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

[2018] AATA 688

Munro and Secretary, Department of Social Services (Social services second review) [2018] AATA 688 (20 March 2018)

Division:GENERAL DIVISION

File Number(s):      2017/2629

Re:Alan Munro

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Ms A F Cunningham, Senior Member

Date:20 March 2018

Place:Hobart

The decision under review is set aside and in substitution the Tribunal affirms the decision made by the authorised review officer dated 13 October 2016 that s 24 of the Social Security Act 1991 does not apply to the Respondent.

................................[sgd]....................................

Ms A F Cunningham, Senior Member

SOCIAL SECURITY – age pension – whether person may be treated as not being a member of a couple – no special reason to justify exercise of discretion – decision under review set aside

Legislation

Administrative Appeals Tribunal Act 1975 (Cth)

Social Security Act 1991 (Cth) ss 4(2)(a), 4(11)(a), 24, 55, 1064-B1

Cases

Drake and Minister for Immigration and Ethnic Affairs (No 2) [1979] AATA 179; (1979) 2 ALD 634
Holt and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 143
Kazmierczak and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084

Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Wilson [2011] AATA 554

Secondary Materials

Department of Social Services, Guide to the Social Security Law

REASONS FOR DECISION

Ms A F Cunningham, Senior Member

20 March 2018

1. This matter concerns an appeal made by the Applicant against a decision of the Social Services & Child Support Division of the Administrative Appeals Tribunal (First-tier reviewer) dated 3 April 2017. This decision set aside a determination of the Department of Human Services (the Department) dated 29 August 2016.

   BACKGROUND

2. The Respondent, Mr Munro, has been in receipt of age pension since 28 July 2010. He remarried on 23 August 2016 and the Department then determined he should be paid age pension at the partnered rate. Mr Munro applied for review and on 13 October 2016 an authorised review officer (ARO) affirmed the decision to pay him at the partnered rate.

3. The ARO found there was no ‘special reason’ warranting the exercise of the discretion contained in s 24 of the Social Security Act 1991 (Cth). This provision gives the Applicant discretion to treat a person as not being a member of a couple for the purposes of the social security law, including in the calculation of the rate of age pension.

4. Mr Munro applied to the First-tier reviewer on 2 December 2016 and a hearing was held on 3 April 2017. By decision dated 3 April 2017, the First-tier reviewer set aside the decision under review and, in substitution, determined Mr Munro was not to be treated as a member of a couple for the purposes of the relevant legislation. On 4 May 2017 the Applicant applied to this Tribunal for review of that decision. The First-tier reviewer decision is subject to a stay order made by this Tribunal on 5 June 2017.

   ISSUE

5. The issue for the Tribunal is whether the discretion afforded by s 24 of the Social Security Act 1991 should be exercised, namely whether there is a ‘special reason’ not to treat Mr Munro as a member of a couple.

   LEGISLATION

6. The relevant legislation is found in the Social Security Act 1991 (Cth) (the Act) and the Social Security (Administration) Act 1999 (Cth).

7. Section 24 of the Act sets out the circumstances in which a person who is a member of a couple may be treated as not being a member of a couple. The relevant subsection provides:

   (1)  Where:

   (a)  a person is legally married to another person; and

   (b)  the person is not living separately and apart from the other person on a permanent or indefinite basis; and

   (c)  the Secretary is satisfied that the person should, for a special reason in the particular case, not be treated as a member of a couple;

   the Secretary may determine, in writing, that the person is not to be treated as a member of a couple for the purposes of this Act.

   …

8. Section 55 of the Act sets out how to determine a person’s age pension rate. Subsection 55(a) applies to Mr Munro and requires that his rate is worked out using the Pension Rate Calculator A at the end of s 1064. Module 1064-B1 provides for different maximum basic rates depending on whether a person is ‘[n]ot member of couple’ or is ‘partnered’.

9. Under the Act, a person is partnered if they are a member of a couple (s 4(11)(a)) and a person is a member of a couple if ‘the person is legally married to another person and is not, in the Secretary’s opinion (formed as mentioned in subsection (3)), living separately and apart from the other person on a permanent or indefinite basis’ (s 4(2)(a)).

