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KIERAN TRANTER, LYNDAL SLEEP and JOHN STANNARD[*]
The Social Security Act 1991 (Cth) (‘the Act’) distinguishes between partnered and single clients for the purposes of determining amount of payment. Generally, partnered clients are paid less than single clients. Being ‘partnered’ is proved either through marriage or the existence of a ‘marriage-like relationship’.[1] Section 4(3) sets out the elements of the marriage-like relationship rule. It specifies that Centrelink is to have regard to ‘all the circumstances of the relationship including, in particular, the following matters’
• the financial aspects of the relationship (s 4(3)(a))
• the nature of the household (s 4(3)(b))
• the social aspects of the relationship (s 4(3)(c))
• any sexual relationship (s 4(3)(d))
• the nature of the people’s commitment to each other (s 4(3)(e)).
If a client is found by Centrelink to have not declared being partnered according to the rule, payments may be cancelled, debts raised and in some situations they may be criminally prosecuted. Five concerns have recently been expressed about marriage-like relationship decisions by Centrelink.
The first is the criticism that, notwithstanding the current gender neutrality of the rule’s expression, it targets women — particularly women with care responsibilities.[2] In so doing it acts as a form of moral control of women and allows invasive surveillance of women’s lives.[3] The second concern is that the limiting of marriage-like relationships to ‘a person of the opposite sex’, discriminates between homosexual and heterosexual couples.[4] The third concern is that the criteria in s 4(3) are open-ended, leading to decisions that involve questions of degree and ultimately are quite subjective.[5] The fourth concern is that the open-ended nature of s 4(3) mandates an invasive investigation into the totality of a Centrelink client’s life, which in gathering evidence from employers, clubs, schools, childcare centres, real estate agents, banks, neighbours, friends and relations can have serious social and financial consequences.[6] The fifth concern relates to the conduct of the Business Integrity branch of Centrelink which undertakes marriage-like relationship investigations and prepares prosecution briefs. Recently described as ‘cowboys’ at a Senate Inquiry,[7] there is anecdotal evidence that some of these officers are using the threat of gaol to intimidate clients, targeting particular clients and commissioning video and private investigator surveillance of clients.[8]
This is the wider context surrounding the recent Federal Court decision of Re Pelka and Secretary, Department of Family and Community Services.[9] Pelka is the first Federal Court decision that has considered the current expression of the marriage-like relationship rule. We argue that Pelka provides a degree of redress to some of the concerns currently being voiced. Pelka discloses two readings. A narrow reading is that it clarifies the meaning of the phrase ‘significant pooling of financial resources’ in s 4(3)(a)(ii), addressing some of the concerns about ‘open-endedness’. A broader reading is it suggests a more structured approach to marriage-like relationship decisions. However, it does not transform the rule. Open-endedness, subjectivity and invasive investigations are still authorised by Pelka.
The facts of Pelka can be stated briefly. From 2000 Pelka received a payment under the Act. This was cancelled in 2003 when Centrelink decided that Pelka was in a marriage-like relationship with Kuhl, and because of Kuhl’s income, Pelka was not eligible for the payment.[10] At the same time a further decision was made that Pelka had never been eligible for any payment and a debt of $29,411 was calculated.[11] These decisions were based on the following facts: that Pelka shared her unit with Kuhl for 16 years without charging formal rent; that Kuhl paid for the utilities; that he paid for annual joint overseas holidays; and in two documents relating to his employment Kuhl listed Pelka as his ‘partner’.[12]
Pelka appealed these decisions to the AAT. At the AAT Pelka claimed that her relationship with Kuhl was explainable as one of Chinese god sister–god brother; that Kuhl called her his ‘partner’ without her knowledge; and if she knew about it she would have insisted that he remove her name.[13] Notwithstanding these submissions the AAT affirmed the decisions and Pelka appealed to the Federal Court.
