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Accident Compensation Cases

Social Security Appeal Authority Decision No 033/05 (SSAA, 05/04/05)

Judgment Text

DECISION 
Ms M Wallace - Chairperson, Ms P McKelvey - Member, Mrs H Tukukino - Member
Introduction 
[1]
The appellant appeals against a decision of the Chief Executive upheld by a Benefits Review Committee declining his application for assistance under the Recoverable Assistance Programme for Non-Beneficiaries. 
Background 
[2]
At the time relevant to this appeal the appellant was a single man aged 40 years. He was in receipt of ACC earnings related compensation of $475.66 gross per week. 
[3]
The Ministry's records indicate that the appellant had never been in receipt of an income tested benefit. He had however sought recoverable assistance as a non-beneficiary in November 2003 for the purposes of reconnecting power. This application was granted but a further application for the same purpose made on 29 December 2003 was declined. 
[4]
On 10 February 2004 the appellant again applied for financial assistance to have his power reconnected. In his application the appellant initially indicated that he required $791 to have his power reconnected. This was later reduced to $525.00. 
[5]
The appellant's application was declined on the basis that his earnings from ACC exceeded the income limit allowed for in clause 7 of the Recoverable Assistance Programme for Non-Beneficiaries, i.e. his income was such that it would prevent payment of an Invalid's Benefit. 
[6]
The Section 12K report notes that at the relevant time the income cut out point for Invalid's Benefit for a single person with no dependants was $426 gross a week. 
[7]
The appellant was advised of the decision to decline his application on 10 February 2004. 
[8]
On 11 February 2004 the appellant applied for a Special Benefit. He requested a lump sum payment of Special Benefit of $525 for the purpose of having power reconnected to his dwelling. His application was declined on the basis that an assessment under the formula contained in the Ministerial Directive indicated the appellant had a surplus of income over expenditure. 
[9]
On 12 February 2004 the appellant applied for Unemployment Benefit. His application was declined on the basis that his income from ACC precluded his entitlement to Unemployment Benefit. 
[10]
At the same time as he applied for Unemployment Benefit he lodged a further application for assistance for the reconnection of the power supply to his home. The appellant's application for assistance was again considered under the Recoverable Assistance Programme for Non-Beneficiaries. It was declined. The appellant was notified of the decision by letter dated 18 February 2004. 
[11]
The appellant sought a review of the decision to decline the application for recoverable assistance made on 12 February 2004 on the grounds that Work and Income's calculation of his income for the purposes of accessing the Recoverable Assistance programme was incorrect. 
[12]
The decision was reviewed both internally and by a Benefits Review Committee. The Benefits Review Committee upheld the decision of the Chief Executive. The appellant then appealed to this Authority. 
[13]
Mr ***** on behalf of the appellant submits as follows:- 
(a)
Whilst it is accepted that the appellant's ACC payments completely abated the appellant's entitlement to an Unemployment Benefit or Sickness Benefit the appellant's income must be calculated differently for the purposes of an application under the Non Recoverable Assistance Programme. In summary Mr ***** says that the appellant's income should be calculated by deducting the amount of ACC he receives from the amount he would receive in respect of a primary benefit and that only any excess received from ACC after this deduction is made constitutes income. 
(b)
In particular Mr ***** says that the definition of ‘income’ in s 3(1)(c) requires that periodic income related insurance payments are included as income “except when section 71A(2) of the Act applies.” He says that s 71A(2) applies in this case. 
(c)
For that reason the correct interpretation of the definition of “income” in this situation means that “every dollar of ACC income that would totally abate the appellant's entitlement to any Emergency Unemployment Benefit or Sickness Benefit is not income for the ongoing purposes of the Act.” 
(d)
The “dollar for dollar” rule of s 71A(2) of the Act has been correctly applied to deny any monetary entitlement to an income tested benefit to the appellant. However, the legislation clearly intends that the quantum of the income related insurance payments that completely abated entitlement pursuant to the application of s 71A(2) of the Act should not be regarded as “income” again for the purposes and objects of the Act. 
(c)
The residue of the income related insurance payment that is over and above the quantum which completely abates any entitlement to income tested benefit may well in some case also be a bar entry to benefits under the Recoverable Assistance Programme for Non-Beneficiaries. In the case of this appellant it did not. 
