The Community Law Reform Committee of the Australian Capital Territory was established in June 1990. The purpose of the Committee is to assist the Government to identify areas in need of reform, anticipate emerging social and legal issues and assess the practical impact of various proposals and laws on the people of the ACT. The Committee's Office and Secretariat are at 3rd floor GIO Building, City Walk, Canberra City ACT 2601 (Tel (06)2070546
This report examines whether essential services should be guaranteed in cases of substantial financial hardship and, if so, how the ACT might best do this. At present, the providers of electricity, reticulated gas and telephone services have the right to withdraw the service for non-payment of an account. The Community Law Reform Committee (CLRC) was provided with many examples of substantial hardship, health risks and heightened family stress caused by threatened or actual disconnection of an essential service.
The mere threat of the disconnection of an essential service can cause severe hardship. Some people unduly curtail the purchase of other essentials such as food and clothing to avoid disconnection. Threatened or actual disconnection causes heightened stress in financially disadvantaged households. Most vulnerable are low income households (particularly sole parents, their children, the aged and people who are chronically ill and house-bound).
Threatened or actual disconnection of an essential service has a significant financial impact on community organisations. The Salvation Army and other community agencies provide some financial assistance to households to avoid disconnection of essential services.
The CLRC believes that the power to withdraw the supply of an essential service to a household in the ACT should be tempered in cases where a member of the household is likely to suffer substantial hardship if a service provider disconnects an essential service.
If the ACT accepts the recommendations in this report, a person suffering substantial hardship will be able to apply to an Essential Services Review Committee. The Committee will have the power to halt disconnection action, make arrangements for the payment of the debt and waive part or all of the debt. Safeguards will deter possible abuse of the scheme.
Case examples
Upon discharge from hospital, Ms F, a young single mother caring for her premature baby found her electricity disconnected. The mother was unable to pay the cost of reconnection. She was unable to use lighting, provide adequate heating, sterilise bottles, heat milk or wash soiled nappies.
Mrs A's husband frequently assaulted her. Her husband didn't pay the telephone account and Telecom disconnected the service. As a result she was unable to call for assistance the next time she was assaulted.
Mr S, a paraplegic from birth, came home from hospital to find that service providers had disconnected both electricity and telephone. As a result, he could not get help using his electrically charged wheelchair or telephone.
AGL disconnected Mr J's gas supply when he lost his job and stopped meeting his financial commitments. The family did not have hot water, heating or cooking facilities for several weeks.
2. Conversely, some households may make a decision to meet an essential service account at the expense of other necessities (such as food, clothing or consumer credit repayments) to avoid disconnection. In this situation many households turn to voluntary welfare agencies such as St. Vincent de Paul or the Salvation Army for support. This causes a significant drain on limited community resources.
Case example: Ms A, a single parent with 4 children rents a Government house ($113.14 per fortnight) and is dependant on a sole parent pension ($565.70 per fortnight).
She was interstate when an electricity account arrived. On her return to Canberra the due date had passed. She proceeded to pay $100 off the $212 account and asked for an extension of two weeks; the next pension date. ACTEW refused and said the service would be disconnected unless she paid. This refusal forced her to seek assistance from a welfare agency which, after some difficulty, negotiated an extension of time with the supplier.
3. Providers of essential services in the ACT may disconnect the service for non-payment of an account and may do so without regard to the hardship that the disconnection may cause.
4. The CLRC believes that in most circumstances there is a strong argument that an individual should not be deprived of an essential service because of substantial financial hardship.
6. In 1987 the Australian Law Reform Commission, in its report on Debt Recovery and Insolvency (ALRC No. 36) recommended that:
(a) the withdrawal of essential services in cases of financial hardship should be dealt with by restricting rather than abolishing an agency's right to withdraw services;
(b) in cases of dishonesty, an agency should be able to withdraw essential services.
7. The Commonwealth did not adopt these recommendations.
9. The ACT provides some of these services (such as police and fire protection services) from taxes levied on the community and business. Individual users of the services are not required to pay directly for these services.
10. Other services, such as the courts, the health system and the provision of low cost government housing, whilst provided by the ACT, also impose some costs on individual users. Sometimes these costs act as barriers to dissuade trivial or non-essential use of services. Sometimes they act as a signal to users of the cost of the service. Often, service providers impose these costs at the time the service is first sought (for example, a court lodgement fee) or as part of a structured system of regular payments (such as concessional rent payments).
11. Other government sanctioned monopolies cast the primary burden of paying for services or goods directly on individual users. Such services and goods include electricity, gas, telephone, milk and eggs in the Territory. The provision of milk and eggs (under monopolies effectively sanctioned or established by the Milk Authority Act 1971 and the Egg Industry Act 1975) impose costs on consumers at the point of sale. Consumers are able to make informed financial decisions about the cost of purchasing these goods. Water, sewerage removal and waste collection services are fixed cost services that are not withdrawn because of failure or inability to pay for the services. However, service providers pursue debtors through the courts. In some cases outstanding debts become a charge on the land.
12. However, electricity, reticulated gas and telephone services are provided to consumers on the principle of supply first, pay later. For each of these services a consumer may run up high costs in a short period with little indication of the cost incurred. Some cost may be incurred without the consumer being aware of it (automatic reheating of water during a cold snap or temperature controlled heating). Some consumers are not aware of the cost incurred until an account arrives.
