Senator MARK BISHOP —I also welcome Mr Sullivan and officers from the department to this round of estimates. Before we go to questioning, arising out of the comments made by the chair, it is my understanding that there is a significant number of questions outstanding from both the budget estimates last June and the round of additional estimates last February. Why is that the case?

Mr Sullivan —Thanks, Senator. It is good to be here and I look forward to working with the committee. I guess it is one of the only times when you can sometimes beg forgiveness and indulgence. We do have outstanding questions. We actually have three outstanding questions relating to the February 2004 additional estimates, we have three outstanding questions in relation to the May estimates and we have 91 outstanding from December 2004 questions taken on notice. Why? The earlier questions largely did require a whole lot of data extraction across a number of years. I think it was decided to do them but I think we should have kept you, through the chair, up to date on where they were going.

We have now moved to a position where I believe that five of those six questions have recently gone to my minister’s office—very recently. She is of the same view as me, that we should strive to get these things cleared up as soon as possible. We are at an advanced stage of the 91 questions from December. I know you would like to say ‘When?’ I can say soon. It will be my greatest endeavour to ensure that they are there. Again, the minister is very keen to assist in that. We will strive, in meeting the 31 March date, to reset what I understand has been a historically good record from the Department of Veterans’ Affairs in answering questions. I hope that is a benchmark for me as well as for the department. We will get these questions to you in the very near future.

Senator MARK BISHOP —Thank you. I turn at the outset to the issue raised by ANAO in their report. In particular, I refer you to report No. 15, paragraphs 4.69 and 4.70 on page 85, where criticism is made of DVA’s use of the special appropriation under the Compensation Act for administrative costs of $1.5 million. That is, funds for a special purpose were taken, as I understand the ANAO report, for routine administrative overheads. What advice was sought prior to this money being used for administrative purposes? Who sought it and from whom?

Mr Sullivan —I will get Neil Bayles, the chief financial officer, to the table. The ANAO report refers to $1.5 million as a maximum amount which in their view was illegally drawn down in 2001. Our view always was that we were not doing something that we were not allowed to do. I make the point that there was at least one newspaper which reported that some POWs were not paid, that we had swiped their money. I can assure this committee, as we assured the Australian people and the veteran community, that every veteran or dependant of a veteran entitled to such a payment was paid. We have accepted the ANAO report. We have negotiated with the Department of Finance and Administration. The actual exposure was $250,000, which has been agreed between us and Finance. We have repaid that $250,000 to the consolidated revenue fund. We have corrected the mistake and accepted the ANAO report.

Senator MARK BISHOP —Before I go to Mr Bayles, Mr Sullivan, the figure that was identified in the report at paragraph 4.70 was $1.5 million. You now say the figure was a quarter of a million dollars. What is the difference?

Mr Sullivan —The $1.5 million was seen by ANAO as a maximum liability. They acknowledged to us—I cannot be certain that it was in the report—that the figure could range. What we have costed with Finance is how we used those funds for administrative expenses and we have agreed with Finance that $250,000 was the extent of our usage of the funds for administrative purposes.

Senator MARK BISHOP —The ANAO report does not use the words ‘up to’. It says:

Mr Sullivan —We are consulting with ANAO to ensure that they are happy with what we have done. We understand that they will be.

Senator MARK BISHOP —Is ANAO’s report inaccurate?

Mr Bayles —There were two pieces of legislation which enabled the payments to prisoners of war of Japan and their widows, and civilian internees and their widows. One was a regulation under the Veterans’ Entitlements Act. That enabled the payments to those prisoners of war of Japan and their widows. There was another piece of legislation, which was for compensation for internment of Japanese—the Japanese internment act. That legislation provided the coverage for civilian internees and their widows. The appropriation that we are talking about here of $1.5 million was included in an appropriation amount mentioned in section 13 of the Compensation (Japanese Internment) Act. We believed at the time that that piece of legislation provided the authority for us to spend $1.5 million on administering the payments made under both of those pieces of legislation. We believed that at the time.

ANAO came to the view that it did not feel that the legislation was specific enough to authorise the expenditure of the $1.5 million. However, it did indicate that a portion of that amount could be legitimately spent on the administration of the payments under the Veterans’ Entitlements Act for the prisoners of war of Japan and their widows, because of the construct of those regulations under the Veterans’ Entitlements Act. So only a portion of the $1.5 million that was spent on administration of the payments to the civilian internees and their widows was what would be regarded as illegally drawn down. What we needed to do was assess what portion of the $1.5 million was spent on administration of the payments for the civilian internees and their widows, as opposed to the administration effort that went into the payments for the prisoners of war of Japan and their widows. So we had to apportion the $1.5 million.

Senator MARK BISHOP —You say that $250,000 was illegally or improperly spent on the civil internees and the remainder was properly spent—

Mr Bayles —It was properly spent under the regulations.

Senator MARK BISHOP —on the POWs.

Mr Bayles —Yes, under the Veterans’ Entitlements Act. So we needed to apportion the $1.5 million.

Senator MARK BISHOP —When you spent the money originally—the $1½ million—did you seek advice from DOFA at that time that it might be spent on either or both of those purposes?

Mr Bayles —The funds were approved to be drawn down by the department of finance at the time.

Senator MARK BISHOP —They approved at the time?

Mr Bayles —Yes. They approved the drawing down of those funds for departmental purposes.

Senator MARK BISHOP —You say, ‘They approved the drawing down of those funds for departmental purposes.’ Does that simply mean for the purposes of the acts—that is, for the payments to the internees or the POWs?

Mr Bayles —For both.

Senator MARK BISHOP —Or does it also extend to the associated administrative costs attached to payment of those moneys to those two groups of people?

Mr Bayles —They approved the amount of money to be drawn down for the administration of both sets of payments under both pieces of legislation.

Mr Sullivan —We shared a belief with Finance that what we were doing was okay.

Mr Bayles —ANAO’s view was that the legislation itself was not explicit enough. We sought advice from the Australian Government Solicitor after we had been advised by ANAO that that was their view. This was only a year ago. We sought that advice. This Government Solicitor said it was arguable, but the better view was that it did not provide the legal coverage.

Senator MARK BISHOP —What you are saying, Mr Bayles, is that back at the time when the funds had to be expended for the two purposes DVA was in consultation with DOFA. DOFA signed off on the spending of the moneys for administrative purposes. That action was later reviewed by ANAO. They say the legislation was not that specific in purpose—there was a misspend—and you came to a negotiated outcome with DOFA to repay a quarter of a million of the alleged $1.5 million overspend. Is that the sequence of things?

Mr Bayles —That is correct.

Senator MARK BISHOP —You also say, ‘Latter advice from the Australian Government Solicitor confirms that.’ It provides an arguable case for your own position.

Mr Bayles —Yes, that is right.

Senator MARK BISHOP —All right. What is the technical difference between the two acts with respect to admin funds being available from special appropriations—what is the difference?

Mr Bayles —I might need to seek the advice of our legal services.

Senator MARK BISHOP —Why is it that under one act you can spend money for the admin costs associated with payments and under the other act you apparently cannot?

Mr Pirani —The difference is that the terms of the special appropriation in section 199 of the Veterans’ Entitlements Act were wider than the terms of the appropriation in section 13 of the compensation act dealing for the civilian interns. So we had previous legal advice from the Australian Government Solicitor concerning the scope of the section 199 power, and that indicated that, yes, departmental expenses could be used in certain circumstances from the 199 power, but it was a different one under the compensation act.

Senator MARK BISHOP —What were the funds that were arguably—arguably now—misspent, the $1½ million, used for?

Mr Bayles —The funds were used to arrange the payments. They were spent on things like systems changes in order to make payments automatically to the prisoners of war of Japan that we had on our database. They were spent on a mail-out to those prisoners of war to tell them about the payment. They were spent on advertising and spent on staff effort investigating claims that we had received—a number of the claims from some of the dependants and some of the civilian internees required considerable investigation. They were not straightforward. There was a lack of documentation.

Senator MARK BISHOP —There was, yes; I remember that. When the government made the decision to make those $25,000 grants and the others, there was obviously an estimate of the number of people, multiplied by $25,000. Is it not normal that, when such a grant is going to be made to many thousands of people, as part of the appropriations there would be an amount set aside for the administrative purposes of paying the funds, or an addition to the routine budget of the department because they are essentially one-off payments? Did either of those things not occur?

Mr Bayles —The provision was made through the appropriation under the Compensation (Japanese Internment) Act. That was how the funds were provided. The government of the day’s intention was perfectly clear: that amount of money was to be given to DVA to administer those payments under both acts. That was the mechanism that was chosen at the time.

Senator MARK BISHOP —So why did you even think you had to have recourse to the $1½ million?

Mr Bayles —I did not catch your question, sorry.

Senator MARK BISHOP —Are you saying that in both acts, when the appropriation went through the parliament, there was an additional amount for the associated admin costs—in addition to the payments to the people?

Mr Bayles —Yes, that is correct. The amount that was appropriated under the Compensation (Japanese Internment) Act included the $1.5 million.

Mr Pirani —The legal argument was that the terms of the appropriation in section 13 that included that extra $1½ million did not make it clear that that was to be used for a departmental expense. That is what the legal argument was about. So the total amount in the appropriation included the $1.5 million that was estimated for the departmental expenses, but in the actual terms of the appropriation itself it was not split up between the amount that was estimated for the departmental expenses and the amount that was estimated for the administrative expenses to actually pay the $25,000 lump sum payments. So Finance had agreed with the amount that had been estimated and it was included in that appropriation but, because the appropriation did not split it up, the legal advice that the ANAO obtained was that that cast some doubt on whether it complied with section 83 of the Constitution.

Senator MARK BISHOP —I understand where you are heading now. So that $250,000 has been paid back?

Mr Sullivan —It has been repaid.

Senator MARK BISHOP —Do you need another appropriation for that or does that come out of running costs?

Mr Sullivan —At the moment we have taken a hit but we will probably ask for it back next year if we can.

Senator MARK BISHOP —I now turn to the second ANAO report, No. 21. There is a reference on page 121 to the three issues found wanting in the Defence Service Homes Insurance Scheme. What is the background to each of ANAO’s criticisms, and what is being done by way of remedial action in respect of each of the three criticisms?

Mr Sullivan —I will pass in a moment to some experts. Basically, Defence Service Homes Insurance is quite a successful insurance scheme set up to assist veterans and others. They have accumulated, as they must, significant reserves. Those reserves have been traditionally invested through an investment company, UBS. I must say the investment strategy is a conservative one. It has seen those reserves build. The Australian National Audit Office, in a review of investment of funds, found that there were deficiencies in the risk management strategy and how current it was. There were some concerns about certain bank deposit investments not being authorised investments under regulation 22 of the FMA Act. I make the point that they now are because that regulation was amended in November 2004 to allow such deposits that were not allowed at the time of the audit. There were some concerns about records keeping. Again we, including DSHI, have moved to correct any problems where necessary. We have accepted the ANAO’s report, and we believe that now we are clear with respect to the ANAO.

Senator MARK BISHOP —So you have accepted the recommendations and made—

Mr Sullivan —We have accepted their recommendations. Again this is an issue which was the subject of quite a lot of debate, but in the end the advice to us was to accept the audit conclusion. We did, and we have now attended to the matters raised. Some of them were simple. The issue of certain bank deposits can get highly technical as to the difference between a deposit in a bank or a deposit covered by a bank which has all the safety of a bank deposit. But the view was taken to accept the ANAO report and take action to redress all the issues raised by them, and that has been done. Mr Douglas and Mr Pirani can talk more about that.

Senator MARK BISHOP —Under 6.196 there are three dot points. You might be the appropriate person, Mr Douglas. Can you give me the background to each of those three criticisms and tell me what remedial action you have taken to make things right into the future? It is on page 121 of ANAO audit report No. 21 of 2004-05.

