Chapter 2Background
2.1This chapter provides relevant background information relating to the Veterans' Entitlements, Treatment and Support (Simplification and Harmonisation) Bill 2024 [Provisions] (the Bill), including:
key veteran and claims statistics;
a summary of the differences of the Acts comprising the current legislative framework;
relevant previous inquiries into the veterans’ entitlements, rehabilitation and compensation framework; and
the Australian Government’s consultation on the Bill.
Key statistics
2.2According to the 2021 Australian Census, more than half a million Australians (581 139) have served or are currently serving in the Australian Defence Force (ADF). There are 84 865 current serving members (full-time and reserve) and 495 276 former serving members.
2.3The Department of Veterans’ Affairs (DVA) has forecast its client population to grow over the next ten years, increasing the number of veterans and family members affected by the proposed changes to the legislation. DVA provided the following table outlining the number of DVA clients, as at 2023, and the number of clients forecast in 2033. DVA noted that not all serving and former serving members engage with DVA, so their number of clients is less than the Census number.
| | | |
348 216 | 379 900 | 283 907 | 343 100 |
Source: DVA, Submission 15, p. 103.
2.4In 2022–23, DVA received 38 433 liability claims and, in 2023–24, received 46 776 liability claims—an increase of 8 343 claims. Approximately 37 per cent of these claims were either dual or tri-Act claims, demonstrating the complexity of the process for both veterans and DVA claims processors.
2.5According to DVA, as of 30 March 2024, there were 164 407 veterans with an accepted service-related condition under one or more of the governing Acts as demonstrated in the following diagram:
Figure 2.1Veterans with an accepted condition by determining Act
Source: DVA, Submission 15, p. 10.
2.6The number of compensation claims being processed by DVA has increased significantly in recent years, as have the processing times. The average processing time has grown to be well above DVA’s own performance targets with initial liability claims under the MRCA and DRCA averaging longer than a year, and the average time to process VEA compensation payments was 520 days in 2023–24 (see Figure 2.2). Some claims processing times have improved in 2023–24, following budgeted additional resourcing which has enabled DVA to clear the claims backlog and focus on determining claims on hand to reduce the time taken to process them. DVA anticipates that the Bill will further improve processing times.
Figure 2.2Average time taken to process compensation claims (days)
Source: DVA, ‘Claim processing times’, 15 August 2024 (accessed 6 September 2024); Michael Klapdor, Veterans' Entitlements, Treatment and Support (Simplification and Harmonisation) Bill 2024, Bills Digest, No. 3, 2024–25, Parliamentary Library, pp. 17–18.
Note: time is measured from date of claim receipt to date of determination.
The current legislation
2.7This section outlines the key differences between the Acts which would harmonised and simplified by the Bill. The Acts comprising the current tri-Act legislative framework, include:
Veterans' Entitlements Act 1986 (VEA);
Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA); and
Military Rehabilitation and Compensation Act 2004 (MRCA).
2.8The VEA is a pension-based scheme, providing periodic pension payments that can be paid for life, as both compensation and income support. The DRCA and MRCA are workers’ compensation schemes, providing both lump sum compensation and periodic payments that can be paid up to Age Pension age. All three Acts provide compensation payments as well as access to medical treatments and rehabilitation services. The VEA also provides for means tested income support payments for war widows/ers.
2.9The eligibility under each of the Acts is generally determined by when an individual’s service occurred, the type of service rendered and the date of onset of an injury or disease. However, this also results in different levels of compensation and benefits for the same conditions, depending on the person’s service, age and when an injury or illness occurred. This leads to inequities between different groups of veterans. Additionally, the way that impairment levels are assessed also differs between the three Acts.
2.10For example, the Productivity Commission’s 2019 report A Better Way to Support Veterans found compensation amounts for those with impairment levels below 80 points can vary by more than $100 000 depending on whether the person had warlike/non-warlike service or peacetime service. The value of compensation over a person’s lifetime can vary based on the fact that the VEA provides access to lifetime disability compensation pensions, while MRCA and DRCA cover the period up to Age Pension age (for former ADF members).