14. In the financial year 1990/1, ACTEW had almost 100,000 domestic customers and issued almost 600,000 accounts. Many customers pay at or immediately after receiving a courtesy reminder. If an account remains unpaid after 7 days, ACTEW lists the account for disconnection. ACTEW listed the accounts of 2,156 domestic customers for disconnection in 1990/1.
15. Following the final notice, some customers are able to avoid disconnection. In 1990/91, 440 customers negotiated 11th hour settlements (welfare agencies helped to negotiate some settlements). Other customers avoid disconnection by paying a visiting collection officer. In 1990/1, 227 customers paid this officer. A number of community submissions commented that ACTEW's negotiation processes in situations of need frequently lacked sufficient sensitivity and flexibility.
16. ACTEW disconnected 1,489 domestic customers in 1990/1. ACTEW reconnected 717 customers after they settled the account and paid a $10.00 reconnection fee. The remaining 772 customers had left their premises.
17. In 1990/1, the average household cost for electricity in Canberra for a two month period was $120. However, accounts listed for disconnection were higher than average and may have over-burdened the household budget.
18. A sample of Australians questioned in the National Social Science Survey Exploratory Study of Economic Policy and Business Regulation [1] considered that electricity was an essential service (93%). Domestic customers use electricity to power a range of appliances that are essential to healthy living: hot water, cooking, refrigeration, space heating and lighting.
19. Most submissions received by the CLRC argued that electricity supply to domestic consumers is an essential service and should not be disconnected where that would cause substantial hardship.
20. The CLRC considers that in most circumstances electricity supplied to domestic consumers is an essential service.
22. The effect of climate is visibly reflected in the amount of electricity purchased by ACTEW (for domestic and commercial use). Even small variations in winter temperatures can have a dramatic unplanned impact on domestic budgets. For example, in June 1990 ACTEW had to purchase 10% more electricity than June 1991 even though the temperature difference was only 3.4 degrees Celsius.
23. The range in seasonal temperatures adversely affects the energy needs of Canberra households in comparison with those in other Australian capitals. Canberra differs from other Australian capitals in being an elevated inland city. Canberra is more subject to climatic differences than coastal cities where climatic extremes are tempered by lower altitude and sea breezes. As a result, domestic electricity usage is higher in Canberra than in any other Australian capital. St. Vincent de Paul submitted that the design of many existing Government homes is inefficient and costly, exacerbating the financial circumstances of families.
24. In winter, domestic energy consumption increases significantly to provide households with acceptable living conditions. In 1977 the National Capital Development Commission (NCDC) undertook a study on energy usage within Canberra households. The NCDC found that the amount of energy consumed for heating a house can be correlated to the coldness of climate but that house design varies little to take account of climatic variations. The NCDC found that the major part of domestic energy consumption in Australia is for heating followed in equal parts by water heating and other energy needs such as cooling and lighting. The ratio for domestic energy consumption in Perth for example is approximately 33% for each of the above parts. By contrast in Canberra the ratio for heating is 60% with the other parts each using 20%.
25. Some consumers are not aware of the cost of a service until an account arrives. It can be difficult to budget for accounts for these services save from previous experience. Because of climatic variations, experience is not a good guide to the cost of a service (particularly winter heating). Service providers might mitigate these difficulties by introducing pay as you go systems or better signals of the cost of the service. For example, Telecom has recently introduced a new scheme aimed at giving consumers more account information.
26. Many low income families in the ACT live in government rented homes. The ACT Housing Trust manages about 12,360 dwellings. The Trust has implemented a range of measures to optimise levels of thermal comfort and minimise the consumption of energy. These include:
(a) in new houses
. energy saving designs and siting;
. efficient use of insulation; and
. the provision of efficient heating appliances; and
(b) in older houses
. improved ceiling insulation; and
. the replacement of inefficient heating and cooking appliances.
Submissions indicate that substantial problems still exist in the thermal efficiency of ACT public housing stock.
28. ACTEW adopts a different approach in dealing with the non-payment of water and sewerage rates. In such cases, domestic customers can apply to ACTEW for remission of water and sewerage charges under section 21C of the Rates and Land Rent (Relief) Act 1970. This section provides that where payment of rates, including water and sewerage rates "would cause undue hardship" payment can be deferred or remitted on decision of ACTEW. In its submission, ACTEW states that it is not its practice to disconnect these services for non-payment of rates. However, ACTEW does wish to introduce the right to restrict the flow of water as an aid to debt recovery. No submission was made to the CLRC critical of present practice in this area.
29. The CLRC considers that the supply of water and sewerage services to consumers in the ACT is an essential service.
31. Most submissions received by the CLRC argued that gas supplied to domestic consumers is an essential service and should not be disconnected where that would cause substantial hardship.
32. AGL submitted that gas is not an essential service as there are many alternative energy sources available most notably heating oil, LPG and wood. However, where gas appliances are used it is unlikely that appliances suitable for these alternatives are installed in the household. In its submission, AGL notes that the ACT has not recognised gas as an essential service in other respects. The discussion relating to climatic factors and electricity above is equally applicable to gas.