(d)
The appellant was a person qualified to receive an income tested benefit, such as Sickness or Emergency Unemployment Benefit pursuant to s 71A(1) but he was not “entitled” to receive a payment of any monetary benefit because of the correct application of s 71A(2) to his ACC payments. The words “qualified to receive” used in s 71A refers to persons who have, prima facie, qualifying circumstances such as illness, incapacity, unemployment that give rise to an entitlement to a monetary benefit. “Qualified to receive” means “fit into the category”. It is an entry point phrase different from “entitled to receive”. An individual may be “qualified” to receive a benefit but their income may mean that they may not be “entitled” to receive it. 
(e)
Section 415(1) and Part I of Schedule 7 of the Accident Insurance Act 1998 came into force on 1 July 1999 and made a major structural change to how income related insurance payments from ACC were to be treated for the purposes of the Social Security Act 1964. It changed how a whole class of main benefits were to be abated in respect of such payments. The legislature's clear intention in applying the new s 71A was that there could be no other satisfactory and rational interpretation other than the one advanced on behalf of the appellant, namely the exclusion of income related insurance payments from being treated as “income” when applying s 71A(2) of the Act to an applicant's ACC payments. 
(f)
There is a strong argument to suggest that a person unable to work already on a reduced income and generally restricted in a physical sense from finding additional income in times of acute need should be treated favourably or given consideration when it comes to accessing ancillary welfare programmes under the provisions of the Act. 
(g)
The purposive approach to statutory interpretation only becomes necessary after the intention of Parliament has first been gleaned from the plain words of the provision and then and only then if there are two or more reasonable interpretations to decide between. The s 3(1) clause (c) definition of ‘income’ is straightforward and unambiguous and the Authority is therefore bound to give effect to its plain words. 
(h)
The proper interpretation of the term “income” results in the appellant having income assistance under the Recoverable Assistance Programme. 
[14]
On behalf of the Chief Executive Mr ***** submitted that: 
[a]
The amendments to which Mr ***** referred were enacted to prevent double payments under the ACC and Social Security Act which in the past have caused overpayments. 
[b]
Part II of the Recoverable Assistance Programme provides that to gain entry to the programme an applicant must meet residence, income and asset tests. 
[c]
In relation to income clause 7.1 of the programme provides: 
“7.1
An Applicant may not be granted a Payment if his or her Income is such that it would prevent payment of an Invalid's Benefit. ”
[d]
“Income” is not defined in the programme but clause 3.2 provides that the definitions provided for in s 3(1) of the Social Security Act 1964 apply to the term income in this case with necessary modifications. 
[e]
The definition of ‘income’ for the purposes of the Social Security Act is a wide one. 
[f]
The ACC payment is caught by the definition of income in s 3(1) of the Act because s 71A(2) does not apply to the Recoverable Assistance programme. 
[g]
The purpose of this provision is to prevent an ACC payment being deducted and an income charge put on it. Alternatively, the ACC payment is caught by subparagraph (a) of the definition of “income” in that it is money received before income tax by the person which is not capital. 
[h]
The context of the Recoverable Assistance Programme particularly as stated in clauses 2(a) and 2(c) is to provide interest free recoverable financial assistance to non-beneficiaries on equivalent low incomes and to ensure that the financial assistance set out in paragraphs (a) and (b) is provided within the limits and for the reasons prescribed. 
[i]
If the Ministry were to apply the interpretation of income contended for by the appellant to the recoverable assistance programme it would undermine the objects of the programme. 
[j]
Clause 4.1 of the programme provides that s 3 of the Act is to apply but with any necessary modifications. The Ministry submits that in this case it is a necessary modification to give effect to clause 2(a) of the programme for income to be calculated in the usual way and not pursuant to s 71A(2). 
[k]
In considering a grant under the programme clause 5 of the programme requires that the Chief Executive take into account “the applicant's ability to meet the need from his or her own resources”. Even if the amount were to be disregarded as “income” as a result of the operation of s 71A(2) it could still be considered as part of the applicant's resources. 
[l]
The purpose of s 71A of the Social Security Act is to ascertain the appropriate rate of benefit payable to an appellant. 
[m]
If the abatement regime under s 71A was intended to apply in respect of calculating income for the purposes of applications under the Recoverable Assistance programme then clause 4 would have specifically provided for it to be included. 
