Senator SCHACHT (8:31 PM) —I rise on behalf of the opposition to speak to the Veterans' Affairs Legislation Amendment Bill (No. 1) 1999 . This bill overwhelmingly contains provisions that the government claim meet their promises to the veterans community in the last election. I accept, reading through the bill, the explanatory memorandum and the second reading speech, that it does meet the promises made by the government in a number of areas of benefit to the veterans community, and of course the opposition do not oppose them. We welcome the fact that the government are meeting those promises. They are not earth-shattering or big bang promises; they are refinements in a number of areas, worth while and beneficial to the veterans community.

The major issue that developed from this bill is the impact of the changes to the invalidity service pension. That appears to be a minor part of the bill, but it certainly created some interest in the veterans community. As a result of that interest, when the bill was introduced into the House of Representatives I, on behalf of the opposition, recommended that this bill go before the Senate Foreign Affairs, Defence and Trade Legislation Committee to seek the views of the public and, if necessary, hold a public hearing on the bill, particularly on that provision I just mentioned.

I was very pleased to see that there was considerable interest from the veterans community and from the public. Some 68 submissions were received. Many of them were received from individual members of the community, veterans in the community and veterans organisations. Most of them dealt with the issue of the invalidity service pension. Of course a number dealt with issues that were not specifically in this bill but raised issues of a wider nature of concern in the veterans community. When we held a hearing some of those views came out, but the issue that held the most interest at the hearing for one evening was the impact of the invalidity service pension change.

The government had recommended that those who received the invalidity service pension as veterans could have the way they obtained that pension, that benefit, reviewed. In evidence given to the committee, the department said that something like 17,000 invalidity service pensions are provided in Australia. After questioning it became clear that, of those 17,000, the government were interested in only some 1,700 pensions that had been issued and that they would like the opportunity to review those pensions by having veterans undergo a further medical examination. That means that some 1,700 veterans who had been receiving the pension could be called upon to front up to the Department of Veterans' Affairs or to an appropriate medical officer and have the test redone.

That did create a fair amount of apprehension in the veterans community, particularly amongst Vietnam veterans and Gulf War veterans. They lobbied hard, saying that this uncertainty was retrospectively changing an entitlement. We in the opposition had considerable sympathy for their concern about retrospectively taking a pension away from somebody once they had received it through the normal processes. We made it quite clear that, if fraud was involved at any stage in someone obtaining a benefit, we in the opposition would in no way support or allow fraudulent activity or fraudulent behaviour to proceed. What we found at the committee hearing was that the government were not worried so much about the fraud; they wanted to review the actual eligibility test people underwent to receive the benefit of the invalidity service pension and see whether the test had been properly applied. There was no fraud involved; the government wanted a second chance to check the test.

I was a bit surprised that the Liberal government would support a retrospective change. As I understand it, it has been an article of faith in the Liberal Party for a long time that they do not support retrospectivity in legislative change. This clearly was a retrospective change, in that people who were receiving the benefit had to undergo a further test and could lose the benefit. I put in a minority report on behalf of the opposition. Our recommendation states:

Labor Senators believe that the anxiety and uncertainty created by requiring current recipients of the invalidity service pension to undergo the new eligibility test is unwarranted and unfair to these pensioners. We support an amendment that would exempt current recipients of the invalidity service pension from the proposed test but would require new applicants to be subject to it.

That was signed by me and my colleague Senator Hogg on behalf of the opposition. I was therefore pleased to see that the government last week issued a statement accepting the opposition's recommendation in the report that the retrospectivity be withdrawn. That was a considerable relief to the veterans community, and I am pleased that the minister was able to change the bill, change the proposal and accept our recommendation.

I understand from the government that, for the government to accept the opposition's recommendation, it does not actually need an amendment to this bill. It is an administrative matter that the government will not give administrative orders to any of the 1,700 to ask them to resubmit to the test. We take it on faith here—and I trust that the parliamentary secretary will reaffirm that in the second reading debate summing up—that this will be clarified. Clearly, the parliamentary secretary would be aware that, if there were any going back on that by administrative action at a later date, he could expect the whole ceiling of the veterans community to fall in on top of him at a very rapid rate. We are pleased to see that the government has accepted that. We take it on the record that the government is not proceeding with that.

I also want to put on the record that the veterans community have raised the area of suggested further amendments. They are concerned that the 40-point GARP test for the invalidity service pension will still be too strict in the new arrangement and that having that test apply to the invalidity service pension will mean that some veterans who are presently getting it will not be getting it in the future.

The government has said two things to the opposition in briefings and at the hearing. It has said that the test is not going to be a tougher test but a more defined, more easily understood and more easily applied test by having the 40-point GARP test operate. However, in the evidence given to the committee, it was said that in the out years for the next four years the department estimated that some 600 fewer invalidity service pensions would be granted under the 40-point GARP test. This immediately raised the idea in the veterans community that the test must be tougher—if an estimated 600 people in four years are not going to get it when they would have got it if this change had not been made. So far I have not received an absolutely satisfactory explanation of how it is that, if the test is not tougher, 600 fewer people over the next four years will not be getting it. I still think the government owes the veterans community an explanation on the record here in the Senate of how you can say, `The test is not tougher, but 600 fewer people are going to get it according to estimations by the government.'

