Saville and Secretary, Department of Social Services (Social services second review)
[2024] AATA 355
•7 March 2024
Saville and Secretary, Department of Social Services (Social services second review) [2024] AATA 355 (7 March 2024)
Division:GENERAL DIVISION
File Number(s): 2022/10378
Re:Stephen Saville
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Member Ranson
Date:7 March 2024
Place:Brisbane
The decision under review is affirmed.
...................................[SGD].....................................
Member Ranson
Catchwords
Social Security – disability support pension – whether employment income reported correctly – whether under reporting of income resulted in debt due to the Commonwealth – whether entitlement to DSP calculated correctly – whether debt should be written off or waived – consideration of special circumstances – decision under review affirmed
Legislation
Social Security (Administration) Act 1999 (Cth)
Social Security Act 1991 (Cth)
Cases
Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Lyall and Secretary, Department of Social Services (Social services second review) [2023] AATA 3356
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
Secondary MaterialsDepartment of Social Services, Guide to Social Security Law (Version 1.185, 20 March 2012)
REASONS FOR DECISION
6 March 2024
BACKGROUND
Mr Saville is a pensioner who lives in North Queensland. He has been in receipt of a disability support pension since 2006, and for a period from April 2008 to February 2011 Centrelink says his DSP was overpaid. This was a period when he was working casually for the then Family Court of Australia. He was required to report his income on a fortnightly basis so he would be paid DSP for the previous fortnight. This is known as the stimulus reporting regime.
Mr Saville acknowledges he did not always report the correct amount of his income on the reporting day because he did not receive his payslip from the Family Court in time to do so. He says he had to guess his income as that was the best he could do.
The first issue is whether Mr Saville correctly reported his earnings from the Family Court to Centrelink for DSP purposes.
At Centrelink’s request, the Family Court provided information about the income paid to Mr Saville, including a list of the hours worked and rate paid for each fortnight. Centrelink reconciled this information with the income declared by Mr Saville and concluded a debt of $9,725.07 had arisen for overpayment of DSP. Of concern to Mr Saville is the possible inclusion of the accommodation and meal allowances he was paid by the Family Court, which he is adamant are not income for reporting purposes. Centrelink agrees and says the income assessed as part of the debt raised does not include travel related expenses.
It is important to determine when the recipient of a benefit earned, derived or received their employment income as that determines into which Centrelink instalment period that income falls. Centrelink recalculated the debt having regard to the available evidence of Mr Saville’s employment income and reached an evaluative factual conclusion as to when income was “earned, derived or received”, before apportioning the income in a manner consistent with the Social Security Act 1991 (Cth) (the Act) as it applied at the time. The revised debt amount is $9,893.44. Mr Saville is concerned income apportionment has been used in the calculation, which Centrelink have told him is a practice they no longer use.
The second issue is whether Centrelink has correctly calculated Mr Saville’s entitlement to DSP while he worked for the Family Court and whether a debt is due to the Commonwealth.
Mr Saville says the debt should be waived in its entirety, the repayments already made should be refunded and Robodebt style compensation should be paid to him. Centrelink says he did not receive the DSP in good faith and there are no circumstances which warrant waiver or write off.
The third issue is whether the debt should be recovered in part or in full.
For the following reasons, the decision under review should be affirmed.
CONSIDERATION OF CLAIMS AND EVIDENCE
The role of the Tribunal
The role of the Tribunal is to make findings of fact and apply the relevant law to those facts in arriving at a decision. The facts are found on the evidence before the Tribunal including the documents presented and the oral evidence of the applicant and the respondent at the hearing. The law is determined by the Federal Parliament as interpreted by the courts.
The Tribunal can inform itself in any way it chooses however it is for the applicant and the respondent to prove their case, and by extension for the applicant to disprove the case against them.
A note about policy
Where a general policy exists to guide the decision maker in exercising its powers, 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 … cogent reasons will have to be shown against its application”.[1]
[1] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, 645 (Brennan J).
