THOMAS GOSLING and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

[2012] AATA 649

[2012] AATA  649

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2012/1222
Re	THOMAS GOSLING
APPLICANT
And	SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
RESPONDENT

DECISION

Tribunal	PROFESSOR RM CREYKE, SENIOR MEMBER
Date	25 September 2012
Place	Canberra

The decision under review is set side and remitted under s43.

...............................[sgd].........................................

PROFESSOR RM CREYKE, SENIOR MEMBER

CATCHWORDS

SOCIAL SECURITY - newstart allowance - income maintenance period - liquid assets test - waiver of debt - administrative error - jurisdiction

LEGISLATION

Administrative Appeals Tribunal Act 1975 (Cth) ss 25, 29

Social Security (Administration) Act 1999 (Cth) s 179
Social Security Act 1991 (Cth) ss 8, 14A, 598, 643, 1068, 1237A

REASONS FOR DECISION

PROFESSOR RM CREYKE, SENIOR MEMBER

1. Mr Thomas Gosling, born 1947, claimed Newstart Allowance on 31 August 2011.

2. On 31 August 2011, a decision was made that Mr Gosling was to be paid Newstart Allowance from 9 September 2011 under the Social Security Act 1991 (Cth) (Act). That date took into account the legislation which deemed that his payments for annual leave were ordinary income during an income maintenance period which commenced on 17 August 2011.

3. On 5 September 2011, Mr Gosling sought review of that decision because he claimed that his income maintenance period should have commenced on 5 August 2011, the day he ceased work.

4. On 5 September 2011, the original decision-maker decided the decision was correct, a decision upheld on review by an authorised review officer on 6 December 2011.

5. On 3 January 2011, Mr Gosling sought review by the Social Security Appeals Tribunal (SSAT), which on 17 January 2011, affirmed the decision.

6. On 11 May 2012, Mr Gosling appealed to the Tribunal.  That application was out of time and the Department of Education, Employment and Workplace Relations opposed the extension of time.  Following an interlocutory hearing on 1 May 2012, the extension of time was granted. On 17 September 2012, in Canberra, the Tribunal heard the application relating to the claim.

7. In its Statement of Facts, Issues and Contentions, lodged with the Tribunal on 20 July 2012, the Secretary contended that the SSAT decision should be set aside.  The reason is that the Secretary had failed to take into account that Mr Gosling had liquid assets, namely, shares, and a liquid assets test waiting period should have been imposed.

8. If that contention is upheld, the income management period and the liquid assets waiting period would commence the same day, either on 6 August 2011, or 31 August 2011. However, the end date for the period in which Mr Gosling was precluded from being eligible for newstart allowance would be 4 November 2011.

9. In that event, since Mr Gosling had received newstart allowance from 9 September 2011, he would have incurred a debt which he needed to repay unless that debt could be waived provided the failure to impose the liquid assets waiting period was due solely to administrative error.

   BACKGROUND

10.  Mr Gosling’s relevant employment came to an end on 5 August 2011.  On 31 August 2011, he lodged a Customer Declaration Form – Newstart Allowance and a summary of share investments with a total market value of $24,750.32.

11.  Mr Gosling delayed making the application because he believed his entitlement to apply for newstart allowance commencing on 31 August 2011, which he calculated was 17 working days from his ceasing employment on 5 August 2011. The reason he did so was because he had received a lump sum payment on 17 August 2011 representing 17 days' annual leave.

12.  The lump sum payment was $7,098.27, being the amount of his salary to 5 August 2011 and $5,476.92 for 17 days’ annual leave.

13.  A decision was made on 31 August 2011 to impose an income maintenance waiting period from 17 August 2011 which meant he did not commence to receive newstart allowance until 9 September 2011.

14.  Despite Mr Gosling having declared the value of his share investments, no decision was made to impose a liquid assets test waiting period by the initial decision-maker in the initial decision dated 31 August 2011. It was not imposed later when the initial decision-maker reviewed the decision on 5 September 2011, by the authorised review officer in the decision dated 6 December, 2011, nor by the SSAT in its decision of 17 January 2012.