33. AGL has nearly 30,000 connected customers in the ACT. AGL advised the CLRC that:
In 1990, some 838 'Collector Calls' were made by AGL Canberra Ltd to all classes of non-paying customers, which resulted in 223 meter disconnections. ... The majority who are disconnected for non-payment of accounts are those who have left the premises. A substantial proportion of them pay once legal action is taken. This would suggest that genuine 'hardship' cases among such non-payers is rare.
34. AGL believes that few domestic customers use the Company's disconnection and debt recovery procedures to get extended credit or time to pay. However, the Company enters into payment plans with customers who have difficulty in paying an account where they notify AGL and do not have a pattern of default. No submission was made to the CLRC critical of present practice in this area.
35. The CLRC considers that gas supplied to domestic consumers should be considered an essential service where a household relies upon it as a source of energy for a key appliance (eg, required for heating or food preparation). As it is ACT Housing Trust policy that future government housing will have gas as the main energy source, many houses in Canberra will be using reticulated gas as the primary energy source in the future.
...in view of the social importance of the service, it is reasonably accessible to all persons in Australia on an equitable basis, wherever they reside or carry on business and that the performance standards of the service reasonably meet the social, industrial and commercial needs of the Australian community. (s.288 of the Telecommunications Act 1991 )
37. Because Telecom is a Commonwealth Statutory Authority, there is doubt about the ACT's power to legislate for it. However, Telecom relies on Territory law and Courts for the collection of debts. The CLRC believes that Telecom may voluntarily submit to the ACT jurisdiction as part of its practice of being a good corporate citizen. If it does not, it may be desirable for the ACT to consider other options to enforce compliance with ACT law.
38. Telecom submitted to the CLRC that a telephone is an essential service although it noted that it does not have 100% penetration of the market. The CLRC notes that the Commonwealth is removing Telecom's monopoly on telecommunication services.
39. A sample of Australians questioned in the National Social Science Survey Exploratory Study of Economic Policy and Business Regulation [2] rated the availability of a telephone service as very important (63%).
40. In 1988, the ALRC considered that in some circumstances a telephone was an essential service but these circumstances were unusual ones.
41. Submissions received by the CLRC about telephones supported the view that for some people the telephone was an essential service.
42. The CLRC considers that the telephone is an essential service, particularly for the housebound, chronically ill or elderly. For those people the telephone service provides a primary method of communication and a lifeline to emergency services in times of crisis.
44. In his submission to the CLRC, Mr Birch referred to a particular instance in 1983. The Commonwealth was concerned about the plight of people using low cost housing. It adopted a policy of not evicting a tenant in arrears in rent payments for reasons of financial hardship. Under this policy the Commonwealth relied on court processes for the recovery of outstanding rent.
45. Mr Birch suggested that once this policy became commonly known, many tenants (some not suffering financial hardship) ceased paying rent at all. Government revenue from public sector rental accommodation dropped sharply. When the Commonwealth reversed its approach, the recovery of outstanding accounts was time-consuming and expensive.
46. The CLRC agrees that there are dangers in taking an overly simplistic approach.
48. The CLRC suggests that the ACT should consider:
(a) ensuring that new housing stock are solar efficient, efficiently insulated and provided with efficient heaters;
(b) developing a program of refitting existing government houses to ensure that they are efficiently insulated and provided with efficient heaters;
(c) reviewing the materials used in the construction of government houses;
(d) improving the efficiency of appliances used in the fitting out of government houses (particularly heaters);
(e) developing a program to encourage private owners (particularly landlords) to refit existing houses to ensure that they are efficiently insulated and provided with efficient heaters; and
(f) making an annual award for excellence in the siting, design and construction of energy efficient houses.
Competition
49. The introduction of additional suppliers to provide essential services is problematic when the industry depends on an infrastructure of capital works. However, some argue that competition leads to greater efficiency with resulting cost benefits to all consumers.
50. The CLRC suggests that the ACT should carefully consider the benefits of introducing competition, where practicable, into the supply of essential services. However, the CLRC does not make any specific suggestions or recommendations relating to this issue.
52. The CLRC suggests that the ACT carefully considers the social costs in setting differential rates. However, the CLRC does not make any specific suggestions or recommendations relating to this issue.
(a) the ACT introduce a voucher scheme similar to that operating in New South Wales; and
(b) the ACT create an independent tribunal or committee to determine whether a service should be disconnected.
55. ACTEW, AGL and Telecom submitted that the use of a voucher system was appropriate as it would place the burden on the general community. They argue that if the scheme is funded by the supplier agencies extra costs may be passed to only consumers of that service.
56. Some welfare agencies had reservations about a voucher system operating effectively. Problems included:
(a) the possible misuse of vouchers (including double dipping, where multiple requests for vouchers are made to welfare agencies in relation to the same account);
(b) inconsistent application of hardship criteria by different welfare agencies;
(c) the need for people seeking assistance to approach welfare agencies; and
(d) the cost to agencies to administer the scheme.
