Sinclair and Secretary, Department of Family and Community Services
[2005] AATA 454
•19 May 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 454
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2004/526
GENERAL ADMINISTRATIVE DIVISION ) Re IAN SINCLAIR Applicant
And
SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
Respondent
DECISION
Tribunal Ms N Isenberg, Member Date19 May 2005
PlaceSydney
Decision The Administrative Appeals Tribunal affirms the decision under review.
[sgd] Ms N Isenberg, Member
CATCHWORDS
Social security - liquid asset test waiting period – exemption of superannuation
LEGISLATION
Social Security Act 1991 ss 14A(1), 598, 19C(3), 23(1)
Banking Act 1959 ss 8, 9
CASE LAW
Re Jacobsen and the Secretary, Department of Social Security (1992) AATA 7846
Re Biddlecombe and Secretary, Department of Family and Community Services (1999) AATA 99/0528
REASONS FOR DECISION
Ms N Isenberg, Member
DECISION UNDER REVIEW
1.The decision under review before the Administrative Appeals Tribunals (“the Tribunal") was the decision of the Respondent, the Secretary, Department of Family and Community Services ("Centrelink") dated 3 November 2003 (T15) as affirmed by the Authorised Review Officer on 21 January 2004 (T30) and the Social Security Appeals Tribunal (“the SSAT") on 30 March 2004 (T2).
ISSUE BEFORE THE TRIBUNAL
2.The issues to be determined are whether a liquid assets test waiting period (‘LATWP’) should have been applied to Mr Sinclair and, if so, whether the whole, or any part, of the waiting period did not have to be served.
THE HEARING
3.A hearing was held before me in Wallsend on 10 May 2005 at which Mr Sinclair was self-represented. He was accompanied by his wife. Centrelink was represented by Mr A Zhang.
4.I had before me documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which I took into evidence. Mr Sinclair tendered a letter from Centrelink dated 13 December 2004 which I also took into evidence.
BACKGROUND
5.The facts of the matter are mostly agreed, and are reproduced here largely from the Respondent’s Statement of Facts and Contentions.
·Mr Sinclair lodged a claim for newstart allowance in August or September 2003 (T6). He advised that his business had been sold on 15 August 2003 (T7).
·On 10 September 2003, Mr Sinclair invested $50,000 into a ‘superannuation account’.
·On 3 October 2003 newstart allowance was granted to Mr Sinclair. He was not immediately entitled to receive the allowance as he was subject to a LATWP until 8 November 2003 (in fact, 8 December 2003), as his total liquid assets were $87,010 (T9).
·On 17 October 2003 Mr Sinclair wrote to Centrelink (T14) expressing concern about the amount of liquid assets taken into account and the resultant imposition of the waiting period. His letter included further information about his and his wife's financial circumstances and the expenditure of their available funds. As a result of his representations, on 3 November 2003 the amount of liquid assets taken into account was reduced to $35,959.36 (T15). This, however, did not affect the liquid assets test waiting period. Mr Sinclair had noted that he had transferred $50,000 into a ‘superannuation account’ but the delegate said she was “unable to deduct superannuation purchased after the start date for NSA (newstart allowance)” (T16).
APPLICANT’S EVIDENCE and SUBMISSIONS
6.Mr Sinclair conceded that his liquid assets were properly calculated by Centrelink at about $36,000, although when all expenses were taken into account, it was probably closer to $32,000. In either event, he conceded that a LATWP of 13 weeks would apply.
7. His contention, however, was that the superannuation account should have been exempted from the calculation of his liquid assets. Although he doubted that this was the position under the Act, he said that as he had opened the account on the advice of a Centrelink officer, Centrelink should be responsible for the advice of its officer acting in the course of his employment. Mr Sinclair said he had relied on the advice, and it had been to his financial detriment.
