10.11 For some people who receive government benefits, Centrelink processes and practices are interwoven into their daily lives. As a corollary, social security laws and legal frameworks can intersect with older persons experiencing, or at risk of, abuse. Stakeholders have identified three sites where the risk of this intersection is high:
the payment nominee scheme;
Carer Payment; and
the Aged Pension gifting rules.
Payment nominee scheme
10.12 A person in receipt of social security payments (the ‘principal’) can appoint another person to assist them to interact with Centrelink or to interact on their behalf. A principal may have a ‘payment nominee’ and may also appoint a ‘correspondence nominee’. The payment and correspondence nominee may be the same person. A correspondence nominee may receive any social security notice on behalf of the principal, and can make enquires and attend appointments with Centrelink on behalf of the principal. A payment nominee receives payments on behalf of the principal. Stakeholders identified the potential for elder abuse in the payment nominee scheme, and some provided examples of misuse.
10.13 Nominees have a duty to act in the best interests of the principal. Payment nominees have fiduciary duties. They are obliged to use payments received on behalf of the principal exclusively for the benefit of the principal, and are required to keep records to this effect. Failing to provide records on request can attract a financial penalty.
10.14 The appointment of a nominee involves submitting an authorisation form to Centrelink. This is a straightforward process that can be done online, submitted in person or via the post.There are sound policy reasons to make nominee appointments easily accessible. Easy access readily facilitates an arrangement that enables people with disability, or people who are experiencing difficulties, to access and interact with Centrelink. The WRC observed that
one of the key benefits of nominee arrangements is that they can provide and prolong independence. Having a nominee to manage complex Centrelink affairs or to respond to correspondence can in some circumstances delay a move to an aged care facility and allow people to continue to live independently at home.
10.15 However, as noted by the WRC, if payment nominee arrangements are misused, the impact can be extreme—leaving older persons with no money, or at risk of losing their home or accommodation. A case study provided by Seniors Rights Victoria shows the extreme impact of abuse, while also illustrating more broadly the intersection between social security payments and elder abuse:
A son was operating his father’s financial affairs using an enduring power of attorney (EPOA), but also managing his pension under a nominee arrangement. To collect more money he failed to notify Centrelink that his father lived with him, and that he was renting the father’s house for considerable profit (retained by the son). Centrelink discovered the situation and raised a $12,000 overpayment against the father. As the son knew he would not be responsible for any debt under Centrelink legislation, he dropped his father off at his sister’s house, emaciated and with only the clothes he was wearing. Before the administrator could get involved in the retrieval of the rent money and protecting the remaining assets the son sold his father’s house and moved interstate. Both the nominee form and the EPOA were signed by the father well after he was deemed not to have capacity by the family doctor.
10.16 There are also less visible consequences of the misuse of payment nominee appointments. Age and Disability Advocacy Australia (ADA Australia) advised that it receives many complaints regarding payment nominees taking a person’s pension. It noted that, while the ‘pension is obviously necessary to the older person’, often the ‘amount taken is often not sufficient to pursue through other legal means’.
10.17 There are existing safeguards against financial abuse by payment nominees. These were outlined by the ALRC in the report Family Violence and Commonwealth Laws—Improving Legal Frameworks, and included:
the process of appointment—the principal must provide written consent and signatory arrangements;
oversight of nominee appointments—‘particular scrutiny’ of the appointment is to be given in certain circumstances;
processes to ensure the capacity of the principal—including investigation where capacity is uncertain;
revocation or suspension of nominee appointments following a written request or where the nominee has not provided records;
processes for allegations of misuse—including referral to a social worker;
reporting requirements—a nominee is to advise of any matter that affects their ability to act as a nominee;
the requirement for payment nominees to keep and supply records; and
the statutory obligations of the nominee to act in the best interests of the principal.