15.  The authorised review officer, however, noted in a document entitled 'ARO Notes', dated 6 December 2011, that the start date for newstart allowance in Mr Gosling’s case was ‘subject to point 1068-G7AKC’, the liquid assets test waiting period. The note continued: ‘In Mr Gosling’s case no liquid assets test waiting period was applied to this claim’.

16.  The 'ARO Notes' went on to assess that Mr Gosling should have been subject to a liquid assets test waiting period calculated to be 13 weeks commencing on 6 August 2011 and concluding on 4 November 2011, that accordingly he had been paid newstart allowance to which he was not entitled. That meant an amount of $2456.39 was a legally recoverable debt (section 1223 of the Act).

17.  The ARO Notes commented further:

However, this debt would have arisen solely due to administrative error on the part of Centrelink  … any debt now raised would be raised more than 6 weeks after the first incorrect payment  on 13 September 2011 [and accordingly] section 1237A of the Act would apply and mean recovery of this debt would be waived in full.’

18.  That is the only reference to the liquid assets test waiting period in the documents before the Tribunal until receipt of the Department’s Statement of Facts, Issues and Contentions, dated 20 July 2012, which raised the issue and contended that the Tribunal should set aside the decision of the SSAT on the ground that a liquid assets test waiting period should be imposed.

19.  At the hearing the representative of the Department noted that on 22 August 2012, Centrelink had coded into the system a liquid assets test waiting period relating to Mr Gosling.  However, she claimed that because of difficulties with the database system, no debt had yet been raised, nor had consideration been given as to whether the debt should be waived.  Nevertheless, she contended that the Tribunal had jurisdiction to consider the issue and that since under the Act, if such a waiting period was imposed, it would have affected the date of commencement of the income maintenance period, the Tribunal should make a decision on that issue.

20.  At the hearing Mr Gosling conceded that the liquid assets test waiting period should have been applied to him.

ISSUES

21.  The issues are as follows:

·What was the start date for the income management period for Mr Gosling?

·Whether Mr Gosling was also subject to a liquid assets test waiting period and for what period?

·Whether Mr Gosling was in severe financial hardship?

LEGISLATION

22.  The legislation is contained in the Social Security Act 1991 (Cth) (Act). Section 643 sets out the start date of newstart allowance. The start date is to be worked out in accordance with the Benefits Rate Calculator in section 1068 of the Act. The start date for newstart allowance is subject to an income test set out in Module G and is dependent on a person’s ‘ordinary income’.

23.  The expression ‘ordinary income’ is defined. ‘Income’ means any ‘income earned, derived or received by the person for the person’s own use or benefit’ (section 8(1)(a)). Receipt of ordinary income determines the start date of newstart allowance because newstart allowance may not commence until the end of any income maintenance period and/or liquid assets waiting period imposed on the person, and these periods are affected by receipt of ordinary income.  

Income maintenance period

24.  The effect of an income maintenance period is to apportion certain lump sum termination payments such as annual leave payments as income received over a period by a person who ceases work.  The purpose of such provisions is to ensure people support themselves, if they are able, prior to seeking social security income support. The relevant provisions are: sections 1068–G7, 1068–G7AH, 1068-G7AKA, 1068G7-AKC. The start date of the income maintenance period is normally the date of termination of payment.  However, if lump sum payments are paid to the person, those payments are taken into account if they comprise, for example, annual leave payments.  The receipt of such sums delays the start date of payment of newstart allowance for a period.

Section 1068-G7AKAStart of income maintenance period--employment terminated

Subject to point 1068-G7AKC, if the person is covered by point 1068-G7AH, the income maintenance period starts, subject to point 1068-G7AKB, on the day the person is paid the termination payment.

Liquid assets waiting period

25.  In addition, the start date of any income maintenance period is affected if a liquid assets test waiting period applies. The liquid assets waiting period also is imposed when a person is able to support themselves through realisation of liquid assets.  The provisions are found in sections 14A, 598, 1068-G7AKC of the Act.

