Re Duncan And Chief Executive Officer of Centrelink

[2011] AATA 660

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 660

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2011/0011

GENERAL ADMNISTRATIVE DIVISION		)
Re		Ian Duncan

Applicant

And Chief Executive Officer of Centrelink

Respondent

DECISION

Tribunal Deputy President Nicholson

Date23 September 2011  

PlacePerth

Decision

1.    The decision under review be set aside and the following decision substituted.

2. The applicant be entitled to access to the Debt Recovery Documents being documents 107.11320, 107.11400 and document 107.11420 save with respect to the following in two of those documents which are matters exempt pursuant to the application of s 40(1)(d) of the Freedom of Information Act 1982 (Cth), namely:

·     Re document 107.11320 – Assessing customer’s financial circumstances for debt recovery purposes.

·     On the first page in the paragraph commencing ‘Documentary evidence’ – all sentences in the paragraph after the sentence in which those words appear.

·     On the third to fourth page: under the heading ‘determine the excess income’ – the whole of what follows down to and including the words ‘Detail steps.’

·     On the fourth page: the whole of the response under the heading ‘Determine the excess income.’

·     On the fifth page: in step 1: the words ‘Only if…to income or assets.’

·     On the eighth page: in step 10 and 11: the reference to the amount of excess income.

·     On the eighth page: in step 11: the periods for recovery of debt and the penultimate sentence reading ‘Centrelink will generally…paid to Centrelink.’

·     On the ninth page: in step 13: the whole of the response.

·     On the ninth page: in step 14: the amount of the excess.

·     On the thirteenth page: in the description of withholdings: the two sentences referring to debt balance.

·     On the thirteenth page: in the description for cash: the three sentences relating to debt balance.

·     Document 107.11420 – Reviewing a withholding arrangement for recovering a debt.

·     On the fourth page as the response to the question re Foreign Pension Data Exchange: the whole of the answer apart from the word ‘Yes.’

·     On the seventh page in question 4: the identification of the amount of rate for recovery per fortnight.

....(sgd) R Nicholson...........

Deputy President  

CATCHWORDS

FREEDOM OF INFORMATION – debt recovery documents – whether  respondent entitled to claim exemption of whole of each document – whether respondent entitled to claim exemption of such portions of those documents as identify minimum amount and minimum period  acceptable under streamlined withholding/cash arrangements.

Freedom of Information Act 1982 (Cth).

REASONS FOR DECISION

23 September 2011   Deputy President Nicholson            

1.It is common ground that the applicant seeks review of a deemed decision made on 30 July 2010 by the respondent in response to a request made and numbered 2010/133309 refusing access under s 24(1)(a) of the Freedom of Information Act 1982 (Cth) (the FOI Act) so far as that decision applies to what are described as the Debt Recovery Documents.

Background to decision under review

2. The background to this decision and its relevant subsequent treatment are set out in the submissions of the respondent as follows:

“On 8 March 2010, Mr Duncan (the Applicant) sent a facsimile to Ms Colleen Kinging of Centrelink (the Respondent) seeking access under section 9 of the Freedom of Information Act 1982 (Cth) (the FOI Act) to copies of:

1.1.       “the first 25 pages of the guidelines used by Centrelink staff, including n determining “a suitable instalment amount”, and “the period over which the debt is to be repaid”;

1.2.       “the guidelines used by Centrelink staff in determining what constitutes “hardship” and “sufficiently convincing” for the purposes of allowing repayment by instalment”;

1.3.       “the guidelines used by you in determining what “details” are forwarded to Dun & Bradstreet”;

1.4.       “your delegation to forward my details to Dun & Bradstreet”;

1.5.       “the guidelines used by Centrelink staff in determining that “09.03.10” is the date on which my details will be forwarded to Dun & Bradstreet”;

1.6.       “the evidence that they only “act as agents” and make no decision what so ever in relation to debt recovery”;

1.7.       “the first 25 pages of any Centrelink guidelines used by Dun & Bradstreet staff ”in making decisions or recommendations, under or for the purposes of an enactment or scheme administered by the agency, with respect to rights, privileges or benefits, or to obligations, penalties or other detriments, to which persons are or may be entitled or subject””;

1.8.       “the guidelines used by Centrelink staff in determining which debts are, and which debts are not, “repaid in full””; and

1.9.       “the guidelines Centrelink staff use to determine who is, and is not, referred to Dun & Bradstreet”.

