Editors --- "Disability support pension: transitional pension provisions where a person's rate of pension temporarily nil" [2010] SocSecRpr 49; (2010) 12(4) Social Security Reporter, Article 4

• PENNELL and SECRETARY TO DFHCSIA
• Background
• The issues
• Rate of pension
• Consequence of nil payment
• Discretion to vary the decision
• Formal decision

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Disability support pension: transitional pension provisions where a person’s rate of pension temporarily nil

PENNELL and SECRETARY TO DFHCSIA

(2010/787)

Decided: 14th October 2010 by A. K. Britton

Background

Pennell had been in receipt of disability support pension since 2000 following injuries at work. In 2009 a number of changes were introduced to the income test applying to disability support pension and other pensions by the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures Act 2009 (the Amending Act). Transitional arrangements were made for those who were receiving their pension as at 19 September 2009.

Clause 146 of schedule 1A of the Social Security Act 1991 (the Act) provided that the rate payable to a person covered by that provision would be the rate payable under the former pension rules, or those applied after 20 September 2009, whichever gave the higher amount: cls. 146(3) and (4). This provision only applied if the person had been receiving their payment on 19 September 2009 and continued without a break to receive their payment: cl. 146(1).

Centrelink calculated Pennell’s disability support pension rate to be nil for the fortnight commencing 6 November 2009 on the basis of his partner’s earnings of $792 for that fortnight. Pennell’s partner worked as a casual and this amount was significantly more than her usual income. She had accepted additional work to supplement the family income over the Christmas period. Centrelink also decided that this nil payment meant that Pennell was no longer entitled to the benefit of the transitional provisions.

Pennell then sought review by the AAT.

The issues

The issues before the AAT were:

(1) Pennell’s correct rate of pension for the period 6 November 2009 to 19 November 2009.

(2) If the rate was correctly nil, whether the subsequent decision to calculate Pennell’s rate of pension under the new rules was correct.

(3) Whether the AAT acting as a substitute decision maker had the power to vary that decision and whether that power should be exercised.

Rate of pension

The AAT requested that Centrelink prepare a document setting out the assumptions employed to calculate Pennell’s pension rate for the period 6 November 2009 to 19 November 2009. The AAT was satisfied Centrelink correctly calculated Pennell’s rate of pension as nil, given Pennell’s partner’s income of $792 for that fortnight, and applying the Pension Rate Calculator at the end of s.1064 of the Act.

Consequence of nil payment

The AAT then considered the effect of Pennell’s nil payment for the period 6 November 2009 to 19 November 2009 in the scheme of the Act, and examined whether receipt of a nil rate of payment for an instalment period would preclude access to the benefit of the transitional arrangements detailed in cl. 146 of the Act.

The AAT considered s.98(1) of the Act which provided that where the rate of disability support pension is calculated to be nil, disability support pension is not ‘payable’ to a person.

The AAT referred to the comments of Deputy President Jarvis inSecretary, Department of Families, Housing, Community Services and Indigenous Affairs and de Waal [2009] AATA 635 that where no payment is made to a person, applying the ordinary English meaning of ‘receive’ as to ‘take into one’s hand or one’s possession’, no payment is received. In that case, in respect of two instalment periods where de Waal’s rate of payment was reduced to nil as a result of earnings, he was found not to have received payments in respect of those instalment periods.

Applying this approach, the AAT found that because of the nil payment during the fortnight commencing 6 November 2009, Pennell was not a person who had ‘continued (without a break) to receive the DSP’ within the meaning of cl. 146(1)

(b). As a result, cl. 146 did not apply to Pennell, and his pension rate from that date must be assessed under the pension rules introduced by the Amending Act.

Discretion to vary the decision

Pennell contended that he was given assurances by Centrelink that he would not be worse off under the changes introduced in September 2009, including a Centrelink information sheet stating ‘A new transitional rate will apply to protect existing pensioners who would otherwise have had a reduction in their payment. These pensioners will receive an increase in their pension and will remain on this transitional rate until they are no longer worse off under the new rules’. He estimated his loss to be about $4000 per annum as a result of his pension rate being assessed under the new rules.

The AAT agreed with Pennell’s arguments about the shortcomings of this information, and commented that it was, at best, ambiguous. However the AAT found that it had no power to vary the operation of cl. 146 of Schedule 1A of the Act. While having sympathy for Pennell’s position, the AAT found the decision that Pennell was no longer entitled to the benefit of the transitional provisions introduced by the Amending Act was correct.

Formal decision

The AAT affirmed the decision under review.

[K.W.]