To the extent the Tribunal has considered policy in this case, it has not applied it inflexibly and has only considered it to the extent the policy is consistent with the requirements as set out in the legislation. It would be an error of law for the Tribunal to state it must (emphasis added) follow what policy says concerning the scope or meaning of a provision in an Act or Regulation.
Issue 1: Did Mr Saville correctly report his employment earnings?
What happened?
Mr Saville was granted a DSP on 22 February 2006. Like any social security benefit, that brought with it the obligation for him to report changes in his circumstances. For DSP that includes income earned from employment, which Mr Saville derived from the then Family Court of Australia where he secured casual employment.
There is no doubt Mr Saville did report amounts of income to Centrelink as the Secretary acknowledges in the Statement of Facts, Issues and Contentions (SFIC) at paragraph 3.7 which lists the amounts he reported.
Centrelink regularly issues notices, with or without written correspondence, to social security recipients requiring them to provide information and updates about their circumstances.[2] These notices can be in the notes section at the end of correspondence. Numerous such notices were sent to Mr Saville.
[2] Section 68(2) of the Social Security (Administration) Act 1999 (Cth) (the Administration Act).
On 16 January 2008, Mr Saville contacted Centrelink to advise he would be commencing work on 25 January 2008. He was placed on two-week reporting and requested to advise if he worked more than 30 hours per fortnight. By then he was on a reporting regime to stimulate his DSP, that is, he had to report his income each fortnight for his DSP to be paid.
Centrelink then issued a letter to Mr Saville, including a reporting statement, and said, amongst other things:
What you must report for each Centrelink Reporting Period. If you were employed: The business where you worked. The gross amount you earned (BEFORE tax or other deductions). The number of hours you worked.
You must tell us about any changes on your reporting day immediately following the change.
You must report your earnings for the whole Centrelink Reporting Period, including the first and last day. Your Centrelink Reporting Period can be different from the period on your payslip. Use 'Your Earnings Worksheets' to help you record and work out how much you earned in a Centrelink Reporting Period.
If you get paid any allowances from your work (e.g. for fuel, meals, clothing) ask Centrelink if you need to report them with your gross earnings. Most allowances are not counted as part of your income from employment. Make sure when you report to answer all of the questions carefully. No-one wants you to get into debt to Centrelink. If you get a debt, you'll have to pay it back.[3]
[3] T-Documents, T12, pages 261-262.
The words: ‘Use “Your Earnings Worksheets” to help you record and work out how much you earned in a Centrelink Reporting Period’ have relevance here. At the hearing Mr Saville said he could not disprove the amount of the debt even though he did not accept it because he had to guess what he was paid each fortnight.[4] He confirmed his position on income reporting in his SFIC at 3.7.1 to 3.7.3 where he says:
3.7.1 The reporting date was on the Monday before the Centrelink pension payment day on the Tuesday;
3.7.2 On most reporting dates the Applicant had to guess the income amounts reported due to the convoluted manner that the Family Court calculated salary, due to when time sheets were submitted and administrative delays;
3.7.3 It is accepted that the correct amounts were not reported on each reporting day due to these factors however it must be noted that on many occasions there was over reporting of income;
[4] Transcript of Proceedings, pages 21-22.
The law
Section 117 of the Act explains how to work out a person’s disability support pension rate. For Mr Saville, Pension Rate Calculator A at the end of section 1064 is used.[5]
[5] Section 117(a) of the Act.
The Secretary’s SFIC from paragraphs 4.5 to 4.10 sets out in detail the basis on which DSP is calculated. The maximum payment rate is the sum of the basic rate plus any pension supplement or rent assistance less the income reduction determined by the ordinary income test using Module E. That produces the income reduced rate. There is a separate calculation for the assets reduced rate, and the rate which produces the lower amount is the provisional annual payment rate. Deducted from that are any special employment advances or advance payments and any remote area allowances are added. DSP is a daily rate worked out by dividing the annual payment rate by 364.