2.        On 5 may 2010, the Respondent wrote to the Applicant acknowledging the 8 march 2010 request, providing the reference number 2010/133309 and advising that the request must be accompanied by an application fee of $30.00.

3.        On 6 July 2010, the Respondent wrote to the applicant advising that the decision-maker had decided to remit the application fee for the 2010/133309 request.

4.        On 30 July 2010, the Respondent wrote to the applicant advising that the 2010/133309 request would be considered as part of the 3010/141441 request.

5. On 4 August 2010, the applicant wrote to the Respondent asserting that the 30 July 2010 letter constituted a deemed refusal under section 24(1)(a) of the FOI Act. The applicant further requested internal review of the decision.

6.        On 2 November 2010, the Respondent wrote to the applicant advising that it considered its decision to consider the 2010/133309 request as part of the 2010/141441 request and proceeded to make a decision with respect to the 133309 request.

7.        In the 2 November 2010 decision, the decision-maker identified:

7.1.     three documents falling within the scope of paragraphs 1.1, 1.2 and 1.8 of the request, being:

7.1.1.   Centrelink e-Reference 107.11329 – Assessing customer’s financial circumstances for debt recovery;

7.1.2.   Centrelink e-Reference 107.11400 – revising cash instalment and withholding arrangements; and

7.1.3.   Centreline e-Reference 107.11420 – Reviewing a withholding arrangement for recovering a debt;

(the “Debt Recovery Documents”)

And decided to refuse to release the documents under section 40(1)(d) of the FOI Act.

7.2      two documents falling within the scope of paragraphs 1.3, 1.5 and 1.9 of the request, being:

7.2.1.   Centrelink 20Reference 107.11910 – Automatic referral of Centrelink debts to a mercantile agent; and

7.2.2.   Centrelink reference 107.11980 – Manually referring Centrelink debts to a mercantile agent;

(the “mercantile Agent Referral documents”)

And decided to release the documents to the Applicant in full;.

7.3      two documents falling within the scope of paragraph 1.4 of the request, being:

7.3.1.   Delegation of powers under the Family Assistance (Administration) Act 1999; and

7.3.2.   Delegation of powers under the Social Security (Administration) Act 1999.

(the “Delegation Documents”)

and decided to release the documents to the Applicant in full.

7.4.     no documents falling within the scope of paragraphs 1.6 and 1.7 of the request (the “Dun & Bradstreet Documents”) and decided to refuse the request under section 24A of the FOI Act.”

Evidence and cross-examination

3. The applicant appeared for himself and did not call any witnesses.  The respondent was represented and called one witness, Mr Michael Bolton, Business Manager of the Debt Operations Team (Qld, SA & NT) in the Debt Management Branch (the DMB) since 2004, the DMB forming part of the Business Integrity Division of Centrelink.

4.Mr Bolton’s evidence was given by affidavit.  His affidavit was based on his knowledge of the practices and procedures of Centrelink and information provided to him by his colleagues in the DMB which he believed to be true.

5.Mr Bolton said that the function of the DMB is to recover debts as quickly and efficiently as possible without causing real financial hardship to debtors, a function set out in par 6.7.2 of the Guide to Social Security Law (the GSSL).  In carrying out this function officers within the DMB are expected to balance the requirement to recover debts owed to the Commonwealth against the customer’s ability to repay the debt, based on their financial circumstances.  He testified that they are also expected to consider the cost effectiveness of the effort to recover, balancing the cost of investigation against the recovery outcome.  In his view officers are expected to consider the cost effectiveness of the effort to recover, balancing the cost of investigation against the recovery outcome.  They are also expected to make timely decisions about non-recovery action when, for example, a customer cannot be located.   These expectations on officers in the DMB are set out in written policy guidelines, including the three e-Reference Guides comprising the Debt Recovery Documents. 

