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Veterans' Entitlements (Clarke Review) Bill 2004

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2002 - 2003 -2004

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

SENATE

 

 

 

 

 

VETERANS’ ENTITLEMENTS (CLARKE REVIEW) BILL 2004

 

 

 

SUPPLEMENTARY EXPLANATORY MEMORANDUM

 

 

 

 

 

 

Requests for Amendments to be Moved on Behalf of the Government

 

 

 

 

 

 

(Circulated by authority of the Minister for Veterans’ Affairs,

The Hon Danna Vale, MP)





 

OUTLINE AND FINANCIAL IMPACT

 

Outline

 

These government amendments to the Veterans' Entitlements (Clarke Review) Bill 2004 will clarify some of the proposed amendments included in that Bill and in the recently enacted Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004 .  The government amendments relate to amendments made by that Act and to the Veterans' Entitlements Act 1986 and other Acts.

 

Financial impact

 

There is no financial impact.

 


 

GOVERNMENT AMENDMENTS

 

Amendment (1) is to the long title of the Bill on page 1.  The word “other” is substituted for the word “related”.

 

The amended long title will refer to: “A Bill for an Act to provide for compensation payments in respect of veterans interned by North Korean military forces and to amend the Veterans’ Entitlements Act 1986 , and for other purposes”

 

Amendment (2) is to the table of commencement provisions in clause 2 of the Bill.  The amendments remove table item 3 and replace it with items 3, 3A, 3B, 3C and 3D.  The amendments provide that items 1 to 14, 16 to 18 and 21 to 44 of Schedule 2 will commence on 20 September 2004.

 

Item 15 will commence from Royal Assent.

 

Items 19 and 20 will commence from the later of:

 

(a)           the start of 20 September 2004; and

(b)           immediately after the commencement of item 4 of Schedule 1 to the Veterans’ Entitlements Amendment (Direct Deductions and Other Measures) Act 2004 .

 

If item 4 of Schedule 1 of that Act does not commence, the provisions will not commence at all.

 

Amendment (3) is also to the table of commencement provisions in clause 2 of the Bill.  The amendment will add item 8 referring to Schedule 6 of the Bill.  Schedule 6 will commence at the same time as section 3 of the Military Rehabilitation and Compensation Act 2004 commences.

 

Amendment (4) omits and replaces Schedule 2 of the Bill and provides for replacement amendments to introduce the payment of the Defence Force Income Support Allowance.

 

The Explanations of the Changes and the Items for Schedule 2 of the Bill have been revised and are set out below.

 

Schedule 2 - Defence Force Income Support Supplement Allowance

 

Part 1  - Amendment of the Veterans’ Entitlements Act 1986

 

Explanation of the Changes

 

The Defence Force Income Support Supplement (DFISA) will be payable to those persons whose social security pension or benefit (the primary payment) under social security law is reduced, including to nil, because adjusted disability pension has been included as ordinary income in assessing the rate of the primary payment.

 

The amount of DFISA a person receives will be equal to the difference between the actual primary payment a person receives under social security law, and the notional primary payment the person would receive if adjusted disability pension was not counted as ordinary income in the assessment of the notional primary payment, and an adjusted disability pension income test for rent assistance was applicable.

 

For the purposes of DFISA, adjusted disability pension will be defined as being a disability pension payable under Parts II and IV of the VEA, certain pensions payable under the repealed Repatriation Act 1920 that have been “saved” and payments of temporary incapacity allowance under section 107 of the VEA.  The definition will also include permanent impairment payments and payments of special rate disability pension under the Military Rehabilitation and Compensation Act 2004 .

 

Adjusted disability pension does not include war widow/ widower’s pensions paid under subsection 30(1), or payments made by other governments as compensation for war or service related injuries or death.

 

The payment of the allowance is automatic and not as the result of a claim for the payment made by or on behalf of the claimant.  The payment of DFISA relates to a claim for the primary payment made before or after 20 September 2004.

 

The payment of DFISA is made under the relevant provisions of Part VIIAB of the VEA and is not the subject of a determination that has been made by any person.  There will therefore not be any merit review of the decision made concerning the amount of the payment.

 

The rate of DFISA will be based on actual and notional calculations made by reference to the relevant Rate Calculators in the Social Security Act.

 

The calculations and determinations in relation to the social security payment will be decisions made under social security law.  As such a claimant may seek merit review of a decision concerning the determinations under the relevant provisions of the Social Security (Administration) Act 1999 .

 

Persons who had previously had a claim for a primary payment rejected on the basis that the primary payment was not payable because of the inclusion of adjusted disability pension in their ordinary income will need to make a new claim for the primary payment in order to ascertain whether DFISA is payable.

 

A transitional provision has been included that will make provision for a claim for a primary payment made prior to 20 September 2004 that has not been determined by that date.  Where the rate of payment would be nil, but DFISA would be payable if a claim were made on or after 20 September 2004, that claim will be treated as if it were made on that date.

 

The amendments will also include provisions for the making of regulations to provide for the payment of DFISA-like payments under other Acts and schemes.

 

Income support payments such as those available under Farm Household Support Act 1992 can be affected by the inclusion of payments of adjusted disability pension in the income test used to determine the rate of assistance.  In such cases there will be a need for a DFISA-like payment to ensure that such persons are not disadvantaged.

 

The amendments in the revised Schedule 2 set out the provisions referring to the eligibility for and calculation of the payment of DFISA in new Part VIIAB.  The amendments also provide for the payment of DFISA bonus (payable to persons claiming a pension bonus affected by the inclusion of adjusted disability pension ) and set out the treatment of DFISA for the purposes of the bereavement provisions of the Social Security Act 1991 (Social Security Act).

 

The Bill also includes amendments to alter the income test applied to income support supplement.  The supplement is an income and assets tested payment to war widows and widowers who do not receive a service pension.

 

The proposed amendments will exclude adjusted disability pension from the adjusted income of income support supplement recipients.

 

Explanation of the Items

 

Item 1 repeals paragraph (b) of the definition of “adjusted income” in subsection 5H(1).  Paragraph (b) of the definition previously referred to an instalment of disability pension payable to the person.