Legislation Relevant to this Appeal 
[15]
The definition of income in s 3 of the Social Security Act 1964 provides as follows: 
“3
Interpretation 
[[income, in relation to any person,— 
(a)
Means any money received or the value in money's worth of any interest acquired, before income tax, by the person which is not capital (except as hereinafter set out); and 
(b)
Includes, whether capital or not and as calculated before the deduction (where applicable) of income tax, any periodical payments made, and the value of any credits or services provided periodically, from any source for income-related purposes and used by the person for income-related purposes; and 
[(c)
[Except where section 71A(2) applies, includes], whether capital or not and as calculated before the deduction (where applicable) of income tax,— 
(i)
Any periodical income-related insurance payments; and 
(ii)
Any lump sum income-related insurance payment to the extent of the income lost by the person as a result of, and within a period of 10 weeks from, the occurrence of the contingency in respect of which the payment was made; and] 
[(iii)
Any payment referred to in subparagraph (i) or subparagraph (ii) which the person would have been entitled to receive under an accident insurance contract within the meaning of section 13 of the Accident Insurance Act 1998 but for the existence of a risk sharing agreement referred to in section 185 of that Act [(as it read immediately before its repeal by section 7 of the Accident Insurance Amendment Act 2000)]; and] … ] ”
[16]
Section 71A of the Social Security Act 1964 provides as follows: 
“[[71A
Deduction of weekly compensation from income-tested benefits 
(1)
Subject to subsection (4), this section applies to a person who is qualified to receive an income-tested benefit (other than New Zealand superannuation or a veteran's pension [unless the veteran's pension would be subject to abatement under section 74D of the War Pensions Act 1954]) where— 
(a)
The person is entitled to receive or receives weekly compensation in respect of the person or his or her spouse or a dependent child; or 
(b)
The person's spouse receives weekly compensation. 
(2)
Where this section applies, the rate of the benefit payable to the person must be reduced by the amount of weekly compensation payable to the person. 
[(3)
In this section, weekly compensation means weekly compensation for loss of earnings or loss of potential earning capacity payable to the person by the Corporation under the Injury Prevention, Rehabilitation, and Compensation Act 2001.] 
(4)
Subsection (2) does not apply where the person— 
(a)
Was receiving the income-tested benefit immediately before 1 July 1999 and continues to receive that benefit; and 
(b)
Was receiving compensation for loss of earnings or loss of potential earning capacity under the Accident Rehabilitation Compensation and Insurance Act 1992 immediately before that date; and 
(c)
Section 71A(2) of this Act (as it was before it was repealed and substituted by the Accident Insurance Act 1998) required the compensation payments to be brought to charge as income in the assessment of the person's benefit.]] Status Compendium ”
[17]
The Welfare Programme for Recoverable Assistance for Non-Beneficiaries provides as its objectives in clause 2: 
“The objectives of this programme are to — 
(a)
provide interest free, recoverable financial assistance to non-beneficiaries on equivalent low incomes for the stated essential and immediate needs set out in Part III of this programme; 
(b)
provide such financial assistance, complementary to the advanced payment of benefit available to beneficiaries under the Act - 
(c)
ensure that that financial assistance set out in paragraphs (a)-(b) is provided within the limits and for the reasons prescribed ”
[18]
Clause 3.2 of the Programme provides that if a word beginning with a Capital letter is not defined in clause 3.1 of the Programme then the definitions in s 3.1 of the Social Security Act 1964 apply. 
[19]
Further, clause 4.1 specifically provides that ss 3, 12, 63, 63A, 64, 66A, 71, 74, 74A, 76, 77, 78, 80A, 81, 86 and 86A to 86J of the Act apply to the programme with “any necessary modifications” as if payment under this programme were a benefit. 
[20]
Part II of the Programme sets out universal entrance criteria to the Programme. 
[21]
Clause 7 in particular prescribes income limits. 
7.1
provides “An applicant may not be granted a payment if his or her income is such that it would prevent payment of an Invalid's Benefit.” 
Our Findings 
[22]
The definition of ‘income’ contained in s 3(1) of the Social Security Act 1964 is very wide. All periodic payments whether capital or not are to be considered income if they are received for income related purposes. 
[23]
Subclauses (c), (d) and (e) of s 3(1) provide specific inclusions in the definition of income for the avoidance of any doubt connected with the specific types of payments referred to. 
