Duress

93. Social security recipients can be subject to economic abuse through duress or undue influence. This Inquiry will examine whether social security law and practice might be improved to provide better protection for social security recipients from such abuse.

94. Two circumstances in which economic abuse may be manifested—waiver of debt and nominee arrangements—are discussed below.^[66] The ALRC is interested in any other circumstances where economic abuse is known to occur in social security contexts.

Waiver of debt

95. If a person is overpaid a social security pension, allowance or benefit, even when not at fault, the amount overpaid is a debt to Centrelink. However, the Secretary may decide that a debt should be waived if a person can demonstrate that:

• ‘special circumstances’ exist; and

• he or she or another person did not ‘knowingly’ make a false statement or ‘knowingly’ omit to comply with the Social Security Act, its predecessor, or the Social Security (Administration) Act.^[67]

96. In this context, the Guide to Social Security Law states that ‘special circumstances’ refers to circumstances that are unusual, uncommon or exceptional—special enough circumstances that make it desirable to waive.^[68] This requires consideration of the person’s individual circumstances, but also a consideration of the general administration of the social security system. A special circumstances waiver would be appropriate only if the person’s particular circumstances made it unjust for the general rule—that is, to repay the debt—to apply.^[69]

97. The Guide to Social Security Law states that it is not possible to set out a complete list of the relevant factors to be taken into account in determining whether special circumstances exist. However, factors to consider include the person’s physical and emotional state and decision-making capacity and financial circumstances.^[70] The Guide to Social Security Law does not expressly direct the decision maker to consider family violence in determining whether circumstances are ‘special’.

98. The Guide to Social Security Law states that knowledge must be actual and not merely constructive;^[71] and it does not refer to examples of family violence which may impinge on a person’s knowledge.

99. Case law provides that it is open to infer that a person had actual knowledge of their obligations where there were opportunities for the person to gain that knowledge and where there were no obstacles to acquire the knowledge.^[72] Such obstacles which may be considered as preventing understanding of obligationsmay include a person’s emotional or mental state. For example, as a result of emotional trauma and concern for family safety, the person’s ability to comprehend obligations and responsibilities may be reduced.^[73]

100. The discretion to waive a debt may not be used where a debt is attributable, even in part, to knowingly false statements or failure to comply with the Social Security Act by a third party. In cases of family violence, false statements and/or failure to comply with the Social Security Act may be attributable to an abusing partner—for example, where the abusing partner insists that his or her partner does not declare true income, employment circumstances, or presence in the family home in order to receive a payment.

Nominee arrangements

101. Part 3A of the Social Security (Administration) Act provides for the appointment of nominees for both correspondence and payment of social security. A nominee is required to act in the best interests of the principal.

102. There is no regular review of nominee arrangements by Centrelink. Rather, any reviews of nominee arrangements are conducted as soon as any allegation of the misuse of a social security payment is received.

103. In addition, the nominee, under Centrelink arrangements, needs not be the person to whom the social security recipient has granted a power of attorney. There are no checks in place to ensure that a person holding the social security recipient’s Power of Attorney is informed of any nominee arrangement.

104. While nominee arrangements can be useful for protecting the income support of victims of family violence such as those who are homeless or with no fixed address, there is potential for economic abuse by a person holding nominee authority on behalf of Centrelink clients. In particular, the following issues have been identified:

• Centrelink may have inadequate safeguards to ensure nominees are appropriate in the circumstances;

• penalties for nominees who are in breach of their obligations may be inadequate;

• provisions to prevent nominee appointments being made under duress, or misuse of pensioner funds by nominees may be inadequate; and

• the fact that it is likely that the social security recipient will be unlikely to notify Centrelink of any abuse, including because the only person aware of the abuse is the nominee authority, may be barrier to any abuse being investigated.^[74]

105. The ALRC noted, in For Your Information: Australian Privacy Law and Practice, Report 108 (2008), that Centrelink nominee arrangements, despite being subject to some criticism, are generally well received and widely utilised. However, the ALRC also recognised that the third party nominee has ongoing powers to make decisions on behalf of a person and that this situation could be subject to abuse.^[75] This may particularly affect disadvantaged and low income recipients living in remote or rural Australian communities, older people, persons with disability and others.