Price and Department of Family and Community Services

[2001] AATA 371

DECISION AND REASONS FOR DECISION [2001] AATA 371

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2000/590
  )          No N2000/591

GENERAL ADMINISTRATIVE  DIVISION       )          
           Re      LIONEL JAMES PRICE  & ERLINDA PRICE 
  Applicants
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Ms J Shead, Member        

Date7 May 2001    

PlaceSydney

Decision      The Tribunal sets aside the decision under review and in substitution therefor decides the rate of withholdings for the debts owing to the Respondent by the Applicants is to be reduced to $15.00 per fortnight from each of the Applicants' pension payments, and this rate should not be increased until their other debts are paid or on application by the Applicants in the event of unforeseen contingencies.
  [sgd]    J A Shead
  Member  
CATCHWORDS
SOCIAL SECURITY – Disability support and wife pension debts – whether recovery of debts ought to be less than 14% of the basic pension rate

Social Security Act 1991 - section 1231
Farmer and Department of Social Security (1993) 31 ALD 262

REASONS FOR DECISION

Ms J Shead, Member              

1. Mr and Mrs Price ("the Applicants) seek review of a decision of the Social Security Appeals Tribunal ("SSAT") made on 12 April 2000.  The SSAT decided to affirm the decisions of a delegate of the Secretary to the Department of Family and Community Services ("the Respondent") on 7 February 2000, and of an authorised review officer on 24 February 2000 to recover debts by withholding more than $20.00 per fortnight each from the Applicants' pension payments.

2. The Applicants represented themselves at the hearing and the Respondent was represented by Ms M Buckley.

3. The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the T documents"). The following documents were also tendered to the Tribunal:
   Exhibit A1     Financial information of the Applicants   
   Exhibit A2     Sleep & Chest Disorders Centre letter dated 17 November 2000 concerning admission and billing procedure for sleep study for Mr Price. 
   Exhibit R1     Centrelink letter dated 26 October 1998 to Australian Jockey Club  
   Exhibit R2     Centrelink computer printouts      

1. The Respondent provided the Tribunal with a Statement of Facts and Contentions dated 24 November 2000.  

2. By way of background, the Tribunal extracts the history of the matter from the SSAT decision:

   "1.       Mr and Mrs Price were repaying a debt by withholdings from their fortnightly pension payments when on 7 February 2000 a decision was made by a delegate of Centrelink to recover the debts by withholding more than $20 per fortnight form each of their pension payments.  Mr and Mrs Price sought a review of this decision and on 10 February 2000, after reconsidering their case, the original decision-maker decided not to change the decision to recover the debt at a higher rate.
   Mr and Mrs Price asked for this decision to be reviewed and on 24 February 2000, after reconsidering their case an authorised review officer affirmed the decision to continue to recover the debt by withholding more than $20.00 per fortnight from their pension payments.
   The review officer found that for both Mr and Mrs Price their basic pension is $305.00 a fortnight and 14% of this is $42.70.  The review officer found that they had not provided evidence to show that recovery of that debt with withholdings of $42.70 a fortnight would cause them undue financial hardship.  The review officer noted that Centrelink's policy is to recover debts as quickly as possible and the standard rate of withholdings is set at 14% of the basic rate.  The review officer noted that if Mr Price's wife's income was included in the assessment, the rate of withholdings would increase to $56.00 per fortnight.  Because of information provided in relation in their expenses however, the review officer reduced the rate of withholding to $42.70.  The review officer was satisfied that on the evidence presented the rate of recovery would not cause undue financial hardship." (T2)

3. In their application to the Tribunal for review of the delegate's decision, the Applicants stated:

   "We still maintain we cannot afford the $42.70 F/N"." (T1)

4. The issue for the Tribunal is to determine the rate of recovery.

5. The following relevant legislation is provided under the Social Security Act 1991 ("the Act"):

   "1231 (1A) .., the Secretary is to decide in each case the amount by which each payment of the person's social security payment is to be reduced, and may vary the amount from time to time.

   1231(2) Subject to subsections (2A) to (2E), the debt or overpayment must be deducted unless:
   (a) the Secretary takes action under Part 5.4 (write off and waiver) in relation to the amount; or
   (b) the amount is recovered by the Commonwealth under another provision of this Chapter."

1. It was noted that the Respondent's general policy is to withhold 14% of a person's basic pension rate.  Where a person has income in addition to pension, a formula is employed to determine the withholding rate as follows:

   The rate of withholdings equals the sum of: 14% of basic pension plus 55% of other income up to the free area (presently $102 per fortnight) and 27.5% of income over the income free area.

