Editors --- "Periodic compensation: affected Centrelink payments; nexus" [2008] SocSecRpr 42; (2008) 10(4) Social Security Reporter, Article 8

• KENNINGTON and SECRETARY TO THE DFHCSIA
• Background
• Legislation
• Consideration
• Decision

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Periodic compensation: affected Centrelink payments; nexus

KENNINGTON and SECRETARY TO THE DFHCSIA

(2008/862)

Decided: 25th August 2008 by J.W. Constance

Background

Kennington was in receipt of disability support pension (DSP). Her husband was injured at work and received periodic compensation payments. Kennington advised Centrelink of her husband’s receipt of fortnightly compensation payments in lieu of wages on 27 November 2007. On 18 December, Centrelink determined that Kennington’s entitlement to DSP should be calculated by taking into account her husband’s compensation payments. Accordingly, her payments of pension were reduced to nil for the period 16 November to 11 December and a debt was raised against those monies said to be overpaid.

On 17 January 2008, the Centrelink authorized review officer adjusted the debt amount to $387.43, but agreed with the decision to treat the compensation payments as disentitling for Kennington’s pension. That decision was affirmed byte SSAT and Kennington appealed to the AAT.

The issue for the Tribunal was whether her husband’s receipt of compensation payments during the period constituted valid grounds for Centrelink’s decision to reduce to zero disability pension payments made to Kennington.

Legislation

Section 1174(1) of the Social Security Act 1991 (the Act) provides that:

a person receives periodic compensation payments; and

the person is a member of a couple; and

the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and

the person is qualified for a compensation affected payment in relation to a day or days in the periodic payments period but, solely because of the operation of this Part, does not, or would not, receive the payment; and

the person’s partner receives or claims a compensation affected payment...; [then] the amount (if any) by which the daily rate of periodic compensation payable to the person exceeds the daily rate of the compensation affected payment for which the person is qualified ...(the excess amount)is to be treated as ordinary income of the person’s partner...’.

Consideration

The Tribunal noted that the dispute between the parties centred on the correct interpretation of sub-section (d). Facts relevant to sub-sections (a), (b), (c) and (e) of s.1174(1) were agreed between the parties. These were that Mr and Ms Kennington were members of a couple, that Mr Kennington was receiving payments of periodic compensation during the twenty-five day period under review, but that he was not qualified for and receiving a compensation affected payment, and that Kennington was receiving a compensation affected payment, namely DSP.

The Department argued that s.1174(1)(d) was satisfied and that in fact Mr Kennington could be said to be considered qualified for the purposes of the section in each of three separate compensation affected payments: newstart allowance, sickness allowance and carer allowance.

It was argued, in respect of both sickness allowance and newstart allowance, that as Mr Kennington had applied in September 2007 for newstart allowance, although he found work and didn’t lodge a written application, it could be said,

...that but for Mr Kennington’s workplace injury sustained on 16 November 2007, he would have continued to work, or he would have been able to work and thus may have been eligible for SKA or NSA,[sickness allowance or newstart allowance], in the period in which he received ‘compensation periodic payments.’(Reasons, para. 17)

The Tribunal found that, as Mr Kennington was employed, although on sick leave, on the evidence before the Tribunal he was not eligible for newstart allowance. The Department argued that there would have been an exemption from the activity test, however, the Tribunal noted there was no medical evidence before it of a temporary incapacity, which was a prerequisite for access to the exemption. The Tribunal noted that the Department’s own argument, using the phrase ‘may have been eligible’, in fact supported the Tribunal’s position. Similarly, in considering eligibility for sickness allowance, the Tribunal pointed out there was a failure of the evidence to establish, ‘that Mr Kennington was qualified for the payment on a day or days in the relevant period.’(Reasons, para. 32)

A third proposition put by the Department, that Mr Kennington had been qualified for carer allowance by the provision of constant care to a person with a disability during the period, was similarly dismissed by the Tribunal as not supported by the evidence.

A supplementary question before the Tribunal was: ‘(h)ad Mr Kennington qualified for a compensation affected payment in the relevant period would he have not received the payment solely because of the operation of Part 3.14 of the Act’?

In addressing the question of whether by its own operation, Part 3.14 of the Act would operate to prevent receipt of payment, the Tribunal went through the Part division by division and found there was no applicable section that could have operated to be ‘the sole cause of Mr Kennington not receiving a compensation affected payment, had he been qualified for it’, and accordingly, the s.1174(1) (d) requirement was not met in relation to Mr Kennington.

Decision

The decision under review was set aside and remitted to the Department for recalculation on the basis that Kennington’s partner was not qualified for a compensation affected payment, and therefore there was no disentitling provision affecting Kennington’s pension.

[J.S.]