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Social Security Reporter |
Decided: 12th June 2012
B had been employed for many years, before he was made redundant from his job as a storeman. He received a redundancy payment of about $70,000 in June 2011. By November 2011, he had run out of money, been unsuccessful in his attempts to find a new job and lodged a claim for newstart allowance. He was also evicted from his home.
Centrelink rejected the claim because it decided that newstart allowance was not payable until September 2012 because of an income maintenance period. This was the first time that B realised he was subject to an income maintenance period.
Apart from rent and ordinary living expenses, he had run out of money and been evicted because he lent considerably more than half of his funds to a friend, who now said they could not repay him. B did not know if the friend was still in Australia.
B claimed special benefit, but Centrelink rejected his claim, a decision affirmed by an Authorised Review Officer. B then appealed to the Social Security Appeals Tribunal (SSAT). The SSAT decided that he was qualified for special benefit, in effect until the expiry of the income maintenance period.
Special benefit is a discretionary payment, with many of the rules affecting qualification and payability found only in Centrelink policy in the Guide to Social Security Law.
However, basic qualification conditions are set down in s.729(2) of the Social Security Act 1991 (Cth) (the Act). Relevantly, a person may qualify for special benefit only if:
- no other social security pension or benefit is payable to them;
- the reason no pension or benefit is payable to them is not for one of the prescribed reasons (eg in cases where newstart allowance is not payable, it is because of industrial action under s.596 of the Act); and
- the person is unable to earn a sufficient livelihood for the person and their dependants (if any) because of age, physical or mental disability or domestic circumstances or for any other reason.
Critically, s.729(2) does not bar qualification for special benefit in cases where newstart allowance is not payable because of an income maintenance period.
Further, the income maintenance period is applied to the various social security payments through the rate calculators in the Act. Those rate calculators do not apply to special benefit.
Section 746 of the Act only caps the maximum rate of special benefit by providing that it cannot exceed the rate of youth allowance, austudy or newstart allowance that would hypothetically be payable to the person if they were qualified and if the payment was payable.
Once the primary qualification criteria in the Act are met, decisions about whether to grant special benefit are discretionary and there is detailed policy about this in the Guide to Social Security Law.
The SSAT accepted that B met the primary qualification criteria in s.729(2) of the Act and decided to exercise the discretion in s.729(1) to grant him special benefit.
The Tribunal referred to the Administrative Appeals Tribunal decisions about the exercise of the discretion Te Velde and Director-General of Social Services (1981) AATA 87 and Watts and Director-General of Social Security (1984) AATA 374. Although it did not discuss these decisions in detail it noted that the discretion in s.729(1) was a ‘true’ discretion and not limited by such concepts as whether the person had acted reasonably or not.
It accepted that although B had been imprudent with his money, he had continued to apply for jobs and thought he would get a new job. It also accepted he genuinely believed his friend would pay him back. The Tribunal rejected the idea that B’s poor decision-making meant the discretion could not be exercised in his favour.
Critically, it found that B was unaware of the income maintenance period until he had run out of money, distinguishing his situation from one where a person is aware that they are unable to receive a Centrelink payment.
It concluded that the discretion to pay special benefit should be exercised in B’s favour. He was in genuine need at the time of the hearing, as he had lost his housing, he had made genuine efforts to obtain work and support himself and ‘his errors in judgment’ should not lead to the rejection of his special benefit claim.
The SSAT decided that B was qualified for special benefit from the date of his claim.
[M.B.]
Author’s note: This decision is an important reminder that special benefit may be granted to a person who is in financial hardship and unable to be paid newstart allowance because of an income maintenance period. It is significant that many people are unaware they are subject to an income maintenance period until they run out of money and try to claim newstart allowance. In the author’s opinion, this circumstance favours the exercise of the discretion to pay them special benefit. An appeal by Centrelink to the Administrative Appeals Tribunal was withdrawn. Centrelink’s appeal to the Administrative Appeals Tribunal was on the ground that s.746 of the Act meant that special benefit could not be paid at all during an income maintenance period. In the author’s opinion, this ground of appeal was misconceived as s.746 of the Act caps the rate of special benefit by reference to the rate of newstart allowance the person would receive if it were payable.
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URL: http://www.austlii.edu.au/au/journals/SocSecRpr/2012/34.html