Editors --- "Administrative breach penalty: reasonable excuse" [2007] SocSecRpr 20; (2007) 9(2) Social Security Reporter, Article 7

• SECRETARY TO THE DEWR and LU-ZAW
• Background
• The issues
• Discussion
• Formal decision

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Administrative breach penalty: reasonable excuse

SECRETARY TO THE DEWR and LU-ZAW

(2007/0082)

Decided: 14th March 2007 by S. Webb

Background

Lu-Zaw was granted an exemption from the newstart allowance activity test on the basis of his voluntary work for the Metaschool of Bodiology (Metaschool) in 2002. On 13 July 2004 he entered into an activity agreement on that basis.

On 8 August 2005 Centrelink wrote to Lu-Zaw asking him to attend an interview with Quest Employment and Training Solutions (Quest). On the same day a Centrelink officer noted “....has been doing voluntary work for too long. Have cancelled [voluntary] work approval”.

On 12 August Centrelink wrote to Lu-Zaw and asked him to attend an interview with Centrelink with his personal adviser. Lu-Zaw did not attend the interview with Quest, but did attend the interview with the personal adviser on 1 September 2005. Lu-Zaw was verbally informed of the decision to withdraw his exemption from the activity test. He informed the adviser that he was complying with his participation agreement and he would not act on advice concerning his exempt status until he received formal notification of the change.

Centrelink wrote to Lu-Zaw requiring him to attend an interview with Quest on 16 September 2005. His failure to attend this interview resulted in a 16% administrative breach penalty reduction of his newstart allowance for the period 5 October 2006 to 4 January 2006.

On 23 September 2005 Centrelink wrote to Lu-Zaw informing him that his proposed voluntary work had not been approved because it did not fall within the guidelines for voluntary work.

An Authorised Review Officer affirmed the administrative breach penalty and decided that his newstart allowance was cancelled from 20 October 2005. The SSAT decided that an administrative breach should not have been applied and that he remained qualified for newstart allowance on 20 October 2005.

The issues

Was an administrative breach penalty correctly imposed or did Lu-Zaw have a reasonable excuse for failing to attend the interview with Quest on 16 September 2005?

Was Lu-Zaw qualified for newstart allowance on 20 October 2005 and in particular, was he unemployed and did he fail to satisfy the activity test?

The law

At the time, s.63 of the Social Security (Administration) Act 1999 (the Administration Act) provided that the Secretary may notify a person who is receiving newstart allowance that he or she is to attend a particular place for a particular purpose within a specified time. Where the requirement was reasonable, failure to comply with the notice could result in newstart allowance being suspended and/or an administrative breach rate reduction being applied. The Secretary had discretion to determine not to suspend or to apply a breach, despite non-compliance, if the person had a reasonable excuse for not complying with the notice.

Section 236 of the Administration Act requires that a decision under the social security law be in writing. Section 237 describes when notice of a decision is taken to have been given to a person.

Discussion

The Tribunal held that, as at 16 September 2005, Lu-Zaw had not been given formal notice of the decision to withdraw his exemption pursuant to s.237 of the Administration Act. The Tribunal observed in relation to ss.236 and 237:

‘If a government agent makes a decision concerning the rights or entitlements of an individual, the rules of procedural fairness and natural justice, which are well understood, require that the individual should be provided with notice of the decision, the reasons for it and their rights of review or appeal. That is especially so in circumstances in which the individual relies for their sole income on income support payments from the government and the decision in question may adversely affect those payments. The decision and notice provisions of the social security law, as expressed in the sections to which I have referred, protect against the arbitrary and unfair exercise of power without proper accountability and administrative procedure. Failing to properly and formally notify a newstart allowance recipient of a significant change in their activity test requirements may result in unfairness to the person involved and may found a reasonable excuse for a subsequent failure to comply with a notice. In this case Centrelink sent Lu-Zaw notice of the decision to cancel his voluntary work approval on 23 September 2005, seven days after the scheduled interview.’

(Reasons, para. 10)

The Secretary had argued that Lu-Zaw’s failure was not reasonable because it alleged he was resisting negotiating a new agreement. The Tribunal held that he did not ‘fail to enter’ the agreement, rather he was waiting for reasons for the withdrawal of his exemption before doing so. It found that it was reasonable for him to do so in the circumstances, and further, it would be unreasonable to penalise him for Centrelink’s delay in providing formal notice of and reasons for the decision.

With regard to the question of whether Lu-Zaw qualified for newstart allowance after 20 October 2005 the Tribunal found that approval for Lu-Zaw’s voluntary unpaid work was withdrawn on 8 August 2005 and notified on 23 September 2005. No further approval was granted and the new agreement dated 29 September 2005 did not exempt Lu-Zaw from the activity test. To satisfy the activity test Lu-Zaw needed to be actively seeking and willing to undertake paid work, which by his own admission he was not. The Tribunal therefore held that he did not qualify for newstart allowance on 20 October 2005.

Formal decision

The decision in relation to Lu-Zaw’s entitlement to newstart allowance was set aside and substituted with a decision that he was not qualified on 20 October 2005. The decision was otherwise affirmed.

[A.M.]