57. While some of these problems can be overcome (eg, double dipping might be reduced by recording the appropriate information on the voucher to prevent misuse) the voucher scheme does not resolve difficulties faced by members of households who may not have any knowledge of or access to the account. Such people cannot use the voucher system to guarantee their access to essential services.
58. The CLRC considers that the voucher system has the disadvantage of the passage of information and vouchers through many hands. It is also likely that problems of accountability would arise.
59. Analysis of the costs of establishing this type of system should recognise the significant costs incurred by welfare agencies in distributing the vouchers (transaction costs).
60. A major concern of the CLRC was that community welfare agencies handling a new voucher system may find a whole new group people approaching them. This would place additional strain and cost on welfare agencies and introduce a new group of people into the cycle of welfare dependency.
62. The major suppliers of essential services at the hearing did not dispute that a role exists for such a body. Service providers did argue that all associated costs involved should be borne by the ACT from the welfare budget and not by the supplier or its customers.
63. The Welfare Rights and Legal Centre argued that the withdrawal of an essential service should not be permitted except with the approval of a tribunal. Under the Centre's proposal, the onus would be on the supplier agency to satisfy the tribunal that:
(a) there was dishonesty; or
(b) disconnection of the service would not cause hardship.
64. The Centre argued that this would provide for a more socially just system than a system that places the onus on the customer. However, the Centre's scheme does not address how service providers would be able to establish either of the two suggested grounds. The scheme might enable unscrupulous consumers to avoid or unreasonably extend the time for paying bills.
65. The Salvation Army and CARE supported the establishment of a tribunal or committee. These agencies submitted that any such body should be able to consider a range of options when considering the issue of disconnection.
66. ACTEW had concerns with over formalising the disconnection process. It felt that a legalistic approach to debt-management could result in high costs and long delays. It questioned the cost-effectiveness of customers being able to challenge the withdrawal of an essential service.
67. ACTEW supported a system by which the evaluation of claims of "exceptional hardship" were made within the welfare system. It argued that the welfare budget should meet all the costs involved in the support of persons facing hardship.
68. Most submissions received by the CLRC suggested that existing private and public systems for determining whether a person was suffering substantial hardship were ad hoc and inconsistent.
(a) will lead to greater equity in the giving of relief (the review body will be able to assess substantial hardship more consistently than would welfare agencies or employees of various service providers applying different service provider's debt recovery policies);
(b) will be accessible to all people affected by disconnection (not simply the person in whose name the account is held);
(c) will significantly reduce the possibility of abuse (discussed in Chapter 4);
(d) is financially viable (discussed in Chapter 5); and
(e) will encourage individual service providers to improve debt recovery processes.
70. The CLRC believes that a voucher system should not operate in the ACT.
71. In the Territory, there is no existing committee or tribunal that performs the type of work likely to be performed by the suggested review body and that might be able to provide the proposed review body with secretariat support. Consequently, because ACTEW would engage most of the attention of the review body, the CLRC believes that secretariat support should be located within ACTEW. Such a move may minimise costs as the required resources could be partially met by existing ACTEW staff and accommodation. It would also minimise transaction costs involved in dealing with ACTEW accounts.
72. The presence of the review body within ACTEW's administrative structure need not be a threat to the independence of the review process if it is carefully structured. The ACT Housing Review Committee and the Legal Aid Review Committees provide useful examples of the location of review bodies within existing administrative structures. The CLRC sees one striking advantage in locating secretariat support within ACTEW. It is very likely that ACTEW would give affect to its debt recovery policy in such a way as to forestall the need of a consumer suffering substantial financial hardship to approach the review body at all. The CLRC believes that this view will commend itself to the present management of ACTEW if the ACT adopts this report's major recommendations.
Hypothetical case 1: A household receives an account. The account and subsequent reminder clearly state that if the account cannot be paid because of substantial financial hardship, an application for relief can be made to the Essential Services Review Committee [ESRC]. A household member contacts the ESRC and applies for relief. Action to disconnect the service stops until the ESRC considers the issue. The ESRC can reduce the debt or make it payable by instalment.
Hypothetical case 2: A rogue, not suffering financial hardship, receives an account and attempts to avoid paying it by contacting the ESRC and applying for relief. Action to disconnect the service stops until the ESRC considers the issue. The ESRC can impose a penalty charge on the rogue and let disconnection action proceed.
Hypothetical case 3: A service is disconnected (the household members may have been interstate or in hospital). A household member contacts the ESRC and applies for relief. The service is reconnected until the ESRC considers the issue. The ESRC can reduce the debt or make it payable by instalment.
73. The CLRC recommends that the ACT adopt the following scheme.
Essential Services
74. Essential services include the provision of electricity, reticulated gas, water, sewerage, telephone and such other services prescribed by regulation.
78. An application for relief may be made in writing or orally to the ESRC. If the application for relief is oral, it must be confirmed in writing within five working days. The ESRC may extend this period of time if the applicant has satisfactory reasons for failing to confirm the application in writing. If ESRC does not extend the time, the oral application lapses. A written application (or written confirmation of an application) must be in a form approved by the Chairperson of the ESRC and published in the Gazette.
80. Once notified, the service provider shall not disconnect a service until the ESRC makes a direction about the application or the application lapses. If the service has been disconnected, it must be immediately reconnected and the service provider shall not disconnect it until the ESRC makes a direction about the application or the application lapses.