6.Mr Bolton also testified that the Debt Recovery Documents contain instructions about minimum acceptable repayment amounts.  He described these as being part of the respondent’s streamlined procedures that were implemented to give staff greater flexibility to accept customer repayment offers, depending on how much they owed.   He said that the streamlined procedures were also implemented to improve the cost effectiveness of recovery by giving staff specific detail around what is acceptable, without the need to conduct exhaustive reviews of an individual’s financial circumstances.  In his view, the purpose of providing staff with minimal acceptable repayment guidelines is to enable streamlining of debt recovery processes, eliminating long and arduous investigations into a customer’s financial circumstances.  He said this is intended to limit the burden on a customer’s time and enable a reasonable level of cost effectiveness in the task of debt recovery.

7.In his affidavit Mr Bolton stated:

“11.     In my opinion, disclosure of the Debt Recovery Documents to the public, in particular the reference to the minimal acceptable payment amounts, would create a high risk of customers changing their behaviour to the detriment of Centrelink’s ability to recover debts as quickly and efficiently as possible.

12.      In my opinion, there is a high risk that disclosure of the Debt Recovery Documents would result in customers failing to disclose specific financial information relevant to their ability to repay their debt.

13.      In my opinion, there is also a high risk that disclosure of the Debt Recovery Documents would result in individuals rearranging their financial affairs to ensure they made only the minimum payment.

14       ….

15.      In my opinion, there is a high risk that disclosure of the Debt Recovery Documents would result in customers not taking up work opportunities to avoid moving onto a higher level of withholdings.”.

8. Mr Bolton’s evidence concluded with the statement that it is likely, if public disclosure of the Debt Recovery Documents occurred, that Centrelink would need to revise its policy by eliminating minimum acceptable guidelines and return to the arduous and time consuming task of conducting comprehensive assessments of financial circumstances, including seeking documentary evidence.

9. The applicant elected to cross-examine Mr Bolton.  The applicant was to some degree inhibited by his absence of knowledge of what questions were open to be put to the witness in cross-examination.   Nevertheless, the following evidence emerged in cross-examination.

10.The witness Mr Bolton is not confined to knowledge of Queensland, South Australia and the Northern Territory, part of his duties relating to the conduct of debt recovery nationally.  In balancing the recovery of debts against a customer’s ability to repay, an officer is actuated by the financial circumstances of which the customer has given information.  The costs of investigation are matters contained in the Debt Recovery Documents.  His opinion expressed in par 11 of his affidavit (quoted above) is founded on fact, that when customers are required to repay debts most want to repay as little as possible.   Similarly to his opinion in par 12 (also quoted above), it would be in a customer’s interest to limit the amount to be repaid.  With regard to his opinion in par 13 (see above), a customer could manipulate a statement of household expenses to ensure only excess income was in question.  With reference to his par 15 (also above), he did not know whether more of the respondent’s customers were not employed.  Inquiries into a customer’s financial circumstances were made when the amount of repayment cannot be determined.  So far as concerns the possibility of policy revision in the event of public disclosure of the Debt Recovery Documents, this would not be Mr Bolton’s decision alone and would involve consultation with other departments.

Respondent’s tender of documents

11.In a letter to the Tribunal dated 6 July 2011 the respondent tendered a copy of each of the Debt Recovery Documents. This tender was made in reliance on s 64(1A) of the FOI Act. As a consequence, it was not necessary for the respondent to seek a confidentiality order.  I propose to now open the envelope containing the documents and to have regard to them in the course of completing these reasons.

The basis of the claim for exemption

12. The basis of the claim for exemption is set out in s 40 of the FOI Act in the following terms:

(1)      Subject to subsection (2), a document is an exempt document if its disclosure under this Act would, or could reasonably be expected to:

(a) ….

(b) ….

(c)….

(d)       have a substantial adverse effect on the proper and efficient conduct of the operations of an agency; or

(e)       ….

(2)       This section does not apply to a document in respect of matter in the document the disclosure of which under this Act would, on balance, be in the public interest.

It will be necessary to consider each of the elements in this section.