Section 598 Liquid assets test waiting period

(1)  Subject to subsections (4A), (5), (6), (7) and (8), if:

(a)  the value of a person's liquid assets exceeds the person's maximum   reserve on:

(i)  the day following the day on which the person ceased work or   ceased to be enrolled in a full time course of education or of vocational   training; or

(ii)  the day on which the person claims a newstart allowance; and

(b)  the person is not a transferee to a newstart allowance;

the person is not qualified for a newstart allowance for a period unless the person has served the liquid assets test waiting period in relation to the claim before the beginning of that period.

Interaction between income maintenance period and liquid assets test waiting period

1068-G7AKC  Start of income maintenance period where liquid assets test waiting period applies

If a person to whom point 1068-G7AKA applies is subject to a liquid assets test waiting period, the income maintenance period is taken to have started on the day on which the liquid assets test waiting period started.

Waiver

1237A Waiver of debt arising from error

Administrative error

(1)  Subject to subsection (1A), 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 in good faith      the payment or payments that gave rise to that proportion of the debt.

(1A)  Subsection (1) only applies if:

(a)  the debt is not raised within a period of 6 weeks from the first payment   that caused the debt.

CONSIDERATION

Income maintenance period

26.  Mr Gosling contends that the commencement date for the income maintenance waiting period should have been 5 August 2011, the date his work ceased, rather than 17 August 2011. In effect that denied him newstart allowance for six working days, that is, between 31 August and 9 September 2011.

27.  His arguments are that:

·     The effect of termination payments for the receipt of income support should be calculated from the period when the payment is due, in his instance, the last day of employment.

·     In most situations employers provide termination pay at the cessation of employment and employees should not be penalised if their employer is slow in depositing the termination payment into the employee’s bank account.

·     As a matter of principle, the purpose of newstart allowance is to assist when a person is unemployed and he should, therefore, have been entitled to that payment from the time of his unemployment. 

·     In addition there are a number of policy documents which Mr Gosling contends have not been complied with in the decision-making in relation to him. These include Centrelink’s service charter which states that the organisation exists to provide easy, high quality services to people at different stages of their lives; the Australian Public Service (APS) value of common sense; and Occupational Health and Safety Guidelines which state that a person must take annual leave for their health and physical wellbeing.

28.  In particular, he argued that the legislation was contradictory since it started from the proposition that a ‘person is taken to have received’ a lump sum payment ‘on the day on which the person’s employment was terminated’ (section 1068-G7).   It also states that if a person’s employment is terminated and the person receives a lump sum payment ‘the person is taken to have received ordinary income for a period (the income maintenance period) equal to the period to which the payment relates’ (section 1068-G7AH).

29.  However, the Act then qualifies that rule by providing that the start of the income maintenance period when a person’s job is terminated is ‘the day the person is paid the termination payment’. In his view it was difficult to reconcile these provisions.

30.  The Tribunal had some sympathy with Mr Gosling’s difficulties.  However, the Tribunal noted and Mr Gosling accepted that in principle the income support provisions are for people in financial difficulties and that, with some qualification, while an individual has money to live on whether from a termination payment of salary or accrued annual payments, the person was not entitled to income support.  For that reason, an income maintenance period was imposed in his case.

31.  The issue for the Tribunal is whether the start date of the income maintenance period was calculated correctly. The starting point is section 1068-G7 which provides that the deemed start date is the date of termination of employment.  However, that section is expressly made subject to ‘points 1068-G7AF to 1068-G7AR.’

32.  These provisions include section 1068-G7AH which provides that when a person’s job is terminated and they receive a lump sum termination payment, the person is taken to have received ‘ordinary income’ for an income maintenance period which is equivalent to the period to which the payment relates.  In Mr Gosling’s case, his termination payment included 17 days of annual leave payment in a lump sum and in that circumstance he was taken to receive ‘ordinary income’ for the relevant period. The period is worked out in accordance with a formula in section 1068-G8.