 

A new paragraph (b) will be inserted which will include those payments of disability pension that are referred to in paragraph (d) of the definition of “disability pension” in subsection 5Q(1).

 

The amendment affects the income support supplement income test.  The effect of the amendment is the exclusion of disability pension payable under Parts II and IV, temporary incapacity allowance and some “saved” pensions payable under the repealed Repatriation Act 1920 , under that test.  Certain payments made in respect of incapacity or death resulting from employment in connection with a war or war-like operations in which the Crown has been engaged will continue to be held in the income support supplement income test.  This includes payments of war widow(er)s pensions under subsection 30(1) of the VEA.

 

Item 2 repeals paragraphs (cc), (cd) and (ce) of the definition of “adjusted income” in subsection 5H(1).  Paragraphs (cc), (cd) and (ce) of the definition of “adjusted income” in subsection 5H(1) were inserted as part of the amendments made by the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004 .

 

Paragraphs (cc) and (cd) were inserted to include payments of permanent impairment compensation made under sections 68, 71 or 75 of the Military Rehabilitation and Compensation Act 2004 (MRCA) in the definition of “adjusted income”.

 

Paragraph (ce) was inserted to provide for the inclusion of special rate disability pension payable under Part 6 of Chapter 4 of the MRCA.

 

The requirement for those payments to be included in the adjusted income of a person eligible for income support supplement will no longer exist from 20 September 2004.  The amendments to the definition will have the effect of excluding those payments from the income support supplement income test.

 

Item 3 amends subsection 5H(8) by inserting new paragraph (g).  Subsection 5H(8) sets out the payments that are to be regarded as being an “excluded amount” for the purposes of determining the income of a person.

 

New paragraph 5H(8)(g) will include all payments made under Part VIIAB including those made under the regulations as being an “excluded amount”.

 

Item 4 inserts a definition for “Defence Force Income Support Allowance into the general definitions provision, subsection 5Q(1).  A “Defence Force Income Support Allowance” or “DFISA” is defined as being payment made under Part VIIAB.

 

Item 5 inserts a definition for “DFISA bonus” into the general definitions provision, subsection 5Q(1).  A “DFISA bonus” is defined as being a bonus paid under Part VIIAB.

 

Items 6 to 11 amend section 45TC by inserting Notes at the end of paragraphs 45TC(1)(e), 45TC(2)(e) and 45TC(3)(e) and inserting new subparagraphs 45TC(1)(f)(ia), 45TC(2)(f)(ia) and 45TC(3)(f)(ia).

 

Section 45TC sets out the requirements to be met before a person will be eligible for the pension bonus.

 

The Notes refer the reader to a new provision of the Social Security Act 1991 , subsection 23(1D).  That section provides that in certain circumstances a person is to be regarded as being in receipt of a social security pension even if the rate is nil.

 

Those circumstances are where a person, or the person’s partner, is receiving adjusted disability pension as defined in new section 118NA of the VEA, and would be receiving a social security pension if two assumptions were made.  Those assumptions being that adjusted disability pension was exempt income and an adjusted disability pension rent test assistance test was applied.

 

New subparagraphs 45TC(1)(f)(ia), 45TC(2)(f)(ia) and 45TC(3)(f)(ia) provide that a person will not be qualified for a pension bonus under the VEA if they have received a DFISA bonus under Part VIIAB.

 

Item 12 inserts a Note at the end of section 53J.  Section 53J refers to the application of the bereavement payment provisions of Subdivision 12A of Part IIIB of the VEA on the death of the partner of a person receiving a service pension or income support supplement.

 

The Note refers the reader to a new provision of the Social Security Act 1991 , subsection 23(1D).  That section provides that in certain circumstances a person is to be regarded as being in receipt of a social security pension even if the rate is nil.

 

Item 13 inserts new subsection 53M(7).  Section 53M provides for a determination of the rates of service pension, income support supplement or social security pension payable to the pensioner and the deceased partner on the last day of the pension period prior to the death of the partner.  The determination is relevant for the purposes of assessing the amount of the bereavement payment that will be payable to the pensioner for the bereavement period.

 

New subsection 53M(7) provides that the amount of DFISA payable to the deceased partner will be added to the rate of the social security pension payable to that person on the last day of pension period prior to their death.

 

Item 14 amends paragraph 53NA(1)(a) to insert a reference to the receipt of an amount of “DFISA” by a financial institution after the death of the partner of a pensioner.

 

Section 53NA will provide that a financial institution will not be liable where an amount of service pension, DFISA, income support supplement or social security pension is paid after the death of the partner of a pensioner to the pensioner who would have been entitled to the payment.

 

Item 15 inserts new Part VIIAB into the VEA.

 

New Part VIIAB is titled “Defence Force Income Support Allowance and related payments”.

 

New section 118N provides a simplified outline stating that the Part is about the payment of DFISA, the payment of the DFISA bonus and the payment of DFISA-like payments.

 

DFISA is a payment to a person whose income support payment under the Social Security Act has been reduced including to nil, because of the payment of adjusted disability pension to the person or the person’s partner.

 

The DFISA bonus is payable in the circumstances where the amount of a person’s pension bonus under the Social Security Act has been reduced including to nil, because the person or the person’s partner has been paid adjusted disability pension.

 

The new Part will also include a power to make regulations to provide for DFISA-like payments to a person who has a payment under a Commonwealth Act, regulations or instrument, where that payment is affected by the receipt of adjusted disability pension by the person or the person’s partner.

 

Payment of DFISA and DFISA-like payments will be automatic.  Payment of the DFISA bonus will be automatic following the claim for pension bonus under the Social Security Act.

 

New section 118NA provides for the definitions of the terms to be used in the new Part.

 

An “adjusted disability pension” is defined for the purposes of the new Part as being:

 

(a)                 a disability pension payable under Parts II and IV of the VEA, to veterans as compensation for injuries or diseases caused or aggravated by war or defence service (other than a pension payable under section 30 to a dependent of a deceased veteran); or

(b)                payment of a temporary incapacity allowance under Part VI; or

(c)                 a “saved” pension payable under the repealed Repatriation Act 1920 because of subsection 4(6) or (8B) of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 (other than a pension payable in respect of a child); or

(d)                a payment for permanent impairment (either as a weekly payment or as a lump sum) under sections 68, 71, 75 or 80 of the Military Rehabilitation and Compensation Act 2004 (MRCA); or

(e)                 a payment of special rate disability pension under Part 6 of Chapter 4 of the MRCA.