10.18 Payment nominees can receive part or all of the payment. Payment nominees need not receive the entire payment amount on behalf of the principal. It is possible for principals to appoint a payment nominee and retain direct receipt of some funds. Principals are also able to quarantine and direct payments from their pension to rent and services through Centrepay, or other direct debit arrangements. Centrelink also provides a free financial counsellor service that can help set up direct payments.
10.19 In some communities an older person may be able to opt into a program of income management. Income management is a measure that quarantines a proportion (usually 70%) of a person’s social security payment for prescribed goods such as food, clothing, housing and utilities. Funds can be held for use through an Eftpos card. Income management operates only in particular declared areas, and the majority of those subject to income management reside in the Northern Territory and are Aboriginal. Stakeholders to this inquiry did not support expanding the use of income management as a strategy to address elder abuse.
10.20 Stakeholders have suggested that current safeguards for payment nominee appointments do not adequately address the possibility of forgery or coercion in the appointment, which may be facilitated by the simplicity of the appointment process. For example, theOffice of the Public Advocate (Qld) noted that the ‘appointment process of nominees involves little to no education or training. Coupled with the limited oversight of the role, it creates an environment ripe for financial exploitation and elder abuse’.
10.21 Legal Aid NSW commented on how simple it is to forge or to trick a person into making the appointment via the online form, and supplied an example of a son who had forged the nominee appointment form to receive the pension of his mother, who had dementia. The son had used the pension for his own benefit.
10.22 There are two relevant social security payments available to non-professional carers, Carer Payment and Carer Allowance. An annual Carer Supplement is also available to recipients of these payments. Stakeholders pointed to a potential intersection between Carer Payment and elder abuse.
10.23 Carer Payment is income and asset tested, including the income and assets of the person receiving care. The amount to be paid is calculated on par with the Age Pension. To qualify for Carer Payment, a carer must personally provide constant and significant care to one or more adults or children with a disability in the home of the carer or the person receiving care.
10.24 To show that the adult is a person with a disability or severe medical condition in need of a significant level of care, the adult requiring care must achieve a particular score under the ‘Adult Disability Assessment Tool’ (ADAT). This comprises two questionnaires that together measure the amount of assistance required to undertake ‘basic activities of daily living’, such as mobility, communication, hygiene, eating and management in a range of cognitive and behavioural activities. One questionnaire is to be completed by the potential paid carer, and the other by a treating health professional, which may be the person’s GP, registered nurse, occupational therapist, physiotherapist, a member of an Aged Care Assessment Team or an Aboriginal health worker.
10.25 A person receiving Carer Payment must notify Centrelink of changes in circumstances that may affect their qualification for the payment, including if they are no longer providing the required level of care to the care recipient.
10.26 The National Commission of Audit reported that 220,000 people were in receipt of Carer Payments in 2013. There is no available data on the constitution of the cohort of people receiving care, but, as older people with dementia make up the largest proportion of people under guardianship, it is reasonable to assume that older persons with intermittent or diminished decision-making ability or limited mobility make up a sizable proportion of people eligible for full-time carers.
10.27 Carer Payment can intersect with elder abuse. A person may receive a payment for provision of care to an older person, and fail to provide that care, or provide inadequate care. Considering the level of care required to be given to qualify for the payment, neglect of duties may, in some circumstances, amount to elder abuse. The North Australian Aboriginal Legal Service advised that it was aware of
allegations about carers, often family members, who are receiving Centrelink carer payments and not providing proper care to older persons (including not providing proper or full meals and not assisting with the cleaning of households). In these situations, the local community or aged care service (if available or in existence) often fills this gap, despite funds being allocated to the individual carer for this purpose.
