Schwabe and Secretary, Department of Family and Community Services

[2005] AATA 248

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 248

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No T2004/54

GENERAL ADMINISTRATIVE  DIVISION		)
Re		HELMUT SCHWABE

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Associate Professor B W Davis AM (Part-time Member)

Date23 March 2005

PlaceHobart

Decision The decision under review is affirmed.

..............................................

Part-Time Member

CATCHWORDS

Social Security - incapacity - benefits - sickness allowance - Regional Forest Agreement (Tasmania) - conservation covenant - liquid assets - liquid assets waiting period (LAWP) - Social Security Appeals Tribunal (SSAT).

Social Security Act 1991 – ss14A, 676(3A) and 676(3B), 676(6), 676(7)

Guide to Social Security Law

Re Drake and Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60

Re Drake (No 2) (1979) 2 ALD 634

Re Walsh and Secretary, Department of Family and Community Services (2002) AATA 881

Re Biddlecombe and Secretary, Department of Family and Community Services (1999) AATA 528

Re Jacobson and Secretary, Department of Social Security (March 1992) AAT 7846

Re Secretary Department of Social Security and Di Bernardo (October 1993) AAT 9029

Re Salas and Secretary, Department of Family and Community Services (July 2002) AATA 635

Re Paulis and Secretary, Department of Family and Community Services (December 2000) AATA 1070

Re Williamson and Secretary, Department of Family and Community Services (July 2003) AATA 652

Re Morales and Secretary, Department of Family and Community Services (July 2004) AATA 669

REASONS FOR DECISION

23 March 2005 Associate Professor B W Davis AM (Part-time Member)   

Decision Under Review

1.      The decision under review is a decision made by a delegate of Centrelink on 6 January 2004, as affirmed by the Social Security Appeals Tribunal (SSAT) on 21 April 2004, to impose a liquid assets waiting test period (LAWP) on the applicant, Helmut Schwabe, from 14 December 2003 to 13 March 2004, with respect to sickness allowance.

The Issue

2.      The issue is whether Mr Schwabe had liquid assets in excess of the allowable amount on the day he claimed sickness allowance, to the extent he was correctly subject to a 13 week LAWP.

Standard of Proof

3.      The standard of proof is on the balance of probabilities and to the reasonable satisfaction of the Tribunal.

Relevant Legislation

4.      The relevant legislation is various sections of the Social Security Act 1991 (“the Act”), in particular ss14A and s676. Section 3.1.2.20 of the Guide to Social Security Law should also be noted.

Background

5.       The applicant, Helmut Schwabe, owns a small rural property near Gunn’s Plains, Tasmania.   He lives alone and decided to enter into a conservation covenant under the Regional Forest Agreement whereby his land would be treated as a private forest reserve.    He would receive an up-front one-off payment in return for managing his land in such a manner as to preserve its natural values.   If he failed to honour the agreement he would subject to a range of penalties, including repayment of monies.   An operations plan for the area was approved in October 2003.

6.      Mr Schwabe is also a sculptor and potter, but became incapacitated for work on 16 December 2003 due to an operation to free the tendons of his hand.   He claimed sickness benefit as he was single and had no children.

7.      On 13 December 2003, he had on his own admission $15,000 to his credit in an account with the Bendigo Bank, as consideration for entering into the conservation covenant for his property registered in his name by Certificate of Title Vol. 251028 Folio 1 at Gunn’s Plains.    That payment had been received on 13 November 2003 from the State Department of Primary Industries, Water and Environment (DPIWE).

8.      Following his application for sickness allowance on 16 December 2003, he was advised he would be subject to a 13 week LAWP and therefore would not receive any social security payment until 21 March 2004.   He was advised of this by letter dated 6 January 2004.

9.      Mr Schwabe requested a review, which was conducted by an Authorised Review Office (ARO) who affirmed the decision in a report dated 30 January 2004.    The applicant then applied to the Social Security Appeals Tribunal (SSAT) for further review on 16 March 2004.    The decision was affirmed by that Tribunal on 21 April 2004.     On 18 May 2004, Mr Schwabe sought review by the Administrative Appeals Tribunal (AAT).

The AAT Hearing

10.     Both parties submitted statements of facts and contentions prior to the AAT hearing.   The applicant claimed it unjust that monies provided for nature conservation purposes should be treated as liquid assets for social security purposes.  By accepting the covenant payment, which involved conservation in perpetuity, the value of his property was diminished, thus the up-front payment was intended for upkeep and maintenance and should be regarded as a return of capital and not treated as income.

11.     The respondent stated that depending upon how the money was used, it could be treated as an asset under the assets test and if invested might subsequently be treated as income under the income test.   However, in situations such as Mr Schwabe faced, the payment would not be treated as income for the purpose of the social security law, but there was no basis in law for exempting the money from the definition of “liquid asset” under the liquid assets waiting period (LAWP) test.

12.     The hearing was conducted in Devonport on 24 February 2005.   Mr Schwabe was represented by Mr John Crookes of counsel and the respondent by Mr Brian Sparkes.

13.     After Mr Crookes had outlined key issues in the case, Mr Schwabe was affirmed and explained the extensive activities required to meet covenant provisions, especially if neighbours might request fencing around the property.  Current upkeep was around $2,000 per year, which meant the prepayment of $15,000 would not go far.   He had been forced to use some of the capital as living expenses, as his hand had taken time to heal and he had purchased an essential second-hand car.