 

An “amount” is defined to include a nil amount.

 

An “excluded amount” is defined as being an amount that is not income for the purposes of the Social Security Act because of the operation of subsection 8(8) of that Act.

 

A “partner” is defined as having the same meaning as it has in subsection 4(1) of the Social Security Act.

 

The term “rate” is defined to include a nil rate.

 

A “social security age pension” is defined as being an age pension under Part 2.2 of the Social Security Act.

 

A “social security pension bonus” is defined as being a pension bonus under Part 2.2A the Social Security Act.

 

New section 118NB provides for the payment of DFISA.

 

Subsection 118NB(1) provides that DFISA will be payable on each day to a person on or after 20 September 2004 if:

 

(a)                 adjusted disability pension is payable to the person or the person’s partner; and

(b)                the adjusted disability pension reduces (including to nil) the rate at which a social security pension or benefit is payable to the person on that day.

 

Notes 1 and 2 to subsection 118NB(1) refer the reader to section 118NA for the definitions of “adjusted disability pension” and “partner” and to section 5Q for the definitions of “social security pension” and “social security benefit”.

 

Note 3 refers the reader to a new provision of the Social Security Act, subsection 23(1D).  That section provides that in certain circumstances a person is to be regarded as being in receipt of a social security pension or benefit even if the rate is nil.

 

Subsection 118NB(2) provides that DFISA will not be payable if:

 

(a)                the rate of DFISA would be nil; or

(b)                the financial hardship provisions of the Social Security Act are applicable to the person in relation to the primary payment; or

(c)                the person has elected not to receive the payment of DFISA and the election has not been withdrawn.

 

Paragraph 118NB(2)(b) precludes the payment of DFISA to those persons receiving a social security pension or benefit under the financial hardship provisions of the Social Security Act.  The amendment will ensure that a person in those circumstances is not more favourably treated than a service pensioner in similar circumstances.

 

The hardship provisions of the VEA provide that a person in receipt of a service pension has disability pension included in the “adjusted annual rate of ordinary income” that is deducted from the maximum payment rate of service pension payable under the financial hardship provisions of the VEA.

 

Paragraph 118NB(2)(c) provides that a person may elect not to receive payments of DFISA.  Such an election will remain in force until it is withdrawn.

 

As DFISA is an automatic payment not requiring a claim, this provision allows a person to choose not to receive the payment if they so wish.

 

If a person withdraws the election, the person will start to receive DFISA from the day following the day they withdraw the election.  DFISA will not be payable for the period during which the election is in force.

 

If a person elects not to receive DFISA, and subsection 23(1D) of the Social Security Act applies to that person, the person will remain a social security recipient at a rate of nil and will therefore be eligible for all secondary benefits such as concession cards and allowances.  This status will continue while section 23(1D) of the Social Security Act applies.

 

A person with the status of being a social security recipient may not be eligible for a pension bonus.

 

Where a person makes an election under this provision, there will be no deprivation of income as DFISA is an exempt income amount under the Social Security Act.

 

Subsection 118NB(3) refers to the making of an election not to receive payments of DFISA and the withdrawal of such an election.  It provides that an election and the withdrawal of an election must be by document lodged at an office of the Department of Veterans’ Affairs in accordance with section 5T.  The lodgement of the document will be taken to have been made on a date determined under that section.

 

New section 118NC provides the Method Statements for calculating the amount of DFISA payable.

 

Subsection 118NC(1) contains Method Statement 1 which is applicable where the primary payment is not subject to the compensation recovery provisions of Part 3.14 of the Social Security Act and is not a prescribed payment for the purposes of the section.  Method Statement 1 comprises the following steps:

 

Step 1.             A calculation of the daily provisional payment rate of the “primary payment” (the social security pension or benefit affected by the inclusion of adjusted disability pension) that is payable to the person on a day that is on or after 20 September 2004.

 

A Note to Step 1 refers the reader to subsection 118NC(4) for the definition of the term “daily provisional payment rate”.

 

Step 2.             A calculation of the amount of the daily provisional payment rate (the “notional rate”) of the primary payment that would have been payable to the person if the following two assumptions were made:

 

First Assumption

 

The first assumption is that adjusted disability pension payable to the person or the person’s partner were an “excluded amount” in the determination of the ordinary income of the person that is used in the assessment of the rate of the primary payment.

 

A Note to the “First assumption” provides that adjusted disability pension will not be treated as income in the assessment of the notional rate.

 

Second Assumption

 

The second assumption is that the amount (if any) of “rent assistance” included in the “primary payment” were reduced (but not to less than nil) by the “rent reduction amount”.

 

A Note to the “Second assumption” refers the reader to the definitions of “rent assistance” and “rent reduction amount” in subsection 118NC(4).

 

Step 3.             The amount of the DFISA for the day concerned is the difference between the two amounts calculated in Steps 1 and 2.  It is determined by subtracting the “daily provisional payment rate” in Step 1 from the “notional rate” in Step 2.

 

Subsection 118NC(2) contains Method Statement 2 which is applicable where the primary payment is subject to the compensation recovery provisions of Part 3.14 of the Social Security Act but is not a prescribed payment for the purposes of the section.  Method Statement 2 comprises the following steps:

 

Step 1.             A calculation of the daily provisional payment rate of the “primary payment” (the social security pension or benefit affected by the inclusion of adjusted disability pension) that is payable to the person on a day that is on or after 20 September 2004.

 

A Note to Step 1 refers the reader to subsection 118NC(4) for the definition of the term “daily provisional payment rate”.

 

Step 2.             A calculation of the amount by which the compensation recovery provisions of Part 3.14 of the Social Security Act reduce the daily primary payment rate.

 

Step 3.             Subtract the amount determined in Step 2 from the amount of the “daily provisional payment rate” as determined in Step 1.

 

Step 4.             A calculation of the amount of the daily provisional payment rate (the “notional rate”) of the primary payment that would have been payable to the person if the two assumptions referred to in Step 2 of the Method Statement in subsection 118NC(1) were made.

