Priestley and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2011] AATA 185
•22 March 2011
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2011] AATA 185
ADMINISTRATIVE APPEALS TRIBUNAL )
) Nos 2010/3320 and
GENERAL ADMINISTRATIVE DIVISION ) 2010/3321
Re DAVID PRIESTLEY AND BRENDA PRIESTLEY Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Deputy President D G Jarvis Date22 March 2011
PlaceAdelaide
Decision The tribunal sets aside the decisions under review, and remits the matter to the respondent for reconsideration in accordance with the directions of the tribunal as set out in its reasons for this decision.
D G Jarvis
...[Signed]…
Deputy President
CATCHWORDS
SOCIAL SECURITY - Pension - income earned from casual employment as an electoral official on polling day – attribution of income - determination of period over which income taken to have been earned - policy guide not followed - decisions under review set aside.
Social Security Act 1991 (Cth), ss 1064, 1073A and 1073B
Social Security (Administration) Act 1999 (Cth), s 43
Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009 (Cth), Schedule 10, clause 146(5)
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634
Re Secretary, Department of Social Security and Moroney and Anor (1998) 52 ALD 655
Secretary, Department of Family and Communities Services v Rolley (2000) 175 ALR 4
Shi v Migration Agents Registration Authority (2008) 235 CLR 286
D.C. Pearce and R.S. Geddes, Statutory Interpretation in Australia, (6th Edition, LexisNexis Butterworths, 2006)
REASONS FOR DECISION
22 March 2011 Deputy President D G Jarvis 1. The applicants, David and Brenda Priestley, were at all material times age pensioners. They were employed as polling officials on a casual basis by the Electoral Commission of South Australia at the State election held on 20 March 2010. They each received a payment of $382.85, which included a meal allowance of $14.85.
2. Their age pensions were calculated in accordance with the rate calculator at the end of s 1064 of the Social Security Act 1991 (Cth) (SS Act).
3. From 20 September 2009 there was a one-off increase in the rate of pensions, including the age pension, as well as an indexation increase. In addition, changes were made to the method by which the rate of certain social security pension payments, including the age pension, was to be calculated. These changes were made by the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009 (Cth) (the 2009 Amending Act). One of the changes related to the amount by which employment income affected the rate of pension payable; income over a statutory “free” area reduced the pension rate by 50 cents in the dollar, rather than by 40 cents in the dollar as had previously been the case.
4. The 2009 Amending Act included transitional provisions, which were intended to protect the position of existing pensioners who were receiving a pension, including the age pension, prior to 20 September 2009. It required pensions to be calculated by using both the new method (to produce the new rate of pension) and a transitional rate method. If the new rate of pension was higher than the transitional rate, from that time onwards, the new rate would apply instead of the transitional rate.
5. Mr and Mrs Priestley’s age pension payment rates were calculated using both the new method and the transitional rate method in respect of the fortnightly instalment period 13 to 26 March 2010, which included the day of the State election. As a result of the manner in which Centrelink attributed their earnings from the Electoral Commission, the new method produced a slighter higher rate of pension for that instalment period, and in accordance with the 2009 Amending Act, the new rate method has been used since then to assess their pension.
6. Mr and Mrs Priestley applied for review of the decisions made to assess their new rate of pension, and ultimately the Social Security Appeals Tribunals (SSAT) affirmed Centrelink’s decisions. They have applied to this tribunal for review of the decision of the SSAT.
Issues before the Tribunal
7. The issue before the Tribunal is whether Mr and Mrs Priestley’s age pension should continue to be calculated at the transitional rate, and this in turn involves determining whether their earnings with the Electoral Commission were correctly attributed to each of the days in the subject instalment period (which included the date of the State election) by being divided equally between those days.
8. It is also necessary to determine the relevance of certain preparatory work which Mr and Mrs Priestley were required to do by virtue of certain documents they received from the Electoral Commission during the fortnightly instalment period that preceded the subject instalment period.
