Osro and Secretary, Department of Families, Community Services and Indigenous Affairs
[2007] AATA 1773
•18 September 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1773
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2007/1191
GENERAL ADMINISTRATIVE DIVISION ) Re Reingott Osro Applicant
And
Secretary, Department of Families, Community Services and Indigenous Affairs
Respondent
DECISION
Tribunal Senior Member B J McCabe Date18 September 2007
PlaceBrisbane
Decision The decision under review is remitted to the respondent for reconsideration pursuant to s 42D of the Administrative Appeals Tribunal Act 1975. The respondent should:
(a) establish the amount of investment income the applicant receives from his bank accounts;
(b) calculate the rate of the applicant’s Australian benefit by taking into account the German pension; and
(c) undertake the currency conversion of the applicant’s German pension on the 5th business day preceding the calculation day of each month for the purpose of assessing the rate of his Australian benefit.
.................[Sgd].......................
SENIOR MEMBER
CATCHWORDS
SOCIAL SECURITY – Income test – age pension – foreign pension to be taken into account when calculating rate of Australian age pension – date of market exchange rate for the calculation date – decision remitted to respondent
Social Security Act 1991 s 1100
Social Security (International Agreements) Act 1999
Social Security Foreign Currency Exchange Rate Determination 2006 (No 1)
REASONS FOR DECISION
18 September 2007 Senior Member B J McCabe 1. Mr Reingott Osro receives a German pension. He also receives the Age Pension in Australia, where he resides. On 12 February 2007 the respondent made a decision that payments of the age pension to Mr Osro should be at a level below the maximum rate. This decision was made after the respondent took into account the applicant’s German pension. The decision was affirmed by the Social Security Appeals Tribunal (the SSAT) and Mr Osro has now asked this tribunal to reconsider the matter.
2. I must decide whether Mr Osro was being paid the correct rate of the Age Pension as at 12 February 2007. That depends on whether Mr Osro’s German pension should have been taken into account when assessing his entitlements in Australia. It may also be affected by the exchange rate applied to calculate the amount of payments from overseas that must be taken into account.
3. Both the applicant and respondent consented to this matter being determined on the papers. The papers before me include Mr Osro’s handwritten annotations on the SSAT’s decision. Those annotations suggest there may be some disputes on the facts. In those circumstances, I will make a ruling with respect to the central question in dispute and submit the matter to the respondent for reconsideration .
4. My decision turns on the interpretation of the international social security agreement between Australia and Germany. The agreement was entered into pursuant to the Social Security (International Agreements) Act 1999 (the International Act) and found at Schedule 14 of that Act. The terms of the agreement have the force of law in Australia: s 6 of the International Act.
5. Section 1100(2) of the Social Security Act 1991 (the Social Security Act) then provides the basis upon which the calculation of foreign currency is to be exchanged into Australian currency.
background facts
6. Mr Osro has been in receipt of an age pension in Australia since he turned 65 in 1999. There was an increase in the level of German pension paid to the applicant sometime in 2003. The decision of the respondent to reduce his payment to below the maximum level in February 2007 was made with regard to his foreign pension payment, as well as deemed income from assets.
7. Mr Osro has two bank accounts with a combined balance of around $450. Mr Osro’s handwritten notes on the SSAT decision appear to dispute that the accounts are savings accounts that generate interest. It was not clear where those accounts are located. In any event, the SSAT found the deemed income from these accounts totals $17.58 per annum. The German pension payment is €176.87 per calendar month. This amounts to €2122.44 per annum.
8. The amount of Australian age pension payment Mr Osro received during the period under review was $516.29 per fortnight. That was below the maximum rate of $517.90 per fortnight - a difference of $1.61. Mr Osro appeared to be particularly concerned that he would lose his entitlement to various concessions available from government bodies if he were not receiving the maximum rate. The SSAT questioned that claim, but it is unnecessary for me to express a view on the point.