 

Step 5.             A calculation of the amount by which the compensation recovery provisions of Part 3.14 of the Social Security Act would reduce the “notional rate”.

 

Step 6.             Subtract the amount determined in Step 5 from the “notional rate” as determined in Step 4.

 

Step 7.             Subtract the amount in Step 3 from the amount in Step 6.  The difference between the two amounts will be the amount of DFISA for the day concerned.

 

Subsection 118NC(3) provides that in certain circumstances a social security pension or benefit may be prescribed for the purposes of determining the rate of DFISA payable to a person.

 

Almost all social security pensions or benefits affected by the inclusion of adjusted disability pension are covered by the Method Statements in subsections 118NC(1) and (2).

 

Subsection 118NC(3) provides for regulations to prescribe the payment of DFISA to those qualified for certain social security pensions and benefits.  The regulations made under this provision must also prescribe the methods by which DFISA will be calculated in respect of those payments.

 

The payments which may be prescribed could include those payments granted under the repealed Social Security Act 1947 that continue to be paid at “frozen” rates.  Other payments may include certain payments made under the current Social Security Act that will require a variation of the Method Statement in order to determine the amount of DFISA that should be paid.

 

Subsection 118NC(4) defines the terms used in the Method Statements.

 

The “daily provisional payment rate” is defined in relation to the primary payment of the social security pension or benefit.  It is either the provisional payment rate, provisional annual payment rate or provisional fortnightly payment rate referred to in the Rate Calculator used under the Social Security Act to work out the rate of the primary payment, divided by either 364 or 14 as appropriate.

 

“Rent assistance” is defined as having the same meaning as it has in the Social Security Act.

 

The “rent reduction amount” is defined as being the amount that would be the person’s income reduction under the Social Security Act if that income reduction were worked out by applying the same income test or ordinary income test that was used under the Social Security Act in calculating the primary payment, ie. using the same income free areas and taper rates, but applying that test on the basis that the adjusted disability pension payable to the person or the person’s partner were the person’s only ordinary income for the purposes of that Act.

 

New section 118ND amends the Social Security Act bereavement payment provisions applicable to deceased persons receiving DFISA at the time of their death.

 

Under the bereavement payment provisions of the Social Security Act the income support entitlements of the deceased person continue to be payable to the partner of the deceased person for the duration of a period known as a bereavement period.  The determination of the rate of the bereavement payment is based on the rate of income support payable to the deceased on the last day of the pension period prior to the death of the person.

 

Subsection 118ND(1) provides that the rate of the social security pension or benefit that would have been payable to a person during the bereavement period if they had not died is to be increased by the rate of DFISA that would have been payable to the person on that day.

 

The effect of the provision is to include DFISA in the determination of the amount of the bereavement payment to be made to the surviving partner, as determined under the Social Security Act.

 

Note 1 to the subsection refers the reader to the definitions of “social security pension” and “social security benefit” in section 5Q.

 

Note 2 to the subsection refers the reader to the definitions of “bereavement payment provision” and “bereavement period” in subsection 118ND(4).

 

Subsection 118ND(2) refers to the situation where a payment of DFISA is made in the name of the deceased person during the bereavement period.

 

The additional payment of DFISA will not be recovered where it can be assumed that the partner of the deceased person has had the benefit of the payment and the payment is not more than the partner of the deceased would have been entitled to under the bereavement payment provisions.  In those circumstances the amount payable under the Social Security Act bereavement payment provisions will be reduced by the additional amount of the DFISA paid.

 

Note 1 to the subsection refers the reader to the definitions of “bereavement payment provision” and “Social Security Secretary in subsection 118ND(4).

 

Subsection 118ND(3) is applicable where after the death of a DFISA recipient, an amount of DFISA payable to the deceased has been paid into a financial institution, and that institution has then paid an amount not exceeding the amount of DFISA to the partner of the deceased.

 

Where the partner of the deceased is eligible for a bereavement payment under the relevant provisions of the Social Security Act the financial institution will be indemnified in spite of anything in any other law against any claim, action or demand in relation to the payment made to the surviving partner.

 

Subsection 118ND(4) defines some of the terms used in section 118ND.

 

The “bereavement payment provisions” of the Social Security Act are defined in subsection 118ND(4) as being:

 

(a)           Division 9 of Part 2.2 (age pension);

(b)           Division 10 of Part 2.3 (disability support pension);

(c)           Division 9 of Part 2.4 (wife pension);

(d)           Division 9 of Part 2.5 (carer payment);

(e)           Division 9 of Part 2.7 (bereavement allowance);

(f)             Division 9 of Part 2.8 (widow B pension);

(g)           Division 9 of Part 2.10 (parenting payment);

(h)           Division 10 of Part 2.11 (youth allowance)

(i)             Division 10 of Part 2.11A (austudy);

(j)             Division 9 of Part 2.12 (newstart);

(k)           Division 11 of Part 2.12B (mature age allowance);

(l)             Division 9 of Part 2.14 (sickness allowance);

(m)         Division 9 of Part 2.15 (special benefit);

(n)           Division 9 of Part 2.15A (partner allowance);

(o)           Division 10 of Part 2.16 (special needs pension).

 

A “bereavement period” is defined as having the meaning given by subsection 21(2) of the Social Security Act.  Subsection 21(2) of the Social Security Act refers to the period of 14 weeks from the date of death of the deceased.

 

The reference in section 118ND to the “Social Security Secretary” is a reference to the Secretary of the Department administered by the Minister who administers the Social Security Act.

 

Section 118NE will allow for the payment of Remote Area Allowance to eligible persons in receipt of a payment of DFISA.

 

Under the various Rate Calculators in the Social Security Act remote area allowance is not payable to a person who would otherwise be eligible for the payment where the rate of the person’s social security or benefit is nil.

 

Subsection 118NE(1) provides that in certain circumstances the rate of a social security pension or benefit is taken to be greater than nil for the purposes of eligibility for the remote area allowance.  Subsection 118NE(1) is applicable if, on a day that is on or after 20 September 2004:

 

(a)           adjusted disability pension is payable to a person or to a person’s partner; and

(b)           a social security pension or benefit is payable to the person; and

(c)           the rate of the social security pension or benefit would is nil; and

(d)           the rate of the social security pension or benefit would not be nil if adjusted disability pension received by a person or the person’s partner was not included in the determination of the rate of pension or benefit payable to the person but was included in the assessment of the rent assistance entitlements.