Conditions of employment by the Electoral Commission
9. The section 37 documents, exhibit R1, include a copy of an “Offer of Temporary Employment and Employee Information” booklet sent to Mr and Mrs Priestley. They accepted the Offer of Employment in December 2009. Section 3 of the Offer is headed “Terms and Conditions of Employment”. This makes it clear that Mr and Mrs Priestley were employed on a casual basis, and provision is made for the hours of employment and the manner of paying wages. A clause headed “Remuneration” provides that “[a]ll polling officials required to work in polling places are paid a fixed fee for polling day ...”. The clause goes on to say that payment, subject to an exception not relevant for present purposes, includes a meal allowance. There is a requirement for polling booth managers and certain other officials to attend a training session as a condition of employment, and that the remuneration payable to such officers includes an allowance for training, but this clause does not apply to Mr and Mrs Priestley.
10. Mr and Mrs Priestley gave evidence that on 1 March 2010, they received a polling booth staff manual from the Electoral Commission, and a home workbook. The introduction to the manual includes the following statement:
“It is recognised that many staff are engaged in the conduct of both State and Federal elections where legislative procedures are not always the same. To assist you to understand the legislation and procedures, you must read this manual carefully in conjunction with your home workbook exercises which you should take with you to your assigned booth on polling day. If, after reading this manual, you remain uncertain about specific procedures, contact your Polling Booth Manager or Returning Officer.” (exhibit R1, T3, page 32)
The manual contains some 63 pages of information relevant to the performance of the duties of polling officials.
11. The workbooks contain a series of questions relating to information in the manual, and are designed to reinforce the understanding of employees of their responsibilities and specific duties as polling officials. The introduction to the home workbooks includes the following paragraph:
“Please read the manual thoroughly, before attempting to answer the questions in this workbook. Included in your remuneration fee is an allowance for the time taken to read the manual and answer the Home Workbook questions. (emphasis added)
Completed workbooks will be checked on polling day and failure to complete it may jeopardise your future employment as a polling official.” (exhibit R1, T3, page 34)
The introduction then contained a request to attempt to answer all the workbook questions in Part 1 before checking the answers in Part 2 of the workbook, and if anything was unclear, to make a note and discuss or clarify the points with the polling booth manager. The introduction concluded with a request to staff to bring the completed workbook and their polling booth staff manual with them on polling day.
12. Mr and Mrs Priestley said that they duly read the manual and completed their home workbooks. They handed the completed workbooks to the polling booth manager first thing on polling day, and at the end of the day, the manager returned the books to them. They were unable to say whether the polling booth manager checked their answers to the questions in the workbooks.
13. Mrs Priestley was clear in her recollection that she partially completed her home workbook prior to the pension instalment ending on 12 March 2010, but she was not sure how much time she spent on the workbook during that period. Mr Priestley in his evidence said at one stage that he could not say whether he did all or any of the preparatory work during the preceding pension instalment period. He later said he thought he had done at least some work during that period, but was also unable to say how much time he spent on the preparatory work during that period. They estimated that answering all of the questions in the workbook would have taken between two and a half and three and a half hours. This presumably included time spent in reading the manual.
Legislative Provisions
14. Under s 43(1) of the Social Security (Administration) Act 1999 (Cth) (Administration Act), a social security periodic payment (which by a chain of definitions includes the age pension) is to be paid in arrears and by instalments relating to such periods (not exceeding 14 days) as the Secretary determines. Under s 43(2), instalments of a social security periodic payment are to be paid at such times as the Secretary determines. It is common ground that the Secretary has determined that the age pension is to be paid in arrears by instalments of 14 days, and that the instalment period that includes 20 March 2010 ended on 26 March 2010. Section 43(3) provides for the method of calculating the periodic payment of social security payments. It provides as follows:
“43(3)Subject to subsection (4), the amount that is to be paid to a person as an instalment of a social security periodic payment in relation to a period is the total of the amounts of the social security periodic payment (calculated by reference to the daily rate of payment applicable to each day) payable to the person for days in that period on which the social security periodic payment was payable to the person.”
15. Section 55(a) of the SS Act provides relevantly that a person’s age pension is worked out by using the Rate Calculator A at the end of s 1064. Section 1064-A1 provides in effect that the rate of pension is a daily rate, and that the rate is worked out by dividing the annual rate calculated according to Rate Calculator A by 364, and that fortnightly rates are provided for information only. The section then includes a Method Statement. This provides in Step 1 for working out the person’s maximum basic rate using Module B, and subsequent steps refer to possible additions to the maximum basic rate. Step 5 entails applying the “ordinary income test” using Module E to work out the income reduction. Step 9 involves working out the reduction for assets, but it is common ground that that step is not relevant in the present proceedings.