81. Once notified, the service provider will provide to the ESRC all relevant information about the account.
Composition
83. Under the legislation, the responsible Minister shall appoint a chairperson and deputy chairperson who are not associated with either a service provider or a welfare agency.
84. Under the legislation, the responsible Minister shall appoint a panel of members:
(a) three community members; and
(b) one (or more) member from each essential service provider.
85. When an application for relief is made, the chairperson shall convene an Essential Services Review Committee to consider the matter comprised of the following members:
(a) the chairperson or deputy chairperson;
(b) one community member; and
(c) a relevant service provider member.
86. Where, before the completion of a hearing, one member of the committee ceases to be available for the purpose of the hearing, the remaining two members may complete the hearing.
87. The chairperson may appoint the deputy chairperson or a community member or members to act as the chairperson in certain situations defined by the chairperson.
88. The chairperson, deputy chairperson or a member may resign by notice in writing to the Minister.
(a) direct that there shall be no disconnection of the service in question for failure to pay the account which is the subject of the application (unless a condition referred to below is broken by the applicant); or
(b) waiver, in part or in whole, the account which is the subject of the application.
91. If an applicant does not establish substantial financial hardship, the committee shall dismiss the application.
92. Where the committee makes a direction it may be expressed to be contingent upon one or more of the following conditions:
(a) restricted supply of the service;
(b) payment of the account by instalment;
(c) referral to financial counselling;
(d) deferred payment of an account;
(e) direct payment arrangements between the applicant's financial institution and the service provider;
(f) the account be furnished more regularly than usual; and/or
(g) any other reasonable condition.
93. The committee may not award costs (legal or otherwise) and costs should not be payable by any party. Where a number of applications concern the same applicant and the same service provider, the committee may consider the applications for relief at the same time.
95. Parties may proceed orally or in writing (or both). Hearings will be in private at such time and place as is determined by the committee and notified to the parties. The committee should not be bound by the strict rules of evidence and should resolve applications economically, speedily and fairly. The hearings of the committee would be informal and would proceed quickly with no recording of the proceedings. The committee would have access to extrinsic material such as service provider's files when determining an application. For example, the committee may consider any accrued debt, the current account and the previous good payment record of the applicant.
96. Decisions of the committee should be in writing and available to the parties. Decisions may be published provided that the applicant and the household are not identified.
97. Decisions of the committee should be binding.
99. If imposed, the administrative fee should become payable by the applicant and collected by the service provider.
101. There should be no additional administrative appeal.
Financial Considerations
102. Threatened or actual disconnection of an essential service is often the trigger (if not the underlying cause) for a catastrophic worsening of an individual's living conditions. The withdrawal of an essential service imposes many emotional, social and financial costs on households, the government, service providers, welfare agencies and the general community. It is not possible to quantify all of these costs.
103. Debt management consumes considerable resources of essential service providers most of whom have a significant (but manageable) number of bad debts. It also imposes a severe strain on the counselling (and financial) resources of welfare agencies as consumers who are disconnected from a service are often forced to seek emergency relief. People seeking emergency assistance strain the budgets of welfare agencies. The Salvation Army in the ACT estimates that it dispersed $12,000 worth of assistance to those households that had an essential service withdrawn in 1990/91.
104. Through the provision of welfare and health services in the ACT, the ACT ultimately meets some of these costs indirectly. In particular, community health can also be adversely affected by disconnection. People who sleep in unheated housing or who do not have access to hot water may cause (or exacerbate pre-existing) health problems. The ACT Regional Advisory Committee of the National Safety Council of Australia submitted that this may create greater health and community costs than would be the case if supply of a service was maintained (although the CLRC notes that if many customers took advantage of such a policy and ceased to pay, the situation might be significantly different).
Who should pay?
105. The ALRC argued in its report that any concession given to debtors should be borne by the community at large as costs incurred by the suppliers would be recovered by increasing the charges for supply. It considered that this extra cost could be justified by considerations of public welfare and by the hardship faced by those who at times simply cannot pay.
106. The CLRC closely considered whether the broader community should fund the relief through ACT Consolidated Revenue or whether consumers should meet the cost through increased charges from service providers. The CLRC recommends that consumers should meet the cost because:
(a) ultimately, it is much more cost-efficient to place the proposed review body within ACTEW (noting that although some of this cost will eventually flow to ACTEW's customers, other service providers such as AGL and Telecom would be required to offset this cost to the extent that they use the system);
(b) the actual cost to individual customers is very small (about 3-17 cents per account per customer); and
(c) the 'tax base' is more appropriate (the measure is designed to assist the 'constituency of customers').
108. Estimates of the cost of maintaining the committee vary according to the amount of sitting time of the committee. These costs could reduce, depending on the success of concurrent strategies to recover in full or in part lost revenue and support from other agencies brought within the ambit of the scheme. Following an examination of like committees, the CLRC believes that the annual cost of the committee will be between $22,000 and $100,000. If there are 200 applications p.a., the annual operating cost will be $22,000 p.a. and the additional cost to the consumer per account cycle is $ 0.03. If there are 1000 applications p.a., the annual operating cost of the committee will be $100,000 p.a. and the additional cost to the consumer per account cycle is $0.17. Once only set up costs would add marginally to the first year's operating costs (although it is possible that ACTEW would also be able to absorb some of these costs).