 

Subsection 118NE(2) lists the “remote area allowance provisions” of the Social Security Act as being:

 

(a)           point 1064-H1;

(b)           point 1065-E1;

(c)           point 1066-H1;

(d)           point 1066A-I1;

(e)           point 1066B-F1;

(f)             point 1067G-K1;

(g)           point 1067L-F1;

(h)           point 1068-J1;

(i)             point 1068A-F1;

(j)             point 1068B-G1.

 

Section 118NF refers to the payment of a DFISA bonus.  A DFISA bonus is payable where the payment of adjusted disability pension to a person or the person’s partner reduces the amount of the pension bonus payable to the person under the Pension Bonus Scheme in Part 2.2A of the Social Security Act

 

Subsection 118NF(1) provides that DFISA bonus will be payable if:

 

(a)           on a day, the “critical day”, on or after 20 September 2004, adjusted disability pension is payable to the person or the person’s partner; and

(b)           an age pension becomes payable to the person on the “critical day”; and

(c)           on or after the “critical day” a pension bonus is granted to the person under Part 2.2A of the Social Security Act; and

(d)           the adjusted disability pension has reduced the amount of the pension bonus or resulted in no bonus being payable.

 

The Note to subsection 118NF(1) refers the reader to the definitions of “adjusted disability pension”, “partner”, “social security age pension” and “social security pension bonus” in section 118NA.

 

Subsection 118NF(2) provides that a DFISA bonus will not be payable if section 1129 of the financial hardship provisions of the Social Security Act is applicable to the person for the purposes of the assessment of the rate of age pension.

 

Section 118NG provides for  payment of a DFISA bonus.  Paragraph 118NG(a) provides that it will be payable on the first pension payday after the social security pension bonus was granted.

 

Paragraph 118NG(b) provides for the payment of the bonus on a later day where the Repatriation Commission considers that it is not practicable to pay it on that pension payday.

 

A Note to the section refers the reader to section 5Q for the definition of “pension payday”.

 

Section 118NH refers to the payment of DFISA bonus after the death of the person to whom the DFISA bonus is payable.

 

Subsection 118NH(1) provides that DFISA bonus will only be payable after the death of the eligible person in the circumstances set out in subsection 118NH(2).

 

Subsection 118NH(2) provides that a DFISA bonus will be payable to the legal personal representative of a person where a DFISA bonus was payable at the time of the death of the person to whom the bonus was payable and the person had not received the DFISA bonus before their death.

 

Subsection 118NH(3) provides that the Commonwealth will have no further liability to any person in respect of the bonus if a DFISA bonus is paid under subsection 118NH(2).

 

Section 118NI provides for the Method Statement to be used to determine the amount of the DFISA bonus payable.  The Method Statement involves the following steps:

 

Step 1.             The calculation of the amount of pension bonus payable under the provisions of Part 2.2A of the Social Security Act.

 

Step 2.             The calculation of the “notional pension bonus” ie. the amount that would be payable under the provisions of Part 2.2A of the Social Security Act if adjusted disability pension were an “excluded amount” and therefore exempt from the ordinary income test used to determine the annual pension rate used to calculate the amount of the “notional pension bonus”.

 

A Note to Step 2 refers the reader to section 118NA for the definition of “excluded amount”.

 

Step 3.             The subtraction of the actual pension bonus under Part 2.2A of the Social Security Act (from Step 1) from the “notional pension bonus” (from Step 2).  The difference between the two amounts is the DFISA bonus.

 

Section 118NJ provides for the making of regulations for, and in relation to DFISA-like payments.  These payments will be payable to those persons eligible for a payment under a “Commonwealth scheme” that is affected by the receipt of adjusted disability pension by the person or the person’s partner.  A “Commonwealth scheme” is defined in subsection 118NI(3).

 

The provision of DFISA-like payments may be required for certain persons in receipt of income support payments under provisions of the Farm Household Support Act 1992 and other current and future schemes.  The ability to provide for the payment of DFISA-like payments under the regulations will ensure that certain persons qualified for income support will not be disadvantaged because DFISA is only payable in respect of income support payments under the Social Security Act.

 

Subsection 118NJ(1) provides that the regulations may make provision for DFISA-like payments to a person on or after 20 September 2004 if:

 

(a)     adjusted  disability pension is payable to the person, or the person’s partner; and

(b)     a payment under a “Commonwealth scheme” is reduced or is not payable because of the inclusion of adjusted disability pension as income.

 

Note 1 to subsection 118NJ(1) refers the reader to the definitions of “adjusted disability pension” and “partner’ in section 118NA.

 

Note 2 to subsection 118NJ(1) refers the reader to the definition of “Commonwealth scheme” in subsection 118NJ(3).

 

Subsection 118NJ(2) provides that the regulations may also provide for a related payment or non-financial benefit to be paid or provided to a person where the payment or benefit is not available solely because the payment under the Commonwealth scheme is not payable.

 

Subsection 118NJ(3) defines a “Commonwealth scheme” as an Act, or regulations or an instrument made under an Act, or a program administered by the Commonwealth.

 

Item 16 amends section 121 by inserting new subsection 121(6A).  Section 121 provides for the payment of all pensions and allowances (with the exception of service pensions and income support supplement) under the VEA to be paid in instalments.

 

Paragraph 121(6A)(a) provides for the rounding of each instalment of DFISA to the nearest cent (rounding half a cent upwards).

 

Paragraph 121(6A)(b) provides that subsections 121(3), (4) and (6) are not to apply in relation to DFISA.

 

Subsections 121(3) and (4) set out eligibility rules that apply to the payment of instalments.  Subsection (3) provides that a person ineligible for a payment on the last day of a pension period will not be eligible for any of the days of the pension period.  Subsection 121(4) provides that an instalment will not be payable to a person who has died during the pension period.

 

Subsection 121(6) provides that the daily rate of pension is determined by dividing the fortnightly rate of pension by 14.