13It is not disputed that a ‘substantial adverse effect’ means an effect that is real or substantial and not insubstantial or nominal: Bayliss and Department of Health and Family Services (1997) 48 ALD 443 at [47]; Wong and Department of Immigration Multicultural and Indigenous Affairs (2006) 90 ALD 154 at [80]. The effect may be caused by the cumulative disclosure of pieces of information that, in themselves, would not have that effect: Bayliss at [47]; Wong at [80].

14.The ‘conduct of the operations of an agency’ extends to the way in which an agency discharges any of its functions: Searle Australia Pty Ltd v Public Interest Advocacy Centre (1992) 36 FCR 111 at 116 approving what was said by Deputy President Hall in Re James and Australian National University (1984) 2 AAR 327 at 340-341. The functions of the respondent agency are set out in s 8 of the Commonwealth Services Delivery Act 1997 (Cth)  (the CSD Act), namely:

(a)       the provision of Commonwealth services in accordance with service arrangements, and doing anything included in the arrangements that is incidental, conducive or related to the provision of the services;

(b)       any functions conferred on the Chief Executive Officer under any other Act;

(c)       any functions that the Minister, by writing, directs the Chief Executive Officer to perform;

(d)       doing anything incidental, conducive or related to the performance of any of his or her other functions.”

15.Section 7(1) of the CSD Act defined ‘Commonwealth Services’ as “a service, benefit, program or facility for some or all members of the public that is provided for by the Commonwealth, whether under an enactment or otherwise”: Forgie DP in Dykstra and Secretary, Department of Family and Community Services [2002] AATA 422 at [4]-[5]. Additionally, the service arrangements referred to in section 8(a) of the CSD Act “have been entered into between the principal officer of the Department of Family and Community Services and the Chief Executive Officer of Centrelink in relation to pensions, benefits and allowances paid or payable under the Social Security Act 1991.

16.Forgie DP in Meschino v Centrelink [2002] AATA 627 at [23] stated that:

“Access to a document under the FOI Act must be considered not on the basis of the identity and qualities of the person who seeks that access but on the basis that it may be seen by anybody. As it is usually expressed, access under the FOI Act is access to the world at large. In that world, it is reasonable to expect, that there are those who would seek to subvert Centrelink in its proper functions. It is reasonable to expect that they may wish to gain, either for themselves or others, a pension, benefit or allowance to which they are not entitled under the social security law….”

17.Meschino related to an internal Centrelink audit system that could identify officers gaining access to Centrelink’s computer system.  However, I agree with DP Forgie’s remarks could equally extend to Centrelink’s procedures for debt recovery.  While knowledge of Centrelink’s procedures for debt recovery would not necessarily allow individuals “to gain, either for themselves or others, a pension, benefit or allowance to which they are not entitled”, then at least it would not allow individuals to evade procedures designed to recover “a pension, benefit or allowance to which they are not entitled”.  

18.Exemption will be established, subject to public interest, if the disclosure of the document in issue ‘would, or could reasonably be expected to’ have the substantial adverse effect referred to in s 40(1)(d). It is the certain effect or reasonably expected effect which must be taken into account.

19.Then the application must pass the public interest test in s 40(2) of the FOI Act. Satisfaction of the grounds in s40(1) ‘would ordinarily be enough, by itself, to make the grant of access prima facie contrary to the public interest’: Re MacKinnon and Commissioner of Taxation (2001) 48 ATR 1114 at [84].

Contentions

20.The applicant contends that it cannot be the case that the whole of the Debt Recovery Documents are exempt and that such proposition would not be supported by the evidence.  The applicant argues that access to one of the documents in issue would have no effect on the operation of Centrelink.  If it did, he says the effect on ‘proper’ conduct would not be adverse.  Likewise if it did have an effect, the effect on ‘efficient’ conduct would not be ‘adverse.’  Rather it would be more efficient if the public knew what were the relevant parameters and considerations.   Further if there was an adverse effect of the requisite kind, it would not be ‘substantial.’  It is submitted by him that the only ‘effect’ identified by Centrelink is a possible modification of information provided to Centrelink.  Of that, it is said, there is no guarantee of such an outcome.  It is argued that there is consequently no evidence that the remainder of the three files in issue is constituted exclusively by ‘exempt material’ as claimed. 