Mr Douglas —We believe we may have a different document. We have audit report No. 22, Investment of public funds.

Senator MARK BISHOP —I will come to that in a minute. Do you have No. 21?

Mr Douglas —No, because we believe this is the audit report that references the Defence Service Homes Insurance matters.

Senator MARK BISHOP —I can give you a copy of the extract I have from No. 21, and you might be able to answer questions. Is that okay?

Mr Douglas —Thank you. I might add while we are waiting for the copy that this was part of a cross-portfolio performance audit done by the ANAO in which these investments were discovered as part of a cross-portfolio audit of the investment of public funds. So we were not the only agency that was—

Senator MARK BISHOP —Sinning.

Mr Douglas —found to be apparently in breach of the FMA Act. I believe that there was some surprise all around in relation to this breach, hence—as the secretary mentioned—the relevant regulations being amended late last year.

Senator MARK BISHOP —Which other agencies were there?

Mr Douglas —From recollection, I think ATSIC was amongst the largest portfolios—in particular the Indigenous Land Fund.

Senator MARK BISHOP —Are you talking about the investment funds issue?

Mr Douglas —Correct.

Senator MARK BISHOP —I am not raising that at this moment. That is in No. 22.

Mr Douglas —We will wait for your reference.

Senator MARK BISHOP —If you look at the document you have just been given, Mr Douglas, you will see that down the bottom it is identified as coming from ANAO Audit Report No. 21 of 2004-05. I refer you to page 121, paragraph 6.196. My questioning will be about the three issues identified in that paragraph as to the areas of significance. My question is: what is the background to each of ANAO’s criticisms and what remedial action, if any, has been taken to fix it for the future?

Mr Douglas —Seeing the document rings some bells for us. You will see that in paragraph 6.197 the ANAO makes the observation:

DSHIS has made reasonable progress in resolving these issues.

Essentially there were findings in relation to the administrative practices in the administration of the scheme. We have, through a range of different measures, for example instructions to staff, training for staff and managers conferences, addressed issues in paragraph 6.196 such as:

• non-compliance with management’s instructions to allow discounts on insurance premiums;
• lack of or untimely signing of a formal agreement by a policyholder when a cash settlement is offered. The signing of this agreement is considered to be standard industry practice ...

We have rectified those through a combination of those issues that I raised before. The other issue in the paragraph is:

• incorrect accounting for GST on cash settlements by not making or claiming a GST ‘decreasing adjustment’.

We have had a major project under way for some time to improve the GST recording in accounts, and we believe that the action we have taken subsequent to the report has addressed the issues concerned.

Senator MARK BISHOP —Did you go back and refund the discounts that were not offered at first instance, which are mentioned in the first dot point?

Mr Douglas —I would have to take that on notice.

Senator MARK BISHOP —If you can, let us know in due course.

Mr Sullivan —I think it is a good time in a public hearing like this to say that of course DSHI offer some of the most competitive rates of insurance for veterans and their families of any insurance company in the country.

Senator MARK BISHOP —I am sure they do; I am not offering any criticism of the organisation.

Mr Sullivan —I know, but I just thought I should put in that it is a great insurance company to be insured with, if you can be.

Senator MARK BISHOP —Thank you, Mr Sullivan. Let us turn now to a more serious matter, which you have come prepared on, Mr Douglas, and that is the investment on the money market of $56.6 million. There was some criticism there of a more serious nature by the ANAO. Could you explain the background, the rules which apply, how it is that there should be such a significant amount of cash service available and what is being done about it.

Mr Douglas —In terms of what is being done about it, I think we have put that on the record concerning the amendment that has now been made to the FMA Act and associated regulations. We have also written to our investment partner to remind them of the need to be compliant with the FMA Act and regulations at all times. In relation to the investment quantity and why it was that amount, my understanding is that DSHI maintains reserves in order to meet insurance claim needs and that the reserves it holds are consistent with what you would expect of standard industry operating practice. Like any insurance fund that has been operating for a number of years, it will have accumulated reserves and it will invest those for the benefit of policyholders. As the secretary has noted, one of the benefits of those investments is reflected in its very competitive low premiums for customers.

Senator MARK BISHOP —That is fine, but the ANAO report advises that the order of magnitude was some $18.6 million in respect of the land fund. What was the order of magnitude of the error in respect of the funds held by the agency on behalf of DVA?

Mr Douglas —Of the $58 million or so, roughly 97 per cent was noncompliant.

Senator MARK BISHOP —In what respect was it noncompliant? Was it just sitting in a cash account or what?

Mr Douglas —It was mainly invested in cash instruments.

Senator MARK BISHOP —And that decision was inconsistent with the investment policy of the organisation?

Mr Douglas —No, it was inconsistent with the FMA Act and underpinning regulations. They had not been made explicit to support an investment strategy in cash instruments. As I mentioned earlier, that came as a surprise to a number of people in a number of different locations.

Senator MARK BISHOP —Why did it come as a surprise—$50 million being held in cash—

Mr Douglas —We should be clear here: the investment in the cash instruments was not seen as a surprise. The fact that an investment in a cash instrument was noncompliant with the FMA Act and underpinning regulations was a surprise. People were operating under a genuine belief that this was a legitimate investment strategy for public funds.

Senator MARK BISHOP —And that is why the act had to be amended later.

Mr Douglas —Correct—and the speed with which it has been amended is a reflection, as I think you will note, of the extent to which there was a genuine belief that this was an acceptable practice.

Mr Sullivan —This is the distinction between a cash instrument and holding money as cash in a bank. Holding it as cash in a bank would have been fine. A cash instrument backed by a bank is not fine—was not fine but is fine now.

Senator MARK BISHOP —I understand.

Mr Sullivan —It was a better return with the cash instrument.

Senator MARK BISHOP —It was probably half a percent higher—I understand. Do those earnings just go back into the fund for routine costs?

Mr Douglas —There is a combination of building on the reserves reflected in payments and claims and also reflected in competitive premiums.

Senator MARK BISHOP —You have answered the question. If you turn to page 19 of the PBS—

Mr Douglas —PBS or PAES?

Senator MARK BISHOP —Yes, PAES. Turn to outcome 1 and the second dot point there. It says $140,000 is required to fund an increase in ‘claims for compensation for detriment caused by defective administration’. What is that about and what did the cases involve?

Mr Douglas —I am delighted to say that there is another officer who I am sure will be able to answer those questions for you.

CHAIR —Do you want to do that now, Senator?

Senator MARK BISHOP —We may as well do it now because then I can move to the programs.

Mr Pirani —In the original estimates we had an amount of $200,000. That was indicated on claims that we were aware of. They were mainly claims relating to double blind pensioners. Apparently in the mid-eighties we had published some material that seemed to indicate that they could not get service pension otherwise they were subject to the income and assets test. That information was incorrect. We got about $240,000 worth of claims that we are dealing with at the moment from double blind pensioners who should have accessed service pension but did not due to information we provided that was faulty. That is one category. We have also got quite a few claims in relation to the Pension Bonus Scheme where the department has given out incorrect advice. Then we have a number of other ad hoc claims—I think that is the best way of describing them—through either some action the department took a long time ago or where it was felt that we gave out incorrect advice that prevented a person from putting in a claim. Those matters are being dealt with. I think up until about January we had spent about $94,000 in relation to defective administration claims. We have in the order of another $360,000 on our books.

Senator MARK BISHOP —Thank you. We might turn now to program 1, compensation, and have a few questions there. First of all I want to talk about BEST and TIP. Ms Spiers, the government made a commitment during the election campaign of $9.2 million for these programs over the next four years.

Ms Spiers —That is correct.

Senator MARK BISHOP —What actual increase, if any, does this represent over the past four years? My memory is that both of the programs were about to come to an end.

Ms Spiers —I will first turn to the BEST program. Our funding previously for the BEST program was $1.81 million and this increase we have apportioned to an additional $1.7 million, giving us $3.5 million. With the TIP, the funding was $0.74 million and there will be an additional $0.6 million.

Senator MARK BISHOP —So that is $1.3 million and the other one is $3.51 million. Are those increases just for the forthcoming financial year or are they of a similar increase in magnitude in the three out years?

Ms Spiers —It will be for the three out years. There is an undertaking that, because it is not recurring funding, in the last financial year we will have to review the program and seek further funding to maintain that level of funding.

Senator MARK BISHOP —My memory is that both of the funds were about to come to an end in the 2004-05 year.

Ms Spiers —I am not sure of that point. I think we had some standing funding but I might defer to the CFO on that point.

Mr Bayles —The funding for both BEST and TIP was ongoing funding. The base level of funding that has been referred to by Carolyn Spiers was ongoing funding; it was not to finish. The government has topped up that funding through the election commitments.

Senator MARK BISHOP —I understand. Are there any plans to amend the guidelines for either of these programs, Ms Spiers?

Ms Spiers —In what way?

Senator MARK BISHOP —You have increased the funding in BEST by $1.7 million in the forthcoming year. As I understand your comments, that increase will be retained in the three out years.

Ms Spiers —That is correct.

Senator MARK BISHOP —Similarly, you have increased TIP by $600,000, similarly to be increased for the next three years. So are you altering the guidelines in any way to allow different claims, extended claims, different provisions or different services—or are we exactly the same but more are going to get it?

Ms Spiers —There are a couple of issues here. First of all, under the existing grants program that we had for the previous few years, we did not have sufficient funding to meet demand. In addition, the election commitment was predicated on the basis of the need to have the ex-service community better informed about the new legislation, the MRC Act. So, in terms of seeking bids for funding under TIP or BEST for the current 2004-05 supplementary round, we are seeking that the grants be based on the focus of how to get out to MRCA clients. One of the areas we are seeing particularly with TIP is that further training packages are being developed where the pensions officer can focus on how they deal with all three acts at once, because they will have individual veterans walking in who potentially have periods of service relating to all three, and the pension advocates need to be in a position to give them accurate advice on how it all operates.

Senator MARK BISHOP —The new act, the MRCA, came into effect on 1 July. So it has now been in operation for eight months at the outside. And it only applies to injuries occurring in service after 1 July. How many claims have you had to date? You would not have had more than 20, would you?

Mr Sullivan —It is more than 20 but there is not a great volume. It is more than 20; it is about 100. It is not a large number.

Senator MARK BISHOP —You have had about 100 so far, have you?

Mr Sullivan —Do not hold me to that. I will just agree with you: it is not a large number but it is not as low as 20.

Senator MARK BISHOP —The other two acts have been in existence for many years.

Ms Spiers —Yes.

Senator MARK BISHOP —What I heard you say was that you are essentially using the extra funding for education purposes and training packages for advocates?

Ms Spiers —That is for the TIP. The guidelines for BEST grants are still in terms of providing the equipment, as the current guidelines specify. When I made that reference to training programs, it was in the context of TIP. The BEST grants program still uses the current guidelines in focusing on providing paid support services, equipment and general support.

Senator MARK BISHOP —So the guidelines on BEST will not change—you will just be able to spend more money?

Ms Spiers —As I have said, the election commitment was that there would be some focus on the new legislation, so we are looking at organisations that can take account of all three acts, in effect. You are right in saying that the bulk of our business is still with the two older acts.

Senator MARK BISHOP —Let me just pin this down now so we can move on. The BEST program is still essentially going to be for provision of equipment, services, hardware and software. Whilst the funds have almost doubled, the guidelines have not changed—and it is not proposed to change them?

Ms Spiers —Not in any significant way, no. If we receive any applications that are outside the guidelines, we would have to look to see if there was a need to review the guidelines. As regards the process, we are in a supplementary funding round for 2004-05, so we really have not had any opportunity to review those guidelines.

Senator MARK BISHOP —And the increase in TIP is really under the generic headings of education and the development of training packages around the interaction of the three acts?

