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Thursday, 20 September 2007
Page: 292


Senator ELLISON (Minister for Human Services) (10:08 PM) —I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

I am pleased to present legislation that affirms the Government’s ongoing commitment to Australia’s veteran community and assists veterans who have been disabled as a result of their service for our country and our war widows and war widowers.

The legislation increases payments to disability pensioners and war widows and war widower pensioners and changes the methodologies used to index their pensions. This Bill will benefit more than 140,000 disability pensioners and approximately 114,000 war widows and war widowers, and ensure that their pensions retain their relative value and equity across the veteran community.

The amendments will provide a one-off increase of $15 per fortnight to the Extreme Disablement Adjustment rate; a five per cent increase to the General Rate; and a change to the methodology used to index the General Rate pension for veterans—all with effect from the March 2008 adjustment.

The Bill also allows a one-off increase of $10 per fortnight to the former domestic allowance component of war widows and war widowers’ pensions, and amends the way it is indexed, also with effect from March 2008.

The legislation’s one-off increase to the EDA brings it into line with increases to the Special Rate and Intermediate Rate disability pensions introduced in the 2007 Budget. Additionally, the Bill provides a five per cent increase to General Rate disability pensions, which will mean a fortnightly increase of $20 for all pensioners at or above the General Rate. These amendments will ensure equity across all veterans’ disability pensions.

The legislation also changes the way the General Rate pension is indexed, from indexation to the CPI alone, to indexation with reference to both the CPI and MTAWE in the same manner used to calculate service pensions. And unlike the current methodology, the new means of indexation will take into account the present economic environment of wages growth and low inflation to calculate the relative value of all disability pensions.

Currently there are two components in the calculations for Special Rate and Intermediate Rate disability pensions. The General Rate provides compensation for non-economic loss or pain and suffering, while the Above General Rate provides compensation for economic loss. Compensation for non-economic loss is currently indexed to the CPI, while the economic loss component of disability pensions is indexed with reference to both the CPI and MTAWE.

While CPI indexation continues to be used to maintain the value of non-economic loss payments in major injury compensation schemes, some smaller schemes do feature wage related methods of indexation.  In keeping with the Government’s commitment to a ‘best practice’ and beneficial system of support for service related injuries, illnesses and impairment the non-economic loss component of disability pensions will also be indexed with reference to both CPI and MTAWE in the same manner as the Service Pension from March 2008.

The veteran community—particularly those veterans on the Special Rate disability pension—has argued strongly that these calculations are inequitable and should be changed. The Government has worked closely with the veteran community on this matter and I am pleased to present a Bill that introduces a uniform—and a more rational and equitable—method of indexation for all disability pensions.

The legislation also ensures that war widows and war widowers’ will continue to receive equitable pension payments that will retain their relative value into the future. This Bill provides a one-off fortnightly increase of $10 to the former domestic allowance component of war widows and war widowers’ pensions, taking it to $35 per fortnight. Furthermore, this component will be indexed for the first time, also with reference to both CPI and MTAWE.

The implementation of these enhancements is supported by a funding commitment of around $470 million from the March 2008 introduction and through the out-years to 2011/2012.

This Bill continues the Government’s ongoing commitment to supporting Australia’s veteran community and will ensure ongoing fairness and value in the pensions for our disabled veterans and war widows and war widowers.