As a result of that evidence, the veterans community raised two further suggestions. I would like the parliamentary secretary at the table to respond to them either in the second reading debate or in the committee stage. One of them was that the 40-point GARP test be reduced to a 30-point GARP test so that it is less stringent than what is proposed. One of the suggestions made was that the invalidity service pension could be the equivalent of TPI. You get it when you are TPI and you are fully incapacitated, but the TPI is still a tougher test. Applying the same test for the invalidity service pension as for the TPI is not consistent. It should be at a lesser level because it is not the same as the benefit you get for the TPI.

The further suggestion was made that the number of hours people receiving the invalidity service pension are allowed to work should be increased from the present eight hours to something like 20 hours—the equivalent of what the intermediate pension gets. Again, I can understand why the veterans community has raised that. It does encourage people to work more hours as part of their rehabilitation as an invalid. Even in the veterans community, I think a lot of people understand that it is better to get people off the invalidity service pension and back to work so that they are more productive in themselves psychologically, with their families and in the community. That is a theme running through all occupational health and safety schemes in Australia. I can understand why they raise it.

But, if you do accept those suggestions as amendments, you may well undermine the invalidity service pension itself. You are decreasing its importance. It is an invalidity service pension because you are a full invalid and you cannot work. If you reduce it to a level where you have the same point test as for an intermediate pension, which does allow 20 hours of work, you may be undermining the value of that pension. Who knows? In some dark days in the future, some bureaucrat in the finance department may well recommend that, as a savings measure, the value of the pension be reduced to match the points rather than the other way around. I am always nervous when putting anything up that it may allow some bureaucrat in the finance department or in the Treasury to use such changes ultimately to make further savings and disadvantage the veterans community.

Therefore, after further discussion with the government, on behalf of the opposition I will not be moving a further amendment to take account of that, though, if it turns out that the veterans community is being disadvantaged because of the new 40-point GARP test, clearly the government is going to have to respond. Otherwise, it will be literally belted around by the veterans community for putting into place a measure that has unintended consequences.

On balance, though we are not proceeding with amendments when we have this opportunity at the moment, I will take the word of the government. I still wait for an explanation, Parliamentary Secretary, of how the test can be the same—it is not being made tighter—but still 600 fewer people are estimated to receive the pension. A new explanatory memorandum was tabled tonight by the parliamentary secretary. I notice at the back of it the sentence: `These corrections remove reference to existing pensioners whose eligibility will not be affected by the new provi sions.' I understand that sentence is the commitment that we will remove the retrospectivity.

I also ask the parliamentary secretary to respond to the issue that, when you compare the financial impact on page (ii) of the original explanatory memorandum with what was tabled today, they are quite striking in their difference. As I read it, in the original document the total financial impact for the first year, 1999-2000, is an increase in revenue of $394,000. In the new explanatory memorandum, that goes up to $607,000. In the following years, the financial impact is shown as being a substantial reduction of what was in the original memorandum, because Centrelink and health have been put in. I would like the parliamentary secretary to make this clear.

As I read this, in the total in the new explanatory memorandum the government has now deducted Centrelink and health. Though there may be a bigger cost to the Department of Veterans' Affairs, when you balance what happens at Centrelink and health, the reduction in the loss of revenue is considerably less. For example, in the original explanatory memorandum, it is minus $5.3 million in 2000-01, minus $12.9 million in the following year and then, finally, minus $16.09 million in 2002-03. The comparison years in the new memorandum are $0.029 million, $1.16 million and $2.6 million loss of revenue. If what I think has happened is right, I trust that can be explained in the parliamentary secretary's summing up of the second reading debate or in the committee stage, which may be very brief.

In the time remaining to me, I wish to touch on a couple of other matters that the government has to be aware of in the operation of the invalidity service pension. The concern I have mentioned from the Vietnam veterans is important. Since this bill has been introduced, Gulf War veterans have raised the concern that the new test may affect them adversely. As yet, we have not got a full scope of the impact of Gulf War syndrome, which is still being investigated by the department. We also now have a large number of soldiers—running into several thousand—serving in the East Timor situation, and they will be entitled to full veterans benefits in the future.

One can anticipate that in the future Australian soldiers will serve in peacekeeping forces around the world as we, as a good international nation, accept our responsibility. Therefore, the invalidity service pension test that has been talked about here is the main matter of interest and controversy in this bill. These are reasons why sections of the veterans community are very concerned about it. On balance, the opposition are not moving further amendments. We will take the government at its word, but I would expect the government to respond rapidly. If, over the next year to 18 months, the new test for the invalidity service pension has the unintended consequence that large numbers of veterans—Vietnam veterans and new veterans from the Gulf War—start missing out, that will be a public issue that will have to be dealt with by the government.

On behalf of the opposition, we support the bill. We recognise it has a number of measures that meet the government's promises from the last election. We are pleased the government has accepted the opposition suggestion to remove the retrospectivity nature of applying the test to 1,700 veterans already granted the pension, but we look forward to monitoring very closely the operation of this new amendment to ensure that veterans, the people who have served this country well and bravely in the national interest, are not disadvantaged.