The narrow reading of Pelka concerns the interpretation of the elements of the rule dealing with financial matters. There are four elements:
• any joint ownership of real estate or other major assets and any joint liabilities (s 4(3)(a)(i));
• any significant pooling of financial resources especially in relation to major financial commitments (s 4(3)(a)(ii));
• any legal obligations owed by one person in respect of the other person (s 4(3)(a)(iii)); and
• the basis of any sharing of day-to-day household expenses (s 4(3)(a)(iv));
French J held that the AAT had wrongly interpreted the phrase ‘significant pooling of financial resources’ in s 4(3)(a)(ii).[14] The AAT had summarised Pelka’s and Kuhl’s relationship as exhibiting ‘a significant level of trust and financial co-operation on both sides [and that their] … financial relationship involved significant co-operation, pooling of resources and mutual benefit’.[15] French J found that the AAT had misinterpreted s 4(3)(a)(ii) by including the concept of financial cooperation. Referring to the dictionary definition of ‘pool’ as ‘putting resources into a common stock or fund; share in common, combine for the common benefit’, French J identified that this ‘plainly involves something more than financial cooperation or separate contributions to different elements of household expenses’.[16] Commenting on the AAT’s gloss on cooperation, he stated:
Cooperation is not identified as a specific factor in s 4(3) of the Act. That is not to say cooperative behaviour may not be taken into account for the matters listed in s 4(3) are not exhaustive. But cooperation of itself does not take a relationship very far down the path towards characterisation as ‘marriage-like’. Cooperation is an indispensable feature of human society and of a multiplicity of different kinds of relationships within human society including the purely commercial.[17]
This clarification of s 4(3)(a)(ii) is a positive development. For Pelka it meant that the fact that she and Kuhl paid for different household expenses, and that he paid ‘rent’ in the form of an annual holiday, was not ‘pooling of financial resources.’ Further, both types of cooperation were not pooling in relation to a ‘major financial commitment’. This provides greater clarity to this element of the rule which can be seen in recent AAT decisions. In recent decisions joint contributions to rent and the joint purchase of a motor vehicle have been held to have satisfied s 4(3)(a)(ii).[18] While a finding that one party had purchased a motor vehicle for the other’s use was not ‘financial pooling’,[19]and the joint purchase of a washing machine was not a ‘major financial commitment’.[20] This clarification is minor in the sense that it only addresses one element in s 4(3), but it is welcome nevertheless.
In our opinion French J’s judgment goes beyond clarifying s 4(3)(a)(ii) to reconsidering how decisions under the rule must be made. Although couched as affirming earlier authority, Pelka is the first time that a court has considered the legal interpretation of the exact wording in s 4(3). This wording was only introduced into social security law in 1990. Before then, a series of Federal Court decisions had developed an interpretation of the earlier phrase in the Social Security Act 1947 (Cth): ‘a woman who is living with a man as his wife on a bona fide domestic basis although not legally married to him’.[21] The current understanding of the rule has been based on retro-fitting the legal understanding of the earlier phrase. Indeed, it has been ‘suggest[ed] that the general approach is similar to the 1947 Act, and that therefore the principles established under the 1947 Act remain relevant, as do the of cases decided under that Act’.[22]
This leads to an examination of the earlier authorities. These decisions declared that criteria which focus on a particular aspect of a relationship, while important, should not distract a decision maker from looking at all the circumstances of a relationship. In Lambe v Director-General of Social Services, while an approach that considered criteria such as the financial, social and domestic arrangement was important, it was emphasised that no single criterion was determinative and ‘“all facets of the inter-personal relationship” of the two persons need to be taken into account’.[23] This emphasis on generality, and not criteria, was taken up in Lynam v Director-General of Social Security.[24] Lambe and Lynam set out that the correct approach was to consider each situation generally and not to give too much regard to a specific criterion. The AAT did set out a list of factors to be considered in Re Tang and Director-General of Social Services[25] and in Staunton-Smith v Secretary, Department of Social Security the Tang list was expressly adopted as an elaboration of ‘bona fide domestic basis.’ However, it was:
not suggested that this list is exhaustive nor will each of these subjects fall to be considered in every case…The responsibility of the fact-finding tribunal is to have regard to all the material facts of each case, treating the matters listed above only as indicators.[26]
This is the established interpretation of the rule and there are numerous AAT decisions that have restated it.[27]In authorising an approach to investigating and deciding about marriage-like relationships where the criteria are non-exhaustive and the decision-maker must be sensitive to ‘all the material facts’ has produced an open-ended ‘rule’ that provides significant scope for subjective values.[28]
However, French J in Pelka suggests that the legislative enactment in 1990 of the s 4(3) criteria changed the nature of the test. He suggested that it went from a broad discussion of the relationship as a whole with, where useful, consideration of specific categories to a structured investigation that, while open to the relationship as a whole, must have recourse to criteria and must make concrete findings about whether or not specific evidence for a criterion discloses a marriage-like relationship. This can be seen in French J’s now regularly cited summary of how to approach a marriage-like relationship decision:
1. Must have regard to their interpersonal relationship as a whole not limited by the factors listed in s 4(3).2. Must have regard to each of:
(a) the financial aspects of the relationship;
(b) the nature of the household;
(c) the social aspects of the relationship;
(d) any sexual relationship between the people;
(e) the nature of the people’s commitment to each other.