   CONSIDERATION AND FINDINGS

10. This Tribunal conducted a hearing on 7 February 2018. Mr Sparkes appeared in person for the Applicant. No evidence was called but the T documents were tendered pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth).

    Respondent’s contentions

11. Mr Munro appeared by telephone from Thailand and gave evidence during the hearing. He contended that the decision of the First-tier reviewer should be affirmed because of his financial circumstances. Mr Munro maintained he should not be penalised for having remarried and said there had been no pooling of resources because his wife had no present income or assets. Mr Munro said that he had spent his savings (approximately $114,000) on the purchase of a house in Thailand. He also told the Tribunal that he had recently separated.

    Applicant’s contentions

12. Mr Sparkes submitted on behalf of the Applicant that there was insufficient supporting evidence produced by Mr Munro at the hearing before the First-tier reviewer to justify the findings of that decision maker, particularly in respect of the claim that Mr Munro’s wife, who is of working age, does not work and is unable to work because she needs to care for him. No supporting evidence was provided regarding the state of Mr Munro’s health or the care provided by his wife, the couple’s claimed expenses or their overall financial circumstances.

13. The Applicant’s position was that there was insufficient evidence available upon which a proper assessment for the exercise of the s 24 discretion could be made. Mr Sparkes submitted that no ‘special reason’ to exercise the discretion existed at the time of the Department’s decision. He maintained that Mr Munro was not in financial hardship at the relevant time and that evidence existed which showed Mr Munro had actually taken approximately $114,000 in savings to Thailand. The evidence also showed that Mr Munro had subsequently used these savings to purchase a house and car.

14. Mr Sparkes informed the Tribunal that prior to Mr Munro’s marriage his fortnightly pension basic rate as of June 2016 was $794.80 per fortnight (plus a supplement of $56.00, rent assistance of $130.00 and $14.10 for other allowances). After being reduced to the partnered rate, Mr Munro received a basic rate of $655.02 (plus a supplement of $53.57, rent assistance of $124.96 and $11.60 for other allowances).

15. Mr Munro’s monthly pension payment was equivalent to 47,081 Thai baht (THB). The average wage in Thailand at that time was 25,000 THB per month. Mr Sparkes calculated that Mr Munro’s annual Australian age pension is equivalent to 656,524 THB per annum, twice the average annual wage in Thailand for a university-qualified person in a well-paying position.

16. Mr Sparkes referred the Tribunal to the ARO’s finding that Mr Munro’s savings of $114,000 was, at the time of that review, equivalent to about 2.941 million THB. Mr Sparkes then submitted that the fact that the cost of living is lower in Thailand than in Australia is a relevant consideration when exercising the discretion under s 24. Both the average wage and cost of housing are substantially lower in Thailand than in Australia.

17. Mr Sparkes submitted it would be contrary to the intent of the legislation to exercise the s 24 discretion in this case. He referred the Tribunal to the relevant provisions of the Guide to the Social Security Law (the Guide), particularly clause 2.2.5.50.

    Consideration

18. The Guide is government policy and should be followed unless there are cogent reasons not to do so: Drake and Minister for Immigration and Ethnic Affairs (No 2) [1979] AATA 179; (1979) 2 ALD 634. In the explanation of the discretion to treat a person as not being a member of a couple for a special reason, s 2.2.5.50 of the Guide states:

    [s]ection 24 is intended to be the option of last resort, and should only be applied when all other reasonable means of support have been explored and exhausted.

    The Guide provides that the discretion to treat a person as not being a member of a couple should only be exercised when full consideration of all the circumstances relevant to the individual’s case ‘would make it unjust or unreasonable not to do so’. These circumstances must also be, to some degree, outside the person or couple’s control and unable to be changed. If it is reasonably within the person or couple’s control to improve their circumstances without requiring the exercise of s 24, this should generally be explored first.

19. Section 2.2.5.50 of the Guide lists three questions that need to be considered as part of the assessment while looking at the full circumstances of the case:

    ·Is there a special reason to be considered in this couple’s circumstances?

    ·Is there a lack of being able to pool resources for the couple as a result of the circumstances?

    ·Is there financial difficulty as a result of the couple’s circumstances?

