Garcia and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 37 (20 January 2009)

Last Updated: 27 January 2009

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 37

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2008/0900

GENERAL ADMINISTRATIVE DIVISION		)
	Re		FRANCISCO GARCIA

Applicant

And

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

Respondent

DECISION

Tribunal

Ms A F Cunningham (Senior Member) Dr R J Walters RFD (Part-Time Member)

Date 20 January 2009

Place Hobart

Decision

The decision under review is affirmed.

[Sgd Ms A F Cunningham]
Senior Member

CATCHWORDS

SOCIAL SECURITY - overseas age pension - Australian/Spanish International Agreement - Spanish creditable period - period of working life residence - decision under review affirmed

Social Security Act 1991, ss.7(5), 43

Social Security (Administration) Act 1999

Social Security (International Agreements) Act 1999, Schedule 5, Articles 1, 9, Clause 1, Part 3, ss 6, 12, 14, 16

Fraccalvieri and Secretary, Department of Family and Community Services [2003] AATA 503

REASONS FOR DECISION

20 January 2009

Ms A F Cunningham (Senior Member) Dr R J Walters RFD (Part-Time Member)

1. Mr Garcia has sought the review of a decision of the Social Security Appeals Tribunal (SSAT) which on 5 December 2007 decided to affirm a decision of Centrelink which determined Mr Garcia's rate of age pension on the basis of an Australian working life residence of 60 months.
2. The application for review was listed for hearing by telephone link to Mr Garcia who resides on Spain on 1 December 2008 at 4.30 pm Australian Eastern Standard Time (AEST). Mr Sparkes appeared on behalf of the respondent. After several attempts to contact Mr Garcia on the telephone number nominated by him, the hearing was adjourned at 5.00 pm AEST. A message was left on Mr Garcia's telephone answering machine advising of the Tribunal's attempts to contact him by telephone and that unless we received a response from him within 14 days, the Tribunal would proceed to determine his application on the basis of the written material received. This advice was confirmed by letter to Mr Garcia on 2 December 2008.
3. On 19 December 2008 the Tribunal received a letter from Mr Garcia which enclosed a letter of 20 November 2008 from the Spanish Secretary of State of Social Security to Mr Garcia, a copy of which had been previously forwarded to the Tribunal. Mr Garcia did not offer any explanation for his non-attendance at the hearing by telephone on 1 December 2008.
4. The Tribunal was satisfied that Mr Garcia was forwarded reasonable notice of the hearing date and has had the opportunity to lodge written submissions in support of his application and respond to the submissions made by the respondent. Accordingly the Tribunal determines the application on the basis of the written material received. All of the written material received from Mr Garcia has been translated from Spanish into English.
5. It is Mr Garcia's contention that the respondent has failed to correctly apply the provisions of the International Agreement between Australia and Spain. Mr Garcia's argument is that the respondent's decision to apply the creditable period with respect to eligibility only and not for the purpose of calculating the rate of age pension is wrong and inconsistent with the tenor of the International Agreements Act. Mr Garcia referred to Article 4 of the Agreement with Spain which refers to equality of treatment and maintains that whilst Spain is complying with the terms of the Agreement, Australia is not. Mr Garcia contends that the effect of Centrelink's decision is that he has been awarded only a partial benefit and not the full benefit to which he is entitled based on his Spanish creditable period.
6. In his Statement of Facts and Contentions, Mr Garcia accepts that his age pension rate should be reduced on the basis of the amount that he receives for his Spanish pension and accepts Centrelink's calculations to this point. Mr Garcia however rejects any further reduction based on an apportionment of his period of residence in Australia.

ISSUE:

7. The issue for the Tribunal to determine is whether Mr Garcia's rate of age pension is correctly calculated as 60/300 of the maximum rate of age pension on the basis of an Australian working life residence of 60 months.

FACTS:

8. The following facts were not in dispute and the Tribunal finds as follows:
   • Mr Garcia was born on 7 February 1942 and thus reached age pension age of 65 years on 7 February 2007.
   • Mr Garcia currently resides in Spain and applied for and was granted an Australian Age Pension from 14 February 2007 at a reduced rate of $96.70 per fortnight.
   • Mr Garcia resided in Australia from 9 October 1982 until 21 September 1987 and as a consequence has an Australian working life residence of 60 months.
   • At the time of his claim, Mr Garcia was in receipt of a Spanish Age Pension at the rate of 17476.34 Euro per annum equivalent to $27,771.00 at current exchange rates.