3. In having regard to the preceding five matters, must have regard to all factors relevant to each and, in particular, must have regard to the factors listed under each heading in s 4(3).
4. Must specifically consider the total picture of the relationship created by all of these factors bearing in mind that consideration must be given to those which weigh against a marriage-like relationship and those which weigh in favour of it.
5. Must undertake the preceding consideration bearing in mind that a marriage-like relationship is not disclosed solely by any one of the following matters:
(a) financial cooperation;
(b) cohabitation;
(c) a sexual relationship;
(d) cooperative household arrangements;
(e) mutual commitment.[29]
In our opinion the use of ‘must’, particularly in points 2, 3, 4 and 5, raises the status of the criteria compared with the situation under the earlier authorities. French J appears to emphasise that it mandates an examination of each and every factor listed in s 4(3) as the core process in deciding, and that finding no evidence for a criterion is a finding against the existence of a marriage-like relationship.[30] He seems to be suggesting that decisions under s 4(3) require setting out the evidence, or lack of it, for each criterion, and balancing findings for a relationship with findings against a relationship. This is brought out in French J’s criticisms of the AAT for failing to balance the finding under s 4(3)(d) that Pelka and Kuhl did not have a sexual relationship as a factor against the existence of a marriage-like relationship, and his criticism that the AAT’s conclusion ‘did not proceed, as one might have expected, from a weighing of various factors against each other’.[31] French J does not elevate these criticisms to a finding that the AAT in doing this was in error.[32] However, these comments suggest there is a stronger argument that where a decision-maker does not make a finding on each and every criterion in s 4(3), and balance the findings (both for and against a marriage-like relationship), they are in error.[33] Thus, decisions that do not set out a structured investigation and balancing of all the criteria or decisions supported only by evidence ‘for’ or ‘against’ a marriage-like relationship, would be in error.
Support for this interpretation of s 4(3) can be found in its legislative enactment. In the second reading speech for the criteria, the responsible Minister justified the amendment introducing the criteria on the basis that ‘[w]ithout legislative provisions staff have been left to administer a program without clear rules and no clear procedures. The results have necessarily been intensive investigation and arbitrary decision-making.’[34] This suggests that the understanding of the rule as articulated in Lambe and Lynam, needed to be replaced with a more structured approach.
In summary, a narrow reading of Pelka clarifies what is meant by ‘significant pooling of financial resources’ in s 4(3)(a)(ii). However, more broadly French J seems to be opening the way for a subsequent Federal Court to hold that s 4(3) requires more structured decision-making. In particular, Pelka suggests that decision makers who only assemble evidence supporting the existence (or not) of a marriage-like relationship are in error. In the light of criticisms that the current understanding of the marriage-like relationship rule is open-ended and subjective, Pelka is a positive development, both in its clarification of s 4(3)(a)(ii), and in French J’s gestures towards a more structured approach to decision-making.
