9.4.7 AoS - Debt

Introduction

This section contains information relating to AoS debt recovery and incorrect payments and covers the following:

• rationale behind AoS debt recovery, and
• incorrect payment to an assuree.

Rationale behind AoS debt recovery

The policy rationale behind AoS debt recovery is to ensure that recovery action commences as soon as practicable after the assuree begins to receive a social security payment specified under 9.4.1.10 Introduction to the AoS Scheme, i.e. as soon as the AoS debt arises.

In the case of:

• AoS (security required) - recovery from the bank guarantee in the first instance can commence as soon as the assuree is granted a recoverable payment. Once the bank guarantee amount is fully recovered then any remaining debt will be directly sought from the assurer, and
• AoS (security not required) - recovery from the assurer can commence as soon as the assuree is granted a social security payment listed in 9.4.1.10 Introduction to the AoS Scheme.

The rationale behind the raising and recovery of AoS debts was discussed by the AAT in Gunn and SDSS:

• in the ordinary course of events, those who are granted (an entry permit which requires an AoS to be lodged in respect of it) should not be supported by public funds for the first 2 years of their being granted it.

If an assuree makes a claim for a recoverable social security payment, Centrelink must establish whether:

• the assurer is willing and able to provide an adequate level of support to the assuree; and
• it is reasonable for the assuree to accept that support.

Centrelink SHOULD contact the assurer before granting any recoverable social security payments to the assuree. This is to ensure that the assurer is aware that the assuree is making a claim for a recoverable payment, and that if this claim is granted it will result in a debt against the assurer (as discussed during the AoS interview). The assurer should be given the opportunity to support the assuree instead, and avoid this outcome.

In cases where advising the assurer could have a negative impact on the assuree, the Centrelink customer service adviser must liaise closely with Centrelink social workers to ensure that the assuree is not put at risk.

Example: The Centrelink social worker considers that contacting the assurer in a domestic violence case will place the assuree at significant risk of harm, Centrelink may defer contacting the assurer until the social worker assesses that the risk of harm is sufficiently diminished. This would generally be no longer than 3 months after recoverable social security payments are granted. The assurer remains liable to repay any AoS debt accrued during this time.

Section 1237 of the Social Security Act 1991 strengthens debt recovery provisions by imposing extra rules when considering the waiver of AoS debts.

Under these debt waiver provisions, new subsections prevent:

• Any waiver of debt if the assurer(s) claim they were unaware of the obligations of providing an AoS. As mentioned in 9.4.2 a potential assurer must attend an interview with Centrelink where they will have these obligations explained to them. They must then confirm that they understand these AoS obligations,
• Any waiver of debt amounts which are lower or equal to the value of the AoS bond (9.4.4), irrespective of whether the AoS was provided by a single assurer or joint assurers.
• Waiving of debt in cases where a joint assurance is provided. In special circumstances, if the Secretary is satisfied that the amount of debt cannot be recovered from any or all of the assurers the waive provision can be activated.

Incorrect payment to assuree

Where the assuree (the recipient of the payment) is incorrectly paid, such as due to administrative error or misrepresentation, a debt may be raised against the assuree. It should be noted that this is a debt against the assuree, not an AoS debt against the assurer. This debt owed by the assuree arises under section 1223 of the Social Security Act 1991.

Note: However, this does not remove the assurers' liability to repay the amount in accordance with the AoS. An assuree may still be legally entitled to SOME of the payment obtained by them, and in such a case only the amount incorrectly paid to the assuree will be raised as a debt under section 1223.

An AoS debt should also be raised for the amount paid to the assuree against the assurer. That is, the assurer may still owe an AoS debt even where the assuree obtained payment improperly. If recovery can be made from the assuree, any debt raised against the assurer will reduce by the equivalent amount recovered from the assuree.

Act reference: SSAct section 1061ZZGG Liability to pay for social security payments, section 1237 Power to waive Commonwealth's right to recover debt

Policy reference: SS Guide 6.7.1.30 Assurance of Support Debts, 9.4.1.10 Introduction to the AoS Scheme, 9.4.2 Providing an AoS, 9.4.4 AoS - Lodgement of Security

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Last reviewed: 2 January 2008