Ms Spiers —And welfare services. In speaking with the TIP state coordinators late last year, they also wanted to focus on the welfare element, which is under the banner of TIP.

Senator MARK BISHOP —What problems did they identify?

Ms Spiers —Nothing specific that I could explain to you today. It is just that they are very conscious that, under the TIP banner, they have two roles: the pension advocacy role and the welfare role. I got the sense from the state coordinators that did mention this that they were trying to ensure that they had adequate information to ensure they could advise people of access to welfare services as appropriate.

Senator MARK BISHOP —Does the department have any plans to amend the TIP guidelines at the moment?

Ms Spiers —Not at this moment.

Senator MARK BISHOP —When will applications for the next round of grants be made and when will the money start flowing to the ESOs?

Ms Spiers —Because we have had some additional funding in the current 2004-05 year—particularly for BEST—we had a supplementary funding round for BEST just before Christmas. We are expecting the outcome and we are analysing the applications as we speak. We are expecting the money to flow from that supplementary round in April this year. Basically, it is then back to back with the true 2005-06 funding round—which starts around March, from memory—where we will seek applications. The ex-service community is aware that we have this back-to-back issue so that we can deliver some funds from the government election commitment this financial year.

Senator MARK BISHOP —Understood—thank you, Ms Spiers. Mr Sullivan, in the top paragraph of page 58 of the annual report, under the heading ‘VEA s.24 (Special Rate Pension) Decision-Making’, the second last sentence says:

It is talking about raising the level of officer responsible for determining special rate applications. Can you tell me how these guidelines differ from previous guidelines? I am talking about the new guidelines for the special rate applications.

Ms Spiers —The additional guidelines in the section 24 investigation work were to recognise that the department was achieving excellent work with regard to its time taken to process, but the focus was on making sure that we made the best decision at the first possible instance. In that sense, we wanted our decision makers to focus on the quality of their decision making. In terms of those guidelines, we have moved to a two-tier approach for any above general rate investigations. Where the disability pension rate has been assessed at 70 per cent—so we potentially have an above general rate issue—the claims assessor will do the investigation for the above general rate aspect of that decision, put together their proposed decision concerning liability and pension assessment and a senior delegate at the APS 6 level will then make the decision.

We have found this approach very beneficial in a number of ways. The senior claims assessor is very much taking on a mentoring role with the claims assessors, and any areas where the senior claims assessor feels there are deficiencies in investigation or issues that have not been fully covered or documented in the proposed decision are referred back to the claims assessor for further work. In essence, you would be aware of a previous commission advisory on the operation of section 24. There is no amendment to that at all. It is to do with how we handle investigations and decisions of section 24 procedurally.

Senator MARK BISHOP —But you do have new guidelines?

Ms Spiers —In terms of the procedural side of it, not—a commission advisory on the operation of section 24.

Senator MARK BISHOP —Please say that again.

Ms Spiers —You would be aware that previously the Repatriation Commission had issued an advisory on how the tests within section 24 operated.

Senator MARK BISHOP —Yes.

Ms Spiers —That has not changed. When we mention guidelines there, we are talking about the procedural aspects of how a claims assessor investigates and determines the claim, not the substantive tests of section 24.

Senator MARK BISHOP —I understand. The substantive tests of section 24 remain; you are just doing it now essentially in a two-tiered process, with an opportunity for the senior person to seek further advice from the claims assessor.

Ms Spiers —Yes.

Senator MARK BISHOP —Has that change in practice resulted from any changes to any guidelines, directions or personnel manuals or has it simply been implemented by the department?

Ms Spiers —I was not actually in the chair at the time it happened, but there was a change in the delegations at the time that we moved to this two-tiered structure so that it was clear that the delegation to determine an above general rate case, which includes section 25, 24 and EDA cases, was handled at the senior claims level.

Senator MARK BISHOP —Where there has been a change in any of the published guidelines, directives or manuals of the VEA, could you take it on notice to provide me with a copy of that in due course, please?

Ms Spiers —Certainly.

Senator MARK BISHOP —I think the annual report refers to a significant reduction in the number of claims accepted. My memory is that they went from around 2,000 down to about 1,600 last year. In what area of disability did this reduction occur?

Ms Spiers —Which part of the annual report are you referring to—which page?

Senator MARK BISHOP —I was originally referring to page 58. There has been a significant reduction in the number of special rates claims being accepted or admitted or approved in the last 12 months. My memory is that the figure has gone from about 2,000 per annum down to around 1,600 per annum. I am asking in what area of disability this reduction occurred.

Ms Spiers —I would not have that information with me. Is it possible to take that on notice?

Senator MARK BISHOP —No. I do not think that is an overly difficult question. That is a reduction in total of the order of 25 per cent. Your officers would have identified that trend. I certainly picked it up from the public documentation.

Ms Spiers —But, as I understand your question, it is not the outcome you are focusing on; it is the conditions that led to the outcome.

Senator MARK BISHOP —No. We know the outcome. The outcome is a reduction in the number of applications being accepted for the special rate. Special rate can be granted for mental disability and it can be granted for a range of physical disabilities.

Ms Spiers —That is correct.

Senator MARK BISHOP —It is my observation of the figures that the reduction is overwhelmingly in the area of applications for special rate based on mental disability. I am asking you, essentially, to confirm or deny that.

Ms Spiers —I can neither confirm nor deny. I would like to seek some further analysis of the statistics before we can provide you with that answer.

Senator MARK BISHOP —Ms Spiers, are you not aware of the reduction in numbers of approvals of the special rate?

Mr Sullivan —There is quite a discussion in the annual report about the general application rates coming through, which have reduced, and the outcome rates having reduced by some 11 per cent in line with the application rate. There is then an analysis in there of where—

Senator MARK BISHOP —Where is that, Mr Sullivan?

Mr Sullivan —Page 63, page 64, page 65 and then page 67. Page 67 I think is where you see that this year saw 1,799 grants at special rate made, compared to 2,418 last year, partly due to a decrease in the number of special rate grants paid to veterans who saw service in Vietnam. We can look and see what more we can—

Senator MARK BISHOP —That is the figure I am talking about. You have reduced it from potentially 2,400 to 1,800. There has been a change in the assessment process. I am inquiring whether there is a linkage between the two. That is the first point. Secondly, it is my understanding that the reduction in the number of claims allowed is significantly higher on the mental disability applications side than on the physical disability applications side. I am asking you to confirm that or to point out to me where I am wrong.

Mr Sullivan —My understanding is that there has not yet been seen to be a change in the acceptance of the above special rate claims due to the delegation change, which is the linkage that you have made. We believe we are seeing higher quality decisions but we are not seeing much change in decision making. I do not have to hand an immediate analysis of what it means in terms of our special rate claims allowed moving from 2,418 to 1,799, how much of that is due to an application rate decline and how much of that is to do with the Vietnam group moving through a bit further. I will get the analysis, but I would be surprised if you actually saw that we were seeing a reduction in mental related claims versus physical related claims. I think you might find it quite different.

Senator MARK BISHOP —Could you take that on notice and do the analysis of the reasons for the decline in the number of successful applications. Could you also give me a response as to whether it is physical, mental or otherwise.

Ms Spiers —Yes.

Senator MARK BISHOP —Ms Spiers, for what proportion of special rate applications were referrals made to a doctor or specialist of DVA’s choice?

Ms Spiers —Is your question in terms of the medical investigations?

Senator MARK BISHOP —Medical reports and medical investigations.

Ms Spiers —I would not have the information to hand. We do not record that sort of data on our claims processing systems in a way that we are able to easily extract.

Mr Sullivan —I think we have the referred doctor but not whether we selected them.

Senator MARK BISHOP —I accept that you would not have that to hand. Could you take that question on notice and let me have a response in due course.

Ms Spiers —If we are able, yes.

Senator MARK BISHOP —Also, how many such referrals were made in the year 2002-03.

Ms Spiers —It is definitely our practice that if the claimant is being treated by a specialist then we would seek a report from that specialist in the first instance. I do not know whether that assists you in your question at all.

Senator MARK BISHOP —If the claimant is being treated by a specialist, you would seek a report from the specialist. No, I am asking you: when a claimant makes an application, do you in addition seek that the claimant be referred to a specialist or doctor of DVA’s choice? That is what I am seeking.

Ms Spiers —We will take that on notice.

Senator MARK BISHOP —In terms of applications for special rate can you take on notice as well, of the numbers referred to in the annual report, how many claims involved decisions for intermediate rate or temporary incapacity rather than for permanent incapacity. I am trying to find out whether there is any trend towards interim assessments rather than final decisions.

Ms Spiers —I point out that the intermediate rate is not an interim assessment. It is saying that the individual has the capacity to work more than eight and up to 20 hours a week. There is the distinction between that and the special rate where you have correctly pointed out total—

Senator MARK BISHOP —You are correct to say that; I accept that. Of the special rate claims rejected, how many were overturned on internal review, how many were appealed to the VRB and how many were appealed to the AAT? You will find that I have asked that question before, so you will have the system there. Can we also know the outcomes of those appeals?

I want to turn now to the deseal-reseal project. I understand it is essentially a matter for Defence as it relates to personnel who were in the ADF at the time. It is being handled by Senator Hill but some processing and administrative responsibilities are going to be imposed on the DVA in due course. Can the DVA put on record the precise nature of the government’s decision on the SHOAMP study? The press reports indicated that a recommendation would be taken to cabinet prior to Christmas and a decision made. I have not seen anything official since that time. Can you bring us up to date—is there is a resolution?

Mr Sullivan —Senator, as you are aware, the study of health outcomes in aircraft maintenance personnel, or SHOAMP, was released by the Chief of Air Force on 26 October 2004. This study helped answer longstanding questions concerning the health of a number of personnel involved in the Royal Australian Air Force’s F111 deseal-reseal program. The government has released a media statement in response to that report. I will get you the date and a copy of that media statement. The media statement says that a lump sum benefit will be offered to those who have suffered exposure. It is proposed that the benefit not distinguish between military, public servants and civilians. The lump sum benefit will be in addition to the rights of individuals under the various state and Commonwealth compensation schemes. Defence and DVA are finalising arrangements to give effect to the government’s offer. The government has also announced that funds are being made available to the Department of Veterans’ Affairs to provide a cancer and health screening and disease prevention program for those involved in the deseal-reseal program—$2.1 million has been committed over five years to the screening program.

The important thing is that anyone who believes they have an injury or an illness relating to their service and who was engaged in any activities around the F111 reseal-deseal program should lodge a claim under the Veterans’ Entitlement Act or the Safety, Rehabilitation and Compensation Act. If they are a Queensland civilian contractor they should lodge that claim with Queensland WorkCover.

The government has said that it is committed to a lump sum payment in respect of those exposed but that those exposed should seek compensation under the appropriate compensation scheme for them, which for the military at that time is the Veterans’ Entitlements Act. For other public servants it is the Safety, Rehabilitation and Compensation Act and for Queensland civilian contractors it is Queensland WorkCover.

Senator MARK BISHOP —I got that. There was some discussion around whether the government might be intending to go down the path of exercising its discretion under the act. You are not saying that at all?

Mr Sullivan —No.

Senator MARK BISHOP —Applicants who are aggrieved can apply for the lump sum payment under the scheme relevant to them.

Mr Sullivan —No, the lump sum payment will be a Commonwealth funded lump sum payment. We are working with Defence on advising ministers as to how that scheme will operate. That will be forthcoming from the Department of Defence and the Department of Veterans’ Affairs. People will be told how to access the lump sum payment. The lump sum payment is not a substitution for the compensation scheme that people are entitled to claim under.

Senator MARK BISHOP —The lump sum decision is in addition to the existing statutory rights that individuals might have.

Mr Sullivan —That is right.

Senator MARK BISHOP —That answers my question on the exercise of the discretion. Have the lump sums been agreed yet?

