Torpy and Secretary, Department of Social Services (Social services second review)
[2016] AATA 845
•27 October 2016
Torpy and Secretary, Department of Social Services (Social services second review) [2016] AATA 845 (27 October 2016)
Division
GENERAL DIVISION
File Number
2016/2764
Re
Mr Raymond Torpy
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Mr Conrad Ermert, Member
Date 27 October 2016 Place Melbourne The Tribunal remits the matter to the Respondent to calculate Mr Torpy’s Newstart Allowance payments in accordance with the findings that his Income Maintenance Period commenced on 24 September 2015 and that it does not apply to him from 7 April 2016 to 6 July 2016 on the basis of his severe financial hardship caused by unavoidable and reasonable expenditure.
[sgd]........................................................................
Mr Conrad Ermert, Member
SOCIAL SERVICES - Newstart Allowance - allowance subject to an income maintenance period - start date of period - duration of period - whether period should be reduced on the basis of severe financial hardship - whether severe financial hardship due to unavoidable and reasonable expenditure - whether the whole or part of the period does not apply - matter remitted for recalculation of benefits.
LEGISLATION
Social Security Act 1991
CASES
Neilsen and Secretary, Department of Education, Employment and Workplace Relations [2012] AATA 591
SECONDARY MATERIAL
Guide to Social Security Law, Commonwealth of Australia 2016
REASONS FOR DECISION
Mr Conrad Ermert, Member
INTRODUCTION
On 19 September 2015 Mr Torpy, the Applicant, ceased work with Myer Pty Ltd, having accepted a redundancy package in August 2015. On 21 September 2015 Mr Torpy lodged a claim for Newstart Allowance. On 24 September 2015 Mr Torpy received from Myer Pty Ltd his net termination payment.
On 30 September 2015 an officer of Centrelink made a decision to grant Newstart Allowance at a reduced rate on the basis that Mr Torpy was subject to an Income Maintenance Period (IMP) from 23 September 2015 to 5 July 2016. Centrelink is the service provider for the Secretary, Department of Social Services, the Respondent.
On 11 January 2016 Mr Torpy wrote a letter to Centrelink requesting payment on a fortnightly basis as he had exhausted his personal savings. On 19 January 2016 Mr Torpy requested a review of the original decision. An Authorised Review Officer (ARO) affirmed the original decision on 3 March 2016. On 15 March 2016 Mr Torpy requested a review of the ARO decision.
On 10 May 2016 the Social Services & Child Support Division of this Tribunal affirmed the decision. On 26 May 2016 Mr Torpy requested a review of the decision of the Social Services & Child Support Division on the grounds that the dates of the IMP had been incorrectly determined, that he had unavoidable and reasonable expenses that were not taken into account in the decision and that he was not informed of the decision to impose the IMP.
This matter is a review of the decision of the Social Services & Child Support Division of the Administrative Appeals Tribunal made on 10 May 2016.
HEARING
The hearing was conducted by telephone. Mr Torpy represented himself and gave evidence under affirmation. Mr Tim de Uray, a solicitor with the Freedom of Information and Litigation Branch of the Department of Human Services represented the Respondent.
I had before me the documents provided by the Respondent in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (“the T-documents”).
For Mr Torpy I took into evidence:
·Exhibit A1 - a bundle of documents provided by Mr Torpy and received on 3 August 2016; and
·Exhibit A2 – a bundle of documents provided by Mr Torpy and received on 9 August 2016.
For the Respondent I took in for consideration the Respondent’s Statement of Facts, Issues and Contentions dated 28 July 2016 together with the attached Supplementary T‑Documents:
·ST1 – Extract from Guide to Australian Government Payments;
·ST2 – Applicant Expenses;
·ST3 – Computer Screen: Payment Summary;
·ST4 – Employment Separation Certificate, Myer Pty Ltd;
·ST5 – Instruction 4.10.2 of the Guide to Social Security Law;
·ST6 – Instruction 4.3.4.10 of the Guide to Social Security Law; and
·ST7 – Instruction 4.3.4.40 of the Guide to Social Security Law.