LEGISLATION:

9. The applicable legislation is contained in the Social Security Act 1991 (the Act), the Social Security (Administration) Act 1999 (the Administration Act) and the Social Security (International Agreements) Act 1999 (the International Act).
10. Section 43 of the Act states that a person is qualified for an age pension if the person has reached pension age and inter alia has ten years qualifying Australian residence.
11. Qualifying Australian residence is defined in section 7(5) of the Act as requiring residence in Australia for a continuous period of ten years or an aggregate period of ten years where one period is at least five years. At the date of his claim, Mr Garcia did not have ten years qualifying Australian residence.
12. The effect of the provisions of the International Agreement with Spain is that a person may be able to qualify for social security benefits where they do not otherwise meet the qualifying provisions of the Social Security Act. Schedule 5 of the International Act contains the provisions of the Agreement between Australia and Spain on Social Security.
13. The provisions of Article 9 allow a person who is a resident of and in Spain to have any "Spanish creditable period" deemed to be a period in which that person was an Australian resident. Clause 1 of Article 9 states as follows:

"1. Where a person to whom this Agreement applies has claimed an Australian benefit under this Agreement and has accumulated:

(a) a period as an Australian resident that is less than the period required to qualify that person, on that ground, under the legislation of Australia for that benefit; and

(b) a period of Australian working life residence equal to or greater than the minimum period identified for that person in accordance with paragraph 4; and

(c) a Spanish creditable period,

then that Spanish creditable period shall be deemed to be a period in which that person was an Australian resident

- only if that Spanish creditable period is considered by Spain to continue to be a Spanish creditable period at the time of totalisation; and

- only for the purposes of meeting any minimum qualifying periods for that benefit set out in the legislation of Australia".

14. There was no dispute that Mr Garcia meets the qualifying provisions for the Australian Age Pension in that he has a Spanish creditable period that can be deemed to be a period in which Mr Garcia was an Australian resident.
15. The respondent relies on the final paragraph of Clause 1 as outlined above which states that the Spanish creditable period is only relevant with respect to the qualifying provisions for the Australian Age Pension. The respondent argues that it cannot be used to determine the amount of pension entitlement.
16. Section 12 of the International Act states that where a person is outside Australia, the rate of the social security payment is to be determined according to the law of Australia and worked out in accordance with Part 3. Part 3 of the International Act contains the provisions to calculate a person's international agreement portability rate on the basis of the person' Australian working life residence. Section 14 of Part 3 requires that amounts treated as income are to be taken into account in the calculation of the rate of pension.
17. Specifically Article 10 of the Agreement with Spain states that only a proportion of a Spanish benefit shall be assessed as income. The proportion is to be calculated by multiplying the number of whole months of Australian working life residence by the amount of that other Spanish benefit and dividing the result by 300. Article 10 also confirms that the rate of benefit is to be determined according to the legislation of Australia.
18. Section 6 of the International Agreement states that the provisions of a scheduled social security agreement have effect despite anything in the social security law.
19. Mr Garcia's Spanish Age Pension which totals $27,771.08 per annum was treated as income and assessed pursuant to Article 10, Paragraph 1B in the following manner: $27,771.08 X 60/300 = $5,554.22.
20. The number of whole months of Australian working life residence was assessed as 60 in accordance with the definition of working life residence under section 16 of the International Act. Section 16 states:

"Subject to sections 17 to 22, a person's period of Australian working life residence at a particular time is the number of months in the period, or the aggregate of the periods, during the person's working life during which the person has, up to that time, been an Australian resident".

21. Article 1 of the Agreement with Spain relevantly defines "period of Australian working life residence" as:

"In relation to a person, means a period defined as such in the legislation of Australia, but does not include any period deemed pursuant to Article 9 to be a period in which that person was an Australian resident".

CONSIDERATION:

22. Mr Garcia contends that his Spanish creditable period should be taken into account in calculating his Australian working life residence. However he has not referred the Tribunal to any legislative provision that supports his contention. Article 1 as outlined above, specifically excludes any period deemed pursuant to Article 9. Article 9 provides that a Spanish creditable period is only deemed to be a period for Australian residence for meeting any qualifying periods. There is no further or other provision that allows a Spanish creditable period to also be used in the calculation of the pension entitlement. To allow this to occur as the Tribunal found in its decision Fraccalvieri and Secretary, Department of Family and Community Services [2003] AATA 503, would be to place the applicant in an equal if not better position than an Australian resident. It would also mean that the provisions of Article 10 would be largely rendered meaningless with no function to perform.
23. The provisions of the International Agreements Act which are supported by the provisions of Schedule 5 clearly suggest that the Spanish creditable period is only relevant with respect to a person's qualification for an Australian benefit. Further, that the period of Australian working life residence to be used in the calculation of the amount of benefit does not include the Spanish creditable period.
24. The Tribunal is satisfied that the amount of pension as calculated by the respondent has been undertaken in accordance with the relevant provisions of the legislation. The Tribunal accordingly affirms the decision under review.

I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham (Senior Member) and Dr R J Walters RFD (Part-Time Member)

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

R Hunt (Administrative Assistant)

Date/s of Hearing Hearing on the papers

Date of Decision 20 January 2009