109. In coming to these conclusions, the CLRC has made the following assumptions:
Remuneration 10 hearing dates X 2 paid members X $250
$5,000
Clerical Support ASO6 @ 30% $10,625
On-costs @ 60% @ 30%
ASO6 $6,375
Remuneration 56 hearing dates X 2 paid members
X $250
$28,000
Clerical Support ASO6 @100% $35,400
On-costs @ 60% ASO6 $21,240
Contingencies (15%) $15,360
Total $100,000
110. These costs do not reflect the existing cost to service providers and the community of written-off debts. The adoption of the CLRC's recommendations should reduce the amount written-off in two ways:
(a) directions made by the Committee may improve the actual collection of outstanding debts (through instalment payment processes) and the gradual modification of behaviour to avoid customer over-commitment; and
(b) the existence of the Committee may improve debt-recovery processes by service providers.
111. In addition, the Committee will serve to focus the attention of welfare agencies. It will permit agencies to redirect welfare money to other more pressing social needs.
112. If the ACT adopts the recommendations in this report, there will be no direct financial consequences to the ACT Consolidated Revenue.
Milk Authority Act 1971
Egg Industry Act 1975
Electricity and Water Act 1988
Audit Act 1989
Telecommunications Act 1991(Cwth)
Administrative Decisions (Judicial Review) Act 1989
Rates and Land Rent (Relief) Act 1970
Australian Capital Territory, Department of Justice & Community Services, Issues Paper, Withdrawal of Essential Services, Canberra 1990
Australian Law Reform Commission, Report No 36, Debt Recovery & Insolvency AGPS, Canberra 1987
New South Wales Department of Minerals and Energy, Annual Report 1989-1990
National Capital Development Commission, Report on Energy Usage in Canberra Households, 1977
National Social Science Survey Report, 1989
National Capital Planning Authority, Energy Conservation in Housing, 1991
ACT Housing Trust, Public Housing Upgrade Standard, 1991
Objectives & Definitions for CSOs, prepared for the Telecom Australia Consumers' Council by the Communications Law Centre, University of New South Wales, 1990
Guidelines for Electricity Councils, Energy Accounts Payments Assistance Scheme, NSW Department of Energy and Minerals, 1989.
A BILL FOR An Act to provide for the continuity of essential services to persons suffering substantial financial hardship
The Legislative Assembly for the Australian Capital Territory enacts as follows:
part i--preliminary
Short title
1. This Act may be cited as the Essential Services (Continuity of Supply) Act 1992.
Commencement
2. (1) Section 1 and this section commence on the day on which this Act is notified in the Gazette.
(2) The remaining provisions commence on a day fixed by the Minister by notice in the Gazette.
(3) If a provision referred to in subsection (2) has not commenced before the end of the period of 6 months commencing on the day on which this Act is notified in the Gazette, that provision, by force of this subsection, commences on the first day after the end of that period.
Interpretation
3. In this Act, unless the contrary intention appears--
"account", in relation to an essential service, means a written statement of the amount payable by a customer to the relevant service provider in respect of that essential service;
"application" means an application for relief under this Act;
"customer" means a person to whom an essential service is being provided for domestic use;
"essential service" means the provision of electricity or any other prescribed service;
"Review Committee" means the Essential Services Review Committee established under this Act;
"service provider" means an authority or body that provides an essential service;
"withdrawal", in relation to an essential service, means the discontinuance or reduction of that service by reason only that an account for that service has not been paid.
Application
4. Nothing in this Act affects the operation of the Rates and Land Rent (Relief) Act 1970 or of section 78 of the Electricity and Water Act 1988.3
part ii--essential services review committee
Establishment
5. For the purposes of this Act, there shall be an Essential Services Review Committee.
Appointments
6. (1) The Minister shall appoint a Chairperson and a Deputy Chairperson of the Review Committee.
(2) Where the Chairperson or Deputy Chairperson is, or is about to be, absent or not available to perform the functions of his or her office or there is a vacancy in the office of Chairperson or Deputy Chairperson, the Minister may appoint a person to act as Chairperson or Deputy Chairperson while he or she is absent or not available to perform those functions or until the filling of the vacancy, as the case may be.
(3) The Minister shall not appoint, under subsection (1) or (2), a person who is an employee of a service provider or a welfare agency.
Composition
7. (1) Subject to subsection (4), the Review Committee shall, for the purpose of considering an application, consist of--
(a) the Chairperson or the Deputy Chairperson;
(b) a person chosen in accordance with subsection (2); and
(c) a person chosen in accordance with subsection (3).
(2) The member referred to in paragraph (1) (b) shall be a person chosen by the Chairperson or Deputy Chairperson from a panel of not less than 3 persons who have had experience in assisting or otherwise working with persons suffering financial hardship, being persons nominated to the panel by the Minister.
(3) The member referred to in paragraph (1) (c) shall be a representative of the relevant service provider chosen by the Chairperson or Deputy Chairperson from a panel of representatives of service providers nominated by the Minister.
