Did the AAT err in its construction of para (d) concerning work capacity, including by relying on the two hour rule found in the e-reference guide?
50 The applicant challenges the legal efficacy of the two hour rule. She says it is not mandated by a proper understanding of para (d) and its application results in her work capacity not being properly evaluated, especially by reference to Centrelink's "Sustainability of work" definition which she says should be accepted as a relevant definition of "work" for para (d) purposes.
51 At the hearing of this appeal, counsel for the Secretary submitted that the meaning of "any work" in the phrase "performing any work independently of a program of support", having regard to the definition of "work" in s 1218AAA(5), meant that if the person was capable of performing any paid work independently of a program of support - no matter how little paid work - then they would be unable to obtain a determination of unlimited portability of their pension under s 1218AAA.
52 Subsection (5) says "work", means work:
(a) that is on wages that are at or above the relevant minimum wage; and
(b) that exists in Australia, even if not within the person's locally accessible labour market.
53 At the conclusion of the hearing, following the initial submissions concerning the construction of para (d), counsel for the Secretary was provided with the opportunity to file further submissions on this statutory construction issue and, in particular, the legislative history of s 1218AAA. The Secretary submitted that s 1218AAA was inserted into the Act, in 2012, at the start of Subdiv B of Div 2 of Pt 4.2 by Item 10 of Sch 3 to the 2012 Reforms Act, to allow a person, who meets the new criteria, to live outside Australia indefinitely and continue to be paid a DSP, as explained in the Background section of the Explanatory Memorandum to the Bill for the 2012 Reforms Act.
54 Schedule 3 of the Explanatory Memorandum to the Bill for the 2012 Reforms Act dealt specifically with portability of DSP, as follows:
Schedule 3 - Portability of disability support pension
Summary
This Schedule introduces more generous rules, for disability support pensioners with a severe impairment that is likely to continue for at least five years and result in the person having no future work capacity, allowing them to retain access to their disability support pension if they travel overseas for more than 13 weeks.
Background
Currently, Division 2 of Part 4.2 of Chapter 4 of the Social Security Act sets out the length of time that social security payments can be paid to a person while that person is outside of Australia. Payment of a social security pension or benefit to a person while they are overseas is referred to as portability.
Generally, disability support pension can only be paid to a person for 13 weeks after they leave Australia. However, there are some existing exceptions to the general portability rule.
Existing section 1218AA of the Social Security Act enables the Secretary to determine that a disability support pensioner's maximum portability period is unlimited if a person has a severe disability, has a terminal illness and returns to their country of origin or moves overseas to be near family.
The amendments made by this Schedule establish a new category of people who can access an unlimited portability period that is similar to the existing section 1218AA. The Secretary will be able to determine that a person who has a severe impairment that is likely to continue for at least five years and who, as a result of the impairment, is not able to undertake any work, has an unlimited portability period. This will mean that a person who meets the criteria can live outside Australia indefinitely and continue to be paid disability support pension.
The amendments made by this Schedule commence on 1 July 2012.
Explanation of the changes
Items 1 to 6 make technical amendments to the qualification criteria for disability support pension in sections 94 and 95 of the Social Security Act. The effect of these items is to ensure that a person continues to qualify for disability support pension even after the person ceases to be an Australian resident. A severely impaired disability support pensioner, as determined in accordance with new section 1218AAA of the Social Security Act (inserted by item 10 below), can live outside Australia and continue to be paid disability support pension.
Item 7 inserts a definition of a severely impaired disability support pensioner into section 1212 of the Act. The term severely impaired overseas disability support pensioner is defined by reference to the new section 1218AAA, inserted by item 10 below.
Item 8 makes a technical amendment to item 2 in the table at the end of section 1217 of the Act. The table sets out the maximum length of time that a particular social security payment can be paid to a person who is overseas, known as the maximum portability period. The amendment made by this item establishes that a person who is a severely impaired overseas disability support pensioner will have an exception to the general 13-week maximum portability period for disability support pension.