20. The term ‘special reason’ in the context of s 24 has been considered on numerous occasions by the Tribunal and the Federal Court. In Holt and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 143 (Holt) the Senior Member stated that ‘special reason’ should be interpreted consistently with the scope and purpose of the Act. At paragraph 32, she referred to the Explanatory Memorandum to the Social Security Legislation Amendment Bill (No 4) 1991 which states:

    … there is justification in paying a higher rate to an unpartnered person than to a member of a couple if both members of the couple are living together. This justification is based on the premise that the unpartnered person does not enjoy the same economies of shared living costs as does the member of a couple in those circumstances. If the economies of scale are not available to the member of the couple because he or she is living apart from his or her partner because, for example, of the illness of one or both members of the couple, then each would face similar living costs as a unpartnered person.

21. The Federal Court in Kazmierczak and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084 approved of the above observations made in Holt. The Court noted that the inability to pool resources informed the policy reason for the insertion of s 24 and referred to the particular focus under the Act ‘on the practical ability of the resources of the partner being available for pooling with the resources of the person holding the pension’ (paragraph 41).

22. The Tribunal referred to the relevant policy considerations in the Guide in its decision in Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Wilson [2011] AATA 554 (Wilson). At paragraph 29, the Tribunal described the two defined situations in which the ‘special reason’ discretion has been exercised as those:

    (a)where the claimant is unable to pool resources with his or her partner, and secure the benefits - the economies of scale – of living as a couple; and

    (b)where, either in concert with the pooling issue in (a) above or separately, the couple find themselves in financial hardship.

23. The Tribunal in Wilson went on to state that the main ways in which the benefits of pooling resources are not possible are where either the claimant and partner have been forced to live separately (whilst remaining members of a couple) or where the partner of the claimant is unable to contribute to the pooled resources, or both: [32]. The result of this would be to create a situation where there was no practical benefit to the claimant from being a member of a couple.

24. Mr Munro submitted that he was not able to pool resources because his wife had no resources to contribute. As Mr Sparkes pointed out however, there was no corroborative or objective evidence supporting this claim. What is clear from the authorities is that the strained financial circumstances of a social security recipient are not a particularly different or unusual situation. A couple must be prevented from being able to pool their resources as a result of a particular circumstance, such as a forced separation, and this circumstance gives rise to the financial difficulties. In other words there must be a ‘special reason’ in Mr Munro’s circumstances to justify treating him as not being a member of a couple.

25. Whilst Mr Munro contends that his financial circumstances at the relevant time were difficult and that they continue to be so, he has not, despite directions from the Tribunal, provided any objective evidence regarding the couple’s expenses. The Tribunal was accordingly unable to undertake a thorough assessment as recommended in the Guide.

26. The Tribunal accepts the evidence regarding income as outlined by Mr Sparkes and also takes account of the comparative incomes and living expenses for persons residing in Thailand. Mr Munro is in receipt of the same amount of age pension in Thailand as he would have received if residing in Australia but has considerably different outgoings and living expenses. It is particularly notable that at the time of the Department’s decision and during the following nine months, Mr Munro had considerable savings which he subsequently chose to use for the purchase of a residence and car.

27. The Tribunal is, for the above reasons, unable to conclude that there was a ‘special reason’ constituting circumstances which either prevented Mr Munro from pooling resources or from being able to enjoy the economies of shared living costs. Whilst Mr Munro claims that he suffers financial difficulties, both now and at the relevant time, there is no corroborative evidence to support his claims. The undisputed evidence is that Mr Munro had $114,000 in savings at the relevant time. In any event the authorities outlined above make it clear that financial difficulty alone would not constitute a ‘special reason’ to justify exercise of the discretion in of s 24 of the Act.

    DECISION

28. For the reasons stated above, the Tribunal sets aside the decision of the First-tier reviewer dated 3 April 2017 and substitutes the decision of the ARO dated 13 October 2016 which determined that s 24 does not apply to the Respondent and that he be paid at the single rate of age pension.

I certify that the preceding 28 (twenty -eight) paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham, Senior Member

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Associate

Dated: 20 March 2018

Date(s) of hearing:	7 February 2018
Applicant:	By telephone
Solicitors for the Respondent:	Mr Brian Sparkes, FOI and Litigation Branch, Department of Human Services