However, Pelka does not address all the criticisms that have been made about the administration of the marriage-like relationship rule by Centrelink. It does not address the residual concerns that the rule targets women and that it discriminates against homosexual relationships. Nor does Pelka address concerns about some of the conduct of some officers from the Business Integrity branch of Centrelink. In clarifying the interpretation of s 4(3) Pelka raises the possibility of addressing, to a degree, the open-endedness and subjectivity of marriage-like relationship decisions. However, it does not transform an open-ended rule into a narrow and bounded one. Indeed, in Pelka French J observed that:
The judgment to be made is difficult and, once out of the range of obvious cases falling within the core concept of ‘marriage-like’, will be attended by a degree of uncertainty. Indeed, it may be that different decision-makers on the same facts could quite reasonably come up with different answers.[35]
Pelka is tinkering at the edges. Even if a subsequent Federal Court adopts the interpretation of s 4(3) suggested by French J it is unlikely to reduce, to any great degree, the open-endedness and subjectivity of its current administration. The phrase to consider all ‘the circumstances of the relationship’ remains and the type and form of evidence required to make a decision about financial matters, social matters, the nature of the household, sexual relations and the subjective commitment of the alleged partners remains open-ended. This means that in continuing the open-endedness that has come to characterise interpretations of the rule, Pelka does not address the concerns currently being voiced about the administration of the rule. Further, the more structured approach seemingly requires evidence gathering and assessment of all criteria, suggesting an increase to the level of invasiveness experienced by clients, alleged partners and children.
What this suggests is that the rule requires more radical reform. One regularly made suggestion is that in a social security system which assists individuals, the division of clients into single or partnered is anachronistic, and its continual use is either punitive or a cost-saving measure.[36] This is based on rejection of the old ‘equity’ argument for the tiered payment scale that ‘a married couple can share the costs of day-to-day living whereas a single person needs a relatively higher rate in order to enjoy the same living standard’.[37] This needs to be questioned given empirical studies of resource distribution within Australian families have show that the assumption that all ‘breadwinners’ provide for all ‘dependents’ all of the time is false.[38] Further, even when income is distributed evenly within a household, more family members simply means more resource needs. This reform would remove the marriage-like relationship rule as a feature of the Australian social security system and the current concerns with its administration and its discrimination against homosexual relationships.
There are three concerns with this reform:
• the danger that in introducing a single scale the lesser partnered rate could be universalised, leading to a reduction in payment for clients currently assessed as single;[39]
• the perception of an increase in expenditure if the partnered rate was abolished and all partnered clients paid according to the single scale. However, this should be balanced against cost savings from streamlining the administrative process;
• the challenge to the means-tested focus of the Australian social security system because it could allow the stay-at-home partner in wealthy households to become eligible for payment.
Another possible reform would be Centrelink accepting self-assessment of relationship status, so that if on application a client claims to be single they are assessed as single, and if they claim to be partnered they are assessed as partnered. This is not a radical change from how Centrelink currently decides most relationships. If, on application, a client indicates they are partnered, Centrelink does not investigate the client to assess the reality of their relationship against the marriage-like relationship rule. Marriage-like relationship investigations are limited to single clients. In extending self-assessment to clients claiming to be single this reform would not only reduce this inequity but minimise most of the current concerns about invasive investigations and the open-ended and subjective assessments of relationships. However, it would not address the discrimination against homosexual relationships. Further, it raises the concern that clients would self-assess as single when they are partnered. There are two reactions to this:
• under self-assessment most clients assess truthfully, either innately or because of social stigmas associated with accessing state-provided income support; and
• as with abolishing the distinction between partnered and single there might be an increase in expenditure that could be offset by the significant administrative cost-saving attached to the review and appeal process.
Another reform option is to remove the concept of ‘marriage’ from the assessment of relationships for social security purposes. The AAT and the courts become speculative and ‘philosophical’ when confronted with the word ‘marriage’.[40] This discussion often veers to the farcical when comments are made that ‘an unhappy marriage is still a marriage’.[41] In the alternative it has been suggested that for an Act dealing with income support what should be identified is whether a client is in a relationship with another that provides them with material support.[42] The benefit of this reform is the limiting of the investigation process to financial considerations. Such a reform would also remove the current discrimination between heterosexual and homosexual relationships,[43] and dispel the residual morality involved in the current comparing of relationships to a heterosexual ideal involving commitment and social and sexual relations. However, this reform has the potential to expand the investigatory net to catch relationships involving inter-generational support between parents and children, intra-generational support between siblings, and situations of shared housing. Such an expansion could, cynically, be regarded as an opportunity for cost savings by treating current single clients as partnered; it also might face political obstacles in that it would expose new relationships, with the exception parent–sibling relations in the areas of youth payments, to Centrelink investigation and decision making.
