Paananen and Secretary, Department of Family and Community Services

[2000] AATA 1022

DECISION AND REASONS FOR DECISION [2000] AATA 1022

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2000/700

GENERAL ADMINISTRATIVE  DIVISION       )          
           Re      HARRI PAANANEN           
  Applicant
           And    SECETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES           
  Respondent

DECISION

Tribunal       Dr J D Campbell     

Date22 November 2000

PlaceSydney

Decision      The Tribunal affirms the decision under review.           

[Sgd] Dr J D Campbell

Member
CATCHWORDS:  
Social Security – cessation of work – reasons for – objective assessment – application for newstart – activity breach test reduction – rate reduction

Social Security Act 1991, sections 628, 644AA, 644AC, 644AE, 644AE(2).

REASONS FOR DECISION

Dr J D CAMPBELL, Member         

1. Mr H Paananen ("the Applicant") in this matter seeks a review of the decision of the Social Security Appeals Tribunal (the "SSAT") dated 11 November 1999, which affirmed the decision of a Centrelink officer dated 5 October 1999 to impose a breach on newstart allowance for voluntary cessation of work. This latter decision was further reviewed by an authorised review officer and affirmed in a decision dated 22 October 1999.

2. A hearing was held before the Tribunal on 25 July 2000 at which the self represented Applicant gave oral evidence. The Secretary, Department of Family and Community Services (the "Respondent") was represented by Ms Schuster, an advocate from the Advocacy and Administration Law section of Centrelink.

3. The following material was placed in evidence before the Tribunal:
   Exhibit No.   Description  Date  
   T1–T19 pp 1-87 Documents prepared pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975
   A1      Bundle of documents from the Applicant re Child Support Agency               
   A2      Bundle of documents re the Applicant's indebtedness            
   R1      Respondent's statement of facts and contentions        6 June 2000 
   R2      Letter from Respondent to the Applicant           3 May 2000  
   R3      Payment documentation of newstart allowance to the Applicant       18 October 1999     to 6 March 2000           

Issues:

1. The relevant issues in this matter are:

   (1) whether the Applicant's decision to leave work voluntarily was reasonable; and
   (2) whether, as a consequence, the decision to impose an activity test breach rate reduction period of 26 weeks to the Applicant's newstart allowance at a rate of 18% was correct.

Legislation:

1. The relevant legislation in this matter is the Social Security Appeals Act 1991 ("the Act") and in particular sections 628, 644AA, 644AC, 644AE and 644AE(2).
   Background:

2. On 10 September 1999 the Applicant ceased work with his employer, the BankTech Group. The decision to cease work was made by the Applicant (T5). On 5 October 1999 the Applicant lodged a claim for newstart allowance (T4). On the same day the Respondent made a decision to impose a breach due to the Applicant voluntarily leaving employment (T6, T7). The breach involved an 18% reduction in the rate of newstart allowance for a period of 26 weeks from 4 October 1999 to 20 April 2000 (T9). This decision was reviewed by an authorised review officer and affirmed in a decision dated 22 October 1999 (T18). The decision was further reviewed and affirmed by the SSAT in a decision dated 11 November 1999. On 3 May 2000 a decision was made pursuant to section 1239(4) of the Act to vary the breach period in so far as it was to commence on 11 September 1999 and conclude on 10 March 2000 (Exhibit R2).
   Applicant's evidence:

3. The Applicant told the Tribunal that he was born on 27 June 1958 and that he completed a three year full-time course at North Sydney Technical College in electronics and communications. The Applicant stated that he was employed by the BankTech Group on 14 April 1997 as a service technician (field services) in electronics and communications (level 3). Salary at time of commencement was said to be $40,000 gross, with the Applicant using his own tools and equipment, and his own car on occasions for which at that time there was no allowance. By 1999, the Applicant stated that the employer was paying overtime, call-out and mileage allowances and he estimated his annual earnings at that time at $43,500 plus allowances.

