Paulis and Department of Family and Community Services

[2000] AATA 1070

DECISION AND REASONS FOR DECISION [2000] AATA 1070

ADMINISTRATIVE APPEALS TRIBUNAL)
  Nº V00/560
GENERAL ADMINISTRATIVE  DIVISION)

Re:            LUAY PAULIS

Applicant

And:         SECRETARY TO THE
  DEPARTMENT OF FAMILY AND
  COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       Mrs H.E. Hallowes, Senior Member
Date:             5 December 2000
Place:            Melbourne

Decision:The decision under review is affirmed.

(sgd) H.E. Hallowes
  Senior Member
SOCIAL SECURITY — newstart allowance — liquid assets — whether liquid assets test waiting period to be served — compensation as a result of a motor vehicle accident — money saved for medical treatment — applicant subject to new lump sum preclusion period and also an assets test waiting period — relevant years HECS payment
Administrative Appeals Tribunal Act 1975ss.35, 37
Social Security Act 1991 ss.14A, 19C, 598

REASONS FOR DECISION

5 December 2000  Mrs H.E. Hallowes, Senior Member

1. This is an application for a review of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 12 April 2000.   The SSAT decided to affirm a decision of a delegate of the Secretary made on 12 July 1999, which was affirmed by an authorised review officer ("ARO") on 22 November 1999, to impose a liquid assets deferment period of 13 weeks, from 3 July 1999 to 1 October 1999, in respect of Mr Paulis's claim for newstart allowance lodged with Centrelink on 12 July 1999.

2. The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the documents") ("the AAT Act") and further material provided by Mr Paulis with respect to his financial circumstances, terms of settlement in the District Court of New South Wales dated 9 December 1997 with respect to a motor vehicle accident and medical reports with respect to injuries Mr Paulis sustained in the motor vehicle accident. The Tribunal noted that Mr Paulis's tax file number was disclosed in the material he lodged and the Tribunal made a confidentiality Order with respect to the tax file number under section 35(2) of the AAT Act, ordering that Mr Paulis's tax file number not be disclosed. Ms E. King, an advocate with Centrelink and who represented the Secretary at the hearing, provided Mr Paulis and the Tribunal with a statement of the Secretary's case, prepared by another Centrelink officer.

3. Liquid assets are defined in subsection 14A(1) of the Social Security Act 1991 ("the Act") as is the meaning of maximum reserve:

   14A(1)     In Parts 2.11, 2.11A, 2.12 and 2.14:

   "liquid assets", in relation to a person, means the person's cash and readily realisable assets, and includes:

   (a)the person's shares and debentures in a public company within the meaning of the Corporations Law; and

   (b)amounts deposited with, or lent to, a bank or other financial institution by the person (whether or not the amount can be withdrawn or repaid immediately); and

   (c)amounts due, and able to be paid, to the person by, or on behalf of, a former employer of the person;

   but does not include:

   (d)an amount that is a qualifying eligible termination payment for the purposes of Subdivision AA of Division 2 of Part III of the Income Tax Assessment Act; or

   (e)in the case of a person who:

   (i)has claimed or is receiving a youth allowance or an austudy payment; and

   (ii)is undertaking a tertiary course of education in any year or part of a year;

   an amount necessary to cover the reasonable expenses incurred, or likely to be incurred, by the person in that year or that part of a year and that are directly related to his or her undertaking the course, including:

   (iii)up front course fees; and

   (iv)HECS payments; and

   (v)union fees; and

   (vi)costs of text books; and

   (vii)costs of any tools or equipment required to undertake the course, including computer software; and

   (viii)expenses directly related to any field trips undertaken for the purposes of the course; and

   (ix)such other expenses as are approved by the Secretary.

   Note 1: The Corporations Law is set out in section 82 of the Corporations Act 1989.

   Note 2: For "qualifying eligible termination payment" see subsections 27A(12) to (12D) of the Income Tax Assessment Act.