Mr Sullivan —No, not yet. That is what we are working on with Defence in providing advice to ministers on.

Senator MARK BISHOP —I am starting to receive correspondence on this, as you probably are. When do you think your advice will be ready to go to the relevant ministers?

Mr Sullivan —I think we are reasonably well advanced. Clearly, ministers will need to make some judgments and decisions but the commitment has always been from ministers that they wish to have this determined as quickly as possible, so nothing is holding it up.

Senator MARK BISHOP —You refer to applicants who were in service or of service, and I know what that means. I was lobbied by a person or persons in Queensland whose family members have come down with the same physical symptoms or disease. They allege that the work suits or overalls that their husband or partner used whilst in the tank absorbed the material. It went through the washing machine, remained in the washing machine and infected other clothes of other family members and they have come down with similar or identical problems to their husband or partner. Do the government’s proposals go to affected family members?

Mr Sullivan —An exposure test will be developed for people. At this stage and looking at the results of the health study, I would expect that people whose exposure was limited to the potential residue on laundry items would not be covered.

Ms Spiers —SHOAMP specifically covered the people who had the primary exposure. It did not cover those who are possibly claiming secondary exposure.

Senator MARK BISHOP —The study addresses primary exposure.

Ms Spiers —The people who were physically involved in the deseal-reseal process. It does not address any secondary exposure.

Mr Sullivan —It goes as far as auxiliary workers around the project but not beyond that.

Senator MARK BISHOP —How many people do we think are affected?

Ms Spiers —The figures that we are using to determine the numbers affected come from a number of sources. The original board of inquiry had estimated that potentially 400-odd people would be affected. When the interim health care scheme was set up the numbers were slightly higher—up in the 600 range. In putting together this material—we are relying on information from our colleagues in Defence—it seems that about 400 or so primary people were exposed in the deseal-reseal process. The numbers are a little less clear for those who were involved in ancillary work around the deseal-reseal program.

Senator MARK BISHOP —It could be up to another 200 who are in the classification of auxiliary?

Ms Spiers —And possibly a few more, depending on how that is classified.

Senator MARK BISHOP —Applicants in due course will apply for the lump sum payment, and they have to the right to retain a statutory application as well. Is there any decision made by government in terms of civil applications?

Mr Sullivan —What sort of a decision could a government take?

Senator MARK BISHOP —To either use that as a trade-off or a set-off or to not process lump sum applications if a person is pursuing a civil case against the Commonwealth.

Mr Sullivan —No, the lump sum scheme would not be able to inhibit a person’s right to take civil action. There are of course provisions within the legislation already where, if a person took civil action and, in a settlement or in a decision of the court, was offered elements of compensation which would otherwise be covered in entitlements under our enactment, there would be offsetting provisions, but nothing new. There would be offsets.

Senator MARK BISHOP —Do applicants have to go through any process of proof? Do they have to prove a medical or scientific link, or is having participated in the deseal-reseal work back in those days sufficient?

Ms Spiers —Is this in relation to the lump sum?

Senator MARK BISHOP —Yes.

Ms Spiers —That is some of the detail still to be sorted out.

Senator MARK BISHOP —All right. I now want to talk about the DFISA, Defence Forces Income Support Allowance. Mr Campbell, can you confirm that DFISA might be zero where rent assistance is paid to the applicant?

Mr Campbell —I think Ms Ricketts might be able to.

Ms Ricketts —It is possible for someone who has a disability pension payment made by DVA being taken into account under the Social Security Act who is also paying rent and is subject to the new rent test to not receive any DFISA. Yes, that is possible.

Senator MARK BISHOP —Is that because rent assistance still includes the disability pension as income at Centrelink?

Ms Ricketts —That is exactly correct.

Senator MARK BISHOP —Do you know how many people in receipt of DFISA also receive rent assistance?

Ms Ricketts —That is not easily obtainable. The information about the composition of the payment made by Centrelink—that is, the primary social security payment—contains that information about whether the primary payment contains an element of rent assistance in it. The DFISA payment does not contain any rent assistance.

Senator MARK BISHOP —It is the interaction of the two payments.

Ms Ricketts —Yes. That would be a question for Centrelink to answer. They may well have the composition of the primary payment for DFISA recipients.

Senator MARK BISHOP —Because DFISA is paid by Centrelink.

Ms Ricketts —No, DFISA is paid by DVA. But the primary payment, which includes the rent component, is paid by Centrelink for these people.

Senator MARK BISHOP —So, if I want to know how many people in receipt of DFISA also receive rent assistance, that question should go to Centrelink?

Ms Ricketts —Yes, or FaCS.

Senator MARK BISHOP —Did the department do any costings on excluding the disability pension from the rent assistance tests for both the Social Security Act and the VEA when the government was doing its work?

Mr Campbell —At the time this was calculated, there were a number of options costed but it is going back 12 to 15 months so I cannot recall the details of any of the particular options that were not taken up.

Senator MARK BISHOP —Can you take that on notice?

Mr Campbell —I can take the question on notice but the advice that we gave to ministers at that time is subject to the confidentiality of advice from officials to ministers.

Senator MARK BISHOP —That is fine. I refer you, Mr Sullivan, to the answer to question No. 2842 in the Senate, where it was revealed that there is an increasing number of ADF personnel being medically discharged for what is known as sleep apnoea. The numbers have gone up from one or two per year, going back four or five years, to, in the most recent figures in the table you have provided, up to 10 per year.

Mr Sullivan —As a cause of discharge or as a claim for a pension? Cause of discharge is a Defence matter.

Senator MARK BISHOP —The answer given was:

The number of Air Force members medically discharged primarily or solely because of a sleep disorder for each year since 1996 are:

1997—0

1998—0

1999—1

2000—0

2001—1

2002—0

2003—3

The answer goes on to state that in 2003 there were 10 Army members medically discharged primarily or solely because of a sleep disorder.

Mr Sullivan —A medical discharge is an issue for Defence. If they claim from us compensation in respect of that, we would then go through the process of determining whether that was related to their service. But you would need to ask Defence what their views are as to why, if it is true, increased numbers of service personnel are being discharged on that basis.

Senator MARK BISHOP —I accept that point, Mr Sullivan. I will ask you this question: how many claims for compensation have been (a) made and (b) accepted for sleep apnoea or any other sleep disorder in recent years under both the VEA and the MCRS. That is within your area.

Mr Sullivan —We will have to take that on notice.

Senator MARK BISHOP —Mr Campbell may be able to answer this: is there a statement of principle for such claims? If the answer is in the affirmative, what sort of service could cause such a disability?

Mr Campbell —The advice I am getting from the back is that we do not know. I do not know whether Dr Horsley knows the answer to the question.

Dr Horsley —Sleep apnoea can be both a condition on its own and a symptom of other things. I would like to take on notice the question about whether or not there is a statement of principle for sleep apnoea. My recollection is that there is but I would like to feel more confident in my answer by taking it on notice.

Senator MARK BISHOP —I am surprised by that answer. I thought sleep apnoea was an inherent condition relating to excess weight, blockage of ear, nose and throat, disordered sleep patterns, excess alcohol—those sorts of things which cause an interruption to blood flow and then sleep. Is that not correct?

Dr Horsley —You are well informed. That is absolutely correct. If a person were to put in a claim for sleep apnoea then it may be, for example, that they show underlying substance abuse, in which case the claims assessor is trained to go to the underlying cause of pathology. If, for example, they show signs of alcohol abuse which is contended to be due to service then they would investigate whether the underlying alcohol abuse is a result of that. But in some cases, sleep apnoea occurs without known cause, in which case it may constitute a disease in its own right, for which there was consideration given to making a statement of principle. I think there is but I would need to check to be absolutely certain.

Senator MARK BISHOP —Could you take that on notice and provide us with an answer. Also, if there is a statement of principle, you might provide that on notice.

Dr Horsley —Yes.

Senator MARK BISHOP —Thank you. The annual report, in the fourth paragraph on page 50, under the heading ‘Data matching’, states:

There are a large number of incorrectly recorded deaths and resultant overpayments. Why are there so many and what is being done to improve the information from families or the various registrar-generals?

Ms Ricketts —One of the difficulties for us for death recording or notification of death is where the veteran is single and there may not be a partner or a close family member who understands the need to advise Veterans’ Affairs. In recent years, the registrars of births, deaths and marriages have put all their records on electronic services. That has enabled us to do regular data matching with these services. The initial runs produced some significant findings. We have continued to do regular checking electronically with registrars of births, deaths and marriages. Those numbers have dropped off considerably since we have been doing the regular checking. It is an ongoing program now to monitor deaths of people. Essentially, the ones that we pick up are where there is no partner to notify of the death.

Senator MARK BISHOP —So those large-scale figures referred to there—

Ms Ricketts —That was a clean-up exercise, I guess you could say. Prior to that, everything had to be done manually and it was a very slow and tedious process. We did it by looking at obituaries and notices of deaths in newspapers. We do not need to do that anymore. It is a much more effective and efficient way of handling the matter.

Senator MARK BISHOP —Off the top of your head, do you know the value of the overpayments raised?

Ms Ricketts —No, I do not. I do not have that information to hand.

Mr Campbell —If you look in the annual report at the next paragraph to the one you were referring to, it talks about these exercises raising $567,404. So the average for those cases, for that group, is a bit less than $1,000.

Senator MARK BISHOP —So you recovered $567,404, of which $2,000 was waived. Thank you for that. When is it likely that the government will respond to the Senate finance and public administration committee report on admin review and health administration? Are you aware if that is in the pipeline?

Mr Sullivan —I am not.

Mr Campbell —This is the report you have raised in a previous hearing, isn’t it?

Mr Sullivan —I think we are consulting with the VRB and our legal area. It should be very soon.

Senator MARK BISHOP —Thank you. Turning to the MRCA, do you know how many claims for compensation for death have been lodged since 1 July? Do we have more accurate figures available?

Mr Johnson —As at 31 January there had been 281 claims lodged for liability for injury, disease, death or damage to medical aids.

Senator MARK BISHOP —And how many of that 281 were for deaths?

Mr Johnson —There were three death benefit claims.

Senator MARK BISHOP —Okay—

CHAIR —I will interrupt you there, Senator Bishop, and we might take a short break. Before we do, there will be a slight change in the order of batting this morning and this afternoon because there is an indication that Senator Bishop will be completing his questions at 11.30. If that is the case, the Department of Defence will be called between 11.30 and 12. The minister has a commitment that he cannot avoid between 12 and one. To allow him to have lunch, the committee will plan to meet again at 1.30 to continue with Defence. So if you can be aware of that, Senator Bishop, for your colleagues to ask questions between 11.30 and 12, obviously—

Senator MARK BISHOP —I think I will probably go until 12 now.

CHAIR —You will be going until 12 now?

Senator MARK BISHOP —Yes. I said that at the beginning of proceedings.

CHAIR —Well, my decision has been changed, if that is the case. If you wish to continue until 12 o’clock, which was the original plan, then we should leave that, but I think you have to give an indication now, before we break.

Senator MARK BISHOP —I have gone a bit slower than I thought I would. I will be here till 12.

CHAIR —Okay; I retract what I said. I hope the secretary noted that. We will go until 12 o’clock with Veterans’ Affairs; we will take break between 12 and one, when the Minister has a commitment. Unfortunately, Minister, under the arrangements, we will be starting again at one. I am sorry you will not get your five-minute lunch. We will go until smoko this afternoon with Defence and then proceed into the evening with Defence. That is the position.

Proceedings suspended from 10.32 a.m. to 10.46 a.m.

CHAIR —Mr Sullivan, if you are happy I think we might continue without the minister. He will be back shortly.

Senator MARK BISHOP —Mr Johnson, just briefly, what is the feedback from veterans, ex-service organisations and the service community on the new scheme? What issues are emerging that might require attention?