33.  Section 1068-G7AKA then provides that if section 1068-G7AH applies, ‘the income maintenance period starts … on the day the person is paid the termination payment’.  In Mr Gosling’s case, that date was 17 August 2011.  In other words, his income maintenance period start date is expressly provided to be 17 August 2011, not 5 August 2011.  The Tribunal finds, subject to the next issue, that this is the correct start date.

34.  There are, however, exceptions to this principle.  The first exception is if the person is subject to a liquid assets test waiting period (section 1068-G7AKC).  No decision was made by the initial decision-maker, the authorised review officer at Centrelink, or by the SSAT, on this issue.

35.  At the hearing the Tribunal raised the issue of whether it had jurisdiction to consider the issue in the absence of any reference to that issue in any of the previous stages of the decision under review. The only reference in the Centrelink documents to the liquid assets waiting test is found in the ARO Notes which were not a decision. 

36.  Further, at the hearing the representative of the Department conceded that although the liquid assets test waiting period had now been coded into Centrelink’s mainframe system in relation to Mr Gosling, he has not yet been advised to that effect, nor has any decision been made to raise a debt against him, nor whether to waive any such debt. The Tribunal notes in that context that section 1237A, the waiver power, requires that the debt be waived in circumstances, such as appear to apply on the facts in this case, where the debt has occurred solely due to administrative error and the payment made was received in good faith.

37.  The result is that no decision was made to impose a liquid assets waiting period, nor has Mr Gosling been so notified even though such a period has, since the date of the SSAT decision, been coded into Centrelink's mainframe system.

38.  The Tribunal notes that its jurisdiction is limited by the terms of the statute granting it jurisdiction.[1] In the case of decisions of the kind before it that means the decision under review is the decision of the SSAT.  The Social Security (Administration) Act 1999 (Cth) s 179 states:

[1] Administrative Appeals Tribunal Act 1975 (Cth) s 25.

179(1) If: (a) a decision has been reviewed by the SSAT; and (b) the decision has been affirmed, varied or set aside by the SSAT; application may be made to the AAT for review of the decision of the SSAT.

(2)  For the purposes of subsection(1), the decision made by the SSAT is taken to be: (a) where the SSAT affirms a decision – that decision as affirmed; and (b) whether the SSAT varies a decision – that decision as varied; and (c) where the SSAT sets a decision aside and substitutes a new decision – the new decision; and (d) where the SSAT sets a decision aside and sends the matter back to the Secretary for reconsideration in accordance with any directions or recommendations of the SSAT – the directions or recommendations of the SSAT.

In other words, the Tribunal's jurisdiction is limited to reviewing the decision as made by the SSAT.

39. Although that section is specifically made subject to section 29 of the Administrative Appeals Tribunal Act 1975 (Cth), section 29 only relates to the form in which and the time within which applications for review to the Tribunal must be made and is not relevant for the purposes of this claim.

40.  The Tribunal notes that the SSAT decision simply affirmed the decision ‘by Centrelink on 31 August 2011 to commence payment of newstart allowance from 9 September 2011 and not an earlier date due to the imposition of a (sic) income maintenance period’. No mention was made of a liquid assets test waiting period.

41.  Nonetheless, despite the absence of any reference to the liquid assets test waiting period in the SSAT decision and despite its initial belief that it lacked jurisdiction to decide the matter, the Tribunal considers, in light of the precise terms of the legislation, that it cannot avoid considering this issue.  That is because in deciding the start date for the income maintenance period, section 1068-G7AKA specifically states that the start date is subject to section 1068-G7AKC the provision relating to a liquid assets waiting period.  In those circumstances, the Tribunal cannot avoid applying the specific terms of the Act and considering the liquid assets test waiting period issue even though all the previous decision-makers in the chain of decisions, including the SSAT, have neglected to do so. The Tribunal is bound to apply the law, in this case, the Act, in its decision-making.

