Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Leslie and Elizabeth Naunton
[2013] AATA 169
[2013] AATA 169
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/3202
Re
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
APPLICANT
And
Leslie and Elizabeth Naunton
RESPONDENT
DECISION
Tribunal Ms A F Cunningham (Senior Member)
Date 27 March 2013 Place Hobart Decision Summary The Tribunal sets aside the decision of the SSAT dated 26 June 2012 and substitutes the decision that :
1.The transitional arrangements in clause 146 of schedule 1A to the Social Security Act 1991 no longer apply to the respondents from 20 January 2012.
2.The matter is remitted to the Secretary for assessment in accordance with this decision.
........................................................................
Ms A F Cunningham (Senior Member)
CATCHWORDS
Social Security-age pension-amending legislation from 20 September 2009-transitional divisions-casual work-work bonus provisions lead to higher rate of pension under new rules-transitional provisions no longer applicable-decision of SSAT set aside
LEGISLATION
Social Security and other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009
Social Security Act 1991 - Clause 146 of Schedule 1A, ss 55, 1073AA , 1073AB, 1064-A1), 1064E1
Guide to the Social Security Law
CASES
Stewart and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2010) AATA 871
McEvoy and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2010) AATA 103
REASONS FOR DECISION
Ms A F Cunningham (Senior Member)
This appeal concerns the rate of age pension payable to the respondents, Leslie and Elisabeth Naunton and whether their pension can continue to be paid under the 2009 transitional arrangements.
The respondents, Leslie and Elisabeth Naunton are a married couple and have been in receipt of age pension since prior to the introduction of the legislative changes on 19 September 2009.
On 26 June 2012 the Social Security Appeals Tribunal (SSAT) set aside a decision made by a Centrelink Authorised Review Officer (ARO) and substituted a decision that the respondents’ rate of age pension was to continue to be assessed under the transitional arrangements in clauses 146 of schedule 1A of the Social Security Act 1991 (The Act). The Secretary has appealed the decision of the SSAT contending that it did not take account of employment income in the sum of $394.18 for the period 20 January 2012 to 2 February 2012 or the effect that work bonus had in the rate calculation under the new rules.
Brian Sparkes appeared on behalf of the Secretary. The respondents were self represented and Leslie Naunton gave oral evidence before the Tribunal. The T documents were tendered pursuant to section 37 of the Administrative Appeals Tribunal Act 1975. Also tendered in evidence was a computer calculation of the rates of pension payable for the period 20 January 2012 to 31 January 2012 under both the transitional arrangements and under the new rate of pension which included provision for work bonus.
LEGISLATION
The legislation that relevantly applies in the present case is contained in the Social Security Act 1991 (The Act). The changes that were made from 20 September 2009 to the Pension Income Test contained in the Act, were made pursuant to the Social Securityand other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Act 2009. As a result of the changes, transitional provisions contained in schedule 1A of the Act were implemented to apply to pension assessments for people who were receiving a part rate of pension before 20 September 2009.
The transitional provisions are contained in clause 146 of schedule 1A, which includes reference to age pension. Subsection 5 of clause 146 provides as follows:
“Subclause (3) does not apply for working out the rate of a social security pension of the person for the relevant day if the relevant day is after a day for which one of the following conditions was met:
a) the amount worked out for the day under subclause (4) (in a previous application of this clause) was less than or equal to the person’s provisional annual payment rate, apart from this clause, for a social security pension described in paragraph (1)(a)”
The provisional annual payment rate is defined in subsection 3. Under Clause 146 a person in receipt of age pension would not be subject to the new rates for payment unless the calculated rate was greater than that calculated under the transitional provisions.
It is stated in the Explanatory Memorandum regarding the amendments to the Social Security Act that:
“The intention of subclause 146(5) is to ensure that, once a person’s provisional annual payment for a day is higher by reference to the rate and income test rules which exist apart from the rules inserted into Schedule 1A by this measure, the person’s rate cannot be determined again by the rules in Schedule 1A. This is to ensure that a person can only benefit from the transitional arrangements for a continuous period directly following 20 September 2009. Once a person no longer benefits from the transitional arrangements, their rate is to be determined by the rate and income test rules that will apply to people who begin receiving a social security pension described in subclause 146(1) on a day that is after 19 September 2009”.
