Editors --- "Exceptional circumstances relief payment: whether partner's income maintenance payments affect rate" [2010] SocSecRpr 23; (2010) 12(2) Social Security Reporter, Article 9

• DEPARTMENT OF AGRICULTURE, FISHERIES AND FORESTRY and ENGLISH
• The issues
• Background
• The law
• Discussion
• Formal decision

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Exceptional circumstances relief payment: whether partner’s income maintenance payments affect rate

DEPARTMENT OF AGRICULTURE, FISHERIES AND FORESTRY and ENGLISH

(2010/216)

Decided: 29th March 2010 by R. W. Dunne

The issues

The question for the AAT was how income maintenance payments received by English’s wife should be treated for the purpose of determining the rate of exceptional circumstances relief payment (ECRP) and whether English had been overpaid ECRP.

Background

English was granted ECRP under the Farm Household Support Act 1992 (FHS Act) from April 2007. English’s wife was receiving income maintenance payments from WorkCover as a result of workplace injuries. In January 2008 Centrelink reviewed the way English’s wife’s income maintenance was treated in the calculation of English’s rate of ECRP and identified an overpayment of $5000.41. A subsequent Centrelink review affirmed the debt on the grounds that his wife’s income maintenance payments extinguished her own notional entitlement to ECRP and the ‘excess’ amount reduced her husband’s entitlement to ECRP on a dollar for dollar basis.

The law

The relevant legislation included the FHS Act. Section 6(1) sets out the object, the ECRP qualification is set out under s.8A(1) and the method of calculating the rate of ECRP for farmers is found under s.24A. The expression ‘off-farm salary and wages’ is defined in s.24A(7) to mean salary and wages not earned from work that is in any way related to a farm enterprise. To determine entitlement to ECRP s.8(1) of the Social Security Act 1991 (SS Act) contains definitions of ‘income’ and ‘ordinary income’ for social security purposes. Where entitlement to ECRP is affected by a ‘compensation affected payment’ s.1173 and/or s.1174 of the SS Act will apply. Compensation affected payment is defined in s.17(1) of the SS Act and s.1068 of the SS Act applies where income maintenance payments are received by the partner of an ECRP recipient.

Discussion

The AAT noted the purpose of the FHS Act is essentially to provide financial assistance to farmers who are in exceptional circumstances and having difficulties meeting their living expenses. When the rate of the ECRP is calculated, ss.24A(4) and (5) of the FHS Act states that up to $20,000 p.a. of ‘off-farm salary and wages’ of the person and their partner will be disregarded. English contended that his wife suffered a workplace injury earning off-farm salary and wages and that the income maintenance payments were in lieu of those off-farm salary and wages. The Department contended that salary and wages is a different concept to income maintenance. Salary and wages are earned from employment, while income maintenance is a compensatory payment where there is an inability to work. The consequence of the Department’s approach reduced English’s ECRP from $775.60 per fortnight to $136.20 per fortnight. The AAT, having regard to the object of the Act, found it difficult to believe that Parliament would have intended such a consequence.

The AAT considered the Federal Court’s decision in Parrett v Secretary, Department of Family and Community Services [2002] FCA 716; (2002) 124 FCR 299 where the operation of the FHS Act and the meaning of ‘farmer’ in determining eligibility for a restart re-establishment grant was considered. The AAT adopted the approach taken in Parrett (supra) concluding that it could be said ‘with certainty’ that Parliament, if it had turned its mind to the matter would have included in the definition of ‘off-farm salary and wages’ the income maintenance payments paid to the person or the person’s partner as an injured worker in lieu of off-farm salary wages or income.

The AAT then turned to consider if the income maintenance payments were ‘compensation’ within the definition of s.17(2) of the SS Act and found that the ECRP did not fall within the definition of compensation affected payment because it does not appear in the specific list of payments in s.17(1) and is not one of the payments or allowances comprising a ‘social security benefit’ in s.23(1) of the SS Act. The Department contended s.24A(1) of the SS Act seeks to put an ECRP recipient in the same position as they would be if they were qualified for newstart allowance, which is a ‘compensation affected payment’. The AAT noted the Departmental policy on this issue but was of the view that there were cogent reasons for not applying the policy as an injustice to English would result.

The AAT found that English’s wife’s income maintenance payments up to an amount of $20,000 should be disregarded in determining English’s rate of ECRP during the relevant period and therefore calculated that the debt would reduce to nil. However in the event that this calculation was incorrect, the AAT noted the Department’s concession that English’s situation constituted special circumstances under s.1237AAD of the SS Act, so that any remaining debt would be waived as a consequence.

Formal decision

The AAT found that English's wife's income maintenance payments constituted 'off-farm salary and wages' for the purposes of determining the rate of ECRP. The AAT varied the decision under review.

[C.O.]