 

Item 17 amends section 122A.  Subsection 122A(1) provides for the payment of a pension into a bank account nominated by the pensioner.

 

The definition of “pension” in subsection 122A(2) refers to any pension or allowance payable under the VEA.  The reference is amended to include the payment of a DFISA bonus under Part VIIAB.

 

Item 18 insets new sections 122C, 122D, and 122E.

 

New section 122C provides that the Repatriation Commission may determine the manner in which and the form of the instalments of DFISA payable to a person who is physically outside Australia.

 

New section 122D provides for the making of deductions by the Repatriation Commission from payments of DFISA and DFISA bonus for payments to be forwarded to the Commissioner of Taxation.

 

Subsection 122D(1) provides for the deduction from instalments of DFISA of payments to the Commissioner of Taxation in accordance with the provisions of Subdivision 260-A of Schedule 1 to the Taxation Administration Act 1953 .

 

Subsection 122D(2) provides for the deduction from a payment of a DFISA bonus of a payment to the Commissioner of Taxation in accordance with the provisions of Subdivision 260-A of Schedule 1 to the Taxation Administration Act 1953 .

 

Subsection 122D(3) provides for the deduction from a payment of DFISA of a payment to the Commissioner of Taxation in accordance with the request of the person to whom DFISA is payable.  The request is to be made by a document lodged at an office of the Department of Veterans’ Affairs in Australia in accordance with section 5T.

 

Subsection 122D(4) provides for the deduction from a DFISA bonus of a payment to the Commissioner of Taxation in accordance with the request of the person to whom the DFISA bonus is payable.  The request is to be made by a document lodged at an office of the Department of Veterans’ Affairs in Australia in accordance with section 5T.

 

New section 122E provides for the deduction of payments from instalments of DFISA for the purpose of making a payment included in a class of payments approved by the Minister for Veterans’ Affairs.

 

Subsection 122E(1) provides that the request is be by a document lodged at an office of the Department of Veterans’ Affairs in Australia in accordance with section 5T.

 

Subsection 122E(2) provides that where the request referred to in subsection 122E(1) is made the Repatriation Commission may make the deductions and pay the amounts deducted in accordance with the request.

 

Subsection 122E(3) provides that the Minister for Veterans’ Affairs may approve classes of payments for the purposes of section 122E.

 

Subsection 122E(4) provides that the approval referred to in subsection 122E(3) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 .

 

Items 19 and 20 repeal new subsection 122D(3) and new section 122E as set out in Item 18 of this Bill.  Both provisions refer to requests to make deductions from DFISA.

 

The Notes to Items 19 and 20 refer to the items commencing only if item 4 of Schedule 1 to the Veterans’ Entitlements Amendment (Direct Deductions and Other Measures) Act 2004 commences.

 

Item 4 of that Act inserts new section 122B which provides for the direct deduction of payments to the Commissioner of Taxation or a class of payments approved by the Repatriation Commissioner from instalments of a pension, allowance or other pecuniary benefit payable under the VEA.

 

Item 21 amends the appropriation provision in section 199 of the VEA by inserting new paragraph (e).  New paragraph 199(e) provides that the Consolidated Revenue Fund can be appropriated to the extent necessary for the payment of all payments made under Part VIIAB and payments and benefits provided under the regulations made under that Part.

 

Items 22 to 28 amend the Rent Assistance Module of the Rate Calculators in Schedule 6.

 

Point SCH6-C1 is repealed and a new point SCH6-C1 is inserted.  New point SCH6-C1 explains which provisions of the Module C Rent Assistance Rate Calculator apply to service pensioners and which provisions apply to income support supplement recipients.

 

Points SCH6-C2 to SCH6-C11 and point SCH6-C15 will be applicable to a person in receipt of a service pension or income support supplement.  Points SCH6-C13 and SCH6-C14 will apply only to a person in receipt of a service pension.  Points SCH6-C14B and SCH6-C14C will apply only to a person in receipt of an income support supplement.

 

A separate Method Statements is required for the determination of the rent assistance reduction amount to be applied to the rate of rent assistance payable to income support supplement recipients.

 

Point SCH6-C2 refers to the payment of rent assistance as an amount that is added to the maximum basic rate of service pension or income support supplement.  Point SCH6-C2 is amended by the omission of the reference to SCH6-C15 being applicable only to a person in receipt of a service pension.  Substituted is a reference to points SCH6-C13 and SCH6-C14 being applicable to a person in receipt of a service pension and points SCH6-C14B and SCH6-C14C being applicable to a person in receipt of an income support supplement.

 

Point SCH6-C7 refers to the factors that will affect the rate of rent assistance.  Paragraph SCH6-C7(c) is repealed and new paragraph (c) refers to the receipt of a disability pension, permanent impairment compensation or adjusted disability pension..

 

Note 2 to point SCH6-C7 is amended to include a reference to “adjusted disability pension”.

 

Point SCH6-C12 refers to the application of points SCH6-C13 to SCH6-C15 only to persons in receipt of a service pension where the person or the person’s partner also receives a disability pension.  As SCH6-C15 will apply both to service pension and income support supplement recipients the reference to SCH6-C15 is replaced with a reference to point SCH6-C14.

 

The amendments to points SCH6-C1, SCH6-C2 and SCH6-C7 relate to the amendments which will provide for the application of the adjusted disability pension income test (as it is set out in new points SCH6-C14A to SCH6-C14C) for rent assistance payable to recipients of income support supplement.

 

New point SCH6-C14A provides that points SCH6-C14B and SCH6-C14C are applicable for the purpose of determining the reduction in the rent assistance payable to a person in receipt of an income support supplement if the person or the person’s partner is in receipt of adjusted disability pension.

 

The Note to point SCH6-C14A refers the reader to point SCH6-C16 for the definition of “adjusted disability pension”.

 

New point SCH6-C14B sets out the Method Statement for the imposition of the adjusted disability pension income test on the rate of rent assistance payable to the person.

 

The Method Statement involves the following steps:

 

Step 1.             A calculation of the annual rate of the person’s adjusted disability pension to determine the person’s “disability income”.

 

Note 1 to Step 1 refers the reader to new point SCH6-C16 for the definition of “adjusted disability pension”.