Mr Johnson —We actually have not had a terrific lot of feedback from the ex-service community. As you noted earlier, there has to be service from 1 July, so most of the claimants have been either reservists or serving members. But feedback from individuals has been very positive so far.

Senator MARK BISHOP —Let us turn to the AFP and the Solomon Islands. What coverage was there for the Australian Protective Services officer killed in the Solomons?

Mr Campbell —The Solomons peacekeeping service has been declared a peacekeeping service under section 68(1) of the VEA.

Senator MARK BISHOP —Was that done prior to the men being deployed there?

Mr Campbell —The instrument would have been prepared and the date of signing may then have varied a bit, but it was at the time that they went. It was made in July last year.

Senator MARK BISHOP —So that APS officer who was killed was a peacekeeper and he was covered under the VEA?

Mr Campbell —Yes, the same as a peacekeeping server. So it would be for the same entitlements that an ADF person would have had before 1 July.

Senator MARK BISHOP —Yes. Under the VEA, not under the new—

Mr Campbell —That is right.

Senator MARK BISHOP —And of course the government of the day would have to keep putting them under the VEA, because they are specifically excluded from the MRC Act, aren’t they?

Mr Campbell —Yes, pending the development of a specific statutory scheme for police, peacekeepers et cetera, if it is decided to do that.

Senator MARK BISHOP —Has that decision been made?

Mr Campbell —No. The VEA is open for them until something else is in place, if ever it comes about.

Senator MARK BISHOP —Mr Campbell or Mr Sullivan, is any consideration being given to making an ex gratia payment to his fiancee or parents?

Mr Campbell —We are not aware of that, but that would not be something that would come under our area of responsibility. We have responsibility for the VEA. If there is an ex gratia payment, it would not come through us.

Senator MARK BISHOP —I would like to talk briefly about beryllium. What is the position with respect to exposure to beryllium and the statement of principles? Do the SOPs cover off exposure as yet?

Ms Spiers —There is a beryllium exposure factor in malignant neoplasm of the lung, but there is not a specific statement of principle for berylliosis, which is the disease that potentially can arise from berylliumexposure.

Senator MARK BISHOP —The RMA does the SOPs, doesn’t it?

Ms Spiers —The Repatriation Medical Authority does that.

Senator MARK BISHOP —Have they been asked to do any work on a statement of principle?

Ms Spiers —Not that I am aware of.

Senator MARK BISHOP —How many claims for compensation have been received over time in which it has been accepted as a causal factor?

Ms Spiers —If you give me one moment I will check with my colleagues.

Mr Campbell —While Ms Spiers is checking: she will give you figures under both the VEA and the SRCA. We have had claims under both schemes.

Senator MARK BISHOP —How many claims have been lodged, how many have accepted and how have been many rejected under both schemes, Mr Johnson?

Mr Johnson —You will have to bear with me, I have got to do some counting. Under the SRCA there have been eight claims, including one death claim, and three have been accepted. Actually, the death claim was accepted as a disability claim before a death claim. One is being considered now and four have been disallowed. Under the VEA there have been three claims. One has been accepted and two have been rejected. One of the rejects was because no incapacity was found. Can I add: this is the information we have been able to get from our system by doing some searching under beryllium and looking at notes. There may be some other cases which, because it was recorded as the disease that they had, we have not been able to find.

Senator MARK BISHOP —So that is what the system has thrown up to date.

Mr Johnson —Yes, by doing a word search and looking at notes searches and that sort of thing.

Senator MARK BISHOP —Do we have any idea of the estimated total number likely to have been affected by exposure?

Mr Sullivan —That is impossible to find out. Beryllium is a very commonly-occurring metal. So are you talking about how many people have been involved in jason pistols or are you taking about beryllium generally in the Defence Force? It is a very difficult thing to do. We have identified—I think it is now on the public record—the sorts of ships where—

Senator MARK BISHOP —This is from ship cleaning, this is maintenance—

Mr Sullivan —No, these are beryllium claims generally across the services. They are not generally related to the use of jason pistols on Navy ships.

Senator MARK BISHOP —Is that right?

Mr Johnson —Only two of the claims that I was referring to were from Navy personnel. The others were from Army and RAAF.

Senator MARK BISHOP —And that was for general exposure.

Mr Johnson —It was because of exposure to beryllium, yes. That was what was claimed.

Senator MARK BISHOP —It would be your department that would have the detail on the total number of claims.

Mr Sullivan —Claims yes, exposure numbers no. Defence would have them, if they could estimate them. If you narrow it down to personnel involved in ships where beryllium rods in jason pistols were used, it is probably achievable. Defence personnel potentially exposed to any beryllium is very difficult.

Senator MARK BISHOP —Has DVA commissioned any medical research on this issue in more recent times?

Mr Campbell —No.

Senator MARK BISHOP —Is there any intention to do so?

Mr Campbell —Not at this stage.

Mr Sullivan —The thing that we have done, Senator, as you know, is that we have set up inquiry lines for people who are concerned. Any serving or former members of the Defence Force can contact that inquiry line and we are certainly taking phone calls.

Senator MARK BISHOP —Is that operational yet?

Mr Sullivan —Yes.

Senator MARK BISHOP —The minister’s release was on 9 February. So it has been set up?

Mr Sullivan —The inquiry line was operational straightaway, basically, and it is already taking calls. It has taken quite a few calls.

Senator MARK BISHOP —Do you have any idea how many calls it has taken?

Mr Sullivan —Between 450 and 500.

Senator MARK BISHOP —So there is a fair bit of interest out there.

Mr Sullivan —Yes.

Senator MARK BISHOP —And it has only been operational since the ninth?

Mr Sullivan —It was actually operational on 27 January, I think. As soon as the publicity started it was important for us to get involved.

Senator MARK BISHOP —Do you anticipate a significant increase in the number of claims now?

Mr Sullivan —The point we are making—and Mr Johnson made the point to you in the VEA analysis—is: if you believe you are suffering an incapacity and you have in your mind that it is linked to your service, make a claim. You do not need to come to us and say, ‘I believe I have suffered from beryllium exposure,’ if you believe you may have a chest complaint or some form of incapacity. If you are covered by the VEA, of course the requirement of the VEA is to establish an incapacity. If you are well but you feel you may have been, on a ship or in another place, exposed to beryllium, if your coverage is to VEA it is necessary that you do understand that a claim is dependent on an incapacity being found.

Under some other compensation schemes, including SRCA, you could say, ‘I’ve been exposed to beryllium,’ and have it agreed without an incapacity. And if something happened to you later on you would do it. The important thing to know is that, if any ex-serviceman or ex-servicewoman is suffering an incapacity—whether or not they believe it is from beryllium—which in their mind or in their doctor’s view or in their advocate’s view or in anyone else’s view is connected to their service, they should come to see us.

Senator MARK BISHOP —Put your claim in and let it be processed?

Mr Sullivan —Yes.

Senator MARK BISHOP —Thank you. We might turn now to program 2 and page 46 of the PAES. We will have a look at the table there under the heading, ‘Veterans’ hospital and health services’. When we look at the variations over on the right-hand side we see that there is a combined underspend of almost $95 million for ‘other health care expenses’. Firstly, what specific areas does this category include? What is ‘other health care’ expenses about?

Mr Campbell —‘the other health care is 36 million. Is that the figure you are looking at?

Senator MARK BISHOP —Yes, it is.

Mr Campbell —$519 million was the budget estimate and $482 million was the final.

Senator MARK BISHOP —The underspend was $36 million, but the total underspend in the health care area is of the order of $95 million.

Mr Douglas —The other expenses included in that are for community nursing, dental services, non-institutional care, rehabilitation appliances, the Vietnam Veterans Counselling Service, in-home respite, carer and volunteer support, expenses of travelling for medical treatment, and home help.

Senator MARK BISHOP —Can you give the underspend for each of those components you have just outlined?

Mr Douglas —I will have to take that on notice. I can see how, on one viewing of this, you could call it an underspend. The difficulty here is that we are trying to estimate the extent to which usage of a service for a treatment might be required over the course of a year. It is not so much therefore an underspend as a refinement of our estimates based on patterns of usage. We continually monitor those patterns of usage through the course of the year and we revise our forecasts on the basis of those revised patterns of usage.

For example, with in-home respite, as veterans age and their partners pass away, there is no respite necessary. So it is not so much an underspend as a revision in our pattern of usage. The biggest categories of expenditure there are community nursing, dental services, non-institutional care, rehabilitation appliances and expenses of travelling for medical treatment.

Senator MARK BISHOP —I think you had about 10 headings there.

Mr Douglas —We will try and give you an estimate of where the revised expenditures have resulted in a shift downwards in those categories, to give you the summation for the $30-odd million.

Senator MARK BISHOP —And in each subcomponent the reason for what I have called the underspend but which may well be something else.

Mr Douglas —I understand your question, Senator.

Mr Campbell —Senator, could I clarify a point. Under health, it is not a $92 million underspend, to use your terminology; it is only $45 million. Those figures under veteran health add up to a net figure of $26 million; then there is $32 million in pharmaceuticals and $13 million in veteran home care.

Senator MARK BISHOP —I added $36 million and $26 million—

Mr Campbell —No, $26 million is a subtotal of the three above it. So it is only $45 million. I make the observation, to add to what Mr Douglas said, that this is a total appropriation of about $4.3 billion. There are billing patterns and all sorts of things that come into this. It is, of course, demand driven. Over $4.2 billion of this is a demand driven program, so we are actually estimating demand.

Senator MARK BISHOP —I understand the point.

Mr Sullivan —There is about a one per cent variation.

Senator MARK BISHOP —I have had this discussion with Mr Campbell before.

Mr Campbell —Being demand driven, we are actually trying to estimate demand.

Senator MARK BISHOP —Could you take the components and provide us with the reason for the variation, and you may as well do that for the treatment in public and private hospitals. Fourteen million dollars is a lot, but in a budget of almost $1.69 billion it is not a great deal. Is any component of the savings due to changed guidelines?

Mr Douglas —No, Senator. That is a conditional ‘no’ until I go and do the detailed analysis that we have just agreed to do. As we have said, the bulk of this is our estimation of patterns of usage.

Senator MARK BISHOP —Can we turn to the partnering issue. Mr Campbell, you will remember that that was an issue over in the west two years ago, with the extension of services from Hollywood to hospitals in some of the outlying areas in Mandurah and Joondalup. I am starting to get correspondence from people in Queensland raising the same issue of travel time and costs associated with getting to Greenslopes. Consequently, the request is for the extension of some or all of those services to tier 1s in other Brisbane suburbs. Are you aware of that issue up there?

Mr Campbell —I am aware of the issue in the sense that it has been around for some years, as we have discussed at previous hearings. I am not aware of any increased concerns in Queensland. Probably the reason is that the Commonwealth contracts with Hollywood hospital and with Greenslopes expire at the end of this year and the beginning of next year—one in December this year and one in March next year. It has been decided that we are going to go out to the market for a tender across both of those metropolitan areas.

Senator MARK BISHOP —A tender for what?

Mr Campbell —In Queensland we already have tier 1 veteran partnering outside the metropolitan area—indeed, within the 20-kilometre zone that we have talked about before. So when we go in Queensland we will be going to the whole state. But the real point of your question was: what is happening with regard to that inner circle in both cities? My answer is that we are going out to a tender process, to the market, in the next couple of months for both cities.

Senator MARK BISHOP —And the aim of the tender process is to see if there are other private hospitals able to offer that tier 1 service in the outer area.

Mr Campbell —It will be to test all hospitals, not only in the outer ring but also in the centre of cities as well.

Senator MARK BISHOP —Is it theoretically possible that the entire veterans shift could leave, for example, Hollywood and go elsewhere? I am not advocating it or saying that it should occur.

Mr Sullivan —The tender will appraise the market. Anyone who appraises the market in either sites could not contemplate them not being involved.

