1. The rate of payment of social security benefits as well as the recovery of any debts to the Commonwealth on account of overpayment are governed by the provisions of the Social Security Act 1991 (the Social Security Act) and the Social Security (Administration) Act 1999 (the Administration Act).
2. Section 643 of the Social Security Act provides that a person's rate of Newstart is calculated in accordance with section 1068. Pursuant to this section, the rate of payment is subject to an income test.
3. Module G of the rate calculator sets out the income test for Newtsart.

In accordance with that module, a person's ordinary income is to be worked out on a fortnightly basis. Based on the amount of ordinary income, an income reduction is calculated which is applied to the maximum rate of Newstart to arrive at the person's correct fortnightly entitlement. 4. The terms "ordinary income", "income amount" and "income" are defined in section 8 of the Act as follows:

"ordinary income" means income that is not maintenance income or an exempt lump sum.

Note 1: For maintenance income see subsection 10.

Note 2: Amounts received as a series of periodic compensation payments may result in reduction of the person's rate of social security pension or benefit under Part 3.14: if this happens the amounts are not counted as ordinary income (see section 1176).

Note 3: For provisions affecting the amount of a person's ordinary income see sections 1072 and 1073 (ordinary income concept), sections 1074 and 1075 (business income), sections 1076-1084 (deemed income from financial assets) and sections 1095-1099DAA (income from income streams).

"income", in relation to a person, means:

(a) an income amount earned, derived or received by the person for the person's own use or benefit; or

(b) a periodical payment by way of gift or allowance; or

(c) a periodical benefit by way of gift or allowance;

but does not include an amount that is excluded under subsection (4), (5) or (8).

Note 1: See also sections 1074 and 1075 (business income), sections 1076 1084 (deemed income from financial assets), sections 1095 to 1099DAA (income from income streams), section 1 099F (exempt bond amount does not count as income) and section 1 099K (refunded amount does not count as income).

Note 2: where a person or a person's partner has disposed of income, the person's income may be taken to include the amount which has been disposed of - see sections 11 06-1112.

Note 3: income is equivalent to ordinary income plus maintenance income.

"income amount" means:

(a) valuable consideration; or

(b) personal earnings; or

(c) moneys; or

(d) profits;

(whether of a capital nature or not).

1. Ordinary income is further defined in section 1072 of the Act as follows:

A reference in this Act to a person's ordinary income for a period is a reference to the person's gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A.

1. Relevant to the overpayment of a social security payment, section 1223(1) provides:

(b) a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;

the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.

THE RESPONDENT'S CONTENTIONS

1. The Respondent submits that the debt raised against the Applicant was correctly calculated.
2. It is argued that the Applicant did not accurately advise Centrelink during the relevant period about the amount of income he received from his employers. The Applicant advised Centrelink that he had been paid a total of $78,258.75 during the relevant period. His payslips, however, show that he was actually paid $83,643.75.
3. Centrelink's records show that the Applicant was paid $33,345.57 in Newstart. It is argued that the actual amount of Newstart payable to the Applicant was $29,081.31.
4. Accordingly, the Respondent argues that the Applicant has been overpaid $4264.26 for the period. This constitutes a legally recoverable debt pursuant to subsection 1223(1) of the Social Security Act.
5. The Respondent contends that, for the reasons discussed below, there is no basis for the debt to be waived or written off.

1. The Applicant contends that the amount of actual income which has been attributed to him as earnings in particular periods is incorrect. In particular, the Applicant has asserted by way of example that an amount has been allocated to him as having been earned in the period 19 November to 2 December 2010 which he could not have earned in that period as he was absent from work on medical grounds.
2. The Applicant also challenges the calculations made more broadly but with no specific amounts being challenged.
3. The Applicant also asserts that the debt should in any event be waived or written off in accordance with any or all of the available avenues for doing so.

WAS THE DEBT OF $ 4264.26 CORRECTLY RAISED?