 

Note 2 to Step 1 refers the reader to new point SCH6-C14C for the treatment of the amount of disability pension of members of a couple.

 

Step 2.             A calculation of the rent assistance free area as set out in Table C-3 in point SCH6-C15.

 

Step 3.             A determination as to whether or not the person’s disability income from Step 1 exceeds the person’s rent assistance free area from Step 2.

 

Step 4.             Where the person’s disability income does not exceed the rent assistance free area, the person’s rate of rent assistance as worked out under Table C-2 in point SCH6-C8 will not be affected.

 

Step 5.             Where the person’s disability income does exceed the rent assistance free area, the difference between the person’s disability income and the person’s rate of rent assistance will be the person’s “disability income excess”.

 

Step 6.             The “disability income excess” is multiplied by 0.4 to determine the “rent assistance reduction amount”.

 

Step 7.             The “rent assistance reduction amount” is subtracted from the rate of rent assistance determined under Table C-2 in point SCH6-C8 to determine the person’s “rate of rent assistance”.

 

New point SCH6-C14C is applicable in the circumstances where the person is a member of a couple and either one member of the couple receives adjusted disability pension or both members of the couple receive adjusted disability pension.  In such circumstances the annual rate of adjusted disability pension, or both the annual rates of adjusted disability pension added together, are divided by 2 to work out the amount of the disability income for each member of the couple for the purposes of Module C.

 

New point SCH6-C16 is inserted to provide that the term “adjusted disability pension” will have the same meaning as it does in new section 118NA.

 

Part 2 - Amendment of other Acts

 

Explanation of the Changes

 

Consequential amendments are required to various other Acts to ensure that persons receiving payments of DFISA will be treated appropriately under the provisions of those Acts.

 

The consequential amendments will include changes to the Income Tax Assessment Act 1936 and Income Tax Assessment Act 1997 , A New Tax System (Family Assistance) Act 1999 and the Social Security Act 1991 .

 

The amendments will ensure that DFISA recipients will not have to provide a tax file number in order to receive the payment and that DFISA will have the same income tax status as the primary payment to which it relates.

 

Most of the amendments to the Social Security Act 1991 (Social Security Act) are minor in nature such as the exclusion of DFISA and the DFISA bonus from the social security income test, and the inclusion of both payments in the definitions provisions of the Social Security Act.  Other amendments provide for the inclusion of DFISA in the calculation of the rate of pension or allowance a person can receive under the pension loans scheme provisions.

 

The major amendment to the Social Security Act is the insertion of new subsection 23(1D).

 

Subsection 23(1D) is a provision related to the payment of DFISA.  The provision affects a person whose social security pension or benefit is not payable because the rate of payment would be nil.

 

Subsection 23(1D) provides that in certain circumstances the related social security pension or benefit will be taken to be payable to the person and will be taken to have been received by the person even though the rate of the social security pension or benefit is nil.

 

Those circumstances are where the rate of the pension or benefit would not be nil if adjusted disability pension was an excluded amount and an adjusted disability pension income test was applied in calculating any rent assistance entitlements.

 

The purpose of the provision is to ensure that for the purposes of the social security law a person in those circumstances will be regarded as being in receipt of the primary payment to which the payment of DFISA would relate, even where the rate is nil.

 

The provision will ensure that such persons will be subject to the relevant provisions of the Social Security (Administration) Act 1999 relating to the obligations of persons receiving social security payments under the Social Security Act.  Those obligations include requirements for a person to whom a social security payment is being paid to provide information concerning any changes in their circumstances and to respond to notices issued by the relevant Department.

 

The provision will also ensure that such persons are regarded as a social security recipient for the purposes of determining eligibility for other payments and benefits such as concession cards and allowances.

 

The provision will also be applicable in the circumstances where the claim for the primary payment would ordinarily be rejected on the basis of the primary payment not being payable.

 

By providing that the primary payment will continue to be payable even though it is payable at a nil rate the claim for the primary payment cannot be rejected on the basis that the primary payment is not payable.  The claim for the primary payment will survive and the primary payment will be automatically payable should the required change in the circumstances of the claimant arise so as to make an amount of the primary payment payable to the person.

 

Explanation of the Items

 

A New Tax System (Family Assistance) Act 1999

 

Item 29 amends paragraph (a) of the definition of “receiving” in subsection 3(1) to include a reference to subsection 23(1D) of the Social Security Act.

 

The amendment will ensure that recipients of DFISA, who are receiving social security pension or benefit at a nil rate will not be disadvantaged by the application of the provisions of the Family Assistance Act that provide for the payment of maximum rates of Family Tax Benefit Part A and Child Care Benefit for a person receiving any amount of social security pension or benefit.

 

Item 30 inserts new paragraph 7(ha) into Schedule 3 of the Act.  Clause 7 defines “tax free pension or benefits” for the purposes of inclusion in the adjusted income test for the payment of Family Tax Benefit Part B.

 

New paragraph 7(ha) will include DFISA as a tax free pension or benefit to the extent that the payment is exempt from income tax.

 

Income Tax Assessment Act 1936

 

Item 31 amends section 202EA by inserting new paragraph 202EA(5)(j) which refers to the payment of DFISA under Part VIIAB of the VEA.

 

Section 202EA provides an exemption for recipients of certain pensions or benefits under the Social Security Act or VEA from the need to provide a tax file number in connection with the payment of the pension or benefit.

 

Income Tax Assessment Act 1997

 

Items 32 to 34 amend section 52-65.  Section 52-65 contains a table setting out the income tax treatment of veterans’ affairs payments.

 

Subsection 52-65(1) provides that the table is not applicable to payments of pension bonus.  Subsection 52-65(1) is amended to include a reference to payments of DFISA bonus.

 

Subsection 52-65(1A) provides that payments of pension bonus under Part IIIAB of the VEA are exempt from income tax.  Subsection 52-65(1A) is amended to include a reference to payments of DFISA bonus under Part VIIAB also being exempt from income tax.

 

The table setting out the income tax treatment of veterans’ affairs payments is amended by the inclusion of new item 5A.1.

 

New item 5A.1 refers to payments of DFISA.  The reference provides that DFISA will be exempt from income tax where the social security pension or benefit that the payment of DFISA relates to is also exempt under the table in section 52-10 which sets out the income tax treatment of social security pensions and benefits.