14.     Under cross-examination, Mr Schwabe emphasised his commitment to conservation and refuted any suggestion the covenant was intended to yield capital he could use for other purposes.   He freely admitted that circumstances had forced him to use portion of the funds to deal with personal circumstances, but this was limited in scale, at a time when if he had sold the property it would have yielded several times its initial price.    If he had known about the LAWP test, he might have hesitated to sign the conservation covenant, since it penalised those who sought to preserve areas in perpetuity.

15.     Counsel for the applicant drew attention to the numerous duties of landowners under RFA operational plans.   It was unjust to treat the initial payment as a liquid asset, a matter that had already been discussed in the Australian Parliament and drawn to the attention of the Minister.   He requested the Tribunal to do the same.

16.     Mr Sparkes for the respondent said that the case dealt with a narrow issue, namely whether the amount of $15,000 received by Mr Schwabe should be treated as a liquid asset and be subject to the LAWP test.    The public policy principle behind the LAWP is that a person who has accessible assets should exercise those assets before calling upon taxpayer funded income support payments.   This is a general principle underpinning several provisions in social security law and seeks to ensure the limited public funding available for social security purposes is targeted to those most in need.

17. The term “liquid assets” is clearly defined in s14A of the Act as cash and readily realisable assets, and includes amongst other things amounts deposited with a bank or other financial institution. Section 14A does list a number of circumstances where amounts can be disregarded, but payments under the Regional Forestry Agreement are not among them. The LAWP was therefore lawfully applied in Mr Schwabe’s case, as a number of prior case determinations show. The decision under review should therefore be affirmed.

Analysis

18.     This is a de novo merits review of a government decision and in deciding the matter the Tribunal is bound to apply the law, standing in the shoes of the original decision-maker, noting statutory provisions, extant policy and any relevant prior case determinations.

19.     It must be said at the outset that Mr Schwabe presented as a credible witness, with a deep concern for environmental conservation.   However he was placed in difficult circumstances in late 20003, having to undergo surgery in order to restore physical capacity to manage his land in accordance with RFA private forest reserve provisions and continue the profession of sculptor and potter.    The Tribunal recognises these contextual factors but must proceed in accordance with what the law prescribes.

20. Eligibility for sickness payment is governed by the Act. Section 666 sets out circumstances where a person is qualified to receive sickness allowance and s676 sets out provisions for the liquid assets test waiting period. Section 676 provides that if on the day on which a person becomes incapacitated for work and study or on the day on which the person claims sickness allowance, the person’s liquid assets exceed the person’s maximum reserve, then that person is not qualified for sickness allowance until the person has served the liquid assets test waiting period in relation to the claim, before commencement of social security payment.

21. The term “maximum reserve” is defined in s14A of the Act. In Mr Schwabe’s case the maximum reserve is $5,000. As the value of Mr Schwabe’s liquid assets ($15,000) exceeded his maximum reserve ($5,000) on the day he claimed sickness benefit, then a liquid asset waiting period applies. Subsections 676(3A) and 676(3B) set out the formula for calculating the length of the liquid assets test waiting period. The Tribunal has applied that formula and is satisfied that Mr Schwabe was required to serve a 13 week waiting period in relation to his application for sickness benefit.

22.     But all of this turns upon the issue of whether the conservation covenant payment of $15,000 should be treated as a liquid asset.    As previously noted, it does not count as an asset for social security purposes, yet the respondent claims it must be considered in determining the LAWP.

23. The Tribunal notes that the term “liquid assets” is clearly defined in s14A of the Act as cash and readily realisable assets and includes amongst other things amounts deposited with a bank or financial institution. Mr Schwabe has openly stated he did have $15,000 payment in the Bendigo Bank at the time of his surgery, thus this must fall within the definition of “liquid assets” in so far as his claim for sickness allowance is concerned.

24. The Act does provide for exclusions in special circumstances. Sections 676(6) and 676(7) authorise the Secretary to determine that whole or part of the LAWP may be cancelled if a person is under severe financial hardship or has already suffered a LAWP during the preceding 12 months, but other situations, such as those created by the Regional Forestry Agreement are not identified or exempted. In this sense the decision to impose a 12 weeks LAWP on Mr Schwabe was lawfully made.

25.     Counsel for the respondent drew attention to a number of case determinations demonstrating that liquid assets, such as cash deposits in banks, are subject to the LAWP test.    The Tribunal has examined a range of these decisions and concurs that they consistently include bank deposits and deposits in other financial institutions as “liquid assets”, which are subject to the LAWP test.   See for example Biddlecombe and Secretary, Department of Family and Community Services (1999) AATA 528, Paulis and Secretary, Department of Family and Community Services (December 2000) AATA 1070, Salas and Secretary, Department of Family and Community Services (July 2002) AATA 635.   The only variation noted was in Secretary, Department of Social Security and Di Bernardo (October 1993) AATA 9029, where the LAWP test was abandoned, because a significant business loan debt existed in relationship to sale of an asset.

26.     To summarise:   The Tribunal finds on the basis of all evidence examined that the decision to impose a liquid assets waiting period of 13 weeks duration on Mr Schwabe was lawfully made.

Decision

27.     The decision under review is affirmed.

I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor B W Davis AM (Part-time Member)

Signed:  K L Miller (Administrative Assistant)

Date/s of Hearing  24 February 2005
Date of Decision  23 March 2005
Counsel for the Applicant         Mr J Crookes
Solicitor for the Applicant          Launceston Community Legal Service
Counsel for the Respondent     Mr B Sparkes
Solicitor for the Respondent     Legal Representative - Centrelink