Podhaski and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 27 (16 January 2009)

Last Updated: 19 January 2009

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 27

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2008/0005

GENERAL ADMINISTRATIVE DIVISION		)
	Re		HARRY PODHASKI

Applicant

And

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal

Mr Egon Fice, Member

Date 16 January 2009

Place Melbourne

Decision

The Tribunal affirms the decision under review.

(sgd) Egon Fice
Member

SOCIAL SECURITY - overpayment – applicant in receipt of US and Australian pensions – permission required to access US pension information – permission obtained – recalculation of overpayment – whether waiver or write off of overpayment – overpayment to be recovered.

Social Security Act 1991 ss 8(1), 1064(1), 1072, 1100, 1100(6), 1122A, 1236, 1237A, 1237AAD

Social Security (Administration) Act 1999 ss 68, 74, 180, 192

REASONS FOR DECISION

16 January 2009

Mr Egon Fice, Member

1. Mr Podhaski was granted a disability support pension on 30 October 1997. Following the commencement on 1 October 2002 of the Social Security Agreement between the United States of America (US) and Australia, Mr Podhaski was invited to claim a US pension. Mr Podhaski notified Centrelink, as the service delivery agency for the Secretary to the Department of Families, Housing, Community Services and Indigenous Affairs (the Secretary), that he was receiving a US pension in the sum of USD$562 per month. Mr Podhaski transferred from the disability support pension to an age pension on 5 April 2004.
2. Mr Podhaski did not notify Centrelink of any changes to the amount received from his US pension until August 2005 when he indicated that his pension was USD$651 per month. Centrelink reviewed the movement of the US consumer price index (CPI) between 2002 and 2005 and adjusted Mr Podhaski’s US pension receipts accordingly. Although Mr Podhaski was told on numerous occasions that he should notify Centrelink if there was any change to his income (US pension), he did not do so.
3. As a result of taking into account CPI adjustments to Mr Podhaski’s US pension, Centrelink calculated that Mr Podhaski’s age pension in Australia had been overpaid by $1,399.83. Dissatisfied with Centrelink’s decision, Mr Podhaski sought a review of that decision by an authorised review officer (ARO). On 9 May 2007 the ARO affirmed Centrelink’s decision. Mr Podhaski then sought review by the Social Security Appeals Tribunal (SSAT). On 29 October 2007 the SSAT set aside the ARO’s decision and remitted the matter to Centrelink for the purpose of having notices sent to Mr Podhaski requiring him to provide accurate information about his US pension. Mr Podhaski now seeks review of the SSAT decision by this Tribunal.
4. The decision made by the ARO regarding overpayment to Mr Podhaski related to the period from 9 January 2004 to 11 June 2006 (the relevant period). In its decision, the SSAT concluded that it did not have sufficient information from either Centrelink or Mr Podhaski regarding his actual US pension amount. This was because Mr Podhaski declined to give Centrelink authority to obtain that information from the US pension fund. For that reason, the SSAT declined to determine whether, and to what degree, Mr Podhaski had been overpaid but merely directed that Centrelink send notices to Mr Podhaski pursuant to s 192 and s 68 of the Social Security (Administration) Act 1991 (the Administration Act). The SSAT concluded that if Mr Podhaski refused to comply with the notice issued under s 68 of the Administration Act, consideration should be given to suspending or cancelling his age pension.
5. On 18 April 2008 Mr Podhaski finally gave consent to Centrelink to obtain information from the US pension fund in relation to payments he had received during the relevant period. As a result of that contact, Centrelink recalculated the overpayments said to have been received by Mr Podhaski and arrived at a figure of $1,297.81. For that reason, an officer of Centrelink varied the decision made prior to the determination of this application in accordance with s 180 of the Administration Act. Therefore, the application before this Tribunal is to be treated as if the SSAT had set aside the original decision and substituted the new decision, and the application before this Tribunal is an application for a review of the new decision.
6. The issues which I am required to decide are:
   • (a) whether Mr Podhaski received an amount which should not have been paid and therefore constitutes a debt due to the Commonwealth; and
   • (b) if Mr Podhaski has a debt due to the Commonwealth, whether that debt should be waived or written off.