16. Section 1064-E1 provides for how to work out the effect of a person’s “ordinary income” on the person’s maximum payment rate. Step 1 of the Method Statement is to “(w)ork out the amount of the person’s ordinary income on a yearly basis”. Subsequent steps provide for further adjustments which are not relevant to a determination of the matters in issue in these proceedings. If a person is a member of a couple, the couples’ ordinary incomes (on a yearly basis) are added together, and the resulting total is divided by two to work out the amount of each person’s ordinary income for the purposes of Module E (s 1064-E2).
17. The new rules for calculating the rate of age pension provide for a work bonus which results in a reduction of 50% of the income concession amount for an instalment period where a person’s employment income for an instalment period is greater than or equal to the income concession amount for that period, or 50% of the person’s actual employment income for that period if his or her employment income for that period is less than the income concession amount for that period (s 1073AA(2) and (3)).
18. The transitional arrangements in the 2009 Amending Act are provided for in Schedule 10, which includes clause 146. This contains transitional provision for rates of social security pensions on and after 20 September 2009. By virtue of clause 146(1)(a)(i) the transitional provision applies to the computation of age pensions. Clause 146(3) provides for a provisional annual rate of pension, which is taken to be the amount worked out under s 146(4). Under clause 146(3), a comparison is to be made between the new rate of pension produced under the new rules and the transitional rate that would have applied if the SS Act had not been amended. However, clause 146(5) provides that clause 146(3) “does not apply again for working out the rate of a social security pension of the person for a day after the relevant day” if the transitional rate worked out under clause 146(4) is less than or equal to the new rate. Clause 146 makes no provision for reinstating the transitional rate if on a subsequent day, due to changes in employment income, the transitional rate becomes more than the new rate.
19. A new Division 1AA of Part 3.10 of Chapter 3 of the SS Act, entitled “Employment Attribution Rules”, was included in the SS Act by the Family and Community Services Legislation Amendment (Australians Working Together and other 2001 Budget Measures) Act 2003 (Cth) (the 2003 Amendments). This new Division comprises ss 1073A, 1073B and 1073C. These sections contain rules for determining the period to which employment income should be attributed in order to calculate the rate of pension. When they were first enacted, the sections did not apply to people of age pension age, but that is no longer the position following amendments to the SS Act in 2009.
20. Section 1073A of the SS Act provides for the attribution by the Secretary of lump sum employment income, in certain circumstances, over a period not exceeding 52 weeks, in the discretion of the Secretary. It provides as follows:
“1073A Employment income attribution over a period for social security pensioners
(1) Employment income:
(a) that is a lump sum amount either:
(i) in respect of a period greater than a fortnight; or
(ii)resulting from remunerative work although not in respect of any particular period; and
(b)that is earned, derived or received, or is taken to have been earned, derived or received, by a person:
(i)who is receiving a social security pension; and
(ii)whose rate of payment of that pension is worked out with regard to the income test module of a rate calculator in this Chapter;
is taken to have been earned, derived or received over such period, not exceeding 52 weeks, as the Secretary determines.
(2)The person’s employment income for the period determined by the Secretary is to be reduced to a fortnightly rate rounded to the nearest cent (rounding 0.5 cents downwards).”
21. Section 1073B applies to employment income earned, derived or received, or taken to have been earned, derived or received, during the whole or a part of a particular instalment period of a person. Section 1073C provides for how to work out the person’s come, when s 1073B applies, on a fortnightly or yearly basis. These sections provide as follows:
“1073B Daily attribution of employment income
(1) If:
(a)a person is receiving a social security pension or a social security benefit; and
(b)the person’s rate of payment of the pension or benefit is worked out with regard to the income test module of a rate calculator in this Chapter; and
(d)the person earns, derives or receives, or is taken, either by virtue of the operation of section 1073A or any other provision of this Act, to earn, derive or receive, employment income during the whole or a part of a particular instalment period of the person;
the person is taken to earn, derive or receive, on each day in that instalment period, an amount of employment income worked out by dividing the total amount of the employment income referred to in paragraph (d) by the number of days in the period.