8.Mr Sinclair told me that at about the time of his application for newstart allowance Centrelink had advised him to speak with its financial adviser, Mr Seamer. He said that he was told that superannuation was exempt from the liquid assets test. Mr Sinclair said he dealt mainly with the Maitland Mutual Building Society and enquired of Mr Seamer if that organisation might have a program that was ‘acceptable to Centrelink’. He said that he was told by Mr Seamer that he did not think it did. Mr Sinclair said he told Mr Seamer that he also banked with Newcastle Permanent Building Society (’Newcastle Permanent’). He said that while Mr Seamer was concerned to point out that he could not recommend one institution over another, he said he understood Newcastle Permanent to have such a program. Mr Sinclair said Newcastle Permanent ‘confirmed word for word’ what Mr Seamer had told him, so he opened the account.
9. I asked Mr Sinclair to tell me about the terms of the account, as I had no information before me about it. He said interest is paid at 6 monthly intervals and at age 65, on death or permanent invalidity, the money deposited, plus interest, is realised. He said the money could be withdrawn from the account, however, on ‘reasonable notice’, which he understood to mean about a week’s notice.
10.He said that had he not been so advised by Mr Seamer, he may have spent the $50,000 on buying, for example, a better house and car. He observed that the value of those assets had not been included in the calculation of liquid assets, and that a further $50,000 would have significantly reduced his liquid assets, and effectively reduced his LATWP to 0 weeks.
11.He also referred to Centrelink’s website which he said was consistent with the advice he had been given. He also referred me to the findings of the SSAT that he had been so advised.
12.Mr Sinclair noted that he has about $3500 - $4000 in Comsuper and this sum was not included in the calculation of his liquid assets.
13.Mr Sinclair said that in addition to the 13 week LATWP, he had been further disadvantaged as it is his understanding that in respect of those aged over 60 and in receipt of newstart allowance prior to the end of September 2003, some ‘allowances’ were made in reduced reporting arrangements. Those like him, whose newstart allowance did not commence until after that time, must continue to be seen to apply for work, notwithstanding that work opportunities are almost non-existent for mature age job seekers.
14.He said he took offence at Centrelink’s letter of 13 December 2004 (Exhibit A1). He invited my attention to the report that Mr Seamer ‘could not recall’ mentioning the waiting period would be ‘reduced or expunged as a result of a superannuation investment’. He said that because Mr Seamer’s role involves giving advice to hundreds of people, it was not surprising that he did not recall one particular piece of advice. On the other hand, Mr Sinclair said, it was the only occasion he had received such advice. He said he also found it offensive that the author of that letter had merely ’discussed’ the matter with Mr Seamer and had not bothered to take a statement from him.
15.He further added that ‘every time’ he goes to Centrelink, he is asked as to the outcome of these proceedings because, he believes, it is the understanding of Centrelink officers (at least in Maitland), that ‘superannuation is exempt from the liquid assets test’.
16.In conclusion, Mr Sinclair said it was unfair that he was being penalised for putting himself in the hands of Centrelink’s adviser.
RESPONDENT’S SUBMISSIONS
17.Centrelink’s submissions focussed on the calculation of the LATWP as specified in Section 598 of the Act. In relation to the superannuation account of $50,000, it was contended that this amount could not be deducted from Mr Sinclair’s liquid assets.
18.Centrelink’s first contention was that subsection 598(1) of the Act applies to the value of a person’s liquid assets on the day on which the person claims newstart allowance. At the time Mr Sinclair claimed newstart allowance, the amount of $50,000, which was subsequently invested in a superannuation account on 10 September 2003, was part of his liquid assets.
19.It was further submitted that, in any event, superannuation per se was not exempt, and my attention was invited to Section 14A of the Act which includes, for the purposes of the calculation of liquid assets, monies deposited with a bank or financial institution.
20.It was also submitted that the only basis on which Mr Sinclair’s LATWP could be reduced was under Section 598(5) of the Act which provides:
If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while serving a liquid assets test waiting period, the Secretary may determine that the person does not have to serve the whole, or any part, of the waiting period.
Note 1: For in severe financial hardship see subsection 19C(2) (person who is not a member of a couple) and 19C(3) (person who is a member of a couple).
