Hirning; Secretary, Department of Family and Community Services [2002] AATA 259 (21 January 2002)

Last Updated: 22 April 2002

DECISION AND REASONS FOR DECISION [2002] AATA 259

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2001/950

GENERAL ADMINISTRATIVE DIVISION )

Re SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And JULIA HIRNING

Respondent

DECISION

Tribunal Dr EK Christie, Member

Date 21 January 2002

Place Hervey Bay

Decision The decision under review is affirmed. This means that the Department of Family and Community Services' application for review is unsuccessful.

.................(Sgnd).....................

Dr EK Christie

Member

CATCHWORDS

SOCIAL SECURITY ACT: Austudy - whether deferment period caused long-term disadvantage or significant hardship - whether expenditure reasonable or unavoidable

Social Security Act ss 19C(4), 19C(5), 19C(6)

ORAL REASONS FOR DECISION

21 January 2002 Dr EK Christie, Member

1. This is an application for review of a decision of the Social Security Appeals Tribunal (the "SSAT") made on 18 September 2001 by the Department of Family and Community Services ("the Department"). The SSAT set aside the decision under review and decided that the income maintenance period, 25 July 2001 to 5 October 2001, imposed by Centrelink on Ms Hirning's Austudy payments should be varied to a period 25 July 2001 to 18 September 2001.

2. The evidence before the Tribunal comprised the documents filed pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the "T" Documents"). The Department was represented by Mr R McQuinlan, a Departmental Advocate. Ms Hirning gave evidence on her own behalf.

Issues before the Tribunal

3. The only issues for the Tribunal to decide were whether expenditure incurred by Ms Hirning after ceasing work and commencing tertiary study were unavoidable and reasonable; and whether the income maintenance period caused financial hardship. The Departmental Advocate acknowledged, during the hearing, that as at 18 September 2001, Ms Hirning's liquid assets would be negligible.

Facts

4. On the basis of the evidence before it, the SSAT made the following finds:

* Ms Hirning claimed Austudy payments on 20 July 2001

* Ms Hirning ceased work as a teacher's aide earlier on 18 July 2001 and received a payout of accrued recreation leave (8 days) and long service leave entitlements (45 days).

* On 24 July 2001, Centrelink imposed an income maintenance period spanning 25 July 2001 - 5 October 2001.

* Ms Hirning is in severe financial hardship because of unavoidable or reasonable expenditure during the income maintenance period spanning 25 July 2001 - 5 October 2001.

Contentions and Submissions of the Parties

5. Mr McQuinlan submitted that the SSAT had erred in not examining Ms Hirning's financial circumstances in the full context. To be in "financial hardship" Ms Hirning would have to have less than two weeks of the "benefit threshold". In Ms Hirning's case that would have to be less than $290.10. Mr McQuinlan submitted that the SSAT did not assess her financial hardship, in this manner, as a first step.

6. The next step was for the SSAT to decide whether all expenditure incurred by Ms Hirning in the deferment period was "reasonable and unavoidable". Mr McQuinlan contended that the money Ms Hirning spent on a computer ($1,470), a futon ($300) and a computer desk ($300) were neither reasonable nor unavoidable. Mr McQuinlan contended that as a computer was not a degree course requirement it was not "absolutely essential". Moreover, the futon and the computer desk were not necessary.

7. As the SSAT had not pursued both steps 1 and 2 as outlined (Paragraphs 5, 6), Mr McQuinlan submitted that the SSAT had erred and the correct income maintenance period was the initial period imposed of 25 July 2001 to 5 October 2001.

8. Ms Hirning stated that she had contacted Centrelink in April, before commencing tertiary studies in July, in order to know where she stood with respect to Austudy entitlements. The advice she was given proved to be wrong. That is, she was told that accrued leave payout of $6,000 would not affect her Austudy payments and that she was entitled to an Austudy entitlement of about $350 per fortnight.

9. In retrospect, Ms Hirning said that if given the correct advice at this time she possibly would not have resigned from her job but reduced it to a part-time position. Subsequent advice given by Centrelink to Ms Hirning was that if "she went on the dole for six months", she would then "fit the system" and be entitled to Austudy payments.

10. Ms Hirning gave the following responses to expenditure incurred:

Futon ($300) - purchased at a time when she was unaware that an income maintenance period would apply;

Computer ($1,470) - required for wordprocessing University assignments and Excel spreadsheets in her Business degree. The availability of University computers were restricted on campus and continuous access for students throughout semester or for after hours work could not be assured;

Computer desk ($300) - an essential as required to have her computer throughout semester as assignments were required to be wordprocessed.