(2)If a person has reached pension age and is receiving a social security benefit, subsection (1) does not apply to the person, to the extent that it relates to that benefit.
Note 1: Subsection (1) applies to a person who has not reached pension age and is receiving a social security benefit.
Note 2: For pension age see subsections 23(5A), (5B), (5C) and (5D).
1073C Fortnightly or yearly expression of attributed employment income
If, in accordance with the operation of section 1073B, a person is taken to earn, derive or receive a particular amount of employment income on each day in an instalment period:
(a)the rate of the person’s employment income on a fortnightly basis for that day may be worked out by multiplying that amount by 14; and
(b)the rate of the person’s employment income on a yearly basis for that day may be worked out by multiplying that amount by 364.”
The parties’ submissions as to the effect of the applicants’ employment income on the calculation of their age pension
22. Centrelink calculated the applicants’ age pension during the subject instalment period by reference to both the transitional rules and the new rules, as required by clause 146 of the transitional provisions, and in each case did so by reference to the Guide to Social Security Law (the Guide) issued by the Department of Families, Housing, Community Services and Indigenous Affairs. Centrelink attributed Mr and Mrs Priestley’s income from the Electoral Commission to each day of the instalment period in which it was received, by dividing the total amount received by the number of days in that instalment period. It did so in reliance upon s 1073B of the SS Act (see exhibit R1, T6, page 52). It was submitted in the present proceedings on behalf of the Secretary that this was the correct approach.
23. The Secretary also relied upon an extract from paragraph 4.3.3.25 of the Guide (the Paragraph 4.3.3.25 Extract). This extract provides for the assessment of employment income for pensioners over age pension age from 20 September 2009, in the following terms:
“Assessment of employment income for pensioners over age pension age from 20/09/2009
Persons over age pension age receiving a social security pension have their employment income (1.1.E.102) assessed in the instalment period in which it is earned, derived or received. The fortnightly amount of employment income is spread evenly across all days in the instalment period, regardless of which days or the number of days worked. Because a pension rate is calculated as an annual rate, the fortnightly rate of employment income is converted to an annual rate for input to the rate calculation process.
If there is access to the work bonus the rate of ordinary income will be adjusted.”
This resulted in the employment income earned in respect of Mr and Mrs Priestley’s work for the Electoral Commission being attributed to each day in the subject instalment period. This came to a combined sum of $19,908.20 (i.e. 2 x $9,954.10) expressed as an annual amount (exhibit R2, paragraph 13).
24. In their comprehensive submissions, Mr and Mrs Priestley contend that this attribution of their income for this one-off casual employment is inappropriate and produces an unfair result, because their employment by the Electoral Commission was one-off employment and not employment on a continuing basis. As it happened, they later also worked as polling officials for the Australian Electoral Commission at the time of the federal election in August 2010, but they said, and I accept, that this was also one-off employment, and did not evidence employment on a continuing basis.
25. Mr and Mrs Priestly also contend that s 1073B of the SS Act does not apply to them, because they had reached pension age and were receiving “a social security benefit” within the meaning of s 1073B(2). However, this expression is a defined expression which is used in the SS Act to refer to various allowances, in contra distinction to the defined expression “social security pension” (see s 23(1)). The latter expression is defined to include the age pension. This contention is accordingly incorrect.
26. Mr and Mrs Priestly have made their own calculations on the basis that their employment income from the Electoral Commission should be attributed to a period of 52 weeks instead of to the instalment period in which it was earned or received. On that basis their transitional rate of pension would continue to exceed the new rate of pension.
27. In the alternative, they contend that their earnings from the Electoral Commission should be taken to relate to a period commencing on 1 March 2010 (when they received the manual and home workbook, and the Electoral Commission’s request for them to undertake preparatory work referred to in those documents). On that basis, they further contend that their earnings from the Electoral Commission should be attributed to the two pension instalment periods that included the dates from 1 to 20 March 2010; and if their earnings are attributed to each of the days in those two instalment periods, once again, the transitional rate of pension exceeds the new rate of pension. Their calculations on these two alternative bases appear in exhibit A4.