1. The definition of income in the legislation refers to an amount earned, derived or received by the person for the person's own use or benefit. In respect of the Applicant, this includes earnings from his employment with Allmen Industrial Services and Interstate Enterprises.
2. The calculations carried out by Centrelink have done exactly what the legislation required, namely a proportionate allocation of the actual earnings across the fortnightly periods. The income test in s 1068 requires a person's ordinary income to be worked out on a fortnightly basis.
3. The Applicant's specific point of confusion relates to an amount of $574.97 which has been apportioned to the fortnightly period being 19 November to 2 December 2010: see T36-246. That amount has been calculated by reference to the amount of Verified Earnings for the 7 day period being 15 to 21 November 2010 being $1341.60. As 3 days of that 7 day period fell into the fortnightly period 19 November to 2 December, the amount of $574.97 (ie 3/7 x 1341.60) was recorded as if earned in that period for Newstart purposes. This is because the Act requires an apportionment of actual earnings across standardised fortnightly periods and the standardised period for the relevant calculation is 19 November to 2 December 2010.
4. Importantly, the amount apportioned will never exceed the actual amount earned over the course of the relevant year. However, because of the need to standardise the periods, the Applicant has had an amount apportioned to a period for Centrelink purposes which was a period in which he did not work.
5. The Applicant has not raised any other specific instances of alleged errors made by Centrelink. In the circumstances, the Tribunal concludes that Mr Skinner was overpaid Newstart in the amount of $4264.26. In accordance with s 1223 of the Act this constitutes a debt due to the Commonwealth. The debt has been correctly raised.

ARE THERE ANY REASONS WHY THE DEBT SHOULD NOT BE RECOVERED?

1. The Social Security Act provides that debts to the Commonwealth may be waived or written off in certain circumstances. There are three possibilities which I will now consider.

Write off under s 1236

1. Section 1236 of the Social Security Act provides for the possibility of writing off a debt for a period. This has the effect that recovery of the debt is delayed. Section 1236 states, in part:

1236.(1) Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.

1236.(1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:

(b) the debtor has no capacity to repay the debt; or

(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or

(d) it is not cost effective for the Commonwealth to take action to recover the debt

1236.(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:

(a) the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or

(b) there is no proof of the debt capable of sustaining legal proceedings for its recovery; or

(c) the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or

(d) the debtor has died leaving no estate or insufficient funds in the debtor's estate to repay the debt.

1236.(1C) For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:

(a) deductions from the debtor's social security payment; or

the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.

1. The term "severe financial hardship" is not defined in the Act. However, it has been the subject of considerable Tribunal comment in a number of cases which the Respondent has conveniently summarised as follows.
2. In Re Lumsden and Secretary Department of Social Security (1986) 10 ALN N225 the Tribunal took the view that for this term to be satisfied a person's entire financial position would need to be materially less than the current rate of pension.
3. Further, in Re Stubbs and Secretary Department of Families and Community Services [2003] AATA 729 the Tribunal stated that:

... Severe financial hardship, while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include financial suffering of a severe or extreme nature...

1. Finally, in L v Department of Social Security [1995] AATA 159; (1995) 38 ALD 176 stated in part as follows:

In summary, I consider that matters relating to the personal financial hardship of the individual are always relevant in any decision as to write off under subsection 1236(1). Retrospective considerations may occasionally be relevant. The essential inquiry will always be whether recovery is a feasible proposition, bearing in mind the financial means and obligations of the individual concerned. Will recovery cause such personal hardship as to run contrary to the beneficial nature of the legislation?

1. It was noted by the SSAT that, at the time of the decision of the SSAT, the Applicant:
   • receives approximately $530 per fortnight in Newstart;
   • pays $210 per fortnight in rent; and
   • has no other debts apart from a $2000 loan that is outstanding.
2. The SSAT determined that the Applicant was capable or repaying the Centrelink debt at a rate of $20 per fortnight. There is nothing before me to suggest that the Applicant is suffering "severe financial hardship" consistently with the commentary in the cases referred to above.
3. The Applicant has not provided any tangible evidence to demonstrate that he is unable to repay the debt to the Commonwealth.
4. In such circumstances, the Tribunal cannot conclude that the Applicant does not have the capacity to repay the debt via the agreed fortnightly instalments. Consequently, it would not be appropriate to write off the debt under section 1236 of the Act.

Waiver on the basis of sole administrative error

1. Subsection 1237A(1) allows for debts resulting solely from an administrative error made by Centrelink to be waived. It provides:

(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.

Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).