11. At the hearing, Ms Hirning gave the following weekly living cost estimates:

* Food $100

* Rent/Mortgage $75

* Medical $20

* Rates $31

* Electricity $20

* Telephone $30

* Fuel $20 $296

Furthermore, during the imposed deferment period, she "very much doubted" whether she had any money in the bank.

The Law

12. The objective of the Tribunal is to review administrative decisions on their merits and in accordance with the law at all times. The relevant legislation is the Social Security Act 1991 ("the Act").

13. Section 19C of the Act deals with "severe financial hardship", "ordinary waiting periods" and liquid assets test waiting periods.

14. Section 19C(4), (5) and (6) are relevant in the circumstances of this application for review:-

"Meaning of unavoidable or reasonable expenditure

9C.(4) Unavoidable or reasonable expenditure, in relation to a person who is serving a liquid assets test waiting period or is subject to a seasonal work preclusion period, or a person to whom an income maintenance period applies, includes, but is not limited to, the following expenditure:

(a) the reasonable costs of living that the person is taken, under subsection (6) or (7), to have incurred in respect of:

...

(iii) if an income maintenance period applies to the person - that part of the period that has already applied to the person;

(b) the costs of repairs to, or replacement of, essential whitegoods situated in the person's home;

(c) school expenses;

...

(f) expenditure to buy replacement essential household goods because of loss of those goods through theft or natural disaster when the cost of replacement is not the subject of an insurance policy;

(g) the costs of essential repairs to the person's car or home;

(h) premiums in respect of vehicle or home insurance;

(i) expenses in respect of vehicle registration;

(j) essential medical expenses;

(k) any other costs that the Secretary determines are unavoidable or reasonable expenditure in the circumstances in relation to a person.

However, unavoidable or reasonable expenditure does not include any reasonable costs of living other than those referred to in paragraph (a).

Meaning of reasonable costs of living

19C.(5) The reasonable costs of living of a person include, but are not limited to, the following costs:

(a) food costs;

(b) rent or mortgage payments;

(c) regular medical expenses;

(d) rates, water and sewerage payments;

(e) gas, electricity and telephone bills;

(f) costs of petrol for the person's vehicle;

(g) public transport costs;

(h) any other cost that the Secretary determines is a reasonable cost of living in relation to a person.

19C.(6) For the purposes of paragraph (4)(a), the amount of reasonable costs of living that a person who is not a member of a couple is taken to have incurred, may not exceed:

...

(c) in the case of a person to whom an income maintenance period applies--the amount of allowance or parenting payment (as the case may be) that would have been payable to the person during that part of the income maintenance period that has already applied to the person, if the period did not apply to the person."

Consideration of the Issues

15. The Tribunal finds Ms Hirning to be a credible witness who had acted honestly within her dealings with Centrelink.

16. The first question for the Tribunal to decide is whether Ms Hirning was in "financial hardship" as at 18 September 2001, ie having less than the threshold of $290.10. However, the Departmental Advocate has conceded this point (see para 3) during the hearing.

17. The next question is for the Tribunal to decide whether Ms Hirning incurred "reasonable and unavoidable expenditure" over the 8 week period, 25 July 2001 to 18 September 2001. The Tribunal finds that the following expenditure was reasonable and unavoidable:

Living costs ($290.10 per fortnight)¹ $1,160

Computer $1470

Computer Desk $300

Text Books ² $400

Living Costs³ $1,210

Bank Debt on her Credit Card⁴ $900 $5,400

(T2 folio 4)

18. The Tribunal finds that a computer is an essential need for any undergraduate today and more so for a student enrolled in a business degree. The Tribunal agrees with Ms Hirning's evidence on this point [para 10(a)].

19. Similarly, the Tribunal finds that the modest outlay on a computer desk was necessary to ensure effective use of the computer.

20. The Tribunal concludes that, based on the above reasons, Ms Hirning was in "financial hardship" at 18 September 2001 and the expenditure incurred (see para 17) over the income maintenance period of 25 July 2001 to 18 September 2001, as determined by the SSAT, was "reasonable and unavoidable".

21. The Tribunal decides that the decision under review should be affirmed.

I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member

Signed: .....................................................................................

Associate

Date/s of Hearing 21 January 2002

Date of Decision 21 January 2002

Date of Written Reasons 17 April 2002

Applicant Mr McQuinlan, Departmental Advocate

Respondent Ms Hirning