28. The Secretary does not dispute that Mr and Mrs Priestley’s transitional pension would have exceeded their new rate of pension on each of the alternative approaches they contended for, and Mr and Mrs Priestley do not dispute that on the Secretary’s approach, the new rate would exceed the transitional rate.
Consideration
29. It is necessary under Step 1 of Module E of s 1064-E1 to work out the amount of the ordinary income on a yearly basis of Mr and Mrs Priestley. This in turn entails determining the period to which their employment income from the Electoral Commission should be attributed, having regard to ss 1073A, 1073B and 1073C of the SS Act.
30. The SS Act is complex legislation that has been amended on many occasions in order to ensure that appropriate levels of support are provided to those in need in the community, and also to give effect to the many changes in government policy that have been introduced since the legislation was first enacted. Some of the amendments to the SS Act are consequential upon amendments to other legislation. As a result, the legislation is complex, and it is sometimes difficult to find a consistent theme in the structure or drafting of the Act. I approach the task of construing the above provisions dealing with the employment income attribution rules in accordance with the following observations of Brennan CJ, Dawson, Toohey and Gummow JJ in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408:
“... the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses ‘context’ in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned [being reports of law reform bodies], one may discern the statute was intended to remedy ...”.
31. Many subsequent authorities where courts have referred to extrinsic materials are reviewed in D.C. Pearce and R.S. Geddes, Statutory Interpretation in Australia, (6th Edition, LexisNexis Butterworths, 2006) at [3.7] and [3.8]. As the learned authors point out at page 74, there is a great deal of overlap between the more limited inquiry as to the mischief which the legislation was designed to remedy, and the purpose or object of the legislation.
32. Quite apart from the guidance provided by the High Court in CIC Insurance Ltd and in other relevant authorities, I also take into account the provisions of ss 15AA and 15AB of the Acts Interpretation Act 1901 (Cth). Section 15AA(1) provides in effect that a construction of a provision of an Act that would promote the purpose or object underlying the Act is to be preferred to a construction that would not promote that purpose or object. Under s 15AB(1)(a), if any extrinsic material is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act.
33. In the present matter it is helpful to have regard to the Explanatory Memorandum in respect of the Bill to introduce the 2003 amendments. The Summary of the Explanatory Memorandum commenced:
“From its introduction on 28 April 2003, the working credit will encourage workforce age income support customers to take up full-time, substantial part-time or irregular casual work by allowing them to keep more of their income support payments while working.”
34. The Explanatory Memorandum went on to refer in detail to the new employment income attribution rules. It first referred to s 1073B, and stated:
“The main purpose of the new division is to establish the rule that any actual employment income earned, derived or received during a person’s instalment period (usually a fortnight) will be spread evenly over the period and be subject to the working credit and income test rules for each day in the period, regardless of the actual days the person worked. This is provided by new section 1073B.”
It was then explained that the effect of this new rule was to spread employment income evenly over each day in an instalment period, and that this was “essentially a beneficial thing for the customer”.
35. The Explanatory Memorandum then discussed the proposed new section 1073A and stated:
“Under current case law, ordinary income for pensioners of any age may be spread over appropriate periods to reach a reasonable representation of the person’s yearly income, which is required for their rate calculation process. However, now that employment income is being singled out from other types of ordinary income by new section 1073B, that spreading effect would be lost for employment income if a further new rule were not provided.
This is because the existing pension spreading arrangements are mostly based on case law – there are few provisions in the Social Security Act that allow the person’s income to be taken to have been earned, derived or received over any particular period. Therefore, amounts that should not be taken into account only in the instalment period of receipt, for example, would be given just that treatment by new section 1073B. Accordingly, new section 1073A provides a specific rule to allow, in certain circumstances, pensioners’ employment income to be spread over such period up to 52 weeks as the Secretary determines. Only lump sums that either represent a period greater than a fortnight or that do not represent a period at all but are paid for a result from remunerative work (such as royalties or commissions) may be spread in this way. This provision reflects the existing policy rules for spreading contract-related lump sums over the period of the contract, or spreading commissions and other result-related lump sums over 12 months. It is not the intention of the provision to spread casual earnings over a period greater than a fortnight.”