Module E is set out in section 1064-E1 of the Act and depends on the definitions of income and ordinary income, which are set out in section 8(1) of the Act. Income means an amount earned, derived or received by the person for the person's own use or benefit. Ordinary income excludes maintenance income or an exempt lump sum and includes employment income for remunerative work of the person as an employee in an employer/employee relationship.
Self-evidently, if the income of the recipient (Mr Saville) of the benefit (DSP) is not correctly reported to Centrelink, the calculation of the benefit payable cannot be correct. If employment income is underreported then applying the appropriate formula the benefit will be overpaid, and vice versa.
The evidence
Numerous notices were issued to Mr Saville reminding him of his reporting obligations. These are set out in the Secretary’s SFIC at paragraph 3.6 and in his SFIC, Mr Saville concurs so those facts are accepted for this decision.
Mr Saville disagrees with the Secretary’s SFIC at 3.7, which sets out a summary of the income reported by Mr Saville during the debt period. His objection to this paragraph includes:
3.7.4 The Respondent has been very subjective and detailed reporting periods of 13 x fortnights out of a 3 x year period that the Applicant was employed by the Family Court (3.7 of Respondent’s statement);
3.7.5 The respondent has relied upon the summary of fortnightly payments (T6/66). This summary is incomplete and details payments for 45 x fortnights out of a period of 36 x months or 72 x fortnights;
In addition several of these payments have negative symbols against the amounts (T6/66);[6]
[6] Applicant’s SFIC.
On 17 January 2012, the Secretary wrote to the Family Court and requested further information about the employment of Mr Saville.[7] The response included a schedule setting out the units (hours), rate and amount paid during fortnights from 14 May 2008 to 2 March 2011.
[7] T-Documents, T6.
The debt period is 26 April 2008 (Saturday) to 25 February 2011 (Friday). After 26 April 2008, the next payroll processing date appears to be 14 May 2008, and 2 March 2011 appears to be the next processing date after 25 February 2011. On that basis, and in the absence of contrary information, the Tribunal is satisfied the payroll report from the Family Court adequately covers the debt period.
Mr Saville complains in his SFIC about the onus of proof being on him. He says:
3.7.9 During the interim conferences with the AAT the Respondent maintained the position that the Applicant should produce evidence to disprove the Respondent’s position;
3.7.10 This position effectively shifted the onus of proving the debt existed from the Respondent to the Applicant to disprove the debt existed, which is very unfair.
Whether it is unfair that an applicant must prove their case and disprove the case against them is not at issue. The onus of proof rests with the applicant. The best evidence in a matter like this is the payslips from the employer (the Family Court) covering the debt period. Mr Saville didn’t produce the payslips for his employment with the Family Court for this case. He says he doesn’t have them and or they have not been retained. Given the passage of time since the debt period, that is understandable. The following exchange at the hearing confirms this:
MEMBER: And then the first entry, which is the example that Mr Dube has been using, and there is the figure of $1941.63 [T6, pages 67 and 68]. Now whether the Family Court in apportioning over 14 days got that right or wrong, the question is was that your gross pay that fortnight? And do you dispute - - -?
MR SAVILLE: I can’t dispute anything, because I haven’t got the record – any payment – like I never kept any payslip. So I have to accept what the Family Court has put in this document.
MEMBER: Well that being the case, then when you were saying before the data is wrong therefore the calculation must be wrong – but are you now saying you have no way of disproving the data?
MR SAVILLE: The only way I can disprove is if there’s 14 entries for a fortnight, it’s not possible that I work 14 days.
MEMBER: Sure. But the question isn’t 14 days and so many hours in each fortnight. How they got to that, only they can say. The question – and think about what I’ve got to do – this – ST2, page 19 says that in that fortnight and at 14 May you (indistinct) gross income $1941.63. And what I’ve got to be satisfied with is that’s your correct gross pay, excluding travel allowances. That’s the nub of this?