On 1 July 2011 legislative changes were made to the work bonus rules in sections 1073AA and 1073AB of the Act increasing the amount that an eligible pensioner could earn from employment before it affected their pension rate. From 1 July 2011, the first $250 fortnightly employment income would not be assessed nor counted under the pension income test. Further, pensioners were able to accrue any unused amounts of the $250 fortnight exemption in an "employment income concession bank" up to a maximum of $6500. The income bank amount offsets future employment income from the pension income test.
Section 55 of the Act refers to the Pension Rate Calculator at the end of section 1064 for calculation of the rate of age pension. Section 1064-A1 of the Act provides a Method Statement for working out a person’s maximum payment rate. Section 1064-E1 of the Act provides a Method Statement for working out the effect of a person’s ordinary income on the person’s maximum payment rate. The terms “income” and “ordinary income” are defined in subsection 8(1) of the Act.
DISCUSSION
Attached to the Secretary’s Statement of Facts and Contentions were numerous attachments which included relevant legislation, extracts from the Guide to the Social Security Law, Explanatory Memorandum to the Social Security and Other Legislation Amendment (Pension Reform and other 2009 Budget Measures) Bill 2009, rate calculations, payment summaries, pension rate calculator, work bonus calculation and transitional rate calculation, work bonus information, pension reform information and notices sent by Centrelink to the respondents with respect to the proposed legislative changes.
The respondents did not dispute receipt of the notices however they contended that they had been misled by the information provided and did not consider that the changes had been accurately explained. In a letter dated 9 September 2009 it is stated :
“You do not have to do anything about these changes unless Centrelink contacts you. Transitional arrangements have been put in place to make sure that customers are not disadvantaged by the new rules. Centrelink has calculated that your pension payment would be at 20 September 2009 under both the new rules and the transitional rules and is paying you at the higher rate.…"
The respondents maintain that they have in fact been disadvantaged by the amending legislation in that following further calculations which took account of casual employment income earned, their age pension rate is now calculated pursuant to the new rules and is now at a lower rate than that previously paid.
The respondents contended that if they had received more accurate information about the effect of the amending legislation they would have made different arrangements, for instance, not accept the few days’ casual work offered to Mrs Naunton which has had a detrimental effect on their joint rate of age pension in the sum of approximately $100 per fortnight. It was Mr Naunton’s evidence that he consulted Centrelink officers on a number of occasions regarding the proposed amending legislation and said that they also had difficulty in understanding the true impacts of the transitional arrangements. Mr Naunton contended that he was misled by Centrelink staff who informed him that low earnings would have no impact on their rate of pension until January 2012.
CONSIDERATION AND FINDINGS
There was no dispute and the Tribunal accepts that Mr and Mrs Naunton were both in receipt of age pension on 19 September 2009. Their rate of age pension was subject to the transitional arrangements in clause 146 of schedule 1A of the Act and the work bonus provisions contained in the 2009 and 2011 amendments. For the period 20 January 2012 to 2 February 2012, the respondents’ rates of age pension were calculated having regard to Mrs Naunton’s employment income of $394.18. In the previous fortnight no employment income was earned.
The respondents advised that they did not dispute the Secretary's calculations under both the transitional arrangements and the new rules which took account of Mrs Naunton’s $394.18 casual earnings and the impact of the work bonus provisions. Under the new rules the employment income was disregarded because of the impact of the work bonus provisions and so did not affect the rate of pension. The work bonus provisions introduced in 2009 allowed for half of up to the first $500 of employment income earned in a fortnight to be disregarded under the income test for pensioners over the age pension age in addition to the usual income free test area. The more generous 2011 work bonus provisions provided for the accrual of any unused $250 per fortnight work bonus in an "employment income concession bank" up to a maximum of $6500 which could be used to offset future implement income. However under the transitional arrangements that income was not disregarded, as worked bonus was not available and so the income was relevantly considered which affected the rate assessed. The evidence provided shows that under the transitional rules the rate assessed was $11.22 per fortnight and under the new rules a slightly higher rate of $13.28 per day.