4. The Applicant informed the Tribunal that he was, prior to the time of leaving work, having great trouble in managing his financial affairs. In this regard the Applicant listed the following issues:

• payment of child support to his former wife for their three children in the amount of $241 per week or 32% of his gross earnings;

• his rent increasing from $85 to $155 a week as a result of a rearrangement of shared accommodation;

• his inability to maintain payments on his car finance ($76 per week) and being much in arrears in regard to this debt;

• a debt of $1300 to American Express;

• repayments of $50 a week on monies advanced by way of a loan from his employer; and

• net weekly wages of $300+ had to meet accommodation, car repayment, car running costs and personal expenses including repaying $50 a week to American Express.

1. The Applicant said that in response to his growing financial difficulties, by about August 1999 he realised he was in a financial quandary. He considered driving taxis to help alleviate the problem, visited an accountant to seek advice, but elected on his advice to cease work in early October 1999 and to use accrued leave payments to meet accrued debt. After leaving work he spent a week residing in Newcastle prior to returning to live at his father's property in Sapphire. In response to questions asked in cross examination the Applicant stated that he had sought legal advice in Hornsby concerning legal aid, which was denied, and that he did not access any support groups because he did not know that they existed.

2. The Applicant, in electing to leave his employment with BankTech, stated that he felt he had no other alternative as his level of debt and financial difficulty appeared to be increasing and he was unable to see any real solution to the issue. In electing to leave his employment, the Applicant foresaw his ability to use accrued holiday pay to pay off debts of immediate concern and by returning to live with his father, he was assured of accommodation and support.
   Submissions
   The Applicant:

3. The Applicant submitted that he left work because he saw no other way of coping with his growing financial difficulties, which had been increased by the increase in the quantum of child support payments, his difficulties with accommodation costs, his attempts to repay loans and his general living and operating expenses. Further the Applicant stated that he had sought advice from an accountant and from his employer and had tried to access legal advice in trying to sort through his difficulties. Similarly his decision to return to live with his father was a response to his desperate financial circumstances. The Applicant submitted that it was unfair and unreasonable for the Respondent to apply an activity test breach for his decision to leave work voluntarily.
   The Respondent:

4. The Respondent submitted that the voluntary act by the Applicant to leave employment with the BankTech Group was not reasonable, in that the reasons for his action was his difficulty with his high child support liability, and the weekly payment of some $241. It was further submitted that the imposition of an activity test breach with a rate reduction of 18% imposed commencing on 11 September 1999 and ceasing on 10 March 2000 was the appropriate consequence.
   Considerations and findings:

5. In preliminary comment, the Tribunal acknowledges that the Applicant at the time of his cessation of work with BankTech Group had during the prior three months experienced an increase in weekly childcare support payments of $100 per week (approx). During this period he also had difficulties with his accommodation, an increasing debt situation and a growing difficulty in being able to rationally address his financial circumstances, despite assistance from his employer in the form of a loan and advice from an accountant. It is further evident to the Tribunal that much of the Applicant's angst was directed towards both the size and inflexible arrangements associated with the weekly child support payments automatically withdrawn from his gross salary. In many ways the Tribunal assesses that the Applicant viewed such payments as the major cause of his inability to deal with his worsening financial circumstances. In the Tribunal's opinion the cause of the Applicant's financial difficulties were more multifaceted, with significant accrued debt to be serviced, a car to be operational, personal accommodation to be met coupled with normal living expenses expenditure as well as the issue of child support payments and tax.

6. In the face of his financial difficulties the Applicant elected to opt out of the work situation, use the money accrued from holidays to pay out the more pressing debts and move to live and be supported in Queensland with his father, with the certainty of accommodation and meals. In considering whether the decision to leave work voluntarily was reasonable, the Tribunal has given particular consideration to the reasons underlying his actions. The Tribunal is aware of some of the reasons that led the Applicant to his particular financial difficulties, but the action in focus is the decision to leave work voluntarily and the reasons that underlie that action.

7. In further consideration, the Tribunal notes that the Applicant perceived that by his action to leave work, his child support payments would be much less, some money would be available to meet pressing creditors and he could return to the family haven with the certainty of food and accommodation. In assessing whether the action to leave work was reasonable the Tribunal, with the understanding that the word "reasonable" implies an objective assessment, finds that the action by the Applicant was not reasonable. He still has obligations to his children and his financial difficulties, while massaged in the short term, remain as evidenced by his continuing level of debt, his limited ability to find work in his new environment and his current level of income which has a limited ability to meet car and living expenditures, let alone debt servicing. In short the Tribunal is of the view that the decision by the Applicant to leave work provided a temporary respite in his continuing difficulties with his financial circumstances and as such cannot be considered to be a reasonable action.