MR SAVILLE: Yes.[8]
[8] Transcript of Proceedings, page 20, lines 5 to 25.
The Secretary tried twice to obtain copies of the payslips from the Family Court to no avail. There is also no evidence before the Tribunal to indicate Mr Saville made any attempt to obtain copies of them, either at the time in 2011 or for this matter. He confirmed this at the hearing.[9] The Secretary acknowledges some payslips were provided at an earlier time and were used in previous calculations.[10] Mr Saville said at the hearing he could not recall ever providing payslips.[11]
[9] Transcript of Proceedings, page 21.
[10] T-Documents, T12, page 217.
[11] Transcript of Proceedings, page 13, line 10.
Even during the debt period when he was required to report his income fortnightly, which he did, he says he did not have accurate information on the relevant day, being the Monday before the Tuesday when he was paid.[12] The Tribunal accepts that. However, there were two actions which may have mitigated that deficiency of accurate information.
[12] Transcript of Proceedings, page 15.
Firstly, he could have completed an Earnings Worksheet each fortnight.[13] That form has provision to record the date and hours worked for each of the 14 days in the Centrelink reporting period, amongst other information. That may have provided the necessary information to be reported on each second Monday.
[13] Centrelink form SU505.2012.
Secondly, he could have taken his payslip to Centrelink after he received it and requested correction of his previously reported income if necessary. There is no evidence to indicate he did that or took any other action to ensure the accuracy of the information he was providing to Centrelink given he knew it was an estimate. This exchange at the hearing confirms this:
MEMBER: And when did you get your payslips in the normal course? How were you – did they email it to you? Did they print it and give you a copy? What did they do?
MR SAVILLE: From memory I think they were printed out and we received it on – the following – the Wednesday after the reporting date.
MEMBER: Right. And how did you physically get the payslips?
MR SAVILLE: I think they were in a pigeonhole or letterbox system, from memory.
MEMBER: And do you recall getting one each fortnight that you worked?
MR SAVILLE: I would have got one every fortnight. I probably never even checked it because -
MEMBER: Well that leads me to the question I was about to ask, which is when you’ve got the payslip – and so there it identified what you did earn – did you then make any attempt to correct what you’d reported with Centrelink?
MR SAVILLE: Not post the reporting date, no.
MEMBER: Okay. And so that never occurred to you to do that?
MR SAVILLE: Well not at that stage. I was – I mean I was in a different frame of mind back then. But, yes, not at that stage.[14]
[14] Transcript of Proceedings, page 22.
Mr Saville also notes the times he over-reported his income. The Secretary acknowledges that. The schedule at paragraph 3.7 of the Secretary’s SFIC includes four periods when Mr Saville over-reported his income and two periods when he accurately reported his income. There are also two periods when he earned income and reported none.
The detailed calculation of the debt is set out in the Supplementary Tribunal Documents filed by the Secretary at ST2 and on pages 19 and 20 there is a schedule showing the dates of each entitlement period, the amount earned (derived from the schedule provided by the Family Court) and the amount declared as income by Mr Saville. Each amount of under and over reporting can be seen there.
The Tribunal finds Mr Saville under-reported his income during the debt period by the amounts shown in the schedule in the Secretary’s SFIC at paragraph 3.7.
Issue 2: Did Centrelink correctly calculate Mr Saville’s entitlement to DSP?
What happened?
The Secretary’s SFIC at paragraph 1.1 states the debt period is 26 April 2008 to 25 February 2011. Centrelink raised a debt on 7 April 2008 for $2,380.00 and revised that on 27 February 2012 to $9,725.07. Then at paragraph 3.21 of the SFIC the Secretary says:
The Agency undertook a recalculation of the debt based on the earnings information provided by the Family Court, based on the date the Applicant received employment income. As a result of those recalculations the debt was increased to $9,893.44 for the debt period.