THE LEGISLATIVE SCHEME

7. Section 1064(1) of the Social Security Act 1991 (the Act) provides that a person’s rate of disability support pension and age pension is calculated by reference to the Pension Rate Calculator A. The rate calculator provides that a person’s pension can be reduced after taking into account their assets and income.
8. The term ordinary income is defined in s 8(1) of the Act as all income that is not maintenance income or an exempt lump sum. There is no question that Mr Podhaski’s US income is not maintenance income or an exempt lump sum.
9. The term income is defined in s 8(1) of the Act as income amount earned or derived or received by the person for their own use or benefit. Furthermore, s 1072 of the Act provides that:

... ordinary income for a period is a reference to the person’s gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A.

Division 1A is not relevant as it refers only to business income.

10. Section 1100 of the Act deals with the valuation of a payment received in a foreign currency. Essentially, it provides that the value in Australian currency of the amount received in foreign currency is to be calculated using the appropriate market exchange rate for the foreign currency on the fifth business day before the calculation day. The expression calculation day is defined in s 1100(6) to mean first business day for each month.

TAKING ACCOUNT OF MR PODHASKI’S US SOCIAL SECURITY PAYMENTS

11. It cannot be disputed that the payments that Mr Podhaski received from his US pension are properly described as ordinary income. The Pension Rate Calculator A expressly provides that in calculating the rate of pension to be paid, the ordinary income test using Module E must be applied to work out the income reduction. Not all ordinary income results in a deduction being made from the person’s maximum payment rate of pension as there is an ordinary income free area which must be taken into account. If the person’s ordinary income exceeds the person’s ordinary income free area then a reduction will result in the rate of pension payment.
12. After Mr Podhaski provided consent for Centrelink to obtain information from the US pension fund in April 2008, Centrelink re-calculated the rate of pension to which Mr Podhaski was entitled during the relevant period. Upon re-calculation, Centrelink arrived at a new debt figure of $1,297.81. That is the amount which Mr Podhaski was overpaid as a result of Centrelink not having accurate information from Mr Podhaski’s US pension fund.
13. I am satisfied that Centrelink’s calculations are correct and that during the relevant period, Mr Podhaski received age pension payments in the amount of $1,297.81 to which he was not entitled. Accordingly, that sum is a debt due to the Commonwealth in accordance with s 1222A of the Act.

WRITE OFF OR WAIVER OF DEBT

14. Under s 1236 of the Act the Secretary may write off a debt only if:

(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost effective for the Commonwealth to take action to recover the debt.

15. Mr Podhaski submitted that his financial position was so precarious that he was simply not in a position to repay the debt. He currently lives in Greece, he said, because he simply could not afford to live in Australia. He provided the Tribunal with a monthly budget regarding his expenses which indicated a deficit of approximately $1,030. That budget indicates repayment of both a credit card and loan repayments. Although I have no way of determining the accuracy of the figures set out in the budget, they do seem quite extraordinarily high. In particular, Mr Podhaski has indicated that his monthly medication bill is EUR€200 which is the equivalent of approximately AUD$400. He has also indicated repayment for dental work which was performed over a period of three years in the amount some EUR€100.
16. Even if I were to accept what Mr Podhaski has set out in his monthly budget, because he is in receipt of both US and Australian pensions, it is not possible to say that he has no capacity to repay the debt. Mr Podhaski chooses to live in Greece, stating that it is cheaper to do so than to live in Australia. On the basis of his monthly budget, I doubt the accuracy of that statement. In any event, he receives pension payments from Australia and the debt due to the Commonwealth can be recovered by deduction made against those payments. I am satisfied that there is a capacity to repay the debt, even though it may be over a fairly lengthy period of time. Because Mr Podhaski has a capacity to repay the debt, it is not possible to write off his debt to the Commonwealth.
17. The other factors set out in s 1236 of the Act do not apply to Mr Podhaski. His debt is not irrecoverable at law, his whereabouts are known and it would be cost effective for the Commonwealth to simply make a deduction from his pension payments for the purpose of recovering the debt. The amount of that deduction can be tailored so as to cause minimal further financial hardship to Mr Podhaski.
18. Under s 1237A of the Act:

... 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.

19. There was no evidence at all of any administrative error. In fact, despite Centrelink’s insistence that his consent be given to Centrelink accessing details of his US pension fund payments, Mr Podhaski steadfastly refused to grant that permission until 18 April 2008, stating he had provided Centrelink with the correct information at all times. Had Centrelink had that permission to access Mr Podhaski’s US pension fund information at an earlier date, the debt would not have arisen.
20. A debt due to the Commonwealth may also be waived where there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt (s 1237AAD of the Act). The difficulty for Mr Podhaski in relying on this section of the Act is that the Secretary must be satisfied that he did not make a false statement or false representation, or he failed or omitted to comply with a provision of the Act.
21. During the period in question, Mr Podhaski received numerous letters from Centrelink reminding him that he was required to notify Centrelink of any changes to his gross income. Under s 68 of the Administration Act, the Secretary may give a notice to a person requiring the person to provide information to Centrelink where there is a specified event or change of circumstances which might affect the payment to the person of the social security payment. It is an offence not to comply with such a notice unless the person is not capable of complying with it or has a reasonable excuse (s 74 of the Administration Act).
22. The only excuse offered by Mr Podhaski for his not complying with the requests to update Centrelink with any change in his circumstances was that Centrelink already had that information and therefore he was not obliged to grant Centrelink consent to go direct to the US pension fund and seek confirmation of his precise US payments. Centrelink was aware that those payments were the subject of CPI increases, although it was uncertain of the precise effect on Mr Podhaski’s US pension. Mr Podhaski also argued that he was merely protecting his personal privacy as a citizen of Australia. While I have no doubt that Mr Podhaski has a right to protect his privacy (that is in fact enshrined in legislation), by making a claim for a social security payment and receiving such payments, Mr Podhaski has, by necessity, accepted the obligations which arise as a consequence of those payments being granted. Those obligations are set out in the Administration Act and compliance is mandatory. Of course if Mr Podhaski wished to maintain his right to privacy regarding his US Social Security payments, he was entitled to do so but that would undoubtedly have resulted in his Australian pension being cancelled.
23. It is my opinion that Mr Podhaski failed to comply with the notices sent to him requesting information about a change in circumstances which might affect his pension payment during the relevant period. Mr Podhaski was capable of complying with the notices and he did not provide a reasonable excuse for his failure to do so. In other words, he knowingly failed or omitted to comply with a provision of the Administration Act. It follows that s 1237AD which provides for waiver in special circumstances cannot be relied upon by Mr Podhaski.

CONCLUSION

24. I am satisfied that Mr Podhaski owes a debt to the Commonwealth in the amount of $1,297.81. That debt is repayable and there is no basis for writing it off. There is also no basis for waiving the debt either due solely to administrative error or as a result of special circumstances. Therefore, the decision made by the SSAT on 29 October 2007 as amended by Centrelink pursuant to s 180 of the Administration Act is affirmed.
    

I certify that the twenty-four (24) preceding paragraphs are a true copy of the reasons for the decision herein of

Mr Egon Fice, Member

(sgd) Mara Putnis

Clerk

Date of Hearing 19 December 2008

Date of Decision 16 January 2009

Advocate for the Applicant Harry Podhaski

Advocate for the Respondent Tim De Uray, Legal Services Centrelink