LEGISLATION
The relevant legislation is contained in the Social Security Act 1991 (the Act). Policy on the application of the Act is contained in the Guide to Social Security Law (the Guide) published by the Department of Human Services.
ISSUES
The Respondent lists the following as issues for determination, whether:
·Mr Torpy’s Newstart Allowance was subject to an IMP;
·the IMP was correctly calculated for the period 23 September 2015 to 5 July 2016; and
·the IMP may be reduced on the grounds that Mr Torpy was in severe financial hardship as a consequence of incurring unavoidable or reasonable expenditure.
The issues for determination submitted by Mr Torpy are whether:
·the start and end dates of the IMP have been correctly determined;
·the duration of his IMP can be reduced as a result of unavoidable or reasonable expenditure; and
·the failure of Centrelink to notify him of his IMP is a breach of Centrelink’s duty of care.
I note that Mr Torpy makes no contentions on the issue of whether his Newstart Allowance was subject to an IMP. Mr Torpy takes issue with the length of the IMP and the start and end date. He also contends that unavoidable and reasonable expenditure was not taken into account when considering whether all or part of the IMP does not apply in his case. However, he makes no submissions that he was not subject to an IMP. I accept that the issue of whether Mr Torpy’s Newstart Allowance was subject to an IMP is not in contention in this case and I do not consider it further in this decision.
The issue of a possible breach of Centrelink’s duty of care is not within the jurisdiction of this Tribunal in this matter. It may be a matter for Mr Torpy to take up separately by way of a claim for defective administration through the Scheme for Compensation for Detriment caused by Defective Administration.
The issues remaining for determination in this matter are whether:
·The duration of the IMP was correctly calculated;
·The dates for the commencement and end of the IMP were correctly determined; and
·The IMP may be reduced on the grounds that Mr Torpy was in financial hardship as a consequence of incurring unavoidable or reasonable expenditure.
EVIDENCE
In his oral evidence, Mr Torpy stated that Centrelink did not inform him of the imposition of an IMP until January 2016, by which time his redundancy payment had nearly run out. He said that he did not qualify for a health care card until February 2016. He had to cancel some dental treatment in January 2016 which has resulted in a re-infection.
Mr Torpy referred to the decisions of the ARO and the Social Services & Child Support Division of this Tribunal and noted that both decisions recorded that he was in severe financial hardship. He said he has applied to Centrelink for crisis payments but has not yet received a reply. He said he is currently receiving Newstart Allowance payments.
Mr Torpy referred to the following payments:
·Ballarat Dental Group invoice dated 9 May 2016 for dental services: $182.00 (Exhibit A1, page 10);
·Eureka Veterinary Hospital invoice dated 24 February 2016 for consultation: $47.50 (Exhibit A1, page 11);
·Mickleham Lodge receipt dated 28 September 2015 for the balance owing on the purchase of a dog: $3,590.00 (Exhibit A1, page 13);
·BORG Corporate Property Services (BORG) request for reimbursement of expenses dated 20 May 2016: $573.87 (Exhibit A1, page 14); and
·Costs for job search training with St Lawrence Employment : $218:00 (Exhibit A2, page 37).
Mr Torpy contended that each of these expenses were unavoidable or reasonable as follows:
·The dental services were essential medical expenses;
·The veterinary services were essential veterinary expenses for his dog;
·In regard to the purchase of the dog, Mr Torpy said that he had paid the deposit while he was still employed. He accepted that, by doing so, he had entered a contract for the purchase of the dog. At the time he paid the balance for the purchase he had no knowledge that an IMP had been imposed on his Newstart Allowance;
·Mr Torpy said he did not commence the job with BORG because he did not have enough money to travel to the workplace or buy the required clothing. He stressed that he has not yet paid the expenses and they remain as a debt; and
·The costs for training were compulsory costs imposed by the conditions of his Job Plan.
