Glasson and Secretary, Department of Education, Employment and Workplace Relations [2009] AATA 969 (18 December 2009)

Last Updated: 18 December 2009

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 969

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2009/2833

GENERAL ADMINISTRATIVE DIVISION		)
	Re		STEVEN GLASSON

Applicant

And

SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal

Ms Regina Perton, Member

Date 18 December 2009

Place Melbourne

Decision

The Tribunal affirms the decision under review.

(sgd) Regina Perton
Member

SOCIAL SECURITY – redundancy payment – application for newstart allowance – income maintenance period – limited grounds for reducing period – severe financial hardship -unavoidable or reasonable expenditure – decision affirmed.

Social Security Act 1991 ss 14A(1), 19C(3), 19C(4), 19C(5), 19C(7), 19C(8), 1068-G7, 1068-GAH, 1068-G7AKA, 1068-G7AM

REASONS FOR DECISION

18 December 2009

Ms Regina Perton, Member

1. Mr Glasson worked for a company in regional Victoria for almost 24 years. The company closed down in January 2008. Mr Glasson received a redundancy payment of just under $140,000, which included outstanding leave entitlements. Following his redundancy, Mr Glasson has been unable to obtain regular work. He has a dependent family. He also has a mortgage and other financial commitments.
2. On 3 July 2008 Mr Glasson lodged a claim for Newstart allowance (NSA) with Centrelink. Centrelink administers NSA on behalf of the respondent. On 14 August 2008 Centrelink determined that Mr Glasson was not eligible for NSA until 28 February 2010, as he was subject to an income maintenance period. The Social Security Act 1991 (the Act) imposes an income maintenance period during which a person whose employment has been terminated and has received a lump sum termination payment from his former employer is ineligible for NSA. The length of the period depends on the amount of the termination payment. Mr Glasson’s income maintenance period was calculated as running from 16 January 2008 until 27 February 2010.
3. An authorised review officer of Centrelink affirmed the decision on 24 March 2009. Mr Glasson sought a review of the decision by the Social Security Appeals Tribunal (SSAT). On 18 May 2009 the SSAT also affirmed the decision. Mr Glasson lodged an application for review of the SSAT with the Tribunal on 23 June 2009.
4. The issue for the Tribunal is whether the length of Mr Glasson’s income maintenance period can be reduced due to his difficult financial circumstances.

MR GLASSON’S PERSONAL AND FINANCIAL CIRCUMSTANCES

5. Mr Glasson told the Tribunal that he had expected to get another job within a short period of time after being made redundant. However, apart from some short-term work and despite many applications for positions, he has not been re-employed. His wife, who had been working part-time, is no longer able to do so because she is ill. He still has three children at school. His eldest child has moved out of home and receives youth allowance.
6. After receiving his redundancy, Mr Glasson installed a swimming pool at their home with associated fencing and landscaping at a total cost of around $34,000. He also paid arrears on his mortgage of around $15,000 and paid $5,000 outstanding on a credit card. His ongoing mortgage payments were in excess of $3,000 per month. He has also spent more than $10,000 on education expenses. He also spent some of the money on some house alterations (new front door and internal wall) and on replacing the hot water service and septic tank. He purchased some new home appliances. He cannot account for all the expenditure but says that much of it has been for just day-to-day living expenses for the family.
7. At the time of the hearing, Mr and Mrs Glasson’s joint account was overdrawn. He owed money on his credit card. He had to seek help from charitable agencies; something he had never imagined he would have to do. Mr Glasson’s car had been repossessed because of his failure to keep up with repayments. He had borrowed his eldest daughter’s car that day and was on his way home from a medical appointment his wife had to attend. His wife’s medical condition prevented her from driving or working at that time.

CAN THE INCOME MAINTENANCE PERIOD BE SHORTENED?