1. During the relevant period, Centrelink sent the Applicant numerous letters which advised him of the requirement to notify Centrelink of his earnings and any change in circumstance. Centrelink also provided him with a series of Statements that provided information about his payments, income and other details.
2. There is nothing to suggest, and no evidence to support any suggestion, in this case that the Newstart debt arose as a result of administrative error.

1. Section 1237AAD of the Act provides that a debt may be waived in part or in full where there are special circumstances. It states:

1237AAD. The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

(a) the debt did not result wholly or partly from the debtor or another person knowingly:

(i) making a false statement or false representation; or

(ii) failing or omitting to comply with a provision of this Act or the 1947 Act: and

(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

(c) it is more appropriate to waive than to write off the debt or part of the debt.

1. It is universally accepted that the debt in question did not arise as a result of the Applicant or another person knowingly making a false statement or representation or knowingly failing to comply with a provision of the Social Security Act.
2. Consequently, the Tribunal is in a position to consider whether there are special circumstances which justify the waiver of the debt in whole of in part.
3. The term "special circumstances" is not defined in the Act. The parenthetical words in s 1237AAD(b) make it clear, nonetheless, that there must be more than financial hardship alone for there to be special circumstances. Beyond this, the meaning of "special circumstances" has been extensively considered in case law which the Respondent has conveniently summarised as follows.
4. In Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25, Besanko J considered the observations in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 that special circumstances are those that are "unusual, uncommon or exceptional." His Honour opined at [33] that it:

"was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words 'unusual' or 'uncommon' are emphasised."

1. In Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114 where Deputy President Forgie stated at paragraph 80 in part as follows:

"...special circumstances" are not merely directed to the person's own circumstances. Rather; they are directed to those that are "special circumstances ... that make it desirable to waive". That necessarily requires a consideration of the person's individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it... He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement... The system of administration of the Social Security Act does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act..."

1. The decision to apply special circumstances should take into account all of the person's circumstances and would usually be based on a combination of factors (see Oberhardt v Secretary, DEEWR (2008) FCA 1923).
2. These circumstances include the current circumstances of the Applicant. As stated by Hayne and Heydon JJ in Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286 at [99] :

Unless there is some statutory basis for confining that further material to such as would bear upon circumstances as they existed at the time of the initial decision, the material before the Tribunal will include information about conduct and events that occurred after the decision under review. If there is any such statutory limitation, it would be found in the legislation which empowered the primary decision-maker to act; there is nothing in the AAT Act which would provide such a limitation.

There is nothing in the Social Security Act and the Administration Act that limits the inquiry to the Applicant's circumstances at the time of the original decision or that of the SSAT.

1. It is important to recognise the need to ensure the integrity of the social security system and the public interest. This means that those recipients who have received monies to which they are not entitled, are generally expected to repay those monies unless the repayment is in the specific circumstances unjust, unreasonable or inappropriate.
2. No evidence has been proffered by the Applicant to suggest that there are sound reasons for the amount owing not to be repaid.
3. The SSAT took into consideration the evidence that was given by the Applicant about his then current financial circumstances and associated medical expenses. The SSAT was not satisfied that, based on the totality of the evidence, special circumstances existed in the Applicant's case so as to warrant the exercise of discretion in s 1237AAD of the Social Security Act.
4. Having considered the material before me, I must agree with the decision of the SSAT. Considering all of the Applicant's circumstances, including his financial circumstances, there is little to suggest that his situation is unusual or uncommon when compared to other social security recipients. Nothing further has arisen in the form of additional evidence to suggest that the situation is now materially different.
5. The Applicant has not provided any further evidence to demonstrate that his circumstances are special and warrant a waiver under section 1237AAD(b) of the Act.
6. The Tribunal concludes that the Applicant's circumstances are not sufficiently special to warrant the exercising of the discretion to waive all or part of the debt under section 1237AAD of the Act.

1. The Tribunal concludes that the Applicant's debt to the Commonwealth was correctly calculated and must be recovered. Write-off on the basis of severe financial hardship and waiver on the basis of either administrative error or special circumstances is not warranted.
2. The decision under review is affirmed.

I certify that the preceding 55 (fifty-five) paragraphs are a true copy of the reasons for the decision herein of Professor R Deutsch, Deputy President

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