TRIBUNAL CONSIDERATIONS
Calculation of the IMP
Section 1068 of the Act provides the scheme for calculation of Newstart allowance. Module 1068-G provides the income test component, which may lead to an IMP being imposed. Subsection 1068-G7AH of the Act provides that, if a person’s employment has been terminated and receives a termination payment, the person is taken to have received ordinary income for a period equal to the period to which the payment relates. This period is the IMP.
Subsection 1068-G7AJ of the Act provides that, if the person receives more than one termination payment on a day, the IMP is worked out by adding the periods to which the payments relate, rounding down weeks to the nearest whole week (section 1068-G7AQ).
The periods to which Mr Torpy’s payments relate are shown in the Employment Separation Certificate (ST4) as follows:
·Redundancy – 20 weeks;
·Annual leave – 11.15 weeks (rounded down to 11 weeks); and
·Long Service Leave – 10.85 weeks (rounded down to 10 weeks).
When these periods are added together the duration of the IMP is 41 weeks. I find that the IMP has been correctly calculated as being a total of 41 weeks.
IMP start and end Dates
Mr Torpy contends that the IMP start date of 23 September 2015 was incorrectly calculated. In the Respondent’s Statement of Facts and Contentions, the Respondent concedes that the dates initially determined for the IMP are incorrect. In substitution the Respondent submits the correct dates for the IMP are 24 September 2015 to 6 July 2016.
Subsection 1068-G7AKA provides that the IMP starts on the day the person is paid the termination payment. Mr Torpy’s termination payment was made on 24 September 2015. Accordingly the correct start date is 24 September 2015. Applying an IMP duration period of 41 weeks, the end date is calculated as being 6 July 2016. I find accordingly.
Can the IMP be reduced?
Subsection 1068-G7AM provides:
If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies to the person, the Secretary may determine that the whole, or any part, of the period does not apply to the person.
In the Respondent’s Statement of Facts and Contentions, the Respondent accepts that Mr Torpy was in severe financial hardship on 14 January 2016 as his liquid assets at that time were less than $661.60. The question is whether Mr Torpy was in severe financial hardship because he had incurred unavoidable or reasonable expenditure.
In its earlier decision the Tribunal found that the following expenditure to be unavoidable or reasonable:
·Purchase and registration of a car;
·Emergency dental treatment; and
·Purchase of Samsung tablet and router.
The Respondent does not dispute these findings. I have no reason to disturb the findings and accept those expenses as unavoidable or reasonable.
I also accept the following as unavoidable or reasonable expenses without the need for further analysis:
·$182.00 spent on dental services as unavoidable medical expenses;
·The $573.87 debt to BORG Corporate Property Services (BORG) for the reimbursement of expenses in seeking employment; and
·The $218.00 being compulsory costs for job search training with St Lawrence Employment.
The Respondent contends that the purchase of the dog and the associated veterinary expenses was not unavoidable or reasonable. In support of this contention the Respondent refers to the decision of the Tribunal in Neilsen and Secretary, Department of Education, Employment and Workplace Relations [2012] AATA 591 which notes that matters listed in subsection 19C(4) of the Act are:
Characterised by a sense of immediacy, urgency or necessity such that a failure to meet the expense may result in real detriment to the person concerned.
However, I accept Mr Torpy’s evidence, not contested by the Respondent, that, at the time of paying for the dog, Centrelink had not informed him of the imposition of the IMP and as a result he was not aware that he was subject to an IMP. He said he was of the opinion that he was under a binding contract of sale and was obliged to proceed with the purchase or risk some action against him.
I accept that, in the absence of advice from Centrelink that he was subject to an IMP, it was reasonable for Mr Torpy to consider himself under a purchase obligation. I accept that Mr Torpy had a genuine concern that failure to meet his contract obligation would have resulted in real detriment to himself. Accepting and applying the reasoning in Neilsen I find his expenditure on the purchase of the dog, and the subsequent veterinary treatment, to be reasonable under these circumstances.