(4) Where, before the completion of the consideration of an application, a member of the Committee ceases to be available, the remaining members of the Committee may continue to consider the application and the Committee shall be taken to be duly constituted for that purpose.
Defect in appointment
8. An action of the Review Committee is not rendered invalid by reason only of a defect or irregularity in the appointment of a member of the Committee.
Removal from office
9. (1) The Minister may remove the Chairperson or Deputy Chairperson of the Review Committee from office for misbehaviour or physical or mental incapacity.
(2) If the Chairperson or Deputy Chairperson--
(a) becomes bankrupt, applies to take the benefit of any law for the relief of bankrupt or insolvent debtors, compounds with his or her creditors or makes an assignment of remuneration for their benefit;
(b) becomes of unsound mind; or
(c) is convicted in Australia of an offence punishable by imprisonment for 1 year or longer;
the Minister shall remove the Chairperson or Deputy Chairperson from office.
Resignation
10. The Chairperson or Deputy Chairperson of the Review Committee may resign his or her office by tendering a written resignation to the Minister.
Function
11. The function of the Review Committee is to consider and decide applications.
Remuneration and allowances
12. (1) The members of the Review Committee shall be paid such remuneration and allowances as are prescribed.
(2) Subsection (1) does not apply to a member of the Review Committee--
(a) in relation to remuneration--if there is a subsisting determination relating to the remuneration to be paid to that member; or
(b) in relation to an allowance of a particular kind--if there is a subsisting determination relating to an allowance of that kind to be paid to that member.
(3) In subsection (2)--
"determination" means a determination of the Remuneration Tribunal of the Commonwealth.
Terms and conditions
13. The members of the Review Committee hold office on such terms and conditions (if any) in relation to matters not provided for by this Act as are determined by the Minister.
part iiI--APPLICATIONS
Withdrawal of essential services
14. (1) A service provider shall not withdraw an essential service from a customer unless--
(a) the service provider has caused a written notice in accordance with subsection (2) to be served on the customer;
(b) a period of not less than 7 days has elapsed since that notice was served; and
(c) the service provider has not been notified under section 16 of an application in relation to the relevant account.
(2) A notice referred to in paragraph (1) (a) shall state that--
(a) the service provider intends to withdraw the essential service after the expiration of 7 days unless the relevant account has been paid; and
(b) if payment of the account would cause substantial financial hardship an oral or written application may be made to the Review Committee for relief under this Act.
Application for relief
15. (1) A person who is, or is likely to be, directly affected by the withdrawal of an essential service may apply in writing or orally to the Review Committee for relief under this Act on the ground that payment of the relevant account would result in substantial financial hardship.
(2) The Review Committee shall not consider an oral application unless it has been confirmed in writing within 1 week after the making of the oral application, or within such further period as may be allowed by the Committee.
(3) A written application or a written confirmation of an oral application shall--
(a) be substantially in accordance with a form approved by the Chairperson of the Review Committee and published in the Gazette;
(b) be signed by the applicant; and
(c) be lodged at the office of the Chairperson of the Committee.
Effect of application
16. (1) On receiving an application the Review Committee shall notify the relevant service provider of the application.
(2) Where a service provider is notified of an application, it shall furnish the Review Committee with a copy of its records concerning the account for the relevant essential service.
(3) Where a service provider is notified of an application, it shall--
(a) if the relevant essential service has not been withdrawn--maintain that service; and
(b) if the relevant essential service has been withdrawn--restore and maintain that service;
pending consideration of the application by the Review Committee.
(4) Subsection (3) does not apply during any period when a failure to maintain or to restore an essential service is not by reason only of an account for that service not having been paid.
part iv--procedure
Privacy
17.(1) An application shall be considered in private by the Review Committee at such time and place as the Chairperson or Deputy Chairperson notifies in writing to the applicant and the service provider.
(2) The notice to the applicant shall include a statement to the effect that if the Review Committee refuses the application as being entirely without merit, the Committee may order the applicant to pay the sum of $50 to the Territory.
Representation
18. On the consideration of an application--
(a) the applicant may appear and be heard in person or by an agent; and
(b) the relevant service provider may appear and be heard by a duly authorised officer, employee or agent of that body.
Presiding member
19. (1) The Chairperson or the Deputy Chairperson shall preside at a meeting of the Review Committee.
(2) In the absence of the Chairperson or the Deputy Chairperson, the member referred to in paragraph 7 (1) (b) shall preside.
Expedition and informality
20. (1) The Review Committee--
(a) shall consider an application as expeditiously as possible; and
(b) may regulate its own procedure.
(2) A meeting of the Review Committee shall be conducted informally without minutes being kept.
(3) The Review Committee may consider together 2 or more applications where the applications concern the same applicant and the same service provider.
(4) Information may be given to the Review Committee orally or in writing.
(5) The Review Committee may inform itself in relation to any matter that it considers relevant to an application.
