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Tuesday, 16 September 2003
Page: 15338

Senator MARK BISHOP (7:55 PM) —I rise on the adjournment this evening to address a controversial issue, which has been led by the government as part of the proposed new military compensation scheme. This particular matter concerns the proposed offsetting of superannuation paid by Defence to former ADF members incapacitated for work due to their service-related injuries against the special rate also paid to those same ex-service personnel under the Veterans' Entitlements Act by the Department of Veterans' Affairs. I make it clear, however, that this proposal is not part of the new military compensation scheme. It is a proposed amendment to the Veterans' Entitlements Act and it affects only those with VEA entitlements now and into the future for injuries incurred during service prior to any new legislation being enacted, effective from 1 July next year—according to the government's timetabling anyway.

To some extent, therefore, in the context of the proposed legislation, this is either a deliberate distraction to muddy the waters with respect to the new scheme or an attempt to use the new scheme as a smokescreen to conceal the government's motives with respect to the TPI community in particular. Veterans should not fall for this. They should deal with the new scheme as it stands and as it is proposed, but they cannot be blamed for their anger at the way these matters have been deliberately confused.

In essence, the facts of the matter are as follows. Under the VEA, provision is made for those who are so injured by their service that they are considered to be totally and permanently incapacitated—that is, their injuries and illness are such that they are unable to work for more than eight hours per week. This is the TPI. This is a category of disability which has been in existence since World War I and, at present, there are some 26,500 such people, mostly veterans with overseas service, but also a small number who obtained dual eligibility under the VEA and the MCRS between 1972 and 1994 and who have peacetime service only.

At a slightly lower level are those on what is called the intermediate rate for whom the work limitation is 20 hours per week. Both the special rate and the intermediate rate are tax-free pensions payable for life and are indexed by the CPI. They have never been means tested. The Senate will be aware that the TPI Federation of Australia has been waging a campaign to have the government redress the real erosion of this pension over the years due to the form of indexation—namely the CPI—as opposed to another index, such as MTAWE, which better reflects the changes in the standard of living. I do not intend getting into that issue now, suffice it to say that the government's response to the TPI Federation can only be described as belligerent.

It is a very complex matter steeped in history, but the government has refused to deal with these people intelligently or even to pursue a range of options which are clearly available. The minister's consistent response to TPIs has in fact been that they are greedy and that there are many others in society in greater need—to the extent that a so-called typical income for families of $1,900 per fortnight is used to exemplify the greed, which is not the slightest bit representative.

This is deliberately misleading, but it is also indicative of the belligerence which I ascribe to government attitude. The minister avoided the rally outside Parliament House on 16 June last and consistently refuses to address this issue. Moreover, this belligerence towards TPIs is also evident from the government's failure to respond to the report of the review of veterans entitlements by Justice Clarke. This report was released late last February but, as we know, despite the opportunity presented by the intervening budget to respond, the 109 recommendations—with one exception—remain gathering dust in the government's big pigeonhole. Having used the inquiry as a stalling device, the government has now shelved the whole report—including a major piece of work on the TPI issue.

This issue, I remind those listening, formed almost one-third of the report and, although many did not like the recommended new model—and quite rightly—the analysis was invaluable. It provided plenty of detail and fact on which to properly deal with the issues. But, as we know now, the government is not the slightest bit interested in the TPIs. The Clarke report was never to be anything other than a cruel hoax, misleading people, holding out false hope, and spending $1.6 million in doing this. That background is highly relevant because we now have, deliberately mixed in with the new military compensation bill, a proposal to change the TPI special rate and its relationship to other compensation benefits, which was not a central plank in the Clarke report.

The real assault on the TPI special rate in this package containing the new Military Compensation Scheme is a consequential amendment to the special rate where effectively, for the first time since its inception, it is to be means tested. The background is that a growing proportion of TPI recipients are now former full-time members of the ADF. For those with service overseas, as well as those with service between 1972 and 1994, there is dual eligibility under both the Veterans' Entitlements Act and the Military Compensation Scheme as we know it today or its predecessor, the Commonwealth Employees Compensation Act. Quite frankly, this dual eligibility is a mess, as has been found by three inquiries in the last six years. The tabling tomorrow of the report of the Senate Foreign Affairs, Defence and Trade Legislation Committee on the matter of offsetting compensation claims between the two schemes is just another example.