42.  Section 598(1) of the Act provides for the taking into account of the amount of a person’s liquid assets on either the day the person ceased work or the day they applied for newstart allowance.  The start day for the liquid assets test waiting period in the case of a single person such as Mr Gosling is ‘the day following the day on which the person ceased  work’ (section 598(3)), that is 6 August 2011. 

43.  Mr Gosling has ‘liquid assets’ in the form of a readily realisable asset, namely his shares (section 14A of the Act). He has declared that he owns these shares from the time he first applied for newstart allowance. The evidence establishes that the value of the shares in the period between 5 August 2011 and 31 August 2011, was between $0.14 and $0.16 per share.  Taking the lowest value of $0.14 per share, the value of Mr Gosling’s shares as at 6 August 2011 was $23,100 and their value as at 31 August 2011 was $24,750. For the purpose of calculating the liquid assets test waiting period, in the case of a single person an amount – the ‘maximum reserve of $2,500 - is excluded from the value of a person’s liquid assets (section 14A(1)).

44.  A liquid assets test waiting period is imposed if the value of the assets ‘exceeds the person’s maximum reserve’ in Mr Gosling’s case, on either 6 August 2011 or 31 August 2011.  Mr Gosling's 'maximum reserve' as a single person with no dependents, is $2,500 (section 14A). In his case, that test is met since the value of his assets did exceed the amount of his maximum reserve. He was, therefore subject to a liquid assets waiting period. 

45.  The length of the period is the lesser of 13 weeks or the period calculated under section 598(2A) of the Act. That requires application of the formula:

liquid assets – maximum reserve amount
divisor

46.  As Mr Gosling is single, and has no dependent children, the divisor is $500.  His maximum reserve is $2,500.  Accordingly the formula is: $23,100 - $2,500/500 = 41 weeks (rounded down).  As this exceeds 13 weeks, Mr Gosling’s liquid assets test waiting period is 13 weeks commencing on 6 August 2011 and ending on 5 November 2011.

47.  In turn, this period affects the start date for the income maintenance period which runs concurrently with the liquid assets test waiting period (section 1068-G7AKC).  Accordingly the start date of Mr Gosling’s income maintenance period is 6 August 2011 ('the day after' he ceased work) and ends 17 working days later. That means the SSAT decision is incorrect.

48.  It also means that Mr Gosling’s newstart allowance should not have started until 5 November 2011.  Mr Gosling has, therefore, been overpaid newstart allowance for the period 9 September 2011 to 4 November 2011.  No decision has been made to recover any debt owed as a consequence.  The Tribunal notes, without deciding, that if the overpayment occurred solely because of administrative error by Centrelink, the debt must be waived (section 1237A).

49.  It was explained to Mr Gosling at the hearing, that although he referred to a number of 'undertakings' by Centrelink and policies concerning the administration of the Act, these are not the law and it is only the law which, in this case, can be relied on by the Tribunal to reach its decision.

'Severe financial hardship'

50.  There was no discussion of this issue at the hearing, nor was any further evidence brought relating to it.  That was because the uncontested evidence establishes that Mr Gosling did have assets on which to draw when he first ceased work, a fact which he has never denied, and the arguments rejecting any possibility of his being in 'severe financial hardship' were comprehensively and adequately dealt with by the SSAT in its decision.  Accordingly the Tribunal has had no need to further consider these findings which it considers to be correct.

51.  In conclusion, the decision of the SSAT is set aside.  Instead a decision is made that Mr Gosling is subject to a liquid assets test waiting period which commenced on 6 August 2011 and concluded on 4 November 2011.  In turn his income maintenance period should have commenced on 6 August 2011.

I certify that the preceding 51 (fifty-one) paragraphs are a true copy of the reasons for the decision herein of Professor RM Creyke, Senior Member.

............................[sgd]............................................

Associate

Dated 25 September 2012

Date(s) of hearing	17 September 2012
Applicant	In person
Advocate for the Respondent	Jennifer MacLean
Solicitors for the Respondent	Centrelink Program Litigation and Review