Editors --- "Newstart Allowance: non payment period: move to area with reduced employment prospect" [2005] SocSecRpr 22; (2005) 7 Social Security Reporter, Article 22

• GERLACH and SECRETARY TO THE DFaCS
• The law
• Evidence and submissions
• Formal decision

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Newstart Allowance: non-payment period: move to area with reduced employment prospect

GERLACH and SECRETARY TO THE DFaCS

(2005/887)

Decided: 13th September 2005 by M.J. Carstairs

Gerlach had been unemployed for a number of years following a work injury. He had ongoing medical conditions restricting him to light employment, but could not find employment in the ACT, despite assistance from MissionAustralia.

In 2004 Gerlach received a settlement in respect of his work injury and he moved from the ACT, using his settlement to purchase a property Queensland.

Centrelink decided that a26 week non-payment period should be applied to Gerlach’s payments. Gerlach disagreed with this decision and maintained that he in fact improved his employment prospects by moving as he no longer required Centrelink payments.

The law

The relevant legislation is contained in s.634 of the Social Security Act 1991 (the Act) and is quoted above (see summary for Trajcevski).

Evidence and submissions

Gerlach told the Tribunal that he had some leads for jobs in Hervey Bay before he left the ACT, but this work was casual and he was employed for limited hours in a few weeks in April and June 2004.

He had also obtained some work with another business and the manager had provided a letter to Centrelink explaining that his firm had discussions early in 2004 with Gerlach offering him full-time employment when he relocated to Queensland. The manager advised the Tribunal that although Gerlach had forklift and front-end-loader tickets, he needed his bob-cat ticket and experience before their firm could take him on full-time. Gerlach argued that without his newstart allowance he had no money to undertake any training. He told the Tribunal that after his newstart allowance was cancelled he was living on the rental receipts of $100 from the house which was not then fully tenanted.

Gerlach argued that in February 2004 he used the money to purchase a residential property that would generate income. He believed that he would be better able to do this in HerveyBay, where real estate was cheaper than the ACT. His elderly mother already lived in Queensland and she had expressed interest in moving to the Hervey Bay area before he made the decision to purchase the house there. After he moved there she sold her house and has lived in the Hervey Bay area since.

The house purchased by Gerlach had four separate self-contained living areas and he considered that it would have good rental prospects. The house also had an area that could be used as a shop with frontage to the street. Gerlach was able to start a business in computer repairs which he operated from the shop area.

Gerlach acknowledged that his business was not immediately profitable, but it was operating during 2004 and he knew it would do well because there were only two people servicing computers in the area.

Gerlach told the Tribunal that the house was now fully tenanted since he carried out repairs during 2004. It had taken him until early 2005 to fully tenant the house. His business had taken off by the end of 2004.

Centrelink contacted Gerlach at the end of the 26 week penalty period and invited him to re-apply for newstart allowance. He advised Centrelink that he did not require the payment anymore as his fortnightly income was $1200.00. This was too high to qualify for newstart payments.

Gerlach argued that the real test of whether he had moved to an area where he lowered his employment prospects was whether he was in employment now. He argued that whilst the business did not take off immediately he was fully employed in it. The Tribunal agreed with him.

Assessing whether there has been a reduction in employment prospects

The AAT accepted that the unemployment figure of 3.3% in Queanbeyan was substantially lower than the16.3% registered in the Torbanlea area, however it also noted that the question posed by the legislation could not be answered simply on a “bald analysis of job market statistics”. It could only be answered by considering the individual circumstances of each person and whether that particular person’s employment prospects were reduced by the move.

The AAT noted that, whilst it was at one time a contentious point whether the “employment” referred to ins.634, but not defined anywhere in the Act, was limited to employment as an employee thereby excluding self-employment, the better view is that adopted byte Tribunal in Re Secretary Department of Social Security and Harding (AAT10641, 25 August 1995) which concluded that the meaning of “employment “refers to more than simply master-servant relationships.

The AAT noted that the use of the word “prospects” in the Act suggested that it was helpful to look at what happens next in the particular person’s working life.

The AAT was satisfied that Gerlach did not reduce his employment prospects as a result of the move, as he had moved from an area where he had no employment for quite some time. The Tribunal considered that Gerlach had demonstrated that the move improved his employment prospects to the extent that he no longer required Centrelink support. The Tribunal was also satisfied that he was actively engaged in looking for work outside of the business that he had successfully started and was able to obtain some paid employment in the time after the move. It considered that Gerlach had been making active employment enquiries before he moved and continued to do so.

Formal decision

The AAT set aside the decision on the basis that Gerlach did not reduce his employment prospects.

[S.P.]