Item 9 provides for the amendment of the table at the end of section 1217, by inserting a new table item 2A to provide that the maximum portability period for a severely impaired overseas disability support pensioner is unlimited.
Item 10 inserts a new section 1218AAA into the Social Security Act at the start of Subdivision B of Division 2 of Part 4.2.
New subsection 1218AAA(1) provides that the Secretary may determine that a person is a severely impaired disability support pensioner if:
(a) they are in receipt of disability support pension; and
(b) they have a severe impairment as defined in subsection 94(3B) of the Social Security Act; and
(c) the severe impairment is expected to last for at least five years; and
(d) they have no capacity to work independently of a program of support (as defined in subsection 94(4) of the Social Security Act) as a result of their severe impairment.
It is generally intended that, before the Secretary makes a determination under new section 1218AAA, the disability support pensioner would be required to undergo an assessment in Australia to determine whether they meet the criteria for a severely impaired overseas disability support pensioner.
However, in relation to a person who is outside Australia, new subsection 1218AAA(2) prevents the Secretary from making a determination unless satisfied that the person is unable to return to Australia because the person has had a serious accident, or has been hospitalised, before the end of the person's portability period.
New subsection 1218AAA(3) allows the Secretary to revoke a determination made under new subsection 1218AAA(1) if the Secretary becomes aware that a severely impaired overseas disability support pensioner no longer meets the criteria set out in new subsection 1218AAA(1).
A determination by the Secretary that a person is a severely impaired overseas disability support pensioner is not a legislative instrument, as noted in new subsection 1218AAA(4). This provision is inserted to assist readers and is merely declaratory of the law. The determination of the Secretary under new section 1218AAA is not a legislative instrument within the meaning of the Legislative Instruments Act.
New subsection 1218AAA(5) inserts a definition of work for the purposes of this new section. For the purposes of new section 1218AAA, work means employment that is available in Australia for a wage that is at or above the appropriate minimum wage. This includes work that is in a location away from where the person ordinarily lives.
Item 11 repeals the heading to section 1218AA and substitutes a new heading to the provision to take account of the amendments made in this Schedule. The amendments in this Schedule provide for a new category of people who can have an unlimited portability period for disability support pension. The new heading for the existing unlimited portability period in section 1218AA distinguishes the provision from new section 1218AAA.
Item 12 amends subsection 1220B(1) to provide that the Pension Portability Rate Calculator at the end of section 1221 of the Social Security Act applies to a person who has an unlimited portability period as a result of new section 1218AAA.
Item 13 is an application provision, which provides that the amendments made by this Schedule will only apply to qualification for disability support pension, and absences from Australia, on or after 1 July 2012.
(Emphasis in original.)
55 Plainly the changes were intended to introduce "more generous rules" to allow a person in receipt of a DSP not to lose their pension if they travel overseas for more than 13 weeks - indeed, for an indefinite period - in certain circumstances, as stated at the beginning of the Summary. Whether the new rules are "more generous" perhaps is and was intended to be a subjective consideration.
56 As the Background explains, up to that point, generally speaking, a DSP could only be paid to a person for 13 weeks after they left Australia, with some exceptions. The Schedule further explains that the then existing s 1218AA of the Act enabled the Secretary to determine that a DSP's maximum portability period was unlimited only if a person had a severe disability or a terminal illness, and returned to their country of origin or moved overseas to be near family.
57 The Schedule then stated that:
The amendments made by this Schedule establish a new category of people who can access an unlimited portability period that is similar to the existing section 1218AA. The Secretary will be able to determine that a person who has a severe impairment that is likely to continue for at least five years and who, as a result of the impairment, is not able to undertake any work, has an unlimited portability period. This will mean that a person who meets the criteria can live outside Australia indefinitely and continue to be paid disability support pension.
(Emphasis added.)
58 In the Explanation of the changes, in relation to Item 10, the terms of the present s 1218AAA(1)(a) to (d) were then set out, with the expression independently of a program of support, in para (d), emboldened in this definitional way.