Pelka creates options for further reform of the way that the Australian social security system deals with relationships. However, the policy options for further change are vexed — abolishment, self-assessment and sole focus on financial relationships each have risks. Abolishment has the concern that the single rate, and not the partnered rate, would be abolished, causing significant hardships to single clients. It also questions the means-tested character of the Australian system in making eligible payments to wealthy non-working partners. Self-assessment also challenges the principle of means testing, in trusting clients to declare there own relationship status and not relying on the expert administrator to ‘objectively’ determine their status according to the rule. Focus on financial relationships could open to scrutiny a new array of relationships currently not assessed by Centrelink, and ask new questions about whether people in certain financial relationships deserve income support. Given these difficulties it is tempting to suggest that the marriage-like relationship rule is a symptom of a fundamental principle of Australian social security that is evident in the complex eligibility and assessment regimes throughout the Act — namely a desire to limit income support to those that are truly ‘deserving’.[44] Possibly, reflection on Pelka reveals that the most radical solution to the assessment of relationships within the Act is a movement away from means-tested income support that attempts to only pay the ‘deserving’ to a regime of universal entitlement. In linking payment to a formal citizenship or residential right, a universal entitlement regime would suffer neither the current concerns with the administration of the rule, nor the difficulties identified in the three reform proposals. However, aside from bean-counter concerns with cost, or neo-liberal concerns with how such a regime would corrupt the competitive spirit, it also represents a radical break with the way Australian social security has operated since Federation.
Pelka represents the first judicial consideration of the current expression of the marriage-like relationship rule in the Act. The decision disclosed two readings, a narrow reading presenting a tighter understanding of the phrase ‘significant pooling of financial resources especially in relation to major financial commitments’, and a broader reading suggesting a reinterpretation of the rule favouring more structured decision-making. Where a current criticism is that the definition is open-ended and subjective, these clarifications are welcome. However, even the broad reading of Pelka does not allay concerns about open-endedness and subjectivity and might actually intensify the invasiveness of investigations. While there are three possible reforms to the way Australian social security law deals with relationships — abolishment of the distinction between single and partnered, self-assessment and focusing solely on financial considerations — all three are problematic. Further reflection of Pelka highlights the problems of a mean-tested social security regime, opening towards thinking about radically different regimes that do not attempt to seek out the deserving.
[*] KIERAN TRANTER, Socio-Legal Research Centre, Griffith University.
LYNDAL SLEEP is a PhD candidate at Griffith University.
JOHN STANNARD is Principal Solicitor at the Welfare Rights Centre (Inc), Brisbane.
© 2007 Kieran Tranter, Lyndal Sleep and John Stannard
[1] Social Security Act 1991 (Cth) ss 4(2)(a), 4(2)(b)(iii).
[2] Lyndal Sleep, Kieran Tranter and John Stannard, ‘Cohabitation Rule in Social Security Law: The More Things Change the More They Stay the Same’ (2006) 13 Australian Journal of Administrative Law 135, 144.
[3] Tamar Hopkins, ‘Divorcing Marital Status from Social Security Payments’ (2005) 30 Alternative Law Journal 189.
[4] Human Rights and Equal Opportunity Commission, Same-Sex: Same Entitlements: National Inquiry into Discrimination against People in Same-Sex Relationships: Financial and Work-Related Entitlements and Benefits (2007) 198–226.
[5] Sleep, Tranter and Stannard, above n 2, 138–9.
[6] Ibid 141–3.
[7] Evidence to Standing Committee on Legal And Constitutional Affairs, Canberra, 10 November 2006, 33 (Michael Raper, President, National Welfare Rights Network).