The detailed calculation of the debt of $9,893.44 is set out in the Supplementary Tribunal Documents at ST2. The recalculated debt was issued to Mr Saville on 14 July 2023.
The law
Section 1223 of the Act deals with debts arising from lack of qualification, overpayment etc. and says:
(1) Subject to this section, if:
(a) a social security payment is made; and
(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
This means the debts were incurred by Mr Saville throughout the debt period each time an overpayment was made due to under-reporting of his income, adjusted for underpayments when his income was over-reported, and not when Centrelink raised the debt. It also means the overpayments, net of underpayments when income was overreported, are debts due to the Commonwealth.
That being the case, the legislation applicable to the debt period applies. That is the Social Security Act 1991 [Act No. 46 of 1991 as amended] (compilation prepared on 1 March 2012 taking into account amendments up to Act No. 179 of 2011), and the Guide to Social Security Law - Version 1.185 - Released 20 March 2012. In the SFIC, the Secretary confirms this is the correct point-in-time legislation because para 4.11 says:
Sections 1073B and 1073C of the Act were inserted by the Family and Community Services Legislation Amendment (Australians Working Together and other 2001 Budget Measures) Act 2003. The date of commencement was 20 September 2003. Accordingly, these provisions were in force during the debt period.
The following are extracts from the point-in-time legislation covering the debt period.
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 to be 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).
1073B Daily attribution of employment income
(a) 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.
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.
Section 1074A, as it then was, is not applicable to this case because it deals with lump sum amounts. It is included because of the reference to it in section 1073B.
The term ‘instalment period’ is referred to in the legislation discussed above. Social security payments are paid in arrears and by instalment (hence the term) for periods not exceeding 14 days.
The following is an extract from the point-in-time Social Security Guide covering the debt period.
4.3.3.05 Employment Income - First Earned, Derived, Received
People receiving a social security income support payment generally have their employment income (1.1.E.102) assessed in the instalment period in which it is earned, derived, or received according to Social Security Act section 8.
As a matter of policy, income test assessment is generally based on whichever event occurs first, which is usually when people earn the money. This is because assessing earnings only when received would create inequities, as it would enable some people to defer receiving their earnings until the income would have less impact on their pension entitlement. This would place people who can defer receipt of income in a better financial position than those paid on a regular basis.
However, there are some circumstances where it is not practical or possible to assess earnings when the amount is earned. In these situations, it may be appropriate to assess when the amount is actually received.
Lyall and Secretary, Department of Social Services (Social services second review) [2023] AATA 3356 (17 October 2023)
At the hearing Mr Dube referred the Tribunal to the decision in Lyall. The following extracts from that decision are instructive:
22. Income is earned when the person completes a unit of work for which payment is due, and for casual workers this may be the hours or days worked. It is derived when the person has a present legal entitlement to the income. Income is received when it is actually received or capable of being accessed by the person.
23. Where a person has casual income from employment and earns more in one instalment period and less in another, this can result in different rates of payment in different instalment periods. Of considerable importance is identifying when the income was earned, derived or received as this will determine the instalment period to which income is attributed.
28. As a different rate can result when casual income is earned on different days, the most accurate approach to calculating the rate is to use employment income earned on each day. This is the preferable approach to calculating a rate when a person has an unpredictable or variable income.
The Secretary’s position
As mentioned above in the extracts from Lyall, the best approach for determining when the employment income for a casual worker is earned, derived or received, is when the person completes a unit of work for which payment is due, that is, the hours or days worked.
The Agency undertook a recalculation of the debt using the earnings information provided by the Family Court. It is based on the date Mr Saville received (emphasis added) employment income. Mr Saville was unable to provide the payslips he received from the Family Court and the payroll information from the Family Court shows the date the payroll was processed and not the days worked, so the only option available to the Secretary was to use the date the payroll was processed as the de facto date the earnings were received.