Senator MARK BISHOP —So that tender process might offer a solution to this issue in terms of tier 1 services outside the cities?

Mr Campbell —The tender process will be seeking hospitals’ interest at prices to provide private hospital services to veterans and war widows within the cities. There can be no guarantee in the end that a hospital that a veteran wants to go to will get a contract, as the secretary just said, but I think it is envisaged that there will be more hospitals providing veteran partnering in those cities in the future than there is at the moment.

Senator MARK BISHOP —Does the tender process involve tendering outside Perth and Brisbane?

Mr Campbell —In Brisbane, yes, because their hospitals are coming due for renewal anyway, because we did their contracts some years ago. The timing is not the same in Perth because, as you will recall, their tier 1 hospitals, of which there are not many outside the Perth area, were done more recently.

Senator MARK BISHOP —Let us turn now to the gold card issue under the RPPS. Could you bring us up to date with any negotiations and progress, if any, in respect of dental and the gold card.

Mr Douglas —We have been in discussions with the Australian Dental Association, and some options are being prepared for the consideration of government.

Senator MARK BISHOP —Is it fair to say that the negotiation process has concluded with the Dental Association?

Mr Douglas —I think a point that I made at the last Senate estimates hearing is that we are not in a position to negotiate anything. We are in a position to consult widely with the industry and prepare some options. Decisions will be taken by government.

Mr Sullivan —We understand the Dental Association’s views.

Senator MARK BISHOP —I thought you were a bit more coy last time, Mr Douglas, and that with the Dental Association there had not been any negotiations for some time.

Mr Douglas —We endeavour to maintain as constant and regular a dialogue as we can with all parts of the industry. That is the opening point. The issue with the Dental Association that I indicated last time was that we had had a set of discussions with them and they had agreed to prepare some additional material for us. We were still waiting for that material. In the end that material was not forthcoming. As I think you would be aware, there was a significant communications campaign undertaken by the dentists. We have continued the development of material which would support examination of the prices paid for dentistry.

Senator MARK BISHOP —‘Support examination of the prices paid for dentistry.’ When did that examination process occur—October, November, December?

Mr Douglas —It is continuing. We are preparing a range of options, and we are continuing to refine those options.

Senator MARK BISHOP —When will we have a final position to recommend to Mrs Kelly?

Mr Sullivan —I think it is more of a cross-government issue for budget purposes. So it is within the budget timetable that you will see any decisions taken.

Senator MARK BISHOP —All right. I ask the same question with respect to specialists.

Mr Douglas —Specialists were granted a price increase of 15 per cent for consultations and 20 per cent for procedures effective 1 January this year. Silence is generally a fairly good indication that things are relatively okay. There were no hiccups that I can recall in relation to the 1 January implementation. Some of the feedback we are having is that this is not an issue that is being raised by the specialists in discussion with hospital operators. Apart from the small pockets of concern which probably go more to work force shortage issues, we have no particular issues. We are in discussion with anaesthetists. Anaesthetists were excluded from the decision announced by government in last year’s budget. That too will probably be a matter taken up in a budget context.

Senator MARK BISHOP —You used the word ‘pockets’. We still have problems in Tasmania—

Mr Douglas —We have problems in Tasmania for orthopaedic surgeons, neurosurgeons and urologists. For urologists the difficulty is primarily only in Hobart.

Senator MARK BISHOP —Do we have pocket problems elsewhere?

Mr Douglas —None quite as remarkable as in Tasmania.

Senator MARK BISHOP —Is the cause of the problems down in Tasmania the fact that specialists’ order books are full from other potential clients? Is that the issue?

Mr Douglas —That is primarily the issue. There is a shortage of specialists. In the whole of Tasmania, for example, there are three neurosurgeons. Those specialists have advised us that they will not be seeing DVA patients under our pricing regime in a private capacity. They are treating them in the public system but we have been advised that a number of those specialists have also withdrawn their services from Royal Hobart.

Senator MARK BISHOP —So we have a very particular problem in Tasmania where a small group of specialists are exploiting their market power.

Mr Sullivan —They are making market decisions. The supply is not there and so they are making choices.

Senator MARK BISHOP —I understand. There is a limited number down there and they are making choices. Whether it is an abuse of market power or not is subjective, I suppose. Is the government giving any consideration to developing a very particularised or specific solution to that problem that we are discussing down in Tasmania?

Mr Douglas —We are trying to look across a range of different potential solutions.

Mr Sullivan —We are certainly talking to the Tasmanian government about the issue that they face as much as we face. They have a general issue in their health system. As I say, some of the specialists have withdrawn their services from Royal Hobart Hospital generally. They have an issue to address in respect of specialist services in Tasmania. We have an issue to address in respect of veterans’ access to specialist services in Tasmania, and it is something that we talk to them about.

Senator MARK BISHOP —Do you think there might be a solution found in the budget process, Mr Sullivan?

Mr Sullivan —I do not think it is a budget issue. I think it is more an issue—

Senator MARK BISHOP —It is a supply problem in terms of specialists.

Mr Sullivan —We have to work through the issue with Health and then see what happens.

Senator MARK BISHOP —Have you done any work on the number of specialists in these areas that you would require in a place like Tasmania to get more balance in the market?

Mr Douglas —Senator, we in Tasmania are a pretty small percentage of the total population. It is difficult to foresee with any certainty what sort of demand might exist for a range of different specialties. The answer to that is no.

Senator MARK BISHOP —I was only talking about the three specialties that you identified.

Mr Douglas —We have put in place arrangements which would cater for issues of high emergency, for example, patients who present in private facilities within very high triage categories. We are trying to work through each particular case as it comes to hand. You recently asked a question in the Senate in relation to some facts and figures on this material, and we are gathering that together to help answer that question.

Senator MARK BISHOP —On the fee structure in Tasmania—the fee structure that applies everywhere—has the 115 per cent fee level now been legislated?

Mr Douglas —It took effect from 1 January.

Senator MARK BISHOP —That is right. It went through last year. Is there any mechanism now in place to ensure that the gap with Medicare is maintained?

Mr Winzenberg —The government increased the general rebate from 85 per cent to 100 per cent and, at the same time, increased the rebate or the fee for general practitioners treating veterans to 115 per cent. In that sense, the relativity of the 15 per cent has been maintained.

Senator MARK BISHOP —But that is a new relativity.

Mr Winzenberg —That is correct.

Senator MARK BISHOP —If you go back prior to that decision, wasn’t the relativity up around 30 per cent?

Mr Winzenberg —In terms of Medicare, a general practitioner received 100 per cent of the MBS for treating a veteran. As of 1 January, that has gone up to 115 per cent.

Mr Douglas —On top of that is the veteran access payment and that also increased on 1 January. So it has maintained that relativity between bulk-billing for general patients and payments made for DVA patients.

Senator MARK BISHOP —Do we have a figure, Mr Douglas, on how many specialists out of the total in Tasmania will not take the gold card?

Mr Douglas —We have a total across the country of some 366.

Mr Winzenberg —In relation to Tasmania, it is 21.

Senator MARK BISHOP —Do you have the figures on the other states?

Mr Winzenberg —Yes.

Senator MARK BISHOP —Could you give them to me.

Mr Winzenberg —For the ACT, it is 10; New South Wales, 143; Queensland, 126; South Australia, 17; Northern Territory, one; Tasmania, as I mentioned, 21; Victoria, 36; Western Australia, nine. There are three that are unknown.

Senator MARK BISHOP —Do you have figures broken up by specialist category?

Mr Winzenberg —I have those here, for the top 10, if you want them.

Senator MARK BISHOP —Okay.

Mr Winzenberg —Of the 366, 89 are orthopaedic surgeons. The second category is ophthalmologists, 49; the third category is urologists, 27; the fourth category is general surgeons, 25; the fifth category is neurosurgeons, 19; the sixth category is ear, nose and throat surgeons and plastic and reconstructive surgeons, both 17; the next category is psychiatrists, 14; the next category is consultant psychiatrists, 13; and the last grouping is dermatologists, 12.

Senator MARK BISHOP —Could you take on notice to provide those figures broken up by state.

Mr Winzenberg —Yes.

Mr Campbell —I would like to add to this issue about the 366 specialists that Mr Douglas and Mr Winzenberg mentioned. There are close to 20,000 specialists in Australia. Of course, we do not deal with some of those.

Senator MARK BISHOP —I was going to come to that issue.

Mr Campbell —The point is that 366 is not a large number out of the number of specialists that are out there.

Senator MARK BISHOP —You are correct to point that out, because my next question was going to be: how many specialists do you have on your books in each of those categories on a state-by-state basis who are providing?

Mr Winzenberg —As we mentioned before, we do not contract with the specialists. At any point in time, we do not know how many specialists are treating veterans other than when the bill comes into the HIC. In terms of numbers, there is a core grouping of around 3,000 specialists across the country that regularly treat veterans and there is another 2,000 to 3,000 who sporadically treat veterans.

Mr Douglas —I would also make the point that when we had a look at some of the 366, for example, we discovered that some of them were still continuing to treat veterans and we surmised that therefore they were honouring longstanding obligations that pre-existed, but they were not taking on new clients.

Senator MARK BISHOP —So you really have up to 6,000 specialists in the various categories who regularly engage with you by way of provision of bills.

Mr Douglas —And another pool of 10,000 which may at some stage or other be called upon.

Senator MARK BISHOP —Will your systems show up in the first category of the 3,000 across the country who regularly engage and then in the 2,000 to 3,000 who sporadically engage by way of provision of bill? Can you break that down into the category of specialisation those doctors are engaged in?

Mr Winzenberg —I think so, but I have to confirm that. It depends on the data holdings at the HIC.

Senator MARK BISHOP —If you could take that on notice and provide me with that information, that will give me a more accurate picture in terms of not only those not working but those who are working.

Mr Winzenberg —We have to put some definitions around that. If we said that a specialist that regularly sees a veteran is one that sees a veteran, say, three or four times a year, is that—

Senator MARK BISHOP —You will have to take some consultation inside and make an arbitrary decision on the definition. I understand that. Really, any preliminary analysis suggests not only that there is the obvious problem down in Tasmania but also that there is a significant problem in New South Wales and Queensland, and the rest of the country not of that scale.

Mr Johnson —If we generalise, if we have a problem it generally reflects a community problem. If you look at community problems and doctors, it is more regional; metropolitan is not so bad in most of the other states. There are areas in regional Australia where clearly our problem is just a reflection of a community problem in respect of a lack of specialists.

Senator MARK BISHOP —I suspect we have a problem in northern New South Wales and southern Queensland.

Mr Douglas —I suspect there are a number of different pockets of potential difficulty at any point in time depending on the specialty. The other observation I want to make is that it is also to be borne in mind that those top 10 are likely to be the 10 largest specialty groupings that are practising as well. The distribution of the numbers by state needs to take into account the total population of the veterans in each state, so you have to have a proportion-to-size dimension to this discussion as well.

Senator MARK BISHOP —Travelling back down to Tasmania, can you tell us how many veterans have been transported to the mainland, at what cost and for which specialties?

Mr Douglas —We are still preparing the answer to your question on notice in relation to that. We will have that for you in due course. As far as we know the number is seven, but we are checking that in the preparation of an answer to your detailed written question.

Senator MARK BISHOP —All right. I think the written question goes to costings as well.

Mr Douglas —Indeed it does.

Senator MARK BISHOP —I have had correspondence from a dental specialist who has been denied a $100 theatre fee. His objection is that theatre charges could be as high as $1,000 elsewhere and that that would be accepted under Medicare. What are the rules for theatre fees under gold card for dental specialists?

Mr Winzenberg —We need to know the context in which he is performing the surgery. We have rules where we pay facility fees for health professionals that operate in licensed premises and hospitals. We do not pay those where they operate in rooms. That sounds to me like a facility fee issue. We would probably need more detail, Senator.