2. Mr Price told the Tribunal that his work history had included 10 years as a customer services manager.  He received a Disability Support Pension ("DSP") and Mrs Price a Wife's Pension respectively.  The Applicants both had worked casually for the Australian Jockey Club.  During the period of the Olympics, from about 3 September to 31 October 2000, they had both worked as volunteers and had not had time to work in paid employment.  

3. In response to questions from the Tribunal, Mrs Price told the Tribunal that she worked on an on-call basis on race meeting days for the Australian Jockey Club, that usually involved five and a half hours at about $13 per hour.  The Tribunal was told that it was unusual for the Australian Jockey Club to have more than two meetings a fortnight.  There was no certainty as to when or how long Mrs Price might work or what she would earn.

4. The Tribunal considered a Financial Information Form dated 7 February 2000, (T7) lodged by Mr Price with the Respondent, and also the oral evidence of Mr Price.  Under cross-examination, Mr Price told the Tribunal he took care of the finances for their household and that their living expenses and debts were:

   Per fortnight $
   Rent  145.50
   Groceries  85.00
   Chemist  30.00
   Clothing  24.00
   Shoes/casual clothes  20.00
   Entertainment  18.00
   Butcher  25.00
   Electricity  33.00
   Telephone  35.00
   Public Transport  30.00
   Credit Union debt  56.00
   NSW Housing Commission debt  50.00
     $551.50         

5. The credit union debt was about $600 which was being paid at the rate of $50 a fortnight and the debt for arrears of rent to the NSW Housing Commission of approximately $700 which was being paid at the rate of $50 a fortnight.  They had debts the subject of the present proceedings, which were $2,224.80 and $2,284.90 respectively (Exhibit R2).  Mr Price maintained that the requirement to repay the payments to the Respondent at $20 per fortnight each for himself and Mrs Price made it "hard to get by on" when his wife did not work.  It also did not take into account those unexpected incidents such as requirement to pay for a sleep study (Exhibit A2).  He argued that the withholdings should be reduced to $15.00 per fortnight per person for 12 months without review, giving them the opportunity to pay debts other than that of the Respondent, and then reviewed once they were back on their feet.  Those debts would, at the evidenced rate of repayment, be paid by about June 2001.  Mr Price also told the Tribunal he had made enquiries concerning a loan to consolidate their debts however his credit union would not agree to lend them money.

6. On behalf of the Respondent, Ms Buckley noted that as at 24 November 2000. The Applicants were each being paid $331.70 per fortnight pension and Mrs Price had advised she had casual earnings of $193.00 in the previous four weeks. 

7. Ms Buckley contended that the merits of the Applicants' circumstances had been considered from time to time.  Discretion had been applied to set the amount of the withholdings at an amount which was not the maximum but an amount which the Applicants were able to pay from time to time, as referred in the schedule of repayments (Exhibit R2).  Withholdings of $42.70 per fortnight each were determined not to cause undue financial hardship and noted that the SSAT considered those reductions appropriate in the Applicant's circumstances at the time.

8. In the Respondent's Statement of Facts and Contentions, reference was made to Farmer and Department of Social Security (1993) 31 ALD 262. In that case repayments were not set at the "maximum rate sustainable by the applicant (s) and certainly not at such a rate as to unreasonably reduce (their) circumstances to utter misery".    It was also asserted that the Applicants' circumstances were not straightened by withholdings.

9. The Tribunal considered that the Applicants were expending their pension and casual earnt income on their living expenses and debts.  Mrs Price's casual work and earnings were variable. Mr Price doubted they would be able to obtain a loan to consolidate their debts.  At the SSAT and during these present proceedings, evidence was given of unexpected medical bills.  Mr Price's submissions on behalf of himself and Mrs Price were that they were having difficulty managing financially.

10. Having given consideration to the financial and other circumstances, the amount of the debts to the Respondent, and the inability to obtain credit or meet unexpected bills, the Tribunal considers that it would be constructive to allow the Applicants some time to pay off their debts other than the debt to the Respondent, before withholdings of more than $15.00 per fortnight from each of the Applicants' pension payments. 

11. Accordingly the Tribunal sets aside the decision under review and in substitution therefor decides the rate of withholdings for the remainder of the debts owed to the Respondent is to be reduced to $15.00 per fortnight from each of the Applicants' pension payments, with effect from the first pension pay day after publication of this decision, and this rate continue until their other debts are paid, or on application by the Applicants in the event of unforseen contingencies.

    I certify that the 19 preceding paragraphs are a true copy of the reasons for the decision herein of Ms J Shead, Member.

    Signed:         .....................................................................................
      Associate

    Date/s of Hearing  29 November 2000
    Date of Decision  7 May 2001        
    Solicitor for the Applicant         Self-represented
    Solicitor for the Respondent    Ms M Buckley