Application of the employment attribution provisions to the applicants’ employment income
36. In order to determine whether Mr and Mrs Priestley’s employment income was of the kind provided for in s 1073A(1), it is necessary to consider the communications between them and the Electoral Commission.
37. As mentioned above, the Offer of Employment provided that Mr and Mrs Priestley were to be paid “a fixed fee for polling day”, but the manual and the home workbook, which Mr and Mrs Priestly received later, required them to read the manual and to complete the home workbook exercises, and also provided that their remuneration fee included an allowance for the time taken to undertake these preparatory tasks.
38. By sending them the manual and workbook, the Electoral Commission made it clear that they expected Mr and Mrs Priestley to undertake the additional preparatory work, in return for the same lump sum payment, between the date when they received the further documents (1 March 2010) and the date of the election (20 March 2010). It may be that the further documents should be interpreted as a proposal to vary the contract constituted by the acceptance in December 2009 of the Offer of Employment, and that Mr and Mrs Priestley’s actions in completing the workbook and handing it in first thing on election day evidenced their acceptance of the varied terms. In order to determine whether on a strict legal analysis these steps resulted in a variation of the original contract a question would also arise as to whether the Electoral Commission could be said to have provided any consideration for the proposed variation of the contract. This in turn would necessitate considering whether the further documents might have assisted Mr and Mrs Priestley to comply with the performance assessment clause in the Offer of Employment, and (if that assistance could be said to have constituted consideration) whether that was adequate consideration. However, having regard to the work which Mr and Mrs Priestley in fact did in return for their remuneration, I do not think it necessary to decide whether the legal effect of the parties’ actions was to vary the original contract made by the parties when Mr and Mrs Priestley accepted the Offer of Employment.
39. It is clear that Mr and Mrs Priestley received a lump sum payment from the Electoral Commission. As far as Mrs Priestley is concerned, her income from the Electoral Commission was “in respect of a period greater than a fortnight” within the meaning of s 1073A(1)(a)(i), because she was clear in her recollection that she did some of the preparatory work prior to the fortnightly instalment period of 13 to 26 March 2010. I further consider that the lump sum received by both Mr and Mrs Priestley resulted from remunerative work that was not in respect of any particular period, in that although their duties as polling officials were carried out on the day of the election, they were able to do the necessary preparatory work at any time between the date when they received the instruction manual and workbook and the date of the election. In these circumstances, I consider that the employment income attribution rule provided for in s 1073A applies, and (standing in the shoes of the Secretary) I have a discretion to deem the income from the Electoral Commission to have been earned, derived or received over such a period, not exceeding 52 weeks, as I determine.
40. In exercising the discretion conferred by s 1073A(1), I am able to do so with the benefit of hindsight. The proceedings before me were heard almost one year after the date of the last State election. Mr and Mrs Priestley said that they earned income from the Australian Electoral Commission when they acted as polling officials on the day of the last federal election. There is no evidence before me that they received any other employment income between 1 March 2010 and the date of the hearing. Certainly there is no evidence that they were receiving any form of regular employment income.
41. The issue of how to extrapolate income from casual employment for the purposes of determining ordinary income on a yearly basis was considered in Secretary, Department of Family and Communities Services v Rolley (2000) 175 ALR 4, where a pensioner received income from casual employment over a 16-week period. The Department of Family and Community Services re-assessed his pension on the basis that for the purposes of s 1064-E1, his income was to be extrapolated to an annual rate. A Full Court of the Federal Court held that the determination of whether a payment received is to be treated as recurring income from which an annual rate may be extrapolated requires an evaluative judgment as to whether or not the income is to be treated as recurring income from which an annual rate may be extrapolated. The Court (French J (as he then was) and Kiefel and Dowsett JJ) said at [20]:
“So a person in regular employment, albeit it may be part-time, could expect to have income received from that employment dealt with on the assumption that earnings at the current rate would continue and be extrapolated by multiplication to an annual rate. On the other hand a one off payment for work unlikely to be repeated could be dealt with on the basis that it reflected the total income from employment likely to be derived in any period of 12 months.”
