adminSocial security rights review

Nhirushni Somasundaram, Social Security Rights Victoria (SSRV); and Linda Forbes[i], Economic Justice Australia (EJA)

The COVID-19 pandemic has presented a fast evolving and significant challenge to global healthcare systems and economies. The Australian Government responded quickly and alongside public health initiatives, introduced a welcome range of innovative economic responses. Special social security measures introduced from April 2020 included the temporary doubling of non-pension income support payment rates, relaxation of income and assets tests, and waiver of waiting periods.

These measures provided relief for many but as for so many contexts, COVID has served to highlight a long-standing need for policy reform to ensure equitable and fair access to the social security safety net.

COVID impacts for compensation lump sum recipients

From mid-2020, Social Security Rights Victoria (SSRV) and Welfare Rights Centre NSW noted an increase in requests for assistance from people in hardship, with no means of support, who had been refused social security income support because they had received a compensation lump sum and were subject to a ‘compensation preclusion period’ (CPP) [ii].

Social security law recognises the need to enable access to the social security safety net for people in hardship due to premature expenditure of compensation lump sums, by providing for waiver of the whole or part of a person’s CPP in the ‘special circumstances’ of the case[iii]. However, feedback to EJA from mid-2020 indicated that decision-makers – both within Centrelink and at the Administrative Appeals Tribunal (AAT) – were not taking into account COVID impacts when considering waiver.

In some cases, the failure to interrogate possible COVID-related issues appeared to be an oversight, while in others it was apparent that decision-makers felt constrained by Departmental guidelines. In the absence of direct reference to the COVID-19 pandemic in the guidelines and its case examples, some decision-makers concluded that these impacts could not be taken into account. Other delegates who were asked by advocates to consider COVID economic and social impacts noted that the pandemic has affected everyone in the community, and concluded that impacts of the pandemic on an individual are not ‘special’, ‘uncommon’ or ‘unusual’ within the meaning of the legislation and relevant case law.

EJA research project highlights need for review of guidelines

This feedback from members prompted EJA to undertake a research project examining the compensation waiver decision-making guidelines in the light of case studies from member centres and recent AAT decisions[iv].

As outlined in the project report, Compensation Preclusion Periods and the impact of COVID-19[v], this examination revealed an inconsistent and restrictive approach to determining what ‘special circumstances’ may include in applying the waiver discretion. 

EJA’s research findings show that the Departmental guidelines for application of this waiver discretion are in urgent need of revision; current guidelines unduly and inappropriately fetter decision-makers in the exercise of the discretion provided by the legislation, leaving people in destitution who may have strong grounds for waiver. Unfortunately, these grounds may never be aired as part of the waiver consideration, if no-one asks pertinent questions – questions to establish whether, e.g., if not for a person’s inability to borrow from family, or access a financial counsellor or psychologist due to COVID impacts, the person would not now be in severe hardship. 

The Victorian experience

Victoria was subject to early and protracted COVID lockdowns. For clients appealing compensation preclusion periods this often meant no access to financial counsellors, disability advocates and gambling counsellors for assistance in explaining and documenting expenditure of compensation monies. 

It’s anomalous that while the special temporary COVID social security measures allowed people with significant assets or partner income to access income support, clients in dire hardship because they had been forced to prematurely expend a compensation payout had no access to relief. Additionally, state-wide restrictions and the mandate to work from home meant that individuals with compensation preclusion periods who were at risk of spending their lump sum early, were unable to access essential services such as financial counsellors and mental health workers. This resulted in individuals being unable to manage their compensation payout for the duration of their preclusion period and exacerbated underlying mental health issues. 

As a result of COVID-19, all legal centres transitioned to an online service delivery mode. Many individuals could not effectively engage with legal services, due to not having access to a computer or scanner in order to send through documentary evidence or copies of correspondence from various organisations. This was further aggravated by closure of libraries and other printing with scanning services.

Centrelink and the AAT generally failed to appreciate these difficulties when requesting documentary evidence for compensation preclusion special circumstances applications.  

Need for reform

Economic Justice Australia is liaising with the Department of Social Services toward a review of the Departmental guidelines, in the light of the 11 recommendations made in the EJA report. We are hopeful that this review prompts a freeing up of the discretion to ensure that people affected by disasters such as pandemics, floods and droughts are not unreasonably barred from accessing the social security safety net.

SSRV Case Example:

Lisa, who is a single mother received a compensation payout after she sustained significant injuries as a result of a workplace accident. As a result of her compensation payout, she was precluded from receiving Centrelink benefits for eight years. Lisa had been managing her finances efficiently to support herself, until she had no choice but to provide financial assistance to her son, who had lost his job due to COVID-19 and was unable to secure another. In doing so, Lisa’s compensation payout ran out during her preclusion period. Lisa applied for JobSeeker Payment, however, Centrelink refused her application due to the compensation preclusion period. Lisa appealed but the Centrelink Authorised Review Officer affirmed the decision, giving no consideration to the fact that Lisa’s son had lost his job due to COVID-19 and was unable to find employment due to the continued restrictions. Lisa is now in severe financial hardship and facing eviction as she has been unable to pay rent. Further, Lisa is unable to find employment due to her ongoing injuries and is unable to rely on her friends and family for financial support as many of them have also been unable to work due to the ongoing COVID-19 restrictions. 

Access EJA’s report, Compensation preclusion periods and the impact of COVID-19, at: https://www.ejaustralia.org.au/wp-content/uploads/Compensation-Preclusion-Periods_0721.pdf

[i] Linda Forbes is EJA’s Law Reform, Policy and Communications Officer

[ii] The compensation recovery provisions of the Social Security Act are designed to prevent ‘double compensation’ or ‘double dipping’ – i.e., payment of social security income support to people with compensable injuries for periods covered by compensation payments. The over-arching rationale for these provisions is to avert cost shifting by employers, insurers and state and territory authorities to the Commonwealth. Where a person receives lump sum compensation that includes payment for loss of earnings or earning capacity, these provisions enable application of a ‘compensation preclusion period’ during which specified social security income support payments are not payable to the person, ongoing and retrospectively, according to a statutory formula.

[iii] Sub-section 1184K(1) of the Social Security Act: http://classic.austlii.edu.au/au/legis/cth/consol_act/ssa1991186/s1184k.html

[iv] This research was funded by the Department of Social Services as part of its grant agreement.  Invaluable pro bono assistance was provided by Hall + Wilcox

[v] Available at: https://www.ejaustralia.org.au/compensation-preclusion-periods/