As a consequence, the respondents’ respective age pensions were calculated under the traditional rules as set out in clause 146 of schedule 1A of the Act until 19 January 2012 and under the new rules from 20 January 2012. This was because the rate of age pension under the new rules was greater than the rate assessed under the transitional arrangements. The respondents asked that the original decision be reviewed as they believed they were disadvantaged by the approach taken by Centrelink contrary to the advice that they had received that they would not be disadvantaged by the new rules.
It was submitted by Mr Sparkes that the purpose of the transitional provisions was to ensure that a person would not be disadvantaged by the amending legislation on the date of the changeover in that they would continue to be paid at the old rate if it was higher than the rate calculated under the new provisions. Mr Sparkes said this is evident from the Explanatory Memorandum which states that the range of savings and transitional provisions allow pensioners who will be affected by changes to the Social Security law to transition smoothly to the new arrangements. The effect of clause 146 of schedule 1A is that a person in receipt of age pension on 19 September 2009 can continue to have their rate of age pension assessed under the transitional arrangements until such time as the new rules provide an equal or higher rate. Once a higher rate is achieved under the new rules, the transitional arrangements cease to apply and can never apply again regardless of the circumstances.
There is no provision in the Act which provides for a reversion to assessment under the old income test rules once the transitional provisions cease to apply. This has been recognised in a number of Tribunal decisions. In Stewart and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2010) AATA 871 the Tribunal recognised that the applicants had been disadvantaged by the 2009 amendments in that the rate of their respective disability support pensions had decreased following calculation of income earned in a fortnight following a fortnight in which no income had been earned. At paragraph 10 the Tribunal stated:
"The parts of the Explanatory Memorandum and Centrelink material which declare that a pensioner will not be worse off under the 2009 amendments are misleading. In the circumstances facing Mr and Mrs Stewart, they were disadvantaged. When the Explanatory Memorandum and Centrelink material, including the Guide, are read as a whole, it becomes clear that a single payment at the higher rate under the new rules prevents a return to the earlier payment. Unfortunately for Mr and Mrs Stewart, this is the direct effect of cl 146 (5) (a) of Sch 1A of the Act. I am bound to apply the terms of the Act which admits no discretion to vary that outcome”.
The Tribunal recognised in McEvoy and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2010) AATA 1038 that the Act does not provide for reversion to assessment of carer payment rate under the old income test rules once the transitional provisions no longer apply and that it had no power to provide relief which is outside the operation of the relevant provisions.
It is not clear from the calculations contained in the SSAT's decision how it assessed the effect of Mrs Naunton's employment income of $394.18 for the period 20 January 2012 to 2 February 2012. It found that there was no change in the amount of ordinary income of Mr and Mrs Naunton between 4 January 2012 and 31 January 2012 and concluded that the rate of pension calculated by reference to the 2009 transitional provisions in January 2012 and February 2012 was higher than the rate calculated by reference to the current income test. Notably there is no reference to the effect of the work bonus on the rate calculation under the new rules.
This Tribunal is not bound by any findings of previous decision makers for the review conducted by the AAT is a de novo review of the decision taking into account all of the evidence available. As previously stated, the respondents do not dispute the Secretary’s calculations. The Tribunal finds that it correctly took account of Mrs Naunton’s earnings for the period 20 January 2012 to 2 February 2012 and the work bonus provisions resulting in a higher rate of age pension assessed under the new rules.
Unfortunately for Mr and Mrs Naunton, once the rate assessed results in a higher payment under the new rules, reversion to the transitional rules is no longer available. As the Act permits no discretion to vary that outcome, I must accordingly set aside the decision of the SSAT and substitute it with the decision that the transitional arrangements in clause 146 of schedule 1A to the Act no longer apply to the respondents from 20 January 2012.
I certify that the preceding 23 (twenty-three) paragraphs are a true copy of the reasons for the decision herein of ........................................................................
Administrative Assistant
Dated
Date(s) of hearing 7 February 2013 Applicants In person Solicitors for the Respondent Mr B Sparkes, Program Litigation and Review Branch
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