The Court added, at [21], that the circumstances of the particular case would show how to treat earnings from intermittent employment. It then went on to hold that the approach taken by this tribunal on the facts of that case of not extrapolating the income over a 12 month period, but treating it as income earned over a closed period of 16 weeks, was correct.
42. A similar approach was adopted in an earlier case in this tribunal, namely Re Secretary, Department of Social Security and Moroney and Anor (1998) 52 ALD 655, where an age pensioner was paid for performing the role of Santa Claus over a period of four weeks, and the tribunal, with the benefit of hindsight, treated the amount of the earnings for that four-week period as constituting his total income for the year, and used that total to calculate his income on a yearly basis.
43. The present case is stronger on its facts than the facts of Rolley and Moroney, because the payments by the Electoral Commission to Mr and Mrs Priestley were clearly isolated one-off payments. If those cases are applied to the present circumstances it would follow that (with the benefit of hindsight) the total of the payments from the Electoral Commission, together with the further payments received in respect of the federal election in August 2010, should be taken to be Mr and Mrs Priestley’s total annual income, and their income on a yearly basis, for the purposes of Step 1 of Module E, and that the transitional rate of pension should be calculated on that basis. The above cases were decided before the enactment in 2003 of the employment attribution rules. Sections 1073B and 1073C have the effect, except in the circumstances provided for in s 1073A(1), of attributing employment income from casual employment equally between the number of days in the instalment period in which it is earned, derived or received. Those sections are inconsistent with the application of the flexible discretion that was available in relation to casual earnings under the court’s approach in Rolley (supra). However, as mentioned above, 1073A applies in the circumstances of this case.
44. The nature of Mr and Mrs Priestley’s earnings in the present matter were not of the kind referred to in the Explanatory Memorandum insofar as it related to s 1073A; that is, their earnings were not royalties or commissions which could logically be spread out over 12 months. However, the Electoral Commission paid Mr and Mrs Priestley a lump sum for their preparatory work and their election day work, and effectively gave them a period of 20 days (counting the day of receipt of the manual and workbook and the day of the election) to do this work. They in fact did the work during this period. In these circumstances it would be consistent with the approach in the Explanatory Memorandum for their earnings to be attributed to this period, and to be spread equally over this period of 20 days in order to calculate their income on a yearly basis as required by Step 1 of the Method Statement in s 1064-E1. On this basis, it is common ground that their transitional rate of pension would exceed the new rate.
45. However, a more appropriate exercise of my discretion would be to attribute Mr and Mrs Priestley’s lump sum earnings over a longer period. This would be consistent with the tribunal taking an evaluative approach, as approved by the Full Federal Court in Rolley (supra). It would also entail taking into account, with hindsight, relevant facts and circumstances known as at the date of my decision, in accordance with established principles of good public administration (see Shi v Migration Agents Registration Authority (2008) 235 CLR 286 at [41]). If the earnings from the Electoral Commission are attributed to a greater period than 20 days, then once again the transitional rate of pension would exceed the new rate of pension, as appears from exhibit A4.
Relevance of Department Guide
46. In reaching my above conclusions, I have not overlooked the Paragraph 4.3.3.25 Extract, which (as mentioned in paragraph 23 above) Centrelink applied in order to attribute the earnings from the Electoral Commission to each day of the fortnightly instalment period in respect of which the earnings were received. Centrelink then converted this fortnightly rate of income to an annual rate, in order to calculate the transitional rate of pension.
47. In Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634, the then President of this tribunal, Brennan J (as he then was), referred to the importance of Ministerial policy in guiding the exercise of discretion by decision-makers, including matters that come before this tribunal. In that case, the matter in issue was whether a deportation order should be made. His Honour pointed out (at pages 640 and 644) that Ministerial policy can be an aid to consistency among tribunal decisions, and to consistency between decisions of the tribunal and those of the Minister, thus enhancing “the sense of satisfaction with the fairness and continuity of the administrative process.” He continued, at page 645:
“When the Tribunal is reviewing the exercise of a discretionary power reposed in a Minister, and the Minister has adopted a general policy to guide him in the exercise of the power, the Tribunal will ordinarily apply that policy in reviewing the decision, unless the policy is unlawful or unless its application tends to produce an unjust decision in the circumstances of the particular case. Where the policy would ordinarily be applied, an argument against the policy itself or against its application in the particular case will be considered, but cogent reasons will have to be shown against its application, especially if the policy is shown to have been exposed to parliamentary scrutiny.”