8. Section 1068–G7 of the Act provides that where a person’s employment is terminated and as a result the person is entitled to a lump sum payment, the person is taken to have received the lump sum on the day his employment was terminated. In Mr Glasson’s case, $139,871.17 was paid into his bank account on 15 January 2008.
9. Section 1068-G7AH of the Act states that if a person’s employment has been terminated and he receives a termination 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.
10. Section 1068-G7AKA of the Act states that the starting date of the income maintenance period is the day the person affected received the payment. In this case, it is 15 January 2008. Other subsequent sections set out how the length of the income maintenance period is calculated. Mr Glasson’s income maintenance period has been calculated as 555 working days, resulting in an end date of 26 February 2010. The Tribunal accepts that calculation as correct.
11. Section 1068-G7AM of the Act provides for the possibility of waiving all or part of the income maintenance period in certain limited circumstances. The decision-maker may determine that the whole or any part of the income maintenance period does not apply if the person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while on an income maintenance period.
12. Section 19C(3) of the Act sets out that a person who is a member of a couple is in severe financial hardship if the value of the couple’s liquid assets is less than twice the fortnightly amount (at the maximum rate) of the payment that would be payable to the person (in this case NSA). Liquid assets are defined in s 14A(1) of the Act as the person’s cash and readily realisable assets including bank deposits, shares or outstanding wages. In Mr Glasson’s case, his bank accounts were negligible and the income coming into the household comprised family tax benefits and youth allowance for one child. Mr Glasson may well have met the definition of being in severe financial hardship.
13. However, being in severe financial hardship does not, of itself, give the decision-maker authority to shorten a person’s income maintenance period. For the Tribunal to exercise its discretion to shorten the period, it must be satisfied that the severe financial hardship is because the person has incurred unavoidable or reasonable expenditure while the income maintenance period applies.
14. The expenditure that can be classified as unavoidable or reasonable expenditure is set out in s 19C(4) of the Act. It includes costs of repairs to, or replacement of whitegoods in the person’s home; school expenses; funeral expenses; essential repairs to the person’s car or home; premiums for vehicle and home insurance; vehicle registration and essential medical expenses. However it does not include any reasonable costs of living.
15. The reasonable costs of living are defined in s 19C(5) of the Act. They include food costs, rent or mortgage repayments; regular medical expenses; rates; gas, electricity and telephone bills; costs of petrol for the person’s vehicle and public transport costs. Section 19C(7)(c) states that the reasonable cost of living for a member of a couple is twice the amount of the allowance that would have been payable to the person during that part of the income maintenance period that has already applied to the person had they not been precluded by the income maintenance period. The definition does not consider the amount of mortgage or rent, whether the person lives in a regional area where a car is the only means of transport or other variable factors.
16. Mr Glasson gave evidence to Centrelink and the SSAT that he had incurred a number of expenses that would fit in the category of unavoidable or reasonable expenditure. These included school expenses ($10,000), replacement of the hot water service ($1,770), car registration fees ($990), car valve repair ($850) and septic tank replacement ($580). The maximum amount that is allowed under s 19C(8) of the Act for the reasonable cost of living during the period was $409 per week. A fresh calculation was done based on those figures but it did not alter the length of the income maintenance period.
17. Given that four more months had elapsed since the SSAT decision, the Tribunal gave Mr Glasson the opportunity to present further details of unavoidable or reasonable expenditure since his previous estimates. At the hearing on 5 October 2009, the Tribunal adjourned the matter for a month to allow him to assemble and provide the material to the Tribunal. On 19 October 2009 the Tribunal sent Mr Glasson a letter reminding him of the reason for adjournment and enclosing a list of items that could be relevant. On the receipt of such information, the Tribunal intended asking Centrelink to do a fresh calculation of the income maintenance period. However, the Tribunal has not received any further material from Mr Glasson. Therefore, there is no basis for a re-calculation of the income maintenance period.
18. The Tribunal accepts that Mr Glasson cannot manage on $409 per week for the reasonable costs of living. That would not even cover the cost of the mortgage on his home. There are also rates, power and telephone bills, petrol and food. However, the Tribunal has no power to change the amount allocated for the reasonable costs of living, given the lack of discretion in the legislation. In cases involving awards of workers compensation, the Tribunal can take account of a range of special circumstances in shortening the preclusion period in situations of hardship. There is no similar discretion when it comes to income maintenance periods where a person has been made redundant.
19. The Tribunal is unable to shorten the income maintenance period based on the legislation and the evidence before it. Therefore, Mr Glasson is not eligible for NSA until the expiry of the full income maintenance period.

DECISION

20. The Tribunal affirms the decision under review.

I certify that the twenty [20] preceding paragraphs are a true copy of the reasons for the decision of:

Ms Regina Perton, Member

Signed: Cassie Renfrew

Clerk

Date of hearing: 5 October 2009

Date submission due: 5 November 2009 (not received)

Date of decision: 18 December 2009

Advocate for applicant: Self-represented

Advocate for respondent: Mr T Noonan, Centrelink Legal Services Branch