2.11The total package of supports and compensation available can also vary based on differences in the rates of assistance for services such as attendants, home care and funeral benefits as well as eligibility for the Gold Card and education schemes for the children of veterans. For example, the Veterans’ Home Care program under the VEA sets limits in terms of hours/days for personal care, domestic help, respite and garden maintenance (for example, 1.5 hours of personal care a week). The Household Services and Attendant Care programs under the DRCA and MRCA set a maximum value for the services available: $574.76 a week for the DRCA and $597.13 a week for the MRCA. The maximum funeral benefit under the VEA is $2 000 while the MRCA can cover funeral expenses of up to $14 639.09.
Previous inquiries
2.12Over many years, a number of inquiries have identified concerns about the complexity of the current legislative framework governing veterans’ entitlements, rehabilitation and compensation. These inquiries have highlighted the significant impact that this complicated tri-Act system has had on the wellbeing of veterans and their families, as well as the administrative burden this system has created for veterans, their families, advocates, and DVA staff. Each of these inquiries recommended that the legislative framework be simplified.
Senate and Joint Committees on Foreign Affairs, Defence and Trade
2.13In April 2019, the Joint Standing Committee on Foreign Affairs, Defence and Trade (JSCFADT) reported on its inquiry into the transition to civilian life from the ADF which had its genesis in the 2017 Senate Foreign Affairs, Defence and Trade (FADT) References Committee’s report on its inquiry into suicide by veterans and ex-service personnel.
2.14The 2017 Senate FADT References Committee report found the legislative framework for the veterans’ compensation system to be complex and difficult to navigate and expressed concerns that inconsistent treatment of claims for compensation and lengthy delays in the processing of claims were key stressors for veterans and their families. In response to the report, the Australian Government agreed to make a reference to the Productivity Commission to review the legislative framework of compensation and rehabilitation for service members and veterans.
2.15Recommendation 1 of the 2019 JSCFADT’s report included the recommendation to:
Reduce the complexity of the legislative framework reporting on the outcomes for veteran support (VEA, DRCA, MRCA) with the objective of transitioning over time to a single system under a single Act.
Productivity Commission
2.16The Productivity Commission’s report titled A Better Way to Support Veterans, published in June 2019, found that the veterans’ compensation and rehabilitation system requires fundamental reform:
The system fails to focus on the lifetime wellbeing of veterans. It is overly complex (legislatively and administratively), difficult to navigate, inequitable, and it is poorly administered (which places unwarranted stress on claimants). Some supports are not wellness-focused, some are not well targeted and others are archaic, dating back to the 1920s.
2.17The Productivity Commission recommended simplifying the system by moving to two schemes:
By 2025, the Australian Government should create two schemes for veteran support—the current Veterans’ Entitlements Act 1986 (VEA) with some modifications (‘scheme 1’) and a modified Military Rehabilitation and Compensation Act 2004 (MRCA) that incorporates the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA) (‘scheme 2’).
2.18DVA acknowledged that the Productivity Commission’s proposal would have resulted in some simplification of the veterans’ legislation framework. However, from the department’s perspective, the retention of multiple Acts would preserve much of the complexity inherent in the current system, including the underlying inequities such as compensation offsetting and differences in entitlements, creating complexities by offering a choice of coverage for certain cohorts of working age. DVA submitted:
The VETS Bill goes beyond what the [Productivity Commission] considered possible by implementing a single-ongoing Act model rather than a dual scheme system, which more closely aligns with the core policy objectives of harmonising veterans’ entitlements as outlined in both the [Productivity Commission] report and the Royal Commission’s interim report.
2.19DVA provided the following table outlining which of the Productivity Commission’s recommendations the Bill achieves, either fully or in part:
Figure 2.4Addressing the Productivity Commission's recommendations
Source: DVA, Submission 15, p. 79.
Royal Commission into Defence and Veteran Suicide
2.20The Royal Commission into Defence and Veteran Suicide (the Royal Commission) was established on 8 July 2021 to inquire into systemic and institutional factors impacting defence and veteran suicide. It found that the current legislative complexity contributes to claims processing delays and uncertainty of compensation eligibility for veterans and families, contributing to poor physical and mental health outcomes for veterans and families in need of support.
2.21The Royal Commission’s Interim Report, released on 11 August 2022, concluded:
In our view, it is necessary that the legislative framework for veterans’ compensation and rehabilitation be reformed to simplify the system and improve consistency and fairness in approach and outcomes for veterans …
We accept that there may be more than one valid model of reform. We also accept that there are significant and difficult policy questions that need to be resolved. These will include not only policy issues that have already been identified (including the service differential and the differences between the MRCA and DRCA regarding permanent impairment…) but other issues that will be identified as policy development work and legislative drafting are undertaken. There may also be important budgetary considerations.