Note 2: For unavoidable or reasonable expenditure see subsection 19C(4).
21.It was submitted that Mr Sinclair was not in severe financial hardship during the LATWP. Subsection 19C(3) of the Act explains that a member of a couple who claims newstart allowance is in severe financial hardship if the value of the couple’s liquid assets are less than twice the fortnightly amount at the maximum payment rate of the newstart allowance that would be payable if the person’s claim were granted and the liquid assets test waiting period did not apply. At the relevant time, twice the maximum fortnightly rate of newstart allowance for a person in Mr Sinclair’s circumstances was $694.40.
22.In the light of its contention that Mr Sinclair was not in severe financial hardship no submission was made by Centrelink as to whether Mr Sinclair incurred unavoidable or reasonable expenditure while serving the liquid assets test waiting period. Mr Zhang said that in any event, this was a very limited provision, and gave an example of unexpected significant medical expenses arising during the LATWP.
23.In response to Mr Sinclair’s assertion that if he had been aware that the amount of $50,000 invested in a superannuation account would be included in his liquid assets and thus included in the amount used to determine the waiting period, he could have disposed of the amount in other ways, Centrelink submitted that while he could have used the amount in other ways, he did not do so. It was also submitted that when deciding whether the discretion in subsection 598(5) of the Act should be exercised a decision-maker must consider a person’s circumstances as they are, or were, and not as they could have been if the person had acted differently.
FINDINGS
24.In coming to the correct and preferable decision, I took into account all of the evidence, submissions, case law and relevant legislation.
25.There was no dispute that, if an amount of either about $36,000 or $32,000 were the value of Mr Sinclair’s liquid assets then the statutory formula would produce a LATWP of 13 weeks, as outlined above.
26.The issue was whether Mr Sinclair’s superannuation account should have been exempted from the calculations of Mr Sinclair’s liquid assets.
27.Centrelink’s first submission was that subsection 598(1) of the Act applies to the value of a person’s liquid assets on the day on which the person claims newstart allowance, and as Mr Sinclair had not at that time invested the $50,000, that amount was properly included in his liquid assets. Although this contention was included in Centrelink’s Statement of Facts and Contentions, this submission was not pressed at the hearing. The intention of subsection 598(1), no doubt, is to prevent manipulation of finances by a potential recipient of newstart allowance so as to bring those finances within the acceptable liquid assets level. In practice, it seems that this provision is not strictly applied by Centrelink. The services of a ‘financial adviser’ were offered, and there appears at least to have been some discussions about liquid assets and the effect on newstart allowance payments. Further, Centrelink was prepared to review its calculations of Mr Sinclair’s liquid assets on several occasions, finally reducing it to about $36,000. It would be inconsistent for it to now rely on this provision. In view of my findings set out below, I need make no findings in this regard.
28.Section 14A of the Act relevantly defines a person’s liquid assets to include amounts deposited with, or lent to, a bank or other financial institution (whether or not the amount can be withdrawn or repaid immediately).
29.Section 23(1) of the Act defines ‘bank’ as following;
"bank" includes, but is not limited to, a body corporate that is an ADI (authorised deposit-taking institution) for the purposes of the BankingAct 1959 .
30.Section 23(1) of the Act similarly defines ‘financial institution’ as
“financial institution” means a corporation that is an ADI for the purposes of the Banking Act 1959.
31.Section 8 of the Banking Act 1959 states that only the reserve bank and bodies corporate that are ADIs may carry on banking business. Further, section 9 of the Banking Act 1959 states that the Australian Prudential Regulation Authority (“APRA”) may, from time to time, publish a list of approved ADIs.
Publication of list of ADIs
APRA may, from time to time, publish a list of ADIs:
(a) in the Gazette; or
(b) in such other manner as APRA determines.
32.A list of authorised ADIs can be found on APRA’s website, which is I note that Newcastle Permanent Building Society Ltd is listed here as being an approved ADI.
33.I therefore find that Newcastle Permanent Building Society Ltd, being a corporation and being listed as an approved ADI by APRA, is a financial institution and that the amount of $50,000 was deposited by Mr Sinclair with that financial institution.