[24]
Most main benefits under the Social Security Act 1964 such as Unemployment, Sickness and Invalid's Benefit are income tested. 
[25]
The definition of ‘income’ in s 3 is critical in determining what is income when the income tests, also defined in s 3(1) are applied in determining eligibility for income tested benefits. 
[26]
Section 71A(2) provides a different regime for dealing with income from weekly ACC payments. In particular it provides: 
“(2)
Where this section applies, the rate of the benefit payable to the person must be reduced by the amount of weekly compensation payable to the person. ”
[27]
In effect s 71A provides for an abatement or deduction regime in relation to persons in receipt of ACC who are also eligible to receive income tested benefits which differs from the treatment of income from other sources. In all other cases the rate of benefit payable is subject to income tests 1 to 5. For example if an applicant for Invalid's Benefit also receives ACC then the rate of Invalid's Benefit payable is to be reduced dollar for dollar by the amount of ACC payments received. If the applicant's income is derived from earnings then in the case of an unmarried beneficiary without dependent children income test 1 applies. Section 71A does not define what is income, it simply regulates how income from ACC is to be treated where an individual is qualified to receive an income tested benefit. 
[28]
The question then is whether or not s 71A(2) applies to the assessment of income in determining eligibility for Recoverable Assistance for Non-Beneficiaries. In this regard we note the programme itself envisages modification to the specified provisions of the Act where necessary to give effect to the Programme. 
[29]
Section 74A(2) applies when a beneficiary is qualified to receive an “income tested benefit”. In this regard it appears to us that the term “qualified to receive” in s 74A(1) includes all of the eligibility criteria for a benefit including the level of income. If in fact we were to apply the dollar for dollar deduction regime in this case the appellant would not have qualified for an Invalid's Benefit. 
[30]
Furthermore in our view s 71A(2) applies only to the calculation of entitlement to income tested benefit. Section 71A(1) refers to a person qualified to receive income tested benefit. 71A(2) refers to the “rate of benefit” payable to the person. It is implicit that the “rate of benefit” referred to in s 71A(2) is “income tested” benefit. The term “income tested benefit” is defined in s 3(1). Payments under the Recoverable Assistance Programme for Non-Beneficiaries do not fall within the definition. Furthermore the appellant in this instance was not a beneficiary and no benefit was payable to him. 
[31]
We are of the view that s 71A(2) does not apply to the situation of a non-beneficiary seeking assistance under the Recoverable Assistance Programme. In our view for the purposes of assessing whether or not the appellant was eligible for Non-Beneficiary Recoverable Assistance the mechanism for determining whether or not the appellant's income would prevent payment of an Invalid's Benefit is to use the mechanism provided for in Schedule 6 relating to the payment of Invalid's Benefit. In this case all of the money received by the appellant, a total of $475.66 gross per week in respect of ACC payments, was income for the purposes of the assessment. The income cut out point which is arrived at by applying income Test 1 was $426.00. 
[32]
Our view that s 71A(2) is not a mechanism for determining income in respect of the Recoverable Assistance Programme is reinforced by the provisions of the Recoverable Assistance Programme itself. The programme is available for people who are not beneficiaries. That in itself suggests that s 74(1A)(2) does not apply. 
[33]
Moreover the purpose of the programme is to provide assistance to non-beneficiaries on equivalent low incomes. Mr *****'s argument would result in persons receiving ACC payments being significantly advantaged over persons receiving an equivalent amount derived from wages. There is no suggestion that this should be the case from the programme itself. 
[34]
Further we note that the programme provides that s 3 applies with necessary modification. In our view to meet the objectives of the programme it would not be appropriate to in effect ignore a significant part of the appellant's income as suggested by Mr *****. 
[35]
We do not think that there is any basis for the appellant's suggestion that the appellant's only income is the amount he receives after the notional amount of a parent benefit is deducted from his ACC payments. We can see no basis either in the definition of s 3 or in s 71A itself for that conclusion. Section 71A does not seek to define income. It simply addresses how income is to be treated in particular circumstances when those circumstances apply. 
[36]
There is simply no indication in the statutory provisions themselves that “income” for the purposes of determining eligibility for supplementary assistance is limited to what is left over after the dollar for dollar deduction regime in s 74(1) is applied. 
[37]
The appellant was not entitled to assistance under the Recoverable Assistance Programme for non beneficiaries. 
[38]
The appeal is dismissed. 

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