Accordingly, the unavoidable or reasonable expenses incurred during the IMP are:
· Ballarat Dental Group treatment (T-Documents, page 47) $ 1,591.00 · Purchase of car $ 5,031.00 · Vehicle transfer (T-Documents, page 48) $ 255.80 · Samsung tablet (T-Documents, page 49) $ 255.55 · Huawei router (T-Documents, page 50) $ 69.00 · Vehicle registration (T-Documents, page 51) $ 660.50 · Ballarat Dental Group treatment (Exhibit A1, page 10) $ 182.00 · Eureka Veterinary Hospital consultation (Exhibit A1, page 11) $ 47.50 · Mickleham Lodge dog purchase (Exhibit A1, page 12-13) $ 3,590.00 · BORG re-imbursement (Exhibit A1, page 14) $ 573.87 · Job search training (Exhibit A2, page 37) $ 218.00 The total amount of unavoidable or reasonable expenses is: $ 12,474.22
The steps in determining whether a person meets the severe financial hardship test are contained in the Guide at Instruction 4.3.4.40. Applying the test with the additionally accepted unavoidable or reasonable costs provides:
·Step 1: Mr Torpy was in severe financial hardship on 14 January 2016;
·Step 2: Value of his total liquid assets at 24 September 2015 - $22,351.70 (termination payment of $22,243.67 plus account balance $108.03);
·Step 3: Unavoidable or reasonable expenditure - $17,813.33 (reasonable cost of living upper limit $5,339.11 plus accepted unavoidable or reasonable expenditure $12,474.22);
·Step 4: $22,351.70 (Step 2) minus $17,818.33 (Step 3) results in a remaining sum of $4,533.37.
·Step 5: As the sum remaining is Step 4 is greater than the severe financial hardship test of $661.60 Mr Torpy, as at 14 January 2016, was not in severe financial hardship due to unavoidable or reasonable expenditure.
However, this does not exclude Mr Torphy entirely. The Tribunal is able to consider Mr Torphy’s circumstances beyond the date of Mr Torphy’s application for review by the Tribunal. In doing so, I take into account the reasonable ongoing fortnightly expenses incurred by Mr Torphy in determining whether he falls below the severe financial hardship test sum of $661.60, as well as any other income or expenses incurred at such a date.
By 7 April 2016 an additional six fortnights of reasonable costs of living expenditure would be included in the test, which would result in the remaining sum calculated at Step 4 falling below the threshold required to satisfy Step 5. The amounts would be:
·Step 2: $22,351.70 (unchanged)
·Step 3: $21,786.13 ($17,818.33 plus $3,967.80, for six additional fortnights at $661.30 per fortnight)
·Step 4: $565.57
·Step 5: As the amount at Step 4 is less than the severe financial hardship test sum of $661.60 Mr Torpy is considered to be in severe financial hardship due to unavoidable or reasonable expenses from 7 April 2016.
In applying the test as at 7 April 2016, I accept that Mr Torpy was still in severe financial hardship at that date. In reaching that conclusion, I accept Mr Torpy’s evidence of having no income of consequence during the period from 14 January 2016 to 7 April 2016. This is supported by the evidence that he is in debt resulting from his inability to pay for costs incurred with BORG.
I am satisfied that, at 7 April 2016, Mr Torpy was in severe financial hardship because he had incurred unavoidable or reasonable expenditure while an IMP applied to him, and I find accordingly.
In accordance with the provisions contained in subsection 1068-G7AM, I now determine that the part of Mr Torpy’s IMP from 7 April 2016 to 6 July 2016 does not apply to him.
DECISION
The Tribunal remits the matter to the Respondent to calculate Mr Torpy’s Newstart Allowance payments in accordance with the findings that his Income Maintenance Period commenced on 24 September 2015 and that it does not apply to him from 7 April 2016 to 6 July 2016 on the basis of his severe financial hardship caused by unavoidable and reasonable expenditure.
I certify that the preceding 41 (forty‑one) paragraphs are a true copy of the reasons for the decision herein of Mr Conrad Ermert, Member [sgd]........................................................................
Associate
Dated 27 October 2016
Date of hearing 13 September 2016 Applicant In person Advocate for the Respondent Mr Tim de Uray Solicitors for the Respondent Department of Human Services,
Freedom of Information & Litigation Branch
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