9. From the material before me, it appears the rate of Mr Osro’s Australian age pension has always been calculated with regard to his German pension. It is only in recent times this has had a practical impact on his entitlement. It appears the coincidence of a more generous pension coupled with exchange rate movements have created problems. Now that it has become an issue, Mr Osro says the German pension should not been counted.
the legislation
10. The agreement between Australia and Germany is found at Schedule 14 of the International Act. Mr Osro receives his Australian Age Pension by virtue of that agreement between Australia and Germany. Article 8 sets out the correct method of calculating the rate of his Australian Age Pension, which is an Australian benefit for the purposes of the Agreement (Article 2 at 1(b)(i)). Article 8 provides (at 6):
Subject to the provisions of paragraph 7, where an Australian benefit is payable only by virtue of the Agreement to a person who is in Australia, the rate of that benefit shall be determined by:
(a) calculating that person's income according to the Australian legislation but disregarding in that calculation any German benefit to which the person is entitled;
(b) deducting that German benefit from the maximum rate of that Australian benefit; and
(c) applying to the remaining benefit obtained under subparagraph (b) the relevant rate calculation set out in the Australian legislation, using as the person's income the amount calculated under subparagraph (a).
11. The effect of the relevant provisions is clear: the German pension must be taken into account. The respondent explained in its statement of facts and contentions how it applied these provisions in this case. The Secretary contends the correct rate of pension as at 12 February 2007 was the maximum rate ($517.90 a fortnight) less a rate reduction of $1.61. The rate reduction amount was calculated by adding the German pension amount and the deemed income from investments. These were taken as at 12 February 2007, with the exchange rate from Euro to the Australian dollar calculated as at 1 February 2007. The respondent says this exercise leads to the conclusion that Mr Osro’s income is in excess of the applicable income-free area by $104.60 per annum, or $4.0230 per fortnight.
12. As I have already pointed out, Mr Osro’s hand written notes appear to dispute the amount of the investment income flowing from the bank accounts. It seems to me that is a question of fact that can be readily resolved by the respondent.
13. There is also a question over the exchange rate that applied to the German pension payments. The evidence before me says Mr Osro receives his German benefit in Euro paid once per calendar month. If the wrong exchange rate is applied to his German pension payments, the final decision will be wrong.
14. Subsection 1100(3) of the Social Security Act 1991 sets out the method for determining the appropriate market exchange rate. However, s 1100(2)(a) provides for the Secretary to make a determination that it is not appropriate for s 1100(3) to apply to certain foreign currencies. The Secretary has made such a determination in writing pursuant to subsection 1100(5), being the Social Security Foreign Currency Exchange Rate Determination 2006 (No 1) (the Determination).
15. Part 3 of the Determination makes provision for “Germany (Euro)”. This Determination applies to the conversion of Mr Osro’s German benefit into Australian dollars for the purpose of determining the rate of his Australian benefit.
16. The Determination sets out (at s 3.2(2)) the appropriate market exchange rate. For currencies in Table A, which includes “Germany (Euro)”, it says it is appropriate to use the on-demand airmail buying rate for the Commonwealth Bank of Australia at the start of business in Sydney on the 5th business day before the calculation day. The calculation day is the first business day of each month: s 1100(6) of the Social Security Act.
17. The first business day in the period under review was Thursday 1 February 2007: the calculation day. Therefore the appropriate day on which to undertake the currency conversion is the 5th business day before 1 February 2007. It is not clear from the material before me whether that has occurred in this case.
conclusion
18. The decision under review is remitted to the respondent for reconsideration pursuant to s 42D of the Administrative Appeals Tribunal Act 1975. The respondent should:
(a)establish the amount of investment income the applicant receives from his bank accounts;
(b)calculate the rate of the applicant’s Australian benefit by taking into account the German pension; and
(c)undertake the currency conversion of the applicant’s German pension on the 5th business day before the calculation day of each month for the purpose of assessing the rate of his Australian benefit.
I certify that the 18 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe.
Signed: .....................................................................................
Associate: Stephen O’GradyHeard on the papers
Date of Decision 18 September 2007
For the applicant Self-represented
For the respondent Mr C Keim, departmental advocate
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