59 The Schedule goes on to say that it is generally intended that, before the Secretary makes a determination under this new section, the disability support pensioner "would be required to undergo an assessment in Australia to determine whether they meet the criteria for a severely impaired overseas disability support pensioner".
60 The Schedule further explains that the new s 1218AAA(3) would allow the Secretary to revoke a determination if the Secretary became aware that a severely impaired overseas disability support pensioner no longer met the criteria.
61 In relation to Item 10, the Schedule notes that s 1218AAA(5) inserts a definition of work for the purposes of the new section and means "employment that is available in Australia for a wage that is at or above the appropriate minimum wage", and includes work that is in a location away from where the person ordinarily lives.
62 On one view, the importance of the qualifying circumstance set out in para (d) is that, if a DSP holder wishes their pension to be portable for an indefinite period, then they must satisfy a stringent no (paid) work capacity test. Otherwise other exceptions permitting limited portability would continue to apply. On this view, the "more generous rules" were only intended for people who did not meet the existing s 1218AA rules, and who could satisfy a stringent no future (paid) work capacity test.
63 On another view, supported by the applicant, there is no reason to read "any work" literally and it refers, as the Secretary indeed acknowledges, to an inability to undertake paid work. In this regard, the applicant further relevantly submits:
21. As raised in this case the issue of when one is able to work is contentious. How is the ability to work identified? Could one say, as the AAT have sought to do (paragraph 70), that if one waters the garden they are able to work? Or could one say if you can cook your meals you are able to work?
22. As the court recognised this is a grey area. All legislation normally list their definitions at the beginning so that there can be no confusion as to what is being said. I would contend that 'any work' was recognised by the legislators as a grey area and this is why it was left, deliberately, undefined. The legislators recognised that this needed to be assessed on a case by case basis. Clearly the person best placed to inform any decision makers is the person with the most knowledge of the impairment and its impact on the client over time. This is normally the treating doctor.
23. If I take watering the garden as a possible indicator of being able to work, would this always apply? For arguments sake, a severely intellectually impaired person unable to talk or feed themselves could water the garden. All one would have to do is attach a hose to their hand in the same way that we are able to attach a spoon to their hand at the very beginning stages of teaching one to feed and say that they are watering the garden. However, in doing so watering the garden in such a scenario does not guarantee that someone is able to work. In my case watering the garden means that I have to omit what should be my daily my exercises for the day.
24. Similarly, although the respondent said at page 16, line 15 in the transcript of proceedings, 'that the Tribunal made a factual finding based on its assessment of the applicant before it and the evidence that she gave which your Honour has referred to about being independent at home and looking after her self-care and that she was capable - it couldn't be satisfied that she was not capable of working the two hours per week.' A core independence skill such as, for example, cooking is not an indicator of being able to work. One needs to ask, what is being cooked, a three course meal or a bowl of soup? If it is a bowl of soup, is it made fresh each day or is it made in bulk for the week? How does the activity leave the person, are they exhausted by the task? Do they have a well-balanced diet or do they rely on soup because it requires the least amount of effort? Has the preparation of soup required prior and post adaptations and changes to routine in order to accomplish the task?
25. It seems strange that the respondent would be suggesting that any independence shown by an applicant for portability would automatically bar them from having their application for portability granted. In my case I am fighting to retain my independence and the government supports me in this endeavour by providing in-home help. They do so because they recognise the need to reduce pressures on aged care facilities and it is cheaper than having people go into homes. Is the respondent really suggesting that as I have already been found to have a severe impairment that if I were to check myself into a home I would then be eligible for portability?
64 In relation to these issues, the Court further invited the parties to address the relevance, if any, of Centrelink's "Sustainability of work" definition to the para (d) construction issue - it having been utilised by Dr Tabrizian, as noted above.
65 Obviously it is not a definition to be found in the Act, and so it cannot, of itself, control the meaning of "any work" as it appears in s 1218AAA. Whether, however, it is intended to reflect the definition of "work" as it appears in s 1218AAA(5) is an interesting question.