Income apportionment
Mr Saville was concerned the debt calculation is based on ‘income averaging/income apportionment’ which he sees as akin to Robodebt. Centrelink wrote to him on 10 November 2023 to advise repayments had been paused on debts calculated using income apportionment, which was a practice they used to evenly divide, or apportion, a customer’s employment income across two or more Centrelink fortnightly reporting periods. The Services Australia website has more to say about this and relevant extracts appear below:[15]
[15] Services Australia, ‘Information about income apportionment’, Centrelink debts and overpayments (Web Page) < only needed to divide your income evenly if:
•Your employer pay period didn’t line up with your fortnightly Centrelink reporting period, and;
•Your payslip or income report showed your total earnings but did not show which days you worked or how much you earned in each Centrelink fortnight, and;
•We had no other information available.
Your payment rate was still based on the total income you reported across those fortnights.
And:
The practice ended on 7 December 2020, when new legislation made income reporting easier for our customers. Prior to 7 December 2020, people had to report their gross earnings based on the number of hours they worked during each Centrelink fortnightly reporting period.
Reporting could be complex if a customer’s earnings period didn’t align with their Centrelink reporting period. Since 7 December 2020, customers only need to report income as it appears on their payslip in the same Centrelink fortnight they actually get paid. This means we don’t need to divide income across fortnights to work out your payment rate.
And:
Income apportionment is not Robodebt. For income apportionment we divided a customer’s reported income to work out how their actual earnings affected their fortnightly Centrelink payment. It was done manually by Centrelink officers. We took action on income apportionment when concerns were raised. The Robodebt scheme used annual income averaged over 26 fortnights to raise historical debts. Robodebt ended in November 2019. We no longer use income averaging to raise debts.
Robodebt was annual income averaged over 26 fortnights and its use has long since been discontinued. It is different to income apportionment, which divided employment income across two or more Centrelink fortnightly reporting periods. Mr Saville was seeking compensation consistent with payment made to other Robodebt victims.[16] He said at the hearing Robodebt was no longer an issue for him in this case so his claim for compensation falls away and will not be considered in this decision.[17]
[16] Applicant’s SFIC, paragraph 4.8.7. The Tribunal notes there was no formal Commonwealth compensation scheme established following the Royal Commission into the Robodebt Scheme. Instead, compensation for individuals impacted by the scheme was sought by way of class action lawsuit (VID 1252/2019). The Federal Court approved a settlement for the class action on 11 June 2021.
[17] Transcript of Proceedings, page 29.
At the hearing, Mr Dube explained the original debt calculation was based on income apportionment.[18] The debt was recalculated in 2023 based on the date of receipt of the income. This was discussed above as the only date available to the Secretary since the payroll data only shows the hours in the period being processed. Mr Saville agreed at the hearing income apportionment was no longer an issue because he said:
MEMBER: So I just wanted to make sure that there was nothing, no confusion still in your mind about this income apportionment which had applied and it now doesn’t apply.
MR SAVILLE: No. There’s no confusion about it did apply and now it doesn’t.[19]
[18] Transcript of Proceedings, pages 7-8.
[19] Transcript of Proceedings, page 15, paragraph 35.
Mr Dube also advised at the hearing the income amounts used to calculate the debt excluded travel allowances and Mr Saville was unable to provide any evidence to prove his assertions that the income amounts did include travel allowances.
The Tribunal finds the overpayments have been correctly calculated based on the best available evidence being fortnightly earnings as advised by the Family Court and attributed to the instalment period when it was received, and the amount of the overpayments is a debt due to the Commonwealth.
Issue 3: Should the debt be recovered in part or in full?
What happened?
Mr Saville says he has been diagnosed with Post Traumatic Stress Disorder. To his credit he has sought and obtained employment when his health permitted. That employment included the casual work with the Family Court and later working full-time for Serco on Christmas Island.[20]
[20] Applicant’s SFIC, paragraph 3.12.