10.28 A case study provided by Seniors Rights Victoria illustrated other, less direct, elder abuse issues attached to Carer Payment:
An older woman had a stroke a number of years ago, and her son moved into her rental accommodation to assist her when she was discharged from hospital. He was unemployed at the time, and then obtained a Carers Payment to assist with her ongoing care needs. The client acknowledged that her son did provide considerable assistance to her at that stage, and facilitated her recovery. However over the course of several years, the son provided less and less assistance, struggled with alcohol problems, and regularly became aggressive towards her. A wall in her home was punched in by her son during an argument between them. The mother’s health improved and she became more fearful of her son’s unpredictable behaviour. She attended an appointment at Centrelink, to advise of her improved health, and that her son no longer provided any care for her. The Carers Payment to her son was suspended. He confronted her about this, but she declined to discuss the matter with him. At the time of contacting SRV for assistance she reported that her son had become more aggressive, and unexpectedly produced papers for her to sign. She signed these documents under duress as she had again been threatened by him, and had no opportunity to read them. She later realised the documents were to reinstate the Carers Payment.
10.29 The National Aboriginal and Torres Strait Islander Legal Services spoke about how the misuse of Carer Payment can form an element of abuse:
An elderly woman sought advice from a Brisbane civil lawyer on housing issues. The elderly woman resides with her daughter, who has locked her out of her own house. The daughter continued to claim Centrelink carers’ payments, despite her mother no longer residing with her. The elderly woman was effectively homeless and only has the clothes on her back, as all her property is held in the house. She has no way to retrieve the property. A Brisbane civil lawyer referred her to an appropriate legal service.
10.30 The Australian Association of Social Workers raised the possibility that dependency on Carer Payment (and possibly housing) by carers could affect decisions about placing an older person in residential aged care, even where residential care would provide a necessary higher level of care.
10.31 There is a strong policy impetus to encourage and maintain full-time unprofessional carers for older persons who need assistance. Carers provide an important and necessary service, and receive payment in recognition of the fact that their caring duties mean that they are unable to receive income through paid employment. The WRC cautioned that
[i]t is important that false community perceptions about the incidence of carer abuse are not created, as this can undermine carers and deter carers from offering this invaluable support.
10.32 The Age Pension is available to Australians who are over 65 years old and who meet certain resident and income/asset requirements. The current maximum payment for the Age Pension is $798 per fortnight.
10.33 The majority of older Australian residents receive steady income through the Age Pension. The National Commission of Audit reported that, in 2012, approximately 80% of all persons over Age Pension age who met the residential requirement received income through government pensions. It estimated that the proportion of eligible people receiving income through the Age Pension will remain steady over the next thirty years. In 2007, the Pension Review Background Paper reported that the average length of time that a person received the Age Pension was 11.3 years. The same report noted that the majority of people on the Age Pension had been in receipt of another form of government payment prior to transferring to the Age Pension.
10.34 In social security terms, ‘gifting’ means to give away assets for less than their market value. Centrelink gifting rules aim to limit the potential for individuals to divest themselves of assets or funds to gain income support, including the Age Pension.
10.35 A single person or couple can make gifts of up to $10,000 per financial year over a period of five years (not exceeding $30,000) without it affecting the amount of government benefits they can receive. Any amount over the allowable amount will be assessed as a ‘deprived asset’ for five years from the date of the gift, and will still be counted as the person’s asset. There are some exceptions, including where a gift creates a ‘granny flat interest’ for the older person, discussed below.
10.36 Gifting rules apply to any gifts made in the five years before receiving welfare benefits. Centrelink provides examples on their website:
Selling a rental property to your daughter valued at $380,000 for $200,000 ($180,000 gift)
Buying your daughter a car for a present
Donating 10% of income to a church
Forgiving a loan
Repaying your son’s business loan where guarantor
Putting money into a family trust which you do not control.
10.37 Legal Aid NSW said that the gifting rule may inadvertently ‘capture older persons who have experienced financial abuse’. As an example, Legal Aid NSW supplied a case study of an adult child who had tricked a non-English speaking parent to enter a secured loan contract as the borrower, under the pretence that the child would repay the moneys. The child defaulted, leaving the bank to commence proceedings against the older person’s home to discharge the debt. This left the older person at risk of losing their home and entitlements under the Age Pension. The older person also had to repay Centrelink the pension amount received from the date of the loan contract. The severity of this outcome was eventually lessened under an application for ‘hardship’.