8. The Tribunal notes the following statutory framework:

   "628   Unemployment due to voluntary act

   (a)a person's unemployment is due, either directly or indirectly, to a voluntary act of the person (the voluntary act); and

   (b)the Secretary is not satisfied that the person's voluntary act was reasonable;

   then:

   (c)if the voluntary act is the person's first or second activity test breach in the 2 years immediately before the day after the voluntary act—an activity test breach rate reduction period applies to the person; or

   (d)if the voluntary act is the person's third or subsequent activity test breach in the 2 years immediately before the day after the voluntary act—an activity test non-payment period applies to the person.

   644AA    Activity test breach rate reduction periods

   If an activity test breach rate reduction period applies to a person under this Part, the period applicable to the person is 26 weeks.

   644AC    Application of activity test breach rate reduction periods before
                 claims for newstart

   644AC(1) Subject to subsection (2), if:

   (a)at a time when the person was not qualified for a newstart allowance, an event occurred that would have resulted in an activity test breach rate reduction period applying to the person under:

   (i)section 624 because the person would have been taken to have failed the activity test under subsection 601A(2); or

   (ii)       section 628 or 629;

   had the person made a claim for a newstart allowance; and

   (b)before the end of that period (assuming that the period had commenced on the day on which the event occurred), the person made a claim for a newstart allowance;

   the activity test breach rate reduction period is taken to have commenced on the day after the day on which the event occurred.

   …

   644AERate of newstart allowance where activity test breach rate reduction period applies

   644AE(1)  If:

   (a)an activity test breach rate reduction period applies to a person under this Part; and

   (b)       the person qualifies for a newstart allowance; and
   (c)       a newstart allowance is payable to the person;

   the person's rate of newstart allowance for the activity test breach rate reduction period is worked out as follows:

   Newstart allowance rate calculator for activity test breach rate reduction period
   This is how to work out a person's rate of newstart allowance for an activity test breach rate reduction period that applies to the person.
   Method statement

   Step 1. Work out the person's maximum basic rate of newstart allowance specified in:
             (a)       Table B of Module B of Part 3.5 (Benefit Rate Calculator A); or
             (b)       Table B of Module B of Part 3.6 (Benefit Rate Calculator B):
             the result is called the maximum payment rate.
   Step 2. Work out the rate reduction amount in accordance with subsection (2).

   Step 3.Take the rate reduction amount away from the rate of benefit worked out in accordance with Benefit Rate Calculator A in section 1067 or Benefit Rate Calculator B in section 1068, as the case requires:

   the result is called the activity test breach reduced rate.

   644AE.(2)  A person's rate reduction amount is worked out as follows: (a)         if the activity test breach is the person's first breach in the 2 year period:   Maximum payment rate X 0.18 (b)          if the activity test breach is the person's second breach in the 2 year period:   Maximum payment rate  X 0.24 …" 17.         The Tribunal, having considered all the material in this matter finds that the Applicant did leave his place of employment permanently on September 1999, and further that his leaving was a voluntary action on his part. The Tribunal has already given consideration to whether or not his cessation of work was reasonable and has concluded that it was not. 18.       As a consequence of the finding that the Applicant's act was not considered to be reasonable, the Tribunal finds that pursuant to section 658 of the Act an activity test breach rate reduction period applies to the Applicant; that pursuant to section 644AA of the Act the period applicable to the Applicant is 26 weeks; that pursuant to section 644AC(1) the activity test breach rate reduction period is taken to have commenced on 11 September 1999; that the rate reduction amount is 18% pursuant to section 644AE(2) and pursuant to section 644AE(1) the rate payable during the activity breach rate reduction period is $267.89 per fortnight (Exhibit R3).  19.        In conclusion the Tribunal finds that the decision taken was appropriate and correct in the circumstances of this matter. Determination: 20.         The Tribunal affirms the decision under review.   I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for the decision herein of DR JD CAMPBELL.  Signed:            .....................................................................................   Associate  Date of Hearing  25 July 2000 Date of Decision  22 November 2000 Representative for the Applicant              Self Represented            Representative for the Respondent  Ms Schuster