In his SFIC, Mr Saville refers to his mental health issues and state of mind during the debt period as reasons why the debt should be waived. As examples of his position, he says:
4.45 It is contended that the entire debt should be waived given administrative errors, income averaging, and (income apportionment), and that the Applicant did report as accurately as possible given the administrative circumstances and medical condition suffered;’
‘4.52 The Applicant contends that the debt is attributable to administrative error, income averaging flawed processes, (income apportionment) and the state of mind of the Applicant;
By contrast, the Secretary’s SFIC sights numerous examples from relevant cases to sustain the position the debt should be neither waived nor written off. As examples, the Secretary says:
4.44 Accordingly, the Secretary contends that the ongoing recovery of the debt would not cause the Applicant severe financial hardship, that it is cost effective for the Agency to recover the debt and that he could continue to pay off the debt by way of withholdings. In those circumstances the Secretary submits that the Applicant’s debt cannot be written off under section 1236 of the Act.
4.64 As the Applicant did not receive the overpayments in good faith, section 1237A(1) of the Act cannot be satisfied by the Applicant.
4.84 The Applicant has not provided evidence which indicates that his health conditions are more severe than that of other social security recipients who have incurred debts. The Applicant was in fact able to work, for at least part of the debt period, and immediately thereafter in a fulltime role with Serco, such that this would indicate his condition was not more severe than others, or that it prevented him from reporting his income accurately as required.
4.86 The Secretary therefore contends that when these circumstances are reviewed in their totality and then compared to the circumstances of others either in receipt of, or reliant on income support payments, it cannot be said that they are distinguishable to the extent that they could be considered ‘special circumstances’ enlivening waiver.
Write off
The Secretary can write off a debt, meaning delay its recovery, for a stated period in certain circumstances.[21] Those circumstances include:
(a)The debt is not recoverable at law
(b)The debtor has no capacity to repay the debt
(c)The debtor’s whereabouts are unknown, or
(d)It is not cost effective for the Commonwealth to recover the debt.
[21] Section 1236(1A) of the Act.
There is no suggestion the debt cannot be recovered from future entitlements of Mr Saville to other social security benefits, as occurred in the past with deductions from his DSP,[22] or future income tax refunds (if any). Mr Saville’s whereabouts are known, and it can be cost effective for the Commonwealth to recover the debt by instalments.
[22] Secretary’s SFIC, paragraph 4.43.
Mr Saville says in his SFIC: ‘the issue of financial hardship is obvious’ albeit he made no written submissions about that, so the Tribunal has considered his Statement of Financial Position dated 17 October 2019 as the best information available.[23] At that time he had no paid work and his only income source was Centrelink benefits of $1,041 per fortnight. He has limited assets and a debt to the Australian Taxation Office of $6,000. His stated cost of living equates to $1,484 per fortnight. As that exceeds his stated income by over $440 per fortnight, either his cost of living is misstated, or he has other income or resources to cover the shortfall.
[23] T-Documents, T2, pages 13 to 18.
Severe financial hardship can be considered in deciding whether a person has the capacity to repay a debt.[24] However, Mr Saville has been employed and may be again as his health permits. The Secretary was accepting repayment by modest instalments from his entitlement to DSP and had been doing so for many years until that was paused in November 2023. This indicates repayment will not cause him severe financial hardship. The Secretary’s SFIC comments on this at paragraphs 4.41 to 4.44 and in his SFIC, Mr Saville makes no comment on the views expressed by the Secretary, that is, he did not seek to rebut the Secretary’s contention the recovery of the debt would not cause him financial hardship.
[24] Section 1236(1C) of the Act.
Given the findings above, the Tribunal is satisfied there are no grounds to write off the debt for any period because it is recoverable, and Mr Saville can negotiate repayment by instalments commensurate with his circumstances.