10.38 Seniors Rights Victoria expressed concern at Centrelink’s application of the gifting rules in the face of elder abuse:
As the majority of older Australians are recipients of the Age Pension, it has significant impact on their lives … If a rule or regulation appears to be breached, the penalties are applied immediately, and elder abuse is not an exception that will have any bearing on the process or outcome for the older person.
Granny flat interests
10.39 For the purposes of social security, a ‘granny flat interest’ represents an agreement for accommodation for life in a private residence. A granny flat interest is created when a person pays for a life interest or right to use certain accommodation for life that will be the person’s principal home. The use of the term ‘granny flat’ does not describe the type of dwelling—it describes the living arrangement. This type of arrangement is commonly understood as an ‘assets for care’ arrangement or a ‘family agreement’.
10.40 Where a person establishes a granny flat interest, the amount transferred or the value of the residential property given away is exempt from the gifting rules, and is not considered income. A granny flat interest will not affect pension entitlements.
10.41 The gifting rules stipulate a number of requirements for Centrelink purposes. A granny flat interest cannot be established where the older person has legal ownership of the property. The older person must stay in the arrangement for at least five years.
10.42 Centrelink will recognise a granny flat interest that is not in writing, although it recommends that a legal document be drawn up by a solicitor that confirms the security of tenure; states any obligations on the parties; and outlines the process for compensation, if required.
10.43 The ALRC has heard about the potential for emotional abuse and financial loss after an older person creates a granny flat interest. Issues arise when the family member does not provide the promised tenancy or care. The family member may not adequately house the older person, may not provide food or access to household appliances, and may even sell the property without recognising the older person’s interest, leaving the older person without housing and care. In Chapter 8, the ALRC proposes avenues for redress when family agreements break down.
10.44 Stakeholders have advised the ALRC that the Centrelink criteria for establishing a granny flat interest may have unintended consequences for older persons in abusive situations. A case study was supplied by the Older Persons Advocacy Network:
Marina is an 80-year old woman from a European background. She came to Australia with her husband in the early 1950s and they prospered. Marina worked in the business and was a driving force behind its success. When her husband died Marina was left reasonably financially secure and owned her own house in an expensive part of Canberra. Marina has a daughter living abroad and a son living in Canberra. Marina has no cognitive impairment and manages her own affairs; however in late 2011 Marina had a bad fall and broke her leg and her arm resulting in long stays in hospital. Marina’s son has four daughters who are now getting too old to share bedrooms and was looking to upsize his house and move to a “better” area but needed additional finance to purchase such a property.
Marina’s recovery period was going to be long but she started to progress well physically. Being in hospital with the only visitors being her son and occasionally daughter in law and grandchildren she became isolated and started to lose confidence in her ability to live alone. When her son made her an offer to live with them, sell her house and invest in their new property under a granny flat arrangement with Centrelink, it seemed tempting. Marina had been groomed by her son over a long period of time to believe she could not manage living alone any longer. A property was found by her son with a flat attached, Marina was taken from hospital to look at the flat and returned to the hospital all within the space of a few hours. She had no opportunity to discuss a major financial decision or the suitability of the property with an independent person. Based on promises of the support the family would give her and her now complete loss of confidence in her ability to care for herself Marina agreed and invested in the son’s new property.
The arrangement was doomed from the start, the promised care and support never eventuated and the flat could not have been more unsuitable. By the time ADACAS [ACT Disability, Aged and Carers Advocacy Service] became involved Marina was locked in to the Centrelink granny flat arrangement for five years and a large sum of money was paid to the son to secure the granny flat interest. Centrelink applies a deprivation rule if the granny flat arrangement is terminated before five years has elapsed unless the reasons for leaving could not have been foreseen at the time of entering into the agreement. The ADACAS advocate was able to support Marina and help her establish a new independent living arrangement. It could so easily have been a disaster for this client locked into isolation and despair for the last years of her life. This case highlights the hidden nature of financial abuse of older persons.