The proposal by the government is that, in future, superannuation payments made to former ADF members with dual eligibility, and also in receipt of the special rate, should be offset against the above general rate portion of the special rate—which is that element paid for work incapacity—and also, in turn, the service pension where it is payable. Because the special rate is tax free, the superannuation is to be offset at 60c in the dollar. This will first be deducted from the above general rate and then against the service pension at the normal taper rate of 40c in the dollar, consistent with the standard means test. Technically speaking, the first is a straight offset; the second is standard means testing.

The argument is that the Commonwealth is effectively paying this group of TPIs twice for their work incapacity: once through the special rate and second through the superannuation paid as an incapacity payment. This, however, is not a new phenomenon and has been technically possible while ever there has been dual eligibility. Yet action is only now taken in the context of the new legislation—but, more importantly, politically speaking, it is also in the context of the government's belligerence towards TPIs. This is no mere coincidence; it is a deliberate ploy.

The most offensive element of this assault on the TPIs, however, is that it is a fundamental reform to the special rate in isolation from the TPI Federation's legitimate campaign. It is also done in complete isolation from the broader need for reform as discussed by Justice Clarke. To be blunt, it is an opportunistic and ad hoc attempt to `fix' the TPIs, and so it is no wonder these people are so hopping mad. They have every right to be. For four years they have been trying to engage in a dialogue and to explore some solutions to what we on this side acknowledge as very real problems. The Clarke review was their day in court, and that has been thrown out as well. So it is no wonder they feel cheated.

This in fact has been a totally duplicitous stunt on the part of the government and the Repatriation Commission to make a major reform by subterfuge. Whatever the merits of the case, it is dishonest in that it has been brought up in complete isolation from all the other issues surrounding the special rate. Quite naturally, the TPI community is incensed not just at the deceit of this surprise but also by the detail. A great proportion of the TPI community is in receipt of superannuation. They are not to be affected but, in the usual discriminatory way, those who apply in the future will be. This is a legitimate complaint. It will, for example, create a new class of TPI veteran who will clearly be worse off than his peers who had the good fortune to apply earlier. Nor is it clear that there is complete policy legitimacy to the government's proposal simply because, under Commonwealth superannuation law, there is an entitlement to access superannuation at the age of 55, for MSBS members at least. Many TPI applicants are now over 55, so does this not mean that the MSBS superannuation pension is legitimately theirs as a retirement benefit at 55 and, therefore, cannot be legitimately offset after that age?

None of this has been explained. Nor has the detail on the impact on the DFRDB scheme been explained because the proposal in its raw form would offset the whole incapacity payment, including that to which the member would normally be entitled after 20 years service—namely 35 per cent of final salary. Nor has there been any explanation of any other Commonwealth superannuation payable as a result of employment elsewhere after discharge. In fact, this is a very common feature of post-service careers. What is more perplexing is that this issue is presented as a case of double-dipping—but one which has remained in place unattended for many years. It is also effectively imposing a means test on the special rate—which is also a historic benefit—as it is for the war widows pension, paid regardless of other means. For the purposes of these benefits, millionaires and the poor are treated alike. The fact, though, is that there is a far greater proportion of TPIs struggling to raise families than there are those with greater means.

The ACTING DEPUTY PRESIDENT (Senator Chapman)—Order! The honourable senator's time has expired.

Senator MARK BISHOP —I seek leave to incorporate the last page and a half of my remarks. I have not declared them to the whip.

Senator Ferris —Are they on the same topic?

Senator MARK BISHOP —They are on the same topic.

Leave granted.

The speech read as follows—

Frankly, if the government want to come at this as a real policy issue, then they should do so up front.

The suggestion has been made many times that the one size fits all nature of the Special Rate and its life long term, are historic features requiring attention—as Justice Clarke tried to do but failed.

The Government should not try and do as they are here, and seek amendments by stealth, which have far reaching consequences, not just for veterans, but on the fundamental questions of long standing veterans policy.

The bottom line is simply this: whatever the merit of this proposal, it will fail if it is pursued dishonestly as it has been, and without a broader focus on the needs of TPIs.

Veterans will not be fooled, and nor will the ALP.

If the Government wants serious policy reform, as foreshadowed by Clarke, then let's have it up front.

On this side we support good policy.

The Government should stop its cowardly secrecy and come clean with a total package.

They should not do it or expect to do it through the backdoor or behind a smokescreen.