48. I consider that the present matter is one where there are cogent reasons not to apply the Paragraph 4.3.3.25 Extract. This deals generally with the assessment of employment income received after 20 September 2009, and does not expressly contemplate the situation that arose in the present matter. Its prescriptive provisions do not appear to take into account the circumstances in which the attribution of employment income should be determined pursuant to s 1073A of the SS Act.
49. Further, I think that the application of the Paragraph 4.3.3.25 Extract would produce an unjust decision in the circumstances of the present case. In applying the new income attribution provisions, it is appropriate in my view to take into account the following statement that was included in the Explanatory Memorandum in respect of the 2009 Amending Act:
“Transitional arrangements will apply for existing pensioners affected by the new income test changes to ensure current payment rates are maintained in real terms, and that those pensioners also benefit from a pension increase.”
The Secretary’s contention that the Paragraph 4.3.3.25 Extract should be applied in the present case would result in Mr and Mrs Priestley being worse off as a result of their very modest earnings from their employment by the Electoral Commission, notwithstanding that all pensioners were to receive a one-off increase in their pension from 20 September 2009 and the introduction of a new work bonus. That result would be inconsistent with the purpose of the 2009 Amending Act, as revealed by the Explanatory Memorandum, and constitutes a further cogent reason for not applying the Paragraph 4.3.3.25 Extract in the circumstances of this case.
50. In his submissions, Mr Priestley relied upon paragraph 4.3.3.30 of the Guide. That paragraph relates to employment income received prior to 20 September 2009, and does not apply in this case. It does, however, provide helpful guidance on the application of the employment income attribution rules provided for in ss 1073A-1073C of the SS Act, by differentiating between one-off employment income, and earnings at a regular constant rate, and variable income over a period. The employment income attribution rules on ss 1073A-1073C were not amended by the 2009 Amending Act, and I do not understand why paragraph 4.3.3.30 was confined to pre-20 September 2009 income.
51. It may be that lump sum earnings earned, derived or received in circumstances to which s 1073A applies were intended to be deal with by paragraph 4.3.3.20 of the Guide. This deals variously with the treatment of income from a contract of services, according to whether the income was received periodically or as a single lump sum. These provisions are not expressed to apply only to income received prior to 20 September 2009. The Guide provides that where income is received as a lump sum, the income is to be “treated as a remunerative lump sum and held as income for up to 52 weeks. The period covered by the payment will be allocated to appropriate instalment periods and spread evenly throughout the instalment periods.” I think that this provision of the Guide is more appropriate to the facts of the present case than the Paragraph 4.3.3.25 Extract. That would have the effect that Mr and Mrs Priestley’s lump sum earnings would be spread out over at least two, and up to 26, instalment periods, and not 20 days.
52. In summary, I have concluded for the above reasons that the attribution rule in s 1073A of the SS Act applies to Mr and Mrs Priestley’s employment income from the Electoral Commission, and that the period to which their income from that source should be attributed is not less than 20 days. In the circumstances of this case it is not necessary for me to quantify what I think would be a more appropriate longer period of attribution, since if the minimum period of 20 days is used as the basis of calculation, the transitional rate of pension in respect of the subject instalment period from 13 to 20 March 2010 would exceed the new rate of pension. I accordingly direct that the rate of Mr and Mrs Priestley’s age pension be recalculated by the respondent on that basis for the subject instalment period, and continuing thereafter until any changed circumstances result in the new rate of pension exceeding the transitional rate.
Decision
53. The tribunal sets aside the decisions under review, and remits the matter to the respondent for reconsideration in accordance with the directions of the tribunal, as set out in its reasons for this decision.
I certify that the 53 preceding paragraphs are a
true copy of the reasons for the decision herein
of Deputy President D G Jarvis…[Signed]…
AssociateDate/s of Hearing 8 February 2011
Date of Decision 22 March 2011Date of receipt of
final submissions 18 March 2011
Applicants Appeared in person
Advocate for the Respondent Ms L Giaretto
Solicitor for the Respondent Centrelink Advocacy Branch
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