Senator MARK BISHOP —He is in Queensland. He is an oral and maxillofacial surgeon. He is the one talking about the $100 theatre fee and Medicare.

Mr Winzenberg —They are covered by the general increase in fees that came in on 1 January. So that surgeon would receive 120 per cent for the procedure. If he is operating in a hospital or on licensed premises then we normally pay a facility fee. That is consistent industry practice that the private health funds follow. If he is operating in his rooms or at an unlicensed facility then our standard policy is not to pay the facility fee.

Senator MARK BISHOP —You said earlier that the specialist increase had flowed through to all groups apart from anaesthetists and you were engaged in some sort of consultation or negotiation with them. Did it not apply to anaesthetists at their request? Why did it not apply to them?

Mr Douglas —They had a prior arrangement that had not extended to the remaining groups. There were two alternative payment regimes. Because they had had a more recent base fee adjustment and because of our desire to work through the issues associated with those two alternative payment regimes, it was decided not to make the payment at that stage.

Senator MARK BISHOP —Was that a joint agreement between yourselves and their—what is their organisation called?

Mr Douglas —No. It was a decision of government.

Mr Winzenberg —Their association is the Australian Society of Anaesthetists. We received a submission from them on a fee increase in September last year. That is what is being considered by government.

Senator MARK BISHOP —What has happened to that submission?

Mr Winzenberg —That is part of the budget process.

Senator MARK BISHOP —Are you engaged in any negotiations or consultations with the anaesthetists now?

Mr Douglas —I mentioned that to you earlier, Senator. Yes.

Senator MARK BISHOP —So that is resolved and going on as part of the budget process.

Mr Douglas —Correct.

Senator MARK BISHOP —Do we have figures on how many anaesthetists who once accepted the gold card no longer do so?

Mr Winzenberg —Nine. They are the 11th group.

Senator MARK BISHOP —Anaesthetists are 11?

Mr Winzenberg —Nine.

Mr Douglas —After the top 10, they are number 11.

Senator MARK BISHOP —Okay. I want to talk about home care, which is referred to at page 46 of the PAES. What is the basis of the calculation of the $52 million promised by the government during the election?

Mr Campbell —What did you say, Senator?

Senator MARK BISHOP —During the election, the government made a commitment to increase home care spending by—

Mr Campbell —Are you talking about $52 million over four years?

Senator MARK BISHOP —Yes.

Mr Campbell —Okay, because there is only $13 million in each year.

Senator MARK BISHOP —It was $52 million over four years, wasn’t it?

Mr Campbell —That is right.

Senator MARK BISHOP —Seventy-two to 85 is 13.

Mr Campbell —That is right. So it is $13 million a year for four years including this year as year 1.

Senator MARK BISHOP —What was the basis of that calculation? Was it increased demand? Changed demand? Are there different services, new guidelines or different regions?

Mr Campbell —It was a commitment made by the government in the lead-up to the election. We have then been asked to implement a program to spend an additional $13 million per year. The department is not in a position to say how that $52 million was calculated by the government in the run-up to the election.

Senator MARK BISHOP —Because you were not consulted.

Mr Campbell —It was done in the run-up to the election. That is something for the government that did it, not the department.

Senator MARK BISHOP —Subsequent to the election, the government has asked you to devise ways to spend the extra $13 million per year.

Mr Campbell —It has asked us to work with a program that now has $13 million a year more that it did.

Mr Sullivan —And we are not expecting an underspend.

Senator MARK BISHOP —Clearly not. When will the extra $13 million start to flow?

Mr Douglas —It has been allocated already both to assessment agencies and to service providers.

Senator MARK BISHOP —What changes will we see coming on board?

Mr Douglas —You could expect to see a combination of both additional hours of service where warranted and additional demand being responded to.

Senator MARK BISHOP —What is the additional demand being responded to?

Mr Douglas —A growth in numbers of those who wish to access the program. It is a combination of service levels and service numbers.

Senator MARK BISHOP —Let us talk about service levels first. Are we going to increase the number of hours that a person can have assistance in their home?

Mr Douglas —No. We are going to respond to any increased demand for service relative to individual need. We have not changed the benchmark.

Mr Campbell —Perhaps I can help here. We now have a situation where our veterans and the widows of World War II veterans are increasing in age. An increase in age into your eighties and nineties comes with an increase in frailty and an increasing need for services. Mr Douglas is saying that we are working towards meeting needs. It is assumed that there will be an increased demand for services because of the increase in frailty of our veterans and their widows, not because we are unilaterally increasing the provision of services across the board. It is the former.

Senator MARK BISHOP —Mr Campbell, you and I have had many discussions about how the demand for services increases and the level of complexity associated with the level of demand also increases as persons become more aged and get into their eighties and nineties. You would have presumed that was going to occur over the next five to seven years anyway in your forward planning.

Mr Campbell —I would not be surprised that has occurred. The fact that the additional money has been provided means that we are able to meet that emerging demand.

Senator MARK BISHOP —So it was the level of services. What was the second point?

Mr Douglas —Additional numbers.

Senator MARK BISHOP —Why additional numbers? My recollection of the last discussion we had was that you had a formula established whereby funding for home care went on the basis of this formula. Are you now telling me that the number of people is going to increase?

Mr Douglas —No. I am saying that, as the population ages, as Mr Campbell has explained, the likely demand for this program is going to occur in two ways. Firstly, there will be more people who up until reaching this older age group may not have needed the program but now do need the program; and, secondly, the increase in the levels of frailty may mean that, where they were in receipt of assistance under the program, the assistance they now require is going to be more intense. That is not universal. In other words, it is not going to apply to everybody in receipt of the program assistance. It is the combination of additional people requiring access to the program and additional services to be provided to those who age.

Senator MARK BISHOP —Would we not be anticipating that the total number of persons using the program would shortly be going into decline?

Mr Douglas —The issue relating to the formula that we spoke about at the last estimates was that the existing decision in relation to the program was at a fixed level, which varied according to the total size of the treatment population—that is, the gold and white card holders. Because that total population size was diminishing, the total funding for the program was also diminishing. This decision as a decision of government subsequent to the election is to recognise the increasing need for access to the program with regard to both the ageing and frailty of the population and the likelihood that there would be additional people of that declining population and an additional share might need access to the program as they age.

Senator MARK BISHOP —Within a generally declining population number.

Mr Douglas —Yes.

Mr Sullivan —We have talked on the factors of age, frailty and the fact that many of these people no longer have partners and have become single.

Senator MARK BISHOP —I understand where you are going. This figure of $13 million per year: has the department been informed as to the basis upon which the government calculated it?

Mr Douglas —Mr Campbell has answered that question.

Mr Campbell —We have provided advice as to how we think it will be spent in the coming year. That is as far as I can go.

Senator MARK BISHOP —That was not my question.

Mr Campbell —I know it was not. I am telling you that because I have already answered your question. The fact is, no, we do not know how it was calculated.

Senator MARK BISHOP —All right. The war widows have asked a question concerning the 1½ hours per fortnight benchmark taken from the HACC program and whether that is appropriate for the older war widow population. Does the department have a view on that?

Mr Douglas —We have been doing some analysis on that and we have been trialling some alternatives to determine whether or not that is still appropriate. That work is still in progress.

Senator MARK BISHOP —When do you think that analysis will be concluded?

Mr Douglas —Probably towards the middle of this year.

Senator MARK BISHOP —If there is a perceived need to change, is that a departmental decision or does that have to go to the minister, Mrs Kelly?

Mr Douglas —Whatever change is made, the government has made it quite clear the amount of money that it is prepared to commit to this program, so we would still need to live within that program.

Senator MARK BISHOP —I see.

Mr Douglas —Some of the early indications, without getting the full formal analysis, would tend to suggest that the benchmark remains appropriate but that there may be different needs in relation to some people who need to exceed the benchmark. In other words, the general benchmark is okay but there will still be people who will present with needs greater than the benchmark.

Senator MARK BISHOP —Okay. I am advised that quinine has been withdrawn from the PBS. Is that correct and what was the reason?

Mr Douglas —No, Senator. We understand that the Therapeutic Goods Association has sought consideration by the Pharmaceutical Benefits Advisory Committee as to some factors which might be used to improve the level of advice that is given to consumers in relation to quinine as to its possible side effects. That consideration by the PBAC has not occurred.

Mr Johnson —If I could add to that. Quinine was listed on the PBS in September as a drug to treat disorders of the musculoskeletal system and as an anti-malarial. One of the common uses of quinine is for nocturnal cramps. Under both listings there was a warning to prescribers which included severe thrombocytopenia, a blood disorder, which has been reported with this drug. In light of that, the TGA, in the December edition of the PBS, deleted the indication for treating disorders of the musculoskeletal system, and we understand the matter is going to be referred to the Pharmaceutical Benefits Advisory Committee at their next meeting, and they will decide whether there is any further action to take—for example, making quinine available under an authority script.

Dr Killer —I think Roger summed it up fairly well. Quinine has been used historically particularly by older patients who suffer from night cramps. Quinine falls into a whole category of drugs—like chloroquine—used primarily for treating malaria but also, in certain circumstances, used for musculoskeletal cramps. It works very well in the treatment of malaria, but in terms of managing cramps there has always been a suspicion that some of the effects were psychological more than physiological. Despite this fact, cramps are common and a lot of patients have been taking quinine tablets on a regular basis—that is, most evenings. Because of the nature of the drug, recent evidence suggests it does have some negative effects on the bone marrow and affects certain aspects of the blood, particularly the platelets, which are important for the blood clotting.

As a result of this recent evidence, there are suggestions now that we should look at the role of quinine, particularly in relation to older people with cramps. I might add that we looked at this a number of years ago, and we found that stretching exercises, programmed by a physio, for people before they go to bed often works far better than taking quinine. I think Roger summed up where we are really at. I think the warning is out now on taking quinine, and the PBAC will clearly look at this at its next meeting to decide how and when it should be provided to patients and for what conditions.

Senator MARK BISHOP —So it has been taken off because—

Dr Killer —No, it has not been taken off; it is still there but there is a warning on it now. It will be reviewed at the next meeting and at that meeting they will decide. I do not think it will actually be taken off; it will either be put on restrictions, restricted to certain conditions, or be on authority—in other words, a doctor would have to ring in to the Health Insurance Commission or to PBAC to get approval for use.

Senator MARK BISHOP —I understand. The advice I was given was couched in the words I used but I now understand the correct situation. We might turn to outcome 3, dealing with commemorations.

[11.41 a.m.]

CHAIR —I welcome the new witnesses for outcome 3, ‘The service and sacrifice of the men and women who served Australia and its allies in wars, conflicts and peace operations are acknowledged and commemorated’.

Senator MARK BISHOP —Could we have a general discussion at the beginning about the commemoration budget allocated last May in addition to the $7½ million announced by the Prime Minister during the election. Could you tell me where those funds are going to be allocated: to what programs, what commemorations, that sort of detail.

Air Vice Marshal Beck —I will refer to Ms Blackburn on the broader program issues.

Ms Blackburn —On the funding that is available for the significant anniversaries for this year, final decisions have yet to be taken on all the components but there have been announcements by the Prime Minister and references by the minister on a number of the elements. These include funding for Anzac Day services at Gallipoli, the likelihood of commemorative missions for VE Day and VP Day, and also activities within Australia, what we are calling the Salute to Veterans, which will centre around VP Day. There will be a number of other elements but the minister has yet to make final decisions on those.

Senator MARK BISHOP —So we have got three broad headings: Anzac Day and Gallipoli, missions to VE Day and VP Day, and then activities within Australia.

Ms Blackburn —Yes.

Senator MARK BISHOP —Can we have a break-up generally of the costings associated with each of those as yet?

Ms Blackburn —There have been some costings which the minister has to provide final sign-off for.

Mr Sullivan —I think we should take it on notice and we will get it back to you very quickly.