Costs
21. The applicant and the service provider shall bear their own respective costs arising from the application.
part v--relief
Power of Committee
22. After considering an application the Review Committee may, by instrument in writing--
(a) if satisfied that the payment of the relevant amount would result in substantial financial hardship--
(i) direct the service provider not to withdraw the essential service--
(A) before the expiration of a specified period; or
(B) unless the applicant fails to comply with a condition specified in the instrument pursuant to section 23;
(ii) declare that the payment of a specified amount within a specified time shall be taken to discharge all liability in respect of the account; or
(iii) declare that all liability in respect of the account shall be taken to be discharged; or
(b) if not so satisfied--refuse the application.
Conditions
23. A decision on an application in accordance with sub-subparagraph 22 (a) (i) (B) may be expressed to be subject to any of the following conditions:
(a) the reduction of the essential service;
(b) the payment of the relevant amount by a specified date or by specified instalments;
(c) the submission of the applicant to financial counselling;
(d) that the applicant agrees to arrangements being made for payment of the relevant amount by a financial institution on his or her behalf;
(e) such other conditions as the Review Committee considers appropriate to the circumstances.
Decision
24. (1) A decision of the Review Committee shall be in writing and shall be signed by the members of the Committee.
(2) As soon as practicable after a decision has been made, the Chairperson of the Review Committee shall ensure that the applicant and the relevant service provider are provided with a copy of the decision.
(3) Where the Review Committee considers that a decision made by it ought in the public interest to be published, it may cause the decision to be published in such manner as will preserve the identity of the applicant and any persons residing with the applicant.
(4) The decision of the Review Committee in respect of an application shall be binding as between the applicant and the relevant service provider.
Abuse of process
25. (1) Where the Review Committee refuses an application as being entirely without merit, the Committee may direct the applicant to pay the sum of $50 to the service provider on behalf of the Territory.
(2) An amount directed to be paid under subsection (1) is recoverable as a debt to the Territory.
Effect of declaration
26. Where the Review Committee makes a declaration under subparagraph 22 (a) (ii) or (iii), the liability in respect of the relevant account shall be taken to be discharged in part or in whole, as the case requires, in accordance with the declaration.
Premature withdrawal of services
27. If a service provider fails to maintain an essential service to a customer in circumstances that involve a contravention of subsection 14 (1) or 16 (3) or a direction under subparagraph 22 (a) (i)--
(a) the service provider is guilty of an offence punishable, on conviction, by a fine not exceeding $5,000 for each day during which the offence continues; and
(b) liability in respect of the relevant account shall be taken to be wholly discharged.
part vi--miscellaneous
Regulations
28. The Executive may make regulations, not inconsistent with this Act, prescribing--
(a) matters required or permitted by this Act to be prescribed; or
(b) matters necessary or convenient to be prescribed for carrying out or giving effect to this Act.
the recommendations of the Australian Law Reform Commission, made in its report No. 36 (debt recovery and insolvency) to the Commonwealth Attorney-General that:
(i) the withdrawal of essential services in cases of financial hardship be dealt with by restricting rather than abolishing the agencies right to withdraw services;
(ii) in cases of dishonesty, the agencies should be able to withdraw essential services;
REFER the following matter to the Community Law Reform Committee as provided for in the Constitution of the Committee:
TO REVIEW the laws in force in the Territory with respect to the withdrawal of essential services as a means of debt recovery;
AND TO REPORT
(a) which, if any, of the recommendations of the abovementioned report of the Law Reform Commission should be adopted in whole or in part; and
(b) on any other relevant matter the Committee wishes to take into consideration.
IN MAKING ITS REVIEW AND REPORT the Committee will have regard to any views of business, community or government agencies on the subject matter of this reference.
SIGNED THIS 21ST DAY OF SEPTEMBER 1990
BERNARD COLLAERY
The Honourable JJA Kelly, QC
Deputy Chairpersons
Ms Jennifer Kitchin
Chief Magistrate Mr RJ Cahill
Committee Members
Ms Robin Burnett
Mr Rod Campbell
Professor Duncan Chappell
Ms Sanora Dell [4]
Mr Rainer Frisch
Mr Ross Gengos
Ms Judy Harrison [5]
Mr Peter Hohnen
Ms Vivienne Joice [6]
Ms Veronica Laletin [7]
Ms Annmarie Lumsden [8]
Mr Graeme Lunney
Mrs Bettie McNee
Mr Nick Seddon
Mr Peter Sutherland
Professor Roman Tomasic
Sub-Committee in Charge of Reference
Ms Judith Harrison
Mr Rainer Frisch
Mr Peter Sutherland
Research Officer: Mr David Snowden ]
Senior Legal Officers:
Ms Tracy Reid
ACT Council of Social Services
Salvation Army
Welfare Rights & Legal Centre
CARE Credit and Debt Counselling Service
Telecom Australia
AGL Gas Companies
ACT Electricity and Water Authority
St. Vincent de Paul
Mr B W Birch
Mrs D Wicks
Mr R McDonald
The Committee held a Public Hearing on 18 June 1991. The agencies which made oral submissions were:
ACT Council of Social Services
Salvation Army
Anglican Careforce
Welfare Rights & Legal Centre
CARE Credit and Debt Counselling Service
ACT Regional Advisory Committee of the National Safety Council of Australia
ACT Electricity and Water Authority
AGL Gas Companies
Telecom Australia
In preparing this report the Committee made use of the collective experience of its members, including those with expertise in community welfare, law and business.