66 The applicant further explained that her treating doctor, Dr Tabrizian, having found this definition through his own devices, used it in his reports. She acknowledges, however, that the definition relates to the DSP qualification in s 94, but says the absence of something similar in s 1218AAA, or in the E-reference guide, required Dr Tabrizian to import the definition to assist his report writing. The applicant makes the point - at a level of generality - in the following terms:
I do not deny that in an emergency I could push myself to do two hours work. However, I also know that in doing so I would then have to pay for it in terms of pain and debility not just for the following day but in subsequent days. It would therefore not be sustainable to work two hours a week on an on-going, regular basis.
She observes that this is exactly what is addressed in the definition of "Sustainability of work" that Dr Tabrizian utilised.
67 She further submits that:
We now have a scenario where the respondent demonstrates inconsistent standards. They encourage pensioners to remain independent recognising the financial burden of their residential care when it suits them yet penalise those 'severely impaired' for remaining independent; they have a definition of 'sustainability of work' which applies to DSP but not to those DSP holders who are 'severely impaired' seeking portability; they accept that 'work involves a substantial degree of personal exertion on the part of the person concerned' but not for those 'severely impaired'; and 'Domestic duties in relation to a person's place of residence do not count as gainful work' for age pensioners but not those 'severely impaired'. All the foregoing can inform the meaning of 'any work' at 1218AAA(d). Instead the respondent has decided arbitrarily to apply the e-reference guide which 'is not a legislative instrument' (1218AAA(4)) as can be seen in the JCA report in the Lee case [referred to below] in which anyone who lives independently is automatically capable of work. Clearly the respondent is taking on powers that need to be policed. Something the AAT are repeatedly failing to do.
68 The Secretary observes that the phrase "Sustainability of work" does not appear in the Act at all and only appears in the Guide to Social Security Law (the Guide) and in the Guidelines. Chapter 3.6.1.67 of the Guide deals with the topic of "Sustainability of Work & DSP" and states that it applies to "people who are subject to either the 15 hour rule or the 30 hour rule for DSP qualification". The Secretary emphasises the words "DSP qualification". The Secretary thus contends it is not relevant to the applicant's application for portability of her DSP under s 1218AAA.
69 The Secretary also notes that Ch 3.6.3.05 of the Guidelines deals with the topic of Guidelines to the Rules for Applying the Impairment Tables and has a heading "Sustainability of work" and provides the following paragraph:
In assessing capacity for work, it is expected that a person will be capable of reliably performing work on a sustainable basis, that is, for a reasonable period of time without requiring excessive sick leave or work absences. In this context, a reasonable period of time generally means 26 weeks and work means work in open, unsupported employment. Sick leave or absences of one month of more (in total) taken in any given 26 week period are considered excessive.
70 The Secretary notes that the topic provides guidance on the rules that are to be complied with in applying the Impairment Tables, that it has headings emphasising significant principles and concepts underpinning provisions contained in the Impairment Tables, and provides guidance on the concepts and practical application of the DSP eligibility criteria contained in the Act. Again the Secretary contends this is not relevant to the applicant's application for portability of her DSP, and was only relevant to her eligibility for DSP initially, which is not the subject of review before this Court.
71 The Secretary submits the issue of sustainability of work arose because the applicant's eligibility for DSP was contested before the AAT (at [56] of the AAT's reasons); and that the comments by Dr Tabrizian, dated 23 September 2013 (at [33], [80], [81], [88]-[89]) and 14 July 2014 (at [42], [82], [90]) on this issue were addressing the 15 hour work rule (that is, from the definition of "work" in s 94(5) emphasised above at [30]).