Senator MARK BISHOP —What I am looking for is the funds to be allocated for each of the commemoration programs. I am not seeking the nth level of detail in terms of $25 for bottled water but a series of subheadings to identify where the funds are going to be spent.

Mr Sullivan —As they are ticked off we will get you that answer, and it may have a still to be determined number. We will get it to you when it is useful.

Senator MARK BISHOP —That is fine. How advanced is the programming for those events: Anzac Day and Gallipoli and the missions to VE Day and VP Day?

Mr Sullivan —Gallipoli is well advanced now, obviously. We are quite well advanced in respect of the VE celebrations in Europe. In respect of the Australian events, we have a steering committee in place and they are working hard at particularly the event around VP Day in Australia, in Canberra, and we are working closely with Defence on both that and a celebration that will occur in the West.

Senator MARK BISHOP —Air Vice Marshal, you might put a bit of flesh on the bones to the extent that you can in respect of each of those proposals. Do you mind doing that?

Air Vice Marshal Beck —Specifically for the 90th anniversary of Gallipoli there are a number of aspects to what we are planning. I suppose we are firstly attempting to cater for an increased visitation of, we think, somewhere between 16,000 and 18,000. We are still seeking approval—we do not have it yet—to enlarge the dawn service site. There is a meeting late this month where hopefully we will resolve that and get the work done next month. We are planning large seven-tier stands around the dawn site and increased stands around the Lone Pine site of about 4,500 seats, which would take some of the pressure off the cemetery. There is normal expenditure associated with the preparation of the services. There is extra expenditure associated with those items. There is also the main expenditure associated with the prelude to the dawn service—a special 90th anniversary event that we are planning.

Senator MARK BISHOP —Can you give me an overview of that special event?

Air Vice Marshal Beck —The purpose of the special event is to try and change the mood of the young people who are attending. Ten thousand to 15,000 Australians will be there overnight. I think they will primarily be there to celebrate our nationhood. The idea of the prelude event is to make them understand and educate them and to set the mood for the dawn service. This is something that has been missing in previous years, and we think this event will do that. Because of the nature of that we are repeating that at about 4.30 in the morning, when the official contingent arrives. That could be 300 to 500 people, including prime ministers. This prelude will be repeated from 11.00 until 11.45 on the evening of the 24th and then from 4.30 to 5.10 on the morning of 25 April.

Senator MARK BISHOP —What do you mean by a prelude?

Air Vice Marshal Beck —It is a series of items that together form a program. I will outline some of those items. There is a special poem being written and it will be performed live; there will be a string quartet accompanying a didgeridoo player from the Queensland Philharmonic Orchestra; there will be a DVD of a seven- or eight-minute documentary outlining the story of Gallipoli showing archival footage; and it will conclude with a son et lumiere, a sound and light show which is set to music—Adagio in G minor by Albinoni. You might be familiar with that; I am not. It comes from the movie Gallipoli, so it is well known by those who have recently seen that movie. That will be presented by a team from London and Germany. It will be a world-class event although it will only last about 10 minutes. That is all we can afford.

Senator MARK BISHOP —When you say a team from London and Germany, do you mean an orchestra?

Mr Sullivan —The engineers. It involves engineering.

Air Vice Marshal Beck —The lights director is coming from there. That was the nearest team we could get for this event.

Senator MARK BISHOP —I think I have seen in the press that the Prime Minister is attending Gallipoli this year.

Air Vice Marshal Beck —That is correct.

Senator MARK BISHOP —Are you taking a group of veterans again?

Mr Sullivan —It has not been finally decided yet. We expect that to be determined very soon.

Senator MARK BISHOP —So organisation is well advanced in terms of Gallipoli—there is a large official party, the Prime Minister is going and you are setting a mood change. Are security issues as prominent this year as they have been in previous years?

Air Vice Marshal Beck —Certainly. We have just come back from Turkey with a security team. We are very favourably impressed by the effort that the Turkish authorities have made both on security terms and in understanding the nature of the events we are conducting. If there has always been a failure it is that the two did not quite work well together. We think there is a far better understanding now of relating the security needs to the actual attendance numbers and the movement of crowds between the various sites. So we are very impressed with the result and we will certainly have a very high level of security at all of the services.

Senator MARK BISHOP —Has any work been done to widen the road or extend the car parks there?

Air Vice Marshal Beck —Yes, that is currently in progress. The 5½ kilometres of road up the coast 3½ kilometres south of Ariburnu and two kilometres north of Ariburnu are being widened, and that is ongoing right now.

Senator MARK BISHOP —Who is paying for that?

Air Vice Marshal Beck —The Turkish government is paying for that.

Senator MARK BISHOP —Is that proposal to charge an admittance fee to the park there forgotten and gone?

Air Vice Marshal Beck —Yes. The entrance fee that might be charged in future is for entry to the visitors centre, not to the park itself.

Senator MARK BISHOP —I see. Can we have a similar discussion on VE Day and VP Day, Air Vice Marshal?

Mr Kelly —As the secretary pointed out, we are fairly well advanced in planning what we will do for VE Day and VP Day. The arrangements for VE Day are very close to completion. They require tick-off from the minister, obviously, and we have not got to that point. I do not know that there is much more I can say about it at this point other than that the arrangements are advanced.

Mr Sullivan —We can say that there will be a veterans contingent going to VE Day and we are in the process now of looking at those nominations and making selections and going through the process of medicals.

Senator MARK BISHOP —Is it going to be in London or Europe?

Mr Kelly —It will be in Paris.

Senator MARK BISHOP —What is the date?

Mr Kelly —It is 8 May.

Senator MARK BISHOP —So that has got to be done quick smart. Is there any suggestion of erection of a memorial?

Mr Sullivan —No.

Senator MARK BISHOP —So it is a visitation led by a senior minister, I presume?

Mr Sullivan —The government will certainly have someone senior there.

Senator MARK BISHOP —And a group of veterans, which is in the process of selection, will be going. Is that going to be done in conjunction with the Allied powers who were victorious in World War II?

Mr Sullivan —This celebration is under the control of the French government. The French will coordinate the exercise. We would expect there would be contingents from many countries who participated in the liberation of Europe.

Senator MARK BISHOP —I see the French are now closer to the Germans than they have been for some time. Do the Germans come within that category of countries who participated in the liberation of Europe?

Mr Sullivan —I do not know what the German participation will be in VE Day.

Senator MARK BISHOP —What about VP Day?

Mr Kelly —We understand that the United States is organising a commemoration in Hawaii on 2 September, which is actually the anniversary of the signing of the surrender rather than the anniversary of the end of the war. So we are considering at this point having a veterans mission to attend those commemorations as well.

Senator MARK BISHOP —I have received two or three letters from people in Western Australia who have taken not offence but some umbrage at the title of VP Day. They think it should be VJ Day as opposed to VP Day because, as they properly put the argument, there were wars all the way to India, there was activity in the north-west of Australia and it was victory over the Japanese and not so much victory in the Pacific. Do you know the origins of VP Day?

Mr Kelly —I am not absolutely sure, but I understand that shortly after the end of the Second World War the government of the day either proclaimed or decided—I am not quite sure of the mechanism—that it would be VP Day as opposed to VJ Day. That has been accepted ever since and, to my knowledge, there has been no great public move to change that. It is fairly well accepted.

Senator MARK BISHOP —The concerns I have expressed may well reflect localised concerns in my own state. Coming back to outlays: can the department confirm Minister Vale’s advice that allocations will be made to MPs to promote commemorations in their own electorates?

Mr Sullivan —We cannot confirm that yet.

Senator MARK BISHOP —Do you recall that Minister Vale made that announcement in Sydney during the election? Are you aware of that?

Mr Sullivan —I am not aware of it, but I do know that, in terms of the total commemoration effort, we are making submissions to our minister and through government and that has not yet been done.

Senator MARK BISHOP —Do you dispute what I say, that Minister Vale did make that announcement?

Mr Sullivan —I am not disputing that. I do not know of it, so I am not disputing it.

Senator MARK BISHOP —Mr Campbell?

Mr Campbell —I am probably in the fortunate position that, for that part of the election campaign, I was on leave overseas. Like the secretary, I am neither confirming nor denying, because neither of us are aware of it.

Senator MARK BISHOP —My understanding is that it was made to an RSL meeting in Sydney.

Mr Campbell —I suspect that, if the meeting you are referring to was the national congress, where the Prime Minister announced the additional $7.8 million, I was not at that congress.

Senator MARK BISHOP —I was at that congress and heard the Prime Minister’s speech. I am not referring to that. I am referring to specific advice that Minister Vale gave to an RSL meeting in Sydney during the election campaign. I have been trying to track it down ever since to find if there is an official position and have been unable to.

Mr Sullivan —I do not believe there is an official position that says this money will be provided in that way.

Senator MARK BISHOP —Is there a recommendation to the minister for money to be provided for MPs to allocate in electorates?

Mr Sullivan —The minister will consider the commemorations program. All I can say is that, the last time we had a major commemoration, there was some money provided to electorates.

Senator MARK BISHOP —There was; I remember that.

Mr Sullivan —I can say no more.

Senator MARK BISHOP —You can add no more?

Mr Sullivan —No.

Senator MARK BISHOP —When do you think you will get advice back from the recommendations you have made to the minister?

Mr Sullivan —As was said, in respect of two of these major events—Gallipoli and VE Day—we need formalisation very quickly.

Senator MARK BISHOP —No, I will make it more specific. When do you think you might get a response from the minister on a recommendation for allocation of funds to electorates for commemoration proceedings?

Mr Sullivan —I think the minister would be expected to announce details of the commemoration spending in a reasonably short time—in weeks, I would think.

Senator MARK BISHOP —After Gallipoli, are VE Day and VP Day regarded as equally significant or does the war in Europe have more prominence?

Mr Sullivan —I think for Australia VP Day is more significant in that, while many Australians did participate in the end of the war in Europe, by then most Australian service personnel were committed to the war in the Pacific. While the war in Europe ending was a great relief to Australia, the war that involved Australians in large numbers and that at times threatened Australia was continuing. Between VE Day and VP Day, we expect that there will be other events to commemorate along the way to VP Day.

Senator MARK BISHOP —I am trying to get a handle on the timing of when there might be an announcement on funding for functions in local commemorations.

Mr Sullivan —I think you will see those announcements reasonably soon. VP Day is very important in terms of the commemoration of the end of World War II.

Senator MARK BISHOP —What is the selection process for veterans to accompany the missions or delegations to both Europe or Japan? Do you simply ask the RSL to provide you with details? Is it done by the minister, MPs or what?

Mr Kelly —There is a laid down selection process which we have used pretty consistently in the time we have been doing these missions. Basically, the department identifies all the relevant units and ex-service organisations whose members would fit the criteria for a visit to a particular area. Usually, the repatriation commissioner then contacts all those organisations and asks for nominations. Nominations come back from those organisations. We ask for details of their medical condition and whether they are, prima facie, fit to travel. They are then considered. A shortlist is then compiled, using a number of criteria: fitness to travel being one, obviously; a balance between the type of service; the arms of the service, which are Navy, Army, Air Force and merchant navy; places they may have served; a mixture between officers and other ranks; and the type of experience they might have had. There are a number of things that go into the mix, then a selection is made by a committee within the department—including Dr Killer, because he has to advise on the medical conditions—and recommendations are made to the minister.

CHAIR —I think we are going to have to stop there, because the minister has to away to a very important meeting.

Senator MARK BISHOP —Air Vice Marshal Beck is going to be very disappointed at your decision because he was looking forward to answering some questions on Fromelles and he will not be able to answer them.

CHAIR —Perhaps you could put them on notice, Senator Bishop. Thank you, Mr Sullivan, and the men and women of your department.

Proceedings suspended from 12.00 p.m. to 1.04 p.m.