10.45 This case study underlines a key issue raised by stakeholders: if the person stops living in the home within five years, Centrelink reviews the granny flat interest. If the reason for leaving the arrangement before five years could have been anticipated at the time of making the arrangement, the funds used to establish the abandoned granny flat interest will be considered income retrospectively. For example, gifting rules may apply where a person leaves the arrangement early due to a pre-existing illness, but not where the illness was unexpected.
10.46 The ALRC has been advised that the abuse of an older person which occurs after a granny flat arrangement commenced is likely to be viewed by Centrelink as an ‘unforeseen circumstance’, so gifting rules should not apply—that is, the exemption to the gifting rules should remain.Caxton Legal Centre pointed out, however, that the five-year requirement could still be inadvertently forcing victims of elder abuse to endure ‘intolerable family dynamics’.
Social Security (Administration) Act 1999 (Cth) pt 3A.
See, eg, Welfare Rights Centre NSW, Submission 184; Eastern Community Legal Centre, Submission 177; Caxton Legal Centre, Submission 174; Seniors Rights Victoria, Submission 171; National Seniors Australia, Submission 154; Australian Association of Social Workers, Submission 153; Office of the Public Advocate (Qld), Submission 149; Legal Aid NSW, Submission 140; State Trustees Victoria, Submission 138; North Australian Aboriginal Legal Service, Submission 116.
Seniors Rights Victoria, Submission 171; Legal Aid NSW, Submission 140.
Social Security (Administration) Act 1999 (Cth) s 123O.
Ibid s 123L.
Ibid s 123L(6).
Welfare Rights Centre NSW, Submission 184.
Seniors Rights Victoria, Submission 171.
ADA Australia, Submission 150.
Australian Law Reform Commission, Family Violence and Commonwealth Laws—Improving Legal Frameworks, Report No 117 (2011) [9.45].
Social Security (Administration) Act 1999 (Cth) s 123D(2).
Department of Social Services (Cth), Guide to Social Security Law (2016) [8.5.3]. ‘Particular scrutiny’ must be given to nominee requests where the proposed nominee runs a boarding or room establishment; where there are multiple voluntary nominee appointments for the same nominee; or where the nominee does not live in the same residence or in close proximity to the principal. A delegate can revoke an appointment where the delegate decides that the appointment is not in the best interest of the principal, and can direct payments to another person.
Ibid [8.5.1]. Centrelink delegates are to investigate if there is any question as the principal’s capability to appoint a nominee. The delegate must also consider the effect of family violence when determining a principal’s capacity to consent to the appointment of nominee. In cases where it is determined that the principal is not capable of consenting to the appointment, the delegate may appoint a nominee, where the delegate is satisfied of the need to appoint a nominee, and is satisfied that the nominee will act in the best interest of the principal.
Social Security (Administration) Act 1999 (Cth) s 123E. The Secretary can suspend or revoke appointments following a written request to the Secretary from the nominee; or where the nominee has not complied with a notice to produce records.
Department of Social Services (Cth), Guide to Social Security Law (2016) [8.5.3]. The delegate may be able to revoke under the above powers if a social worker is not immediately available.
Social Security (Administration) Act 1999 (Cth) s 123K.
Ibid s 123L. Where a review is undertaken, nominees must supply records, otherwise a fine may apply.
Ibid s 123O(1).
Ibid s 123F.
Centrepay is a Centrelink service which facilitates the direct debit of payments to pay bills, such as electricity or rent. A user can set a target amount, change deduction amounts, and choose the order in which services are paid. There is no cost for using Centrepay: Department of Social Services (Cth), Commonwealth Financial Counselling <www.dss.gov.au>.
J Rob Bray et al, ‘Evaluating New Income Management in the Northern Territory: Final Evaluation Report’ (SPRC Report No 25/2014, Social Policy Research Centre, 2014). In December 2013, 90.2% of those subject to income management in the Northern Territory were Aboriginal: Table 4.1.