72 The Secretary further submits that Dr Tabrizian quoted from the definition of sustainability of work from the Guidelines and gave an opinion as to the applicant's ability to work on the basis of this definition. His opinion in relation to this issue was based on his own observation and the applicant's written notes of her symptoms. The Secretary thus submits that the AAT found that Dr Tabrizian's opinion did not address the requirements of s 1218AAA of the Act and did not clarify whether the applicant "might be able to work at all and, if so, when and under what circumstances" (at [86], [87] of the AAT's reasons). The respondent submits that the AAT was correct to distinguish between the applicant's ability to reliably perform work for a period of 26 weeks and the requirement in s 1218AAA; and that the AAT's findings of fact in relation to the reports of Dr Tabrizian (at [86], [87], [89] and [90]) were all open to the AAT and do not disclose any error of law.
73 The Secretary then repeats the submission that the AAT, after consideration of all the evidence before it, including the medical evidence, its assessment of the applicant's written work and her appearance before the AAT, made a finding of fact that it was not satisfied that "...the Applicant is incapable of working more than two hours per week", at [84], that was open on the evidence and for the reasons it gave. The AAT was entitled to accept or reject or give such weight to the evidence proffered as it thought appropriate in all the circumstances.
74 The Secretary thus submits that, for the purposes of DSP portability, the meaning of "any work" is more restrictive than for DSP eligibility. In relation to DSP eligibility, s 94(5) defines "work" in that section to mean work that is for at least 15 hours per week. In relation to DSP portability, s 1218AAA(5) defines "work" in that section without any reference to a necessary number of hours.
75 In the Court's view, there is little doubt that the question of "Sustainability of work" has been included for DSP qualification purposes in the manner that the Secretary submits and it was not intended, consciously at least, to suggest the meaning of "work" for the purposes of para (d) of s 1218AAA(1). It does, however, appear to pick up components of the s 1218AAA(5) definition of "work".
76 When regard is had to the definition of "work" that appears in s 1218AAA(5), it is plain enough that it is not just any capacity for physical effort that qualifies as "work" for the purposes of para (d), but work "(a) that is on wages that are at or above the relevant minimum wage; and (b) that exists in Australia, even if not within the person's locally accessible labour market". It is by reference to this definition of work that the AAT, in Stojanovski, said that para (d) required that the severe impairment must prevent the person from performing any work "in the open labour market". I agree with that observation although, in my view, its import requires further exploration.
77 I would add that para (b) of the definition of "work" makes it clear the para (d) question is whether a severely impaired person is prevented, without a program of support, from undertaking available work for wages that exists in Australia, where he or she lives or elsewhere in Australia. This invokes a labour market analysis. It invites the question whether there is work on wages available in Australia that the person could perform, within the next five years, without a program of support. The requirement, "that [work] exists in Australia" emphasises that the para (d) consideration is not theoretical or open ended. For example, the question is not whether there is work in another country that the severely impaired person could do: it is whether there is work "that exists in Australia". Such work must be identified in order to decide if the severely impaired person is prevented from doing any such work, without a program of support. The question of work capacity for para (d) purposes is not, therefore, to be asked and answered in a labour market vacuum, so to speak.
78 It follows that some of the submissions made by the applicant are answered by this understanding of what "work" relevantly is. For example, the simple fact that a severely impaired pensioner can water their garden, work on their home computer, or help out in the community in some voluntary capacity, or receives some remuneration for their exertion but not by way of wages in the open labour market, does not mean the person thereby is demonstrated as able to perform "work" for the purposes of para (d). Such evidence does not directly answer the question whether the severely impaired person is prohibited from undertaking any work, for wages, that exists in Australia. It may possibly be relevant, with other evidence, to that question, but it does not directly answer it.
79 On the AAT's approach, however, the capacity of the applicant to do such things as spend time on a computer and undertake odd jobs around the house, including watering the garden, was considered of direct significance to whether it was satisfied para (d) was met. By relying on evidence concerning what other physical activities the applicant, on her own evidence and appearance before the AAT, was capable of doing, the AAT failed, in my view, correctly to apply the para (d) consideration. It failed to address the question whether the applicant, by her severe impairment, was prevented from performing any work on wages that exists in Australia for the next five years. Rather, it assumed she could do such work - which was not relevantly identified - simply because, in part, she could perform some non-wage activities.
