Editors --- "Newstart allowance breach rate reduction: whether relief from activity test; whether satisfied activity test" [2007] SocSecRpr 2; (2007) 9(1) Social Security Reporter, Article 2

• SECRETARY TO THE DEWR and CHAN
• Background
• The issues
• The law – relief from the activity test
• Discussion – relief from the activity test
• The law – satisfying the activity test
• Discussion – satisfying the activity test
• Formal decision

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Newstart allowance breach rate reduction: whether relief from activity test; whether satisfied activity test

SECRETARY TO THE DEWR and CHAN

Decided: 1st December 2006 by C. Ermert

Background

Chan received newstart allowance. He was 55 years old. He held a Bachelor of Economics degree, and had worked in the finance industry in Malaysia for ten years. Since arriving in Australia in 1990 he had applied without success for many accounting and clerical jobs.

On 4 August 2005 he entered into a participation agreement with Centrelink. The agreement obliged Chan to make four job search contacts each fortnight. In addition Chan undertook voluntary work with the Red Cross and Oxfam, working one full day a week for each organisation, as well as undertaking paid work for four to five hours a week as a kitchen hand.

On 15 December 2005 Chan refused permission for his Job Network Provider to forward his resume for a position of kitchen hand because he believed that doing more kitchen hand jobs would prejudice his chances of obtaining better skilled positions. A Centrelink officer determined that Chan’s refusal constituted a failure to accept a suitable job offer and on 25 December2005 an activity test breach rate reduction of 18% was imposed for 26 weeks.

The SSAT set aside the decision and held that Chan had satisfied the activity test and was therefore not liable for the breach rate reduction. The DEWR appealed the decision.

The issues

The AAT considered whether Chan was entitled to relief from the activity test, and if not, whether he satisfied the activity test.

The law – relief from the activity test

In order to receive newstart allowance a person must satisfy the activity test. A person satisfies the activity test if they are actively seeking and willing to undertake paid work (s.601(1) of the Social Security Act 1991 (‘the Act’)). There are limited circumstances where a person can get relief from the activity test, including:

603AA.(1) Subject to subsection (3), a person who has reached 50 years is taken to satisfy the activity test in respect of a period (the relevant period) if the person:

(a) is engaged in approved full-time unpaid voluntary work for an approved organisation for at least 32 hours in the period; or

(b) is engaged, for at least40 hours in the period in a combination of:

(i) approved unpaid voluntary work for an approved organisation; and

(ii) suitable paid work for another person;

603AA.(3) This section does not apply to a person in respect of a day in a relevant period if, in respect of the person, having regard to the opportunities, or possible opportunities, for employment that become available to the person on or before the day, the Secretary considers that this section is not to apply to the person in respect of that day.

Discussion – relief from the activity test

The DEWR submitted that s.603AA(3) applied, therefore denying the relief in subsection (1). The AAT held that it was unable to find a direct connection between the Job Network Provider’s request for permission to forward a resume to a prospective employer and a determination by the Secretary that s.603AA(1)was not to apply to Chan. Having found s.603AA(3) was not satisfied the AAT considered whether the relief provisions in s.603AA(1) of the Act applied to Chan.

Whether s.603AA(1) of the Act applied depended on how many hours Chan worked in approved unpaid voluntary work for approved organisations, and in suitable paid work. The only issue in dispute was whether the voluntary work at the Red Cross was approved. The documentary evidence showed that in January 2003 Centrelink approved the voluntary work at the Red Cross for the period 25 January 2002 to 24January 2003. Chan’s evidence was that he was not aware of the requirement to periodically re-apply for approval for his work at the Red Cross. The AAT held that it was bound to accept the Department’s submission that Chan’s lack of awareness did not alter the fact that the work was not approved for the relevant period.

Whilst the Oxfam voluntary work was approved by Centrelink for the relevant period, it only amounted to 14– 16 hours per fortnight, below the requirement of 32 hours approved voluntary work (s.603AA(1)(a)). Nor did the Oxfam voluntary work, when combined with the8 – 10 hours paid work, meet the requirement of 40 hours (s.603AA(1)(b)). As a result the AAT held that Chan was not entitled to relief from the activity test.

The law – satisfying the activity test

The criteria for satisfying the activity test is set out in s.601(1) of the Act. Section 601(1) states:

601.(1) Subject to subsections (1A) and(5), a person satisfies the activity test in respect of a period if the person satisfies the Secretary that, throughout the period, the person is:

(a) actively seeking; and

(b) willing to undertake;

paid work in Australia, other than paid work that is unsuitable to be undertaken by the person.

601.(5) If a person fails to comply, throughout a period, with the terms of a Newstart Activity Agreement between the Secretary and the person, the person cannot be taken to satisfy the activity test in respect of the period in spite of any compliance of the person with subsection (1).

Discussion – satisfying the activity test

The DEWR argued that Chan’s refusal to submit his resume to a prospective employer led to a conclusion that Chan was not willing to undertake paid work that was not unsuitable. Referring to the recent AAT decision in Gregory and Sec, DEWR (2006) AATA 139 the Secretary argued that Chan’s actions were analogous to sabotaging an interview to ensure a job offer was not made. Chan gave evidence that he refused permission for his resume to be forwarded for a kitchen hand job because such a job would not help him get back into the job market.

In considering this issue the AAT referred to Branson J’s decision in Castleman v Secretary, Department of Social Security (1999) FCA 836:

18. ... However, nothing in s601(1) creates an obligation on a person required to satisfy the activity test to seek every kind of paid work which is not unsuitable for him or her to undertake, or even a range of such work.

19. The requirement of s 601(1)(a)is that the person satisfy the Secretary that he or she is ‘actively seeking’ paid work. In this context the adverb ‘actively’ imports a requirement of active effort as opposed to indolence or procrastination. What the person is required to make an active effort about is the seeking of paid work which is not unsuitable for him or her to undertake – not the seeking of any particular class of such work, nor the seeking of any particular mix of such work.

20. If a person were to so limit the categories of work which he or she sought that, although the work being sought was not unsuitable for him or her to undertake, the chance of work being obtained was low, the Secretary (or as the case may be, the Tribunal) might not be satisfied that the person was genuinely seeking paid work.

The AAT held that in this case there was no evidence that Chan was not making an ‘active effort as opposed to indolence or procrastination’. He continued to meet his obligations of four job applications per week. There was no evidence that he was limiting the categories of his work such that the chance of finding work was low. The AAT considered the limitation of one specific category of work, namely kitchen hand, from the wide range of employment open to a person as qualified as Chan did not limit the categories of work such that the chance of work being obtained was low. The AAT held, in line with the reasoning of Branson J, that Chan did not fail the activity test because he had failed to seek every kind of paid work that was not unsuitable for him to undertake. The AAT noted that Chan had not regularly refused to forward his resume. His one act was not analogous to regularly sabotaging interviews, therefore differentiating his case from Gregory.

The AAT found that Chan was actively seeking paid work and that he was willing to undertake paid work and therefore satisfied s.601(1).

Finally the AAT dealt with whether Chan complied with the terms of his newstart activity agreement. Section 601(5) of the Act provides that if the person has not complied with the terms they cannot satisfy the activity test in spite of compliance with the requirements in s.601(1). After considering the terms of Chan’s activity agreement the AAT held there was no evidence that Chan did not at all times comply with those requirements.

Formal decision

The AAT held that Chan satisfied the activity test and therefore was not subject to a breach rate reduction. The SSAT’s decision was affirmed, although on different reasoning.

[J.F.]