21.Turning to the affidavit of Mr Bolton, the applicant says that pars 11, 12, 13 and 15 (all quoted above) of his affidavit are entirely speculative.  It is contended by the applicant that there is no evidence, and no rational grounds for speculation, that actions would be taken by the majority of debtors to the extent that there would be a ‘substantial adverse effect on the proper and efficient conduct of the operations’ of Centrelink.  Further, he says that most debtors are probably already well aware of what is the minimum acceptable repayment amount because they have been given no option but to pay it. 

22.The applicant argues that while Centrelink acknowledges the extensive public interest in ensuring that it complies with its debt recovery guidelines, the respondent offers no substantive reasons for withholding them. He refers to s 1.6.2.1 of the FOI Guidelines-Exemption sections in the FOI Act where it is said in relation to s40 exemptions ‘the decision-maker must have real and substantial grounds for the expectation that harm will occur and must not rely on grounds which are merely speculative, imaginable or theoretically possible.’ In the submission of the applicant, the effect of the respondent’s submissions is that there may be some justification to delete the minimum acceptable repayment calculation.

23.The respondent contends that the procedures set out in the Debt Recovery Documents similarly rely on customer responses being a frank and factual statement of the facts.  He argues that it stands to reason that if customers were aware of what instalment amounts were deemed to be acceptable, what hardship circumstances were deemed to be sufficiently convincing and the level of any debt write-off threshold, then they would have an incentive to provide responses to Centrelink other than in a frank and factual form.  He says that anticipated effect of Centrelink having less than accurate information about a customer’s financial circumstances in the context of debt recovery is to impair Centrelink’s streamlined debt recovery procedures introduced to give staff greater flexibility to accept customer repayment offers and avoid exhaustive reviews.  It is argued that the flexibility aim is within the understanding of what is ‘proper’ and the cost effectiveness aim is within the understanding of ‘efficient.’   This impact, it is argued, is substantial and adverse.

24.The respondent maintains that the substantial adverse effect it has identified is one that could reasonably be expected.   Further that the expectation could not be described as irrational, absurd, ridiculous, fanciful, imaginary or contrived. 

25.In relation to the public interest the respondent recognizes that there are public interest factors favouring disclosure of the information. These include the objects as set out in s 3 of the FOI Act and the need to scrutinise the action of Centrelink in respect of debt recovery activities.  Additionally, quick recovery of debts can assist customers to move out of welfare dependency, so that the process of debt recovery must avoid creating disincentives for debtors to take up work opportunities.

Tribunal’s submission to respondent

26.Having reviewed the Debt Recovery Documents and considered the above submissions, the Tribunal in a letter dated 27July 2011 formulated a submission to the respondent as if it had been submitted on behalf of the applicant.  Notice was given to the applicant that this procedure was being followed.  These steps were taken in accordance with a procedure agreed at the hearing.  At the request of the respondent a direction was made on 29 August 2011 extending the time for response by the respondent from 26 August 2011 to 12 September 2011.

27.By letter dated 12 September 2011 the respondent advised that it had conducted appropriate consultations and

‘.1 maintains its objection to the release of those matters identified by the Tribunal which relate to disclosure of:

·     The minimum amount acceptable under streamlined withholdings/cash; and

·     The minimum period acceptable under streamlined withholdings/cash;

And

.2 has no objection to the release to the applicant of the balance of the Debt Recovery Documents.’

A copy of the respondent’s letter to the Tribunal was also sent to the applicant.

28.The first consequence of this is that, aside from the matters identified by the Tribunal to the applicant in the Tribunal’s letter to the respondent of 27 July 2011, there is no objection maintained by the respondent to the release of the balance of the Debt Recovery Documents to the applicant.

29.The second consequence is that it remains to consider whether the matters so identified by the Tribunal to the respondent do all relate to the disclosure of either of the minimum amounts and otherwise satisfy the requirements of the law for application of the respondent’s claim for exemption made in reliance on s 40 (1)(d) of the FOI Act.