80 In those circumstances, it would appear, as the Secretary submits, that the "Sustainability of work" definition otherwise employed by Centrelink for other s 94 qualification purposes, is not directly relevant to the question that needs to be grappled with under para (d). It is not difficult to understand, however, why Dr Tabrizian, when asked to respond to the matters set out in the AGS letter to the applicant dated 13 June 2014, dealt with the matter in the way that he did in his report. His focus was not directly drawn to any particular concept of "any work". At least, the letter requesting his opinion was ambiguous as to what he was specifically required to comment on. While it is correct to submit, as the Secretary did when the Court invited further oral submissions following the presentation of the written submissions on the sustainability of work definition question, that the letter adverted to the terms of para (d), the fact is that the letter in para 9 raised substantive, technical questions for Dr Tabrizian's medical opinion, which he provided. It is entirely understandable that Dr Tabrizian gave his report in the manner that he did.
81 The substantive question whether the applicant, by reason of her severe impairment was prevented from performing any work, without a program of support, within the next five years, was, on the face of it, not directly addressed by Dr Tabrizian. It is understandable therefore that the AAT was, in a sense, confounded by the evidence before it.
82 But as indicated, it was first necessary to address the question that is, in effect, what work is there that exists in Australia, on wages, that the applicant might possibly be able to do in the next five years, in order to answer the question whether, by reason of her severe impairment, she is prevented from performing such work.
83 There are also additional constructional issues, as the Secretary points out. The definition of "work" utilised for the purposes of s 94 is to be found in s 94(5) and is not dissimilar from the definition of "work" to be found in s 1218AAA(5). To repeat what is set out above, the s 94(5) definition of work is:
work means work:
(a) that is for at least 15 hours per week on wages that are at or above the relevant minimum wage; and
(b) that exists in Australia, even if not within the person's locally accessible labour market.
84 Section 1218AAA(5) defines work as follows:
work means work:
(a) that is on wages that are at or above the relevant minimum wage; and
(b) that exists in Australia, even if not within the person's locally accessible labour market.
85 One begins to see the constructional difficulty that arises. The s 94 definition of work incorporates the concept of work "that is for at least 15 hours per week on wages …". It also includes the concept of that work existing in Australia, as does the s 1218AAA definition.
86 The s 1218AAA definition of work, however, does not refer to any particular number of hours per week that work on wages etc comprises. Indeed, it is silent in that regard and simply provides that work means work "that is on wages …" that exists in Australia.
87 It is in respect of that unqualified concept of work that para (d) operates and provides that the Secretary must be satisfied that, if the person were in Australia, the severe impairment would prevent them "from performing any work independently of a program of support … within the next five years".
88 On one view, pressed by the Secretary, the concept of being prevented from performing "any work" in this context is to be contrasted with the concept of work under s 94, being work "that is for at least 15 hours per week". Thus, it is submitted, if there is any capacity for work, however small (even less than two hours), para (d) cannot be satisfied.
89 But that contention, in my view, does not respond to the issue at hand. The question remains not whether, in some theoretical or detached setting, free from the actual labour market in Australia, the severely impaired person is prevented from performing work, but whether their impairment prevents them from performing any work that is on wages that are at or above the relevant minimum wage and that exists in Australia. That work needs to be identified before the question can be answered whether or not they are prevented, by their impairment, from performing such work.
90 If that had been done in this case, a medical practitioner, like Dr Tabrizian, could have provided a relevant response to the question of the applicant's work capacity.
91 For that reason, in my view, the applicant is correct in asserting, in her grounds of appeal, that the AAT did not apply the correct test created by para (d).
92 I should add that, in my view, the AAT further limited its purview of the question it needed to answer by considering it was bound to apply the two hour rule stated in the E-reference guide, when it was not so bound. See Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 69-71 (Bowen CJ and Deane J); (1979) 46 FLR 409. See also Lee and Secretary, Department of Social Services [2016] AATA 60 at [25]. The two hour rule is apt to lead a decision-maker into error when applying para (d), even though its good intentions may be noted.
93 The appeal should be allowed for these reasons.