[8] Submission to the Senate Inquiry from the Queensland Council for Civil Liberties http://www.aph.gov.au/Senate/committee/legcon_ctte/centrelink/submissions/sub8.pdf at 20 April 2007.
[9] [2006] FCA 735; (2006) 151 FCR 546 (Pelka).
[10] Ibid 547 [5].
[11] Ibid.
[12] Re Pelka and Secretary, Department of Family and Community Services [2005] AATA 120, [6], [25].
[13] Ibid [25].
[14] Pelka [2006] FCA 735; (2006) 151 FCR 546, 559 [63].
[15] Re Pelka and Secretary, Department of Family and Community Services [2005] AATA 120 [36], [37].
[16] Pelka [2006] FCA 735; (2006) 151 FCR 546, 556 [52].
[17] Ibid 557 [53].
[18] Re Cullinane and Secretary, Department of Employment and Workplace Relations [2006] AATA 1078 [22], [33]; Re Secretary, Department of Employment and Workplace and Another and Finn [2006] AATA 827; (2006) 92 ALD 223, 228 [23]–[24].
[19] Re Secretary, Department of Employment and Workplace and Another and Muller [2007] AATA 73 [11].
[20] Re Kenny and Secretary, Department of Families, Community Services and Indigenous Affairs [2006] AATA 725 [23a].
[21] Social Security Act 1947 (Cth) ss 6(1), 59(1), 83AAA.
[22] Peter Sutherland with Allan Anforth, Social Security and Family Assistance Law (2nd ed, 2005) 10.
[23] [1981] FCA 171; (1981) 4 ALD 362, 369 (Evatt, Fisher and Ellicott JJ).
[24] (1984) 52 ALR 128, 131 (Fitzgerald J).
[26] [1991] FCA 513; (1991) 25 ALD 27, 32 (O’Loughlin J).
[27] For example Re Cahill and Secretary, Department of Family and Community Services [2005] AATA 1147, [22].
[28] Sleep, Tranter and Stannard, above n 2, 143–4.
[29] Pelka [2006] FCA 735; (2006) 151 FCR 546, 555–6 [46]. Quoted in Bolton and Anor and Secretary, Re Department of Families, Community Services and Indigenous Affairs and Anor [2006] AATA 685 [8]; Re Kenny and Secretary, Department of Families, Community Services and Indigenous Affairs [2006] AATA 725 [12]; Re Nguyen and Secretary, Department of Employment and Workplace Relations [2006] AATA 1106 [43].
[30] Pelka [2006] FCA 735; (2006) 151 FCR 546, 555–6 [46].
[31] Ibid 558 [59], 559 [61].
[32] Ibid 555–559 [63].
[33] This is how Pelka was understood and applied in the recent Federal Magistrate decision of Marei v Department of Employment and Workplace Relations [2007] FMCA 458 at [20]–[25].
[34] Commonwealth, Parliamentary Debates, House of Representatives 1989, 1606 (Brian Howe, Minister for Social Security) 5 October.
[35] Pelka [2006] FCA 735; (2006) 151 FCR 546, 556 [47].
[36] Meredith Edwards, ‘Individual Equity in Social Policy’ in Jacqueline Goodnow and Carole Pateman (eds), Women, Social Science and Public Policy (1985) 95, 102.
[37] Commonwealth, Parliamentary Debates, House of Representatives 1974, 668 (Bill Hayden, Minister for Social Security) 20 March.
[38] Meredith Edwards, The Income Unit in the Australia Tax and Social Security Systems (1983).
[39] Sleep, Tranter and Stannard, above n 2, 145.
[40] An example was the referencing of Anthony Giddens in Re Gill and Secretary, Department of Family and Community Services [1999] AATA 156 at [53].
[41] Re Milovanovic and Secretary, Department of Employment and Workplace Relations [2006] AATA 930, [35].
[42] Mary Jane Mossman, ‘The Baxter Case: De Facto Marriage and Social Welfare Policy’ [1977] UNSWLawJl 1; (1977) 2 University of New South Wales Law Journal 1.
[43] Human Rights and Equal Opportunity Commission, above n 4.
[44] Terry Carney, Social Security Law and Policy (2006), 41–42, 92.
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