Editors --- "Arrears of rent assistance: was a valid notice given of the original decision?" [2011] SocSecRpr 18; (2011) 13(2) Social Security Reporter, Article 7

• SHUAR and SECRETARY TO THE DEEWR
• Background
• The law and considerations
• Rate reduction determination
• Formal decision

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Arrears of rent assistance: was a valid notice given of the original decision?

SHUAR and SECRETARY TO THE DEEWR

(2011/185)

Decided: 8th April 2011 by A. K. Britton

Background

Shuar was paid newstart allowance from 28 December 2006 with a component of rent assistance. On 7 February 2007, Centrelink made a decision to discontinue rent assistance and reduced Shuar’s newstart allowance rate by about $60 per fortnight.

In July 2010, following an enquiry made by Shuar, Centrelink reinstated rent assistance and increased the rate of newstart allowance. Centrelink also decided that rent assistance could not be back paid to February 2007 as requested by Shuar.

The law and considerations

The AAT considered whether rent assistance could be back paid to February 2007, and whether the letter sent by Centrelink to Shuar on 7 February 2007 constituted a valid notice for the purpose of s.109 of the Social Security (Administration) Act 1999(the Administration Act) which imposes time limits on when a favourable decision made following review of an original decision, can ‘take effect’. A critical issue to the operation of s.109 is whether the person was given notice of the original decision.

The AAT firstly considered the nature of rent assistance and whether it was a ‘social security payment’ within the meaning of the Social Security Act 1991 (the Act). The AAT noted the case of Secretary, Department of Family & Community Services v Laurent [2003] FCA 1017; [2003] 132 FCR 211:

[Rent assistance] is a notional amount to be added to a person’s maximum basic rate of pension, benefit or allowance to help cover the cost of rent. What is in fact payable and paid is the Newstart Allowance in a sum calculated in accordance with Benefit Rate Calculator B (s.1068) and that is the payment to which s.109(1)(a) of the Administration Act applies.

In that case, Cooper J, considered that for the purpose of s.109 of the Administration Act, the ‘original decision’ was not the purported decision to terminate rent assistance but rather the decision to calculate the pensioner’s rate of pension without including a component for rent assistance.

The AAT went to consider the statutory requirements of a notice and noted that

s.109 of the Administration Act provides that if notice of an original decision is given and an application for review is made within 13 weeks of the notice, a favourable decision takes effect from the date of the original decision. If notice of the original decision is given and an application for review is made more than 13 weeks after the notice is given, a favourable decision takes effect on the day on which the application for review was made. If notice of the original decision is not given, a favourable decision will take effect from the date of the original decision.

The AAT noted the matter of Secretary, Department of Families, Community Services and Indigenous Affairs and Walshe [2007] AATA 1861 (Walshe)where the Tribunal considered whether several notices issued constituted ‘adequate notice’ for the purpose of s.109 of the Administration Act. Some of the notices related to decisions to reduce the rate of the respondents’ social security payments. Section 79 of the Administration Act deals with decisions of that type and provides:

Rate reduction determination

(1) If the Secretary is satisfied that the rate at which a social security payment is being, or has been, paid is more than the rate provided for by the social security law, the Secretary is to:

(a) determine that the rate is to be reduced to the rate provided for by the social security law; and

(b) specify the last-mentioned rate in the determination.

The Tribunal noted that to meet the requirements of s.109 a notice must be given informing the person of the original decision. The Tribunal identified the two elements of a decision made under s.79:

(a) that there be a reduction in the rate of pension; and

(b) the amount of the newly determined rate of pension.

The Tribunal concluded that s.109 requires that the person be notified of the fact and content of the decision, not the reason for it. The Tribunal also concluded that in determining whether the notice constituted ‘adequate notice’, the test to be applied is whether an ordinary reasonable person would understand the decision the Secretary sought to convey. The Tribunal stated that in deciding whether a particular letter effectively conveys the requisite information, it is appropriate to consider how the letter would be read by ordinary or reasonable persons within the group of persons to whom the information is directed.

