Editors --- "Austudy: administrative error, solely; duty of care" [2008] SocSecRpr 21; (2008) 10(2) Social Security Reporter, Article 3

• FOUND and SECRETARY TO THE DEEWR
• Background
• Legislation
• Consideration
• Formal decision

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Austudy: administrative error, solely; duty of care

FOUND and SECRETARY TO THE DEEWR

(2008/222)

Decided: 20th March 2008 by S.M. Sweidan

Background

Found enrolled in a correspondence course with the Open Training and Education Network (OTEN) TAFE. On 24 March 2005she lodged an application with Centrelink to move from newstart allowance to austudy. Based on advice from Centrelink, she said that she was enrolled full-time. She declared she was doing thirty formal course-workhours per week. On 10 September 2005, a letter was sent requesting confirmation of Found’s study details. Found, however, had moved and did not receive the letter. She advised on 6October 2005 of her change of address.

Found’s austudy payments were suspended on 18 January 2006. A debt of$6798.86 was raised by Centrelink on 21 March2006 on the basis that Found was in fact a part-time student and ineligible for austudy. On appeal to the ARO the debt was increased to $8344.86 to include the (holiday) period from 30November to 23 January 2006. The ARO however, then waived the debt for the period following 6 October 2005, ‘because of the time Centrelink took to cancel...’. The ARO applied s.95 of the Social Security (Administration) Act 1991 (the Administration Act), finding that Centrelink ought to have cancelled Found’s payments when its letter of 10 September 2005 to Found received no reply.

Found appealed to the SSAT which set aside the decision of the ARO, finding that there was a recoverable debt for the entire period and there was no basis for waiving any of the debt.

Found lodged an application for review with the AAT arguing her austudy debt had arisen due to administrative error.

Legislation

Section 1237A (1) of the Social Security Act 1991 (the Act) provides that a debt must be waived by a decision maker if it is decided that the debt has arisen solely due to administrative error and the monies were received in good faith.

Section 95 of the Administration Act states that where a person fails to comply with an s.68(2) notice to provide information, ‘the [person’s] social security payment is cancelled, by force of this section, on the first day in that period’.

Consideration

Before the AAT, the respondent argued that, as the applicant had contributed to the events creating the debt, it could not be said the debt arose due to sole administrative error. The errors pointed to particularly were that Found had incorrectly ticked that she was full-time when she was not, and that she had incorrectly stated her study hours, in spite of the Centrelink form asking that she ‘not include private study’.

The Secretary also argued that the debt could have also been halved had Found responded to the letter as she was obliged to do. The Secretary contended further that the letter ought be deemed to have been received, as per s.237 of the Administration Act and s.29 of the Acts Interpretation Act 1901and SDSS and Dossis [1990] AATA 282; (1990) 21 ALD 628.

In response, Found stated she had initially advised that her view was she was in fact studying part time, and she was nevertheless encouraged by Centrelink staff to apply for austudy. The Tribunal accepted this evidence and made a finding that she ‘trusted and relied’ upon Centrelink in applying. Moreover, the Tribunal considered that Found’s response to the question, ‘how many hours do you spend studying’, was honest, given her limited schooling, the complexity of the question and the unclear nature of the Centrelink information brochures with no practical examples, and an austudy contract that the Tribunal described as ‘clearly inadequate’.

The Tribunal applied the duty of care concept. It stated:

Australian Government employees have a duty of care to the public when performing their duties. This advice extends to any advice given and any actions performed.

It is well established that a duty of care with regard to advice involves the performance of duties to a reasonable standard of care. “Reasonable” generally means a standard of care expected of a reasonably prudent public servant administering welfare legislation consistent with sound administrative principles. (See Shaddock v Parramatta City Council).(Reasons, paras. 91-92)

The duty was not met in this case in the way the applicant was told to write ‘full time student’. Relevant duties were not performed to a reasonable standard in explaining the austudy progress rules to Found and in not cancelling her payments when she did not reply to the notification letter, as Centrelink was required to do.

Further, the Tribunal noted this failure of the duty of care was also in disregard of the agreement between Centrelink and the Department of Employment, Science and Training, (DEST), as set out in Centrelink’s ‘Austudy qualification guide’, which also curtails staff discretion in these decisions.

The failure to cancel her payment following Found’s failure to reply to their letter, the Tribunal noted, doubled the debt. In summary it said:

In the Tribunal’s view the wrong advice given by Centrelink as well as Centrelink’s initial incorrect decision to grant Austudy and the inadequate review procedures subsequently used in Found’s case are the sole cause of the debt due by her to the Commonwealth. (Reasons, para. 105)

Formal decision

The decision under review was set aside and a finding made that there was a debt of $8344.86which arose solely as a result of administrative error on the part of the Commonwealth. The Tribunal then applied s.1237A (1) of the Act, determining the monies were received in good faith and the debt was not recoverable and should be waived in full.

[J.S.]