   "maximum reserve", in relation to a person, means:

   (a)if the person is not a member of a couple and does not have a dependent child - $2,500; or

   (b)in any other case - $5,000.  

4. In giving reasons for his application for review Mr Paulis stated:

   The Money we had in the Bank was a compensation payment to an injury occurred in 1994.   The compensated money was specifically for loss and treatment to myself (Luay Paulis) which covered the period from 1994 to the future.   As the accident has left me with a 30% loss in performance this money is put aside for continues treatment (not covered by Medicare) and therefore should not be taken in account as our available funds.   

5. When Mr Paulis lodged his claim for newstart allowance Part 2.12 Division 1 of the Act provided for qualification and payability of that allowance. Mr Paulis was qualified for newstart allowance but Ms King contended that it was not payable to him for 13 weeks. Section 598 and subsection 19C(3) provide, so far as relevant:

   598(1)     Subject to subsections (4A), (5), (6), (7) and (8), if:

   (a)the value of a person's liquid assets exceeds the person's maximum reserve on:

   (i)the day on which the person becomes unemployed; or

   (ii)the day on which the person claims a newstart allowance; and

   (b)the person is not a transferee to a newstart allowance;

   the person is not qualified for a newstart allowance for a period unless the person has served the liquid assets test waiting period in relation to the claim before the beginning of that period.

   Note 1:  for "liquid assets" see section 14A.
   Note 2:  for "maximum reserve" see section 14A.
   Note 3:  for "transferee to a newstart allowance" see subsections 23(6) and (7).
   Note 4:  for "serving the liquid assets test waiting period" see subsection 23(10).

   598(2)     The liquid assets test waiting period in relation to the claim is to be worked out under subsections (2A), (2B) and (2C).
   598(2A)   Work out the number of formula weeks (disregarding any fractions of a week) in relation to the claim using the formula:

   Liquid assets — Maximum reserve amount

   Divisor

   where:
   "liquid assets" means the person's liquid assets.
   "maximum reserve amount" means the maximum reserve in relation to the person under subsection 14(1).
   "divisor" means, in relation to a person:

   (a)if the person is not a member of a couple and does not have a dependent child - $500; or

   (b)otherwise - $1,000.

   598(2B)   If the number of formula weeks is equal to or greater than 13 weeks, the liquid assets test waiting period in relation to the claim is 13 weeks.
   598(2C)   If subsection (2B) does not apply, the liquid assets test waiting period in relation to the claim is the number of weeks equal to the number of formula weeks.

   . . .

   598(3A)   Subject to subsections (3B) and (4), if the person is a member of a couple, the liquid assets test waiting period in relation to the claim starts on the last occurring of the following days:

   (a)the day on which the person became unemployed;

   (b)if, when the claim is made, the person's partner is unemployed — the day on which the person's partner became employed;

   (c)if, when the claim is made, the person's partner is incapacitated for work— the day on which the person's partner became incapacitated for work.

   . . .

   598(5)     If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while serving a liquid assets test waiting period, the Secretary may determine that the person does not have to serve the whole, or any part, of the waiting period.
   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).

   . . .

   19C(3)     Meaning of in severe financial hardship:  person who is a member of a couple.  A member of a couple who makes a claim for parenting payment, austudy 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 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).

   . . .

   598(8)     A person is not subject to a liquid assets test waiting period under subsection (1) at any time during which the person:

   (a)       is undertaking:

   (i)formal vocational training in a labour market program approved by the Employment Secretary; or

   (ia)an activity approved by the Employment Secretary under the CSP; or

   (ii)a rehabilitation program approved by the Employment Secretary; and

   (b)       has been exempted from the application of that subsection by the Secretary.

   Note 1:  (Omitted by No 93 of 1998, s 3, Sch 6(27)).
   Note 2:  for Employment Secretary see section 23.  