Waiver
Mr Saville asserts he should not have to repay the debt because he suffers from PTSD. This would require the debt waiver provisions of the Act apply. For the purposes of this decision, there are two circumstances where waiver might apply.
Firstly, the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received the payment or payments that gave rise to that proportion of the debt in good faith. The relevant section of the Act does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).[25] ‘Solely’ means the error must have been caused only by the Commonwealth and by no other party.[26]
[25] Section 1237A(1) of the Act.
[26] See, for example, Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190, [35].
Secondly, the Secretary may also waive the right to recover all or part of a debt if satisfied the debt did not result wholly or partly from the debtor or another person knowingly making a false statement or a false representation or failing or omitting to comply with a provision of the Act, the Administration Act or the Social Security Act 1947 (Cth). There must be special circumstances (other than financial hardship alone) that make it desirable to waive the debt, and it must be more appropriate to waive than to write off the debt or part of the debt.[27]
[27] Section 1237AAD of the Act.
As already discussed, the main issue in this case is the error by Mr Saville in the amounts, over or under, of gross income he reported or failed to report when he was working for the Family Court. In his SFIC, Mr Saville says many times there has been administrative errors by Centrelink, such as:
4.37 It is contended that this issue has been caused by a series of administrative errors by the Respondent. It is accepted that reporting was not perfect given the dates of reporting required. This reporting process has now been changed due to these difficulties and the ceasing of the practice of income apportionment, (see attachments 2 & 3). The calculation of debt cannot be accepted given that it has been construed through the illegal process of income averaging, (income apportionment);
Even if there were administrative errors by Centrelink, the admission by Mr Saville ‘that reporting was not perfect given the dates of reporting required’ is sufficient to confirm the errors were not solely that of Centrelink.[28] Further, the debt as it stands has not been calculated using income apportionment so that argument falls away. That being the case, there is no obligation on the Secretary to waive the debt due to administrative error and the question of whether Mr Saville received the DSP payments in good faith does not arise.
[28] Applicant’s SFIC, paragraph 4.37.
Waiver of a debt for special circumstances firstly requires the applicant (Mr Saville) to unknowingly make a false statement or a false representation or fail or omit to comply with a provision of the law. By his own admission at the hearing and in his submissions, Mr Saville knew he was not reporting the correct amount of his income. That immediately precludes waiver for special circumstances because the error or omission had to be done unknowingly. He knew he was not reporting correctly and yet took no action to correct that despite the numerous notices he received reminding him to report his income correctly. Further, special circumstances excludes financial hardship which has been dealt with above.
The Tribunal finds there are no special circumstances to justify waiving the debt because by his own admission, Mr Saville knew he was incorrectly reporting his income.
CONCLUSION
Ultimately, this decision gets down to one matter, that is, Mr Saville knew he was not correctly reporting his income to Centrelink while he was working at the Family Court, and he did nothing about it.
Incorrect reporting of income can only lead to an incorrect calculation of entitlements and where income is underreported the benefit is overpaid and a debt arises. Difficulties in obtaining the correct information about income are no defence. It is the responsibility of the recipient of the benefit to know what they must do and do so correctly. If they do not understand their obligations or are unsure of what to do, they can always approach Centrelink for assistance.
This debt was never about Robodebt because the calculation of the debt was not made using annual income apportioned over 26 fortnights. Income apportionment was used in the original calculation and corrected in the calculation on 14 July 2023, which is the subject of this review.
DECISION
The decision under review is affirmed. That means Mr Saville has a recoverable debt due to the Commonwealth of $9,893.44, less amounts since repaid, and there are no grounds to write off or waiver the debt.
I certify that the preceding 72 paragraphs are a true copy of the reasons for the decision herein of Member Ranson
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AssociateDated: 7 March 2024
Date/s of hearing: 9 January 2024 Advocate for the Applicant Self-represented Representative for the Respondent: Mr B Dube of Sparke Helmore Lawyers
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