Editors --- "Newstart Allowance rate: s.24; subsistence lifestyle; remote location" [2010] SocSecRpr 16; (2010) 12(2) Social Security Reporter, Article 2

• HOLT and SECRETARY TO THE DEEWR
• Background
• Issues
• Legislation
• AAT Decisions
• Discussion
• Formal decision

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Newstart Allowance rate: s.24; subsistence lifestyle; remote location

HOLT and SECRETARY TO THE DEEWR

(2010/143)

Decided: 26th February 2010 by R.M. Creyke

Background

Mr and Mrs Holt were married in April 2006 and lived on 2.57 hectares of land about 20km from the town of Crows Nest and some 50km from Toowoomba. Mr Holt estimated that the total value of his assets, including the house and land, would be $160,000. Mr Holt had been on newstart allowance (NSA) intermittently since 1991and was paid at the partnered rate since his marriage. He was 61 years old, had no formal qualifications, and worked mainly in the forestry business. The work was piecemeal and sporadic.

Mrs Holt was much younger. She had lived at her parents’ home before the marriage. She had tertiary qualifications in naturopathy, she had done household chores in return for her keep and worked on a casual basis in her parents’ garden maintenance business. She had earned less than $2500 per annum in the two years before her marriage and less than $4000 per annum since her marriage. She had brought little in the way of assets or money to the marriage.

Mr Holt did the outside work at home and Mrs Holt did all of the household chores. They had rainwater tanks but had to conserve water. Mrs Holt boiled a kettle to wash the dishes, they had no electric heater and used a woodfire in the winter. They had no mobile phone because there was no service and the landline was set up for only incoming calls. They could not afford to pay the monthly rental for outbound calls. They could not afford to buy vegetables and fruit so Mrs Holt established a vegetable garden. The seeds were expensive, it was difficult to keep the animals out and she watered the garden with recycled water. Mrs Holt’s working day was between 10-12 hours.

Mr Holt had a 1981 Honda Accord car and a small motor scooter. The scooter was not suitable to carry forestry tools and Mrs Holt did not have a scooter licence. Mr Holt conceded that it would be possible for him to take the scooter to work and for Mrs Holt to take the car if they were both employed at the same time but that it would be difficult. In addition Mrs Holt had a fear of mechanical breakdown in the remote area. There was no public transport and hitchhiking was dangerous.

Unless Mr Holt had work the couple had to live on the NSA partnered rate of $414.50 per fortnight. Mr Holt said it was illogical to grant a person more if they are single than if they are married. The SSAT affirmed the decision that Mr Holt was paid at the correct rate for a person living as a member of a couple.

Issues

The main issue was whether Mr Holt, despite being married, was eligible for payment of NSA at the single rate. The issue was whether there were practical reasons for being unable to enjoy the pooling of resources. The discretion is set out in s.24(1)(c) of the Social Security Act 1991 (the Act), namely if, ‘the Secretary is satisfied that the person should, for a special reason in the particular case, not be treated as a member of a couple’.

Legislation

Section 1068 of the Act decrees at what rate NSA is paid. The policy in the Social Security Guide, at 2.2.5.50 refers to the usual pooling of resources and sharing of expenses which makes it cheaper for a couple to live than two individuals. Section 24 is often considered in matters where a NARWP [Newly Arrived Resident’s Waiting Period] is in place and the couple is experiencing financial hardship. The ‘Guide’ suggests the following steps should be applied:

• Calculate the amount the partner who is entitled to payment would receive at the partnered rate. In this step, all income and assets of the couple should be considered.

• Add the above amount to any income that the couple is receiving.

AAT Decisions

If the total is less than the combined partnered rate which the couple would receive if they were both eligible for payment (taking into account their income and assets), then section 24 should be applied.

The AAT stated that in s.24(1)(c), the critical expression was the ‘special reason in the particular case’. The AAT held that this provides a broad discretion. The AAT stated that it was not equivalent to the expression ‘special circumstances’ used elsewhere in the Act. The AAT held that the different wording indicated a legislative intention to differentiate between the two.

The ‘Guide’ imports a requirement that whatever the ‘special reason’, it must be ‘outside the couple’s or individual’s control and cannot be changed’. The AAT found that policy came from the test for ‘special circumstances’ in ss.542H and 603A of the Act, which state that the circumstances must be ‘beyond the person’s control’. The AAT stated that this criterion is not part of the s.24 provision.

The AAT also referred to the decision of French J. in Boscolo v Secretary, Department of Social Security [1999] FCA 106; (1999) 53 ALD 277 stating that the discretion is ‘not lightly to be enlivened’, but that it ‘does not require that the case be extremely unusual, uncommon or exceptional’. (Reasons, para. 31)

Discussion

The AAT referred to the ‘Guide’ at 2.2.5.50: ‘A significant body of case law has established that the inability to pool resources for their mutual benefit is a special reason to exercise the discretion in section 24’ and stated that the cause of the ‘inability’ needed exploring.

Mr and Mrs Holt had one residence and there were economies of scale in their sharing of food, costs of electricity, rates, etc, although there were increased costs for two individuals, rather than for one. The AAT found that the economies of scale were likely to favour a couple over a single person.

Mrs Holt had no assets or income to pool at the commencement of their marriage. This alone would not allow the exercise of the discretion. Mrs Holt had contributed some income since the marriage, however, there was little work close to their home and it was impractical to commute to Toowoomba given the distance involved and the age of their car. If Mrs Holt found work and was to take the car it would jeopardise Mr Holt’s grant of NSA because he would be unable to look for work without a car.

It would not be feasible for the couple to move in order to obtain more opportunity to work. The sale of the house and land would be unlikely to be sufficient to buy a house in Toowoomba and Mr Holt would be unlikely to find work away from the forestry business.

Mr and Mrs Holt were existing at subsistence level. It was impractical for them both to work at the same time and the travel time and costs would impact on their ability to maintain their frugal lifestyle. Mrs Holt was herself unable to meet the activity test required for NSA.

The AAT found that these circumstances were both special and particular and were unlikely to be replicated by many other couples living together. The AAT found that the couple could not ‘reasonably be expected to benefit from the pooling of resources that usually occurs in a marital relationship resulting in financial hardship’ and that the discretion in s. 24 should be exercised to permit Mr Holt to receive NSA at the single rate.

Formal decision

The decision under review was set aside and substituted on the basis that the discretion to provide Holt with the newstart allowance at the single rate should be exercised in his favour in the special reasons of the particular case.

[M.R.]