34. In coming to this view I noted the Guide to Social Security Law contains guidance for Centrelink decision-makers in the interpretation of the law. Part 1.1.L.50 of the Guide states:
Definition
Liquid assets are any readily available funds which can be accessed by the customer within 28 days of the date last worked.........
Examples: Liquid assets include:
·cash on hand,
·shares and debentures, term deposits,
·other money available at short notice,
·some payments made or due to be made (within 28 days) by a customer's last employer,
·10 year insurance bonds,
·amounts deposited or lent to banks or other financial institutions whether or not the amount can be withdrawn or repaid immediately,
·amounts borrowed from the bank for a specific purpose such as overseas travel that may not have been used for the said purpose,
·assets given to a son or daughter in some circumstances,
·loans to other people,
·unencumbered proceeds from sale of business,
·monies in trust funds, bank accounts including mortgage offset accounts, BUT NOT balances of mortgage redraw accounts, and
·compensation payments.
35.The definition is silent in relation to superannuation accounts. This approach is logical, however when it is considered that an account such as Mr Sinclair’s is adequately described as a ‘deposit with a bank or financial institution’. Further, Mr Sinclair’s Comsuper account would not have been included in his liquid assets as Comsuper is not a bank or financial institution.
36.I also note the decisions in Re Jacobsen and the Secretary, Department of Social Security (1992) AATA 7846 and Biddlecombe and Secretary, Department of Family and Community Services (1999) AATA 99/0528 where the term ‘liquid assets’ was held to mean ’no more than assets which are capable of ready conversion to cash’. Mr Sinclair’s evidence was that he had what in my view, was very ready access to the deposited funds.
37.Having found that the amount of $50,000 was deposited by Mr Sinclair with that financial institution, I find that that amount was properly included in Mr Sinclair’s liquid assets. I am obliged to make this finding irrespective of the circumstances by which those funds came to be deposited in that account.
38.I also find that Mr Sinclair was not in severe financial hardship during the LATWP, as his evidence was that his liquid assets are, and were at the relevant time, about $32,000. That is far in excess of the amount specified in Subsection 19C(3) of the Act.
39.As I told Mr Sinclair at the hearing, I am not required to make a finding whether Centrelink had a duty of care to him and whether, through its financial adviser it had breached that duty. Pursuit of that issue would need to occur elsewhere, and I understand Mr Sinclair to be addressing this. He has already made a claim for compensation for Detriment Caused by Defective Administration, but this has been refused. This is perhaps surprising in view of the findings of the SSAT that he had in fact been given erroneous advice. He told me a further complaint has been lodged with the Ombudsman.
40.However, I make the following observations:
·As suggested by Mr Sinclair, I located the following in Centrelink’s website under the heading ‘Treatment of superannuation and rollover investments under the Social Security pension and allowance income and assets tests’:
How these investments are treated depends on your circumstances as set out below.
Customers who have reached Age Pension age
Your superannuation and rollover investments are:
• included as assets under the assets test; and
• regarded as financial investments, are added to the value of other financial investments and deemed to calculate income from all financial investments.
…
All other customers
Your superannuation and rollover investments are disregarded for income and asset test purposes.
·Mr Sinclair said that he may have spent the $50,000 on buying a better house and car. I cannot comment if the increased value of those assets would have reduced his LATWP to 0 weeks, but I note that his present house and car had been excluded from the calculation of liquid assets.
·I found Mr Sinclair’s reasoning in his criticism of the response by Centrelink to his claim for Detriment Caused by Defective Administration discussed in paragraph 12 above to be compelling.
·I also note his evidence of the continued interest in the progress of the matter at the branch level, as discussed in paragraph 13 above.
DECISION
The Administrative Appeals Tribunal affirms the decision under review.
I certify that the preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Member
Signed:
Niamh Kinchin AssociateDate of Decision 19 May 2005
Representative for the Applicant Self-represented
Representative for the Respondent Mr Andrew Zhang
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