centrelink would have to grant them social security benefits. She set about doing so, apparently buying additional furniture, furnishings and whitegoods and spending money having dinner and entertaining at local Leagues clubs. Within a few months, their remaining funds had been spent and evidence from St Vincent de Paul indicates that by late April 2012, they were reliant on charitable assistance for the purchase of food and other necessaries. Their only income since this time has been the family tax benefit payments in respect of their son. (I note that the house has been for sale since September 2012 but has not sold. Mr Naumoski’s evidence is that the asking price is that recommended by the real estate agents and copies of advertising dated 19 September and 20 November 2012 indicates that the asking price of the house was reduced over this period from $329,000 to $289,900.)
So was Mr and Mrs Naumoski’s expenditure during this period reasonable given their circumstances? Mr Naumoski has limited English skills and a lack of knowledge of the social security system. At the time Mr and Mrs Naumoski contracted to purchase the house they were clearly unaware of the effect Mr Naumoski’s termination payments might have on their entitlement to social security benefits. In my view, it is understandable that, after years of renting, that they should want to purchase a house, particularly in view of Mr Naumoski’s poor health and the likelihood that, at best, his capacity to work in the future would be limited. Dr Harvey’s reports state that Mr Naumoski had suffered a stroke four years previously and that he suffers from diabetes, chronic pancreatitis (as at 25 May 2012 quiescent), and hypertension requiring regular medication. Mr Naumoski gave evidence that the stroke has limited his ability to walk and he has lost 45 kgs in weight since ceasing work. Without any income, he has been unable to afford his medication. His evidence indicated that he has a poor memory and his response to questions (with the aid of an interpreter) raised a question in my mind as to the degree of his cognition.
The house Mr and Mrs Naumoski purchased - for $255,000 - was a modest one at the bottom end of the market. In the particular circumstances of this case, I am satisfied that this expenditure was reasonable. Despite already having furniture, albeit that it may have been old, they also purchased new furniture, furnishings and whitegoods for the house and a computer for their now 14 year old son, who is at High School. Initial purchases do not seem to have been extravagant although Mrs Naumoska’s evidence about purchasing a new bed for their son, after she had been advised to spend the remainder of their funds, indicates that the bed and bedding purchased for their son, costing more than $4,000 was extravagant. In view of their financial situation, the spending in local Leagues clubs also appears extravagant.
How much, if any, of this expenditure was reasonable in the circumstances? The purchase of the computer for their son seems reasonable given acceptance that computers are an integral part of children’s education. Some but not all expenditure on furniture and furnishings for the new house may have been reasonable. The spending in local Leagues clubs does not seem reasonable. Without any detailed breakdown of Mr Naumoski’s expenditure in the period from November 2011 to April 2012, which obviously included ordinary living costs, the best I can do is to make a guestimate of what might be considered reasonable. In my view, the following expenditure should be considered reasonable in the particular circumstances of this case:
·the purchase of the house for $255,000;
·associated costs, fees and disbursements shown in the Settlement Statement dated 14 December 2011 of approximately $3,165.00;
·an allowance of $10,000 for furniture, furnishings etc;
·$1,039 for their son’s Apple computer; and
·as at the date of the SSAT decision on 14 April 2012, living expenses for the period from 1 November 2011 to 14 April 2012 of $10,545.60 (equivalent to 24 weeks at $878.80 per fortnight, being the maximum rate of newstart allowance payable to Mr Naumoski during this period).
I am not satisfied from the evidence that other expenditure should be regarded as reasonable for the purposes of s 19C(4) of the Act.
Having regard to the expenditure considered reasonable set out above, I am satisfied that the Secretary’s discretion in s 1068-G7AM of the Act should be exercised to reduce the IMP applicable in relation to social security benefits that would otherwise be payable to Mr Naumoski.
DECISION
The decision under review is set aside and the matter remitted to the Respondent to recalculate the applicable income maintenance period with directions that the expenditure found to be reasonable in the circumstances of this case, set out in paragraph 55 of the statement of reasons, be taken into account in reducing the income maintenance period.
I certify that the preceding 57 (fifty seven) paragraphs are a true copy of the reasons for the decision herein of Deputy President R Handley. .........[sgd].....................................................
Associate
Dated 11 April 2013
Date(s) of hearing 2 April 2013 Date final submissions received 11 April 2013 Advocate for the Applicant I Turton Solicitors for the Applicant Illawarra Legal Centre Advocate for the Respondent J Maclean Solicitors for the Respondent Department of Human Services
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