In this case, the ‘original decision’ was the decision made on 7 February 2007, to reduce Shuar’s rate of newstart allowance and purportedly set out in the subject letter. While there was no issue that Shuar received the subject letter it was necessary to decide whether it constituted adequate notice for the purpose of s.109 of the Administration Act, that is, a notice, ‘informing the person of the original decision’.

The notice sent to Shuar advised that she would receive newstart allowance in the sum of $137.50 per week ‘from payday 21 March 2007’. It made no mention of the rate of newstart allowance paid immediately prior to 7 February 2007; and that the rate had been reduced or that rent assistance had been discontinued.

A notice sent to Shuar the day before the subject letter stated that she would be paid newstart allowance of $137.50 and rent assistance of $68.80, totalling $206.30. Notices in identical terms were sent to her on 11 January 2007, 23 January 2007 and 29 January 2007.

The AAT accepted that the subject letter disclosed the revised rate of newstart allowance — the first element of a rate reduction determination made under s.79 of the Administration Act. However it made no mention of a reduction having been made to Shuar’s previous rate of newstart allowance and did not refer to that rate.

The subject letter was similar to one of the notices (Letter 5) considered by the Tribunal in Walshe. Like the subject letter, Letter 5 did not expressly state that there had been a change in the pension rate, refer to the previous rate or give reasons for the revised rate. The Tribunal concluded at [35] that while it was the least specific of the letters considered in that case, it nonetheless provided adequate notice:

... in the hands of a pensioner who is regularly receiving a pension, the purport of the letter would be clear. The pensioner would know that these letters are not received every fortnight. He or she would know from that fact and the note on the reverse that the letter was giving notice of a decision. To be told that the payment “from” 23 November 2001 is to be $193.35 is to be told that prior to that it was something else. It is to be noticed that, in terms, ss 78 and 79 require only the specification of the new rate. This letter provides adequate notice.

The AAT in Shuar’s case then posed the question — would the ordinary reasonable person understand from the subject letter that a decision had been made to reduce the rate of newstart allowance — and concluded that the answer must be ‘no’. However, if the approach taken in Walshe was adopted, the information known to Shuar that immediately prior to 7 February 2007 she had been paid a significantly higher rate of newstart allowance would be imputed to the ordinary reasonable person, and the answer was ‘yes’. Adopting that approach the AAT concluded that the subject letter constituted adequate notice for the purpose of s.109 of the Administration Act. Therefore s.109(3) did not apply and a ‘favourable decision’ could not take effect on the date of the original rate reduction decision made on 7 February 2007.

The AAT accepted the Secretary’s submission that the decision under review should have been made under

s.109(1) of the Administration Act and not s.109(2) as decided by the SSAT and the Authorised Review Officer. Adopting that approach the ‘original decision’ the subject of Shuar’s application for review could be taken to be the decision made on 19 April 2010 — 13 weeks before the application was made, not the decision made on the day the application for review was made. This means that the increased rate of newstart allowance, payable to Shuar which included a component for rent assistance could be reinstated to 19 April 2010.

The Tribunal in Walshe, while finding that the letters the subject of its review constituted ‘adequate notice’, recommended that the Secretary take immediate steps to have the letters redrafted for clarity and consistency and that the new form of letter should at least inform the recipient that:

• ▪ a decision has been made changing the recipient’s pension entitlement;

• ▪ the nature of the change, ie an increase, decrease, suspension or cancellation;

• ▪ the date the change takes effect;

• ▪ the amount of the old entitlement; and

• ▪ the amount of the new entitlement.

The AAT in Shuar noted that the subject letter suggested that these recommendations had not been adopted and expressed disappointment that a recommendation made by the President of the AAT over three years before, designed to improve the quality of decision making, not taken up. The AAT noted that it is in the interests of open and transparent decision making that a person directly affected by a decision made by the Secretary is advised in clear and unambiguous terms that a decision has been made, and the contents of that decision. That is consistent with Centrelink’s customer service charter, which states that Centrelink customers can expect Centrelink to give them: ‘information that is accurate, consistent and easy to understand’.

Formal decision

The decision under review was set aside and a new decision was substituted that the applicant was to be paid arrears of newstart allowance to include a component for rent assistance, from 19 April 2010.

[S.P.]