Resolution of claim for exemption so far as not conceded

30.In its submission to the respondent in the letter of 27 July 2011 the Tribunal identified the following portions of the Debt Recovery Documents as matters within the scope of the respondent’s submissions relating to the disclosure of the minimum amount acceptable under streamlined withholdings/cash and the minimum period acceptable under streamlined withholdings/cash:

“Re document 107.11320 – Assessing customer’s financial circumstances for debt recovery purposes.

On the first page in the paragraph commencing ‘Documentary evidence’ – all sentences in the paragraph after the sentence in which those words appear.

On the third to fourth page: under the heading ‘determine the excess income’ – the whole of what follows down to and including the words ‘Detail steps.’

On the fourth page: the whole of the response under the heading ‘Determine the excess income.’

On the fifth page: in step 1: the words ‘Only if…to income or assets.’

On the eighth page: in step 10 and 11: the reference to the amount of excess income.

On the eighth page: in step 11: the periods for recovery of debt and the penultimate sentence reading ‘Centrelink will generally…paid to Centrelink.’

On the ninth page: in step 13: the whole of the response.

On the ninth page: in step 14: the amount of the excess.

On the thirteenth page: in the description of withholdings: the two sentences referring to debt balance.

On the thirteenth page: in the description for cash: the three sentences relating to debt balance.

Document 107.11400-Reviewing cash instalment and withholding arrangements.

None of the document appears to have matter falling within the above description of ‘essential matters.’

Document 107.11420 – Reviewing a withholding arrangement for recovering a debt.

On the fourth page as the response to the question re Foreign Pension Data Exchange: the whole of the answer apart from the word ‘Yes.’

On the seventh page in question 4: the identification of the amount of rate for recovery per fortnight.”

31.In my opinion the matters referred to in par 30 are entitled to exemption pursuant to s 40 of the FOI Act on the basis that their disclosure would have a substantial adverse effect on the proper and efficient conduct of the operations of an agency and, as a consequence, their disclosure would not be in the public interest. In reaching this view I have had regard to the statements of the law set out above in relation to the relevant provisions of s 40.

32.The respondent now accepts that there is not a case for the whole of any of the Debt Recovery Documents to be exempt.  There is no claim now made by the respondent that any of such Documents are exclusively exempt.

33.In reaching the opinion on the application of the exemption to the matters set out in par 30 I have had well in mind that if those matters, relating to the essential minimums to be applied by the agency in applying the new streamlined process, were to not be exempt there would be a predictable impact on the successful recovery of pensions, benefits or allowances.  The important feature of those provisions is that they go to the heart of when and how the agency will exercise its discretion to seek recovery.  What is then being sought is recovery of payments to which there is no entitlement.  Knowledge of precisely how the agency will approach such recovery may itself be encouraging of responses and accounting designed not to facilitate recovery but rather to facilitate non-recovery.  Mr Bolton’s evidence provides support for this conclusion.

34.I do not accept the applicant’s submission that the matters in issue would function more efficiently if the public knew the parameters and minimums in the scheme being applied.  On the contrary, I accept that knowledge of those matters may, in the context of recovery being sought from the person being the source of evidence, may entice arrangements of their affairs or their accounting of them in such way as would avoid or minimise the responsibility of making repayment.

35.Nor do I accept the applicant’s submission that public knowledge of the minimums to be applied in the exercise of a discretion in accordance with the matters referred to in par 30 above would become established even if those matters were exempt.  In my view, there is no evidence to support a finding that knowledge of the minimums by some members of the public to whom the matters have been applied would necessarily give rise to a spread of awareness of those matters thoughout the public generally.

Conclusion

36.Accordingly I consider that the applicant is entitled to an order that the Debt Recovery Documents be made available to him save those portions encompassed by the matters identified by the Tribunal to the respondent in the letter of 27 July 2011 and set out above in par 30, all of which are exempt in accordance with s 40(1)(d) of the FOI Act.

I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President Nicholson

Signed:..(sgd) T Freeman...............
  Associate

Date/s of Hearing  12 July 2011
Date of Decision  23 September 2011
Representative for the Applicant               Self represented       
Representative for the Respondent          Mr S Thackrah
Instructed by  Mr P Maishman
  Centrelink Legal Services
  Advocacy Branch