…
There is no perfect solution and an endless search for one would not only be fruitless but would unjustifiably prolong the harm that is being done by the complexity of the current system. After many years of examination and consideration, and after many inquiries and reports, the urgent need now is for the Australian Government to make a decision. It should choose what it considers to be the best available model already identified and work towards turning it into legislation.
2.22The Interim Report recommended the Australian Government to develop and implement legislation to simplify and harmonise the framework for veterans’ compensation, rehabilitation, and other entitlements. It outlined that the drafting of this legislation should be completed by 22 December 2023 and the Bill presented to Parliament by early 2024 to commence and be fully operational by 1 July 2025.
2.23On 9 September 2024, the Royal Commission released its final report which contained 122 recommendations aimed at:
… preventing harm and supporting early intervention and recovery; improving cohesion, collaboration and coordination in the delivery of support services; building institutional capability and capacity; and improving oversight, transparency and accountability across the ecosystem of agencies and institutions responsible for the health and wellbeing of serving and ex-serving ADF members and their families.
2.24DVA stated that its initial assessment of the Royal Commission’s final report recommendations is that they are not directly affected by the Bill.
Government consultation
2.25The Government held three rounds of public consultation which contributed to the development and drafting of the Bill. The first round was held from October to November 2022 and was focused on receiving feedback on Recommendation 1 of the Royal Commission’s Interim Report and related Productivity Commission recommendations. According to DVA, the feedback indicated strong support for legislative simplification and harmonisation, but that there was some concern about the potential for the reduction of existing or future benefits because of potential legislative reform.
2.26The second round of consultation ran from 16 February to May 2023 and sought feedback on the Government’s proposed veterans’ reform pathway which would establish an improved MRCA as the sole ongoing scheme, close the VEA and DRCA to new claims and grandparent all existing arrangements to ensure there is no reduction in entitlements currently or previously being received by veterans. DVA submitted that the following key elements which arose during the consultation process were incorporated into the draft Bill:
the safeguarding of current veteran and dependant entitlements by grandparenting existing payments;
recognition under the new Act of previously determined compensable conditions, with no need to re-establish liability;
continuation of the automatic eligibility for benefits for those dependants whose partner died while they had permanent impairments of more than 80 points or were eligible for the MRCA Special Rate Disability Pension;
retention of two standards of proof when applying the Statement of Principles (SoPs);
inclusion of the Additional Disablement Amount (ADA) in the MRCA to replicate the Extreme Disablement Adjustment (EDA) payment under the VEA to veterans who are of pension age and have high levels of incapacity due to service conditions;
legislating the ability to prescribe conditions subject to presumptive liability;
an exception to the prohibition of acceptance of liability under the MRCA for conditions related to service caused by tobacco use; and
inclusion of the ability to accept liability under the MRCA by establishing a temporal connection between defence service and a medical condition.
2.27The third round of consultation was undertaken between February and April 2024 on an exposure draft of the Bill. In total, over 50 consultation sessions were held and 569 individual submissions were received and considered in developing the Bill.
2.28DVA reported that the consultation revealed broad general support for the single ongoing Act approach with many organisations and individuals agreeing that this approach would achieve the stated outcome of simplifying the legislative system. Submissions expressed support for the expanded and equitable access to benefits, for the MRCA as the single ongoing Act because of its greater focus on rehabilitation, and the inclusion of the ADA was well received by the veteran community.
2.29While generally supportive of the single Act approach, some concerns were expressed about implementation issues such as timing, resourcing, legislation review and practical issues relating to veterans transitioning from coverage under the VEA and DRCA to the MRCA. There was also a strong view that there should be no detriment to veterans and families by way of reduction in any existing benefits in transitioning to a single ongoing Act.
2.30Based on feedback obtained during consultation on the exposure draft, the following changes were included in the Bill:
veterans in receipt of DRCA incapacity payments will automatically transition to (more beneficial) MRCA incapacity payments from 1 July 2026;
where the Repatriation Medical Authority (RMA) updates a SoP between a primary level and secondary level (reviewable) decision, the version of the SoP that is most beneficial to the veteran’s circumstances will be applied; and
an instrument-making power will be introduced to enable the Repatriation Commission to determine circumstances where a vulnerable veteran must receive financial advice before receiving a lump sum payment.