Welfare Rights Centre NSW, Submission 184; Seniors Rights Service, Submission 169; State Trustees Victoria, Submission 138; Older Women’s Network NSW, Submission 136; North Australian Aboriginal Legal Service, Submission 116.
Office of the Public Advocate (Qld), Submission 149.
Legal Aid NSW, Submission 140.
Up to $600.
Department of Human Services (Cth), Income and Assets Tests for Carer Payment <www.humanservices.gov.au>; Social Security Act 1991 (Cth) ss 198A(1), 198D.
Social Security Act 1991 (Cth) s 201.
For definitions see case law cited: Law Book Company, Laws of Australia, vol 22 (at 31 October 2016) 22 Insurance and Income Security, ‘22.3 Social Security’ [22.3.1480].
Social Security Act 1991 (Cth) ss 197–198. With some exceptions: ss 198AAA, 198AA, 198AB.
Department of Social Services (Cth), Guide to Social Security Law (2016) [3.6.9].
See forms for Adult Disability Assessment Determination 1999 and Carer Payment and/or Carer Allowance Medical Report for a Person 16 Years or Over: <www.humanservices.gov.au>.
Department of Human Services (Cth), Change of Circumstances While Receiving Carer Payment <www.humanservices.gov.au>.
National Commission of Audit, The Report of the National Commission of Audit (2014) Carer Payments [9.10].
See ch 6.
North Australian Aboriginal Legal Service, Submission 116.
Seniors Rights Victoria, Submission 171 p 22.
National Aboriginal and Torres Strait Islander Legal Services, Submission 135.
Australian Association of Social Workers, Submission 153.
Welfare Rights Centre NSW, Submission 184.
National Commission of Audit, above n 43, Age Pension [9.1]. From 2017 the Age Pension age will be increased by half a year every two years and will reach 67 by 2023.
Social Security Act 1991 (Cth) ss 43, 55, 1064.
Department of Human Services (Cth), Age Pension <www.humanservices.gov.au>. Rounded up.
National Commission of Audit, above n 43, Age Pension [9.1]. Fewer than 20% of people aged 65 years receive no pension. The Australian Bureau of Statistics reported that, in 2012, 2,278,215 people received income through the Age Pension, which was an increase of 57,831 people from the same point in time in 2011: Australian Bureau of Statistics, National Regional Profile, 2008 to 2012, Cat 1379.0.555.001.
National Commission of Audit, above n 43, Age Pension [9.1].
Jeff Harmer, Pension Review Background Paper (Department of Families, Housing, Community Services and Indigenous Affairs) Table 6.
Ibid 41. Notes that of males eligible for the maximum pension in 2006/07, 82.9% came from another income support payment. Of women, 89.6% came from another income support payment, primarily the disability support pension.
Department of Human Services (Cth), Gifting <www.humanservices.gov.au>.
Social Security Act 1991 (Cth) s 1222A(a), div 3; Seniors Rights Victoria, Submission 171; Legal Aid NSW, Submission 140.
Senior Rights (Vic), Submission 171.
Social Security Act 1991 (Cth) ss 12C(2)–(3).
See ch 8.
Social Security Act 1991 (Cth) ss 1118(1)(c)(i)–(iii).
Provided that the amount paid is not more than the cost or value of the granny flat interest.
Department of Social Services (Cth), Guide to Social Security Law (2016) [126.96.36.199].
Department of Human Services (Cth), Granny Flat Right or Interest <www.humanservices.gov.au>.
See, eg, Older Women’s Network NSW, Submission 136; Macarthur Legal Centre, Submission 110; Hervey Bay Seniors Legal and Support Service, Submission 75.
Older Persons Advocacy Network, Submission 43.
Department of Human Services (Cth), above n 67.
Department of Human Services (Cth), Advice Correspondence (11 November 2016).
Caxton Legal Centre, Submission 174.