6. Mr Paulis represented himself at the hearing.   He told the Tribunal that, when he lodged his claim for newstart allowance in July 1999, he had $20,700 in his bank account.   He had been paid the money early in 1998 following the injuries he received in a motor vehicle accident in 1994.   Mr Paulis said that he has a permanent impairment of 30 per cent of his neck and back and his ability to find work is reduced.   He had paid his lump sum compensation payment into a bank account so that he could pay for his ongoing medical treatment.   Mr Paulis had undertaken study at a Technical and Further Education College for five years.   He provided evidence of a student financial supplementary scheme debt amounting to $4677 as at 1 June 2000 and he indicated to the SSAT that he had a HECS debt of $12,000 which he is anxious to pay off as soon as possible.   Mr Paulis outlined to the Tribunal his ongoing expenses with respect to treatment which he must pay for himself.

7. The documents disclose that, following receipt of his compensation payment of $53,350, Mr Paulis was subject to a new lump sum preclusion period under the Act, the economic loss amount of the lump sum being deemed by the Act to be half of that amount, $26,675. Social security payments paid to Mr Paulis during the preclusion period under the Act were recovered. The Tribunal can understand why Mr Paulis feels that he is again being penalised under the Act, having been precluded from a social security payment from 22 November 1994 until 26 February 1996 and, having been prudent and kept in the bank part of the other half of his compensation payment for medical expenses, he is again, in effect, precluded from a social security payment for another 13 weeks. Mr Paulis and his wife have had to meet the expenses of moving to Melbourne and finding bond money for rental premises, furniture for their new accommodation and car repairs. Mr Paulis decided that he should be financially responsible but it now appears to him that, instead of renting premises, he should have used the money in his bank account to purchase a property. If he had done so, he would no longer be precluded from payment of newstart allowance.

8. Ms King contended that there is no legislative basis under which any part of the money in Mr Paulis's bank account in July 1999 can be excluded from the liquid assets test. She further put to the Tribunal that it should not exercise its discretion under subsection 598(5) of the Act as Mr Paulis was not in "severe financial hardship", Mr Paulis having not incurred unavoidable or reasonable expenditure during the waiting period. At all times Mr Paulis had a reserve of $5000 and when his reserve fell below that amount he was paid newstart allowance in October 1999. At that time his bank balance was $4212. She put to the Tribunal that, although Mr Paulis has a HECS debt with respect to his period of study between 1993 to 1998, that debt does not fall within the exclusion under the definition of liquid assets, subparagraph 14A(1)(e)(iv).

9. The Tribunal notes that, even allowing for the HECS debt at the time he lodged his claim, Mr Paulis had liquid assets of over $5000.   The Tribunal is also satisfied that the reference to reasonable expenses incurred "or likely to be incurred by the person in that year or that part of a year" [emphasis added] in the above subparagraph relates to the years Mr Paulis was undertaking his course.   Mr Paulis's expenses were during the years indicated above and not during the course of the year when he claimed his newstart allowance.  

10. The Tribunal is further satisfied that it must affirm the decision of the SSAT. Unfair as that may seem to Mr Paulis, social security payments are a safety net for those unable to meet daily living expenses. It is very frustrating for a prudent man like Mr Paulis to have to use moneys he put aside for medical treatment when he is aware of others who are not precluded from a social security payment because they have expended compensation payments on a home or their lifestyle. However, the Tribunal can do no more than apply the law in effect. The effect of subsection 19C(3) of the Act precludes any finding in Mr Paulis's favour with respect to severe financial hardship.

    I certify that the ten [10] preceding paragraphs are a true copy of the reasons for the decision herein of 
    Mrs H.E. Hallowes, Senior Member

    (sgd)      Catherine Thomas
                  Personal Assistant

    Date of Hearing:  10.08.00
    Date of Decision:  05.12.00
    Solicitor for the Applicant:           NIL — IN PERSON
    Solicitor for the Respondent:       Ms E. King, Advocate with Centrelink