 

If the related social security payment is not exempt the DFISA payment will be taxable income.

 

Item 35 inserts a reference to DFISA in the table in section 52-75 listing the provisions of the VEA under which veterans’ affairs payments are made.

 

New item 5A inserts the reference to DFISA being payable under Part VIIAB.

 

Social Security Act 1991

 

Item 36 inserts new paragraph (x) referring to DFISA in the listing of the payments in subsection 8(8) that are to be regarded as an “excluded amount” for the purposes of determining income under the Social Security Act.

 

Item 37 inserts a reference to the “DFISA” in the listing of general definitions in subsection 23(1).

 

Item 38 inserts new subsection 23(1D) into the general definitions provision.

 

New subsection 23(1D) is a provision related to the payment of DFISA.  It provides that in certain circumstances a social security pension or benefit will be taken to be payable to a person and the person will be taken to be receiving the payment where the rate of payment is nil.

 

Those circumstances are where the rate of the pension or benefit is nil and the rate would not be nil if adjusted disability pension was not included in the determination of the rate of pension or benefit payable but was included in the assessment of rent assistance entitlements.

 

The purpose of the provision is to ensure that for the purposes of the social security law a person to whom these circumstances apply will be regarded as being in receipt of the primary payment to which the payment of DFISA relates.  Therefore, when the person’s claim for a social security payment is assessed, their claim will not be rejected.  Instead, they will be paid DFISA and, as a recipient of a social security payment, will be required to comply with the obligation provisions applicable to such recipients under social security law.

 

The provision will also mean that a person will not be denied access to the supplementary payments and non-financial benefits that may be available to a person receiving the underlying primary payment.

 

The Note to subsection 23(1D) advises the reader that the subsection will override provisions of the Social Security Act that refer to a pension or benefit not being payable when the rate is nil.  The Note gives the examples of sections 44 and 98.

 

The effect of the amendment is not restricted to the operation of either the Social Security Act or Social Security (Administration) Act 1999 .

 

The amendment is also designed to impact on other Acts such as the Aged Care Act 1997 .  A person in receipt of DFISA and no other pension or benefit under the Social Security Act or VEA will be regarded for the purposes of that Act as being in receipt of income support payment and will therefore be regarded as eligible for the “pensioner supplement”.

 

Items 39 and 40 amend section 92C.  Section 92C refers to the qualification of a person for a pension bonus under the Social Security Act after they begin to receive an age pension.

 

The Note to paragraph 92C(e) refers the reader to new subsection 23(1D).  It explains that while a person may not actually be receiving an amount of social security pension or benefit because the rate would be nil, in certain circumstances they are to be taken to be receiving the pension or benefit where adjusted disability pension is payable to the person or the person’s partner and where the exclusion of that adjusted disability pension would be sufficient for the pension or benefit to be paid at a rate greater then nil.

 

New subparagraph 92C(f)(iii) inserts a reference to a person having already received a DFISA bonus under Part VIIAB of the VEA as not being eligible for a pension bonus.

 

Items 41 and 42 amend section 1134 by inserting new subparagraph 1134(1)(e)(ia) and substituting the word “lowest” for the word “lower”.

 

Section 1134 refers to the rate of pension or allowance payable to a person who is qualified to participate in the Pension Loans Scheme.  The Pension Loans Scheme provides that for a qualified person whose rate is reduced under either the income or assets tests the rate of pension or allowance will be increased up to the maximum rate.  The increased amount of pension or allowance becomes a debt that is repaid at a later date.

 

Section 1134 provides that the rate of pension or allowance payable to the person under the scheme will be the lower of the maximum payment rate of the pension or allowance or the rate nominated by the person.

 

New subparagraph 1134(1)(e)(ia) provides that in determining the rate of pension or allowance the maximum payment rate of the pension or allowance that is to be payable is to be reduced by the amount of DFISA payable under Part VIIAB of the VEA.  This ensures that a person cannot receive the maximum payment rate of the pension or allowance under the pension loans scheme as well as an amount of DFISA.

 

Part 3 - Applications and transitional provisions

 

Explanation of the Items

 

Item 43 is an application provision referring to the amendments made by Schedule 2.

 

It provides that the amendments made by items 1, 2, 22, 23, 24, 25, 26, 27, and 28 apply in relation to payments made under the Veterans’ Entitlements Act 1986 payable on or after 20 September 2004.

 

It also provides that the amendments made by item 29 apply in relation to payments made under the Social Security Act 1991 payable on or after 20 September 2004.

 

Item 44 is a transitional provision relating to claims made under the Social Security Act that have not been determined before 20 September 2004.

 

The provision states that the claim will be taken to have been made on 20 September 2004 despite any provisions in the Social Security (Administration) Act 1999 if:

 

(a)           the person has made a claim for a social security pension or benefit on a day (the “claim day”) that is before the 20 September 2004; and

(b)           on the “claim day” adjusted disability pension was payable to the person or to the person’s partner; and

(c)           a determination of the claim has not been made before 20 September 2004; and

(d)           apart from the transitional provision the claim would be rejected on or after 20 September 2004 because the rate of the pension or benefit would be nil; and

(e)           the rate of the pension or benefit would not be nil if adjusted disability pension was an excluded amount and the rent reduction amount for disability pension income was applied.

 

The provision will ensure that a person in the above situation to whom DFISA would otherwise have been payable, will receive DFISA from the commencement date.

 

Amendment (5) inserts a new Schedule 6 to the Bill.

 

Schedule 6 - MRCA-related amendments

 

Overview

 

These amendments will cease liability under Part IV of the Veterans’ Entitlements Act 1986 (VEA) for a defence-caused injury, disease or death that occurs on or after the commencement of the Military Rehabilitation and Compensation Act 2004 (MRCA) on 1 July 2004, and where the injury, disease or death relates to service rendered by a member of the Australian Defence Force (ADF) on or after, or before, and on or after, 1 July 2004.

 

Background

 

Until 30 June 2004, compensation coverage for ADF members is provided for under the Safety, Rehabilitation and Compensation Act 1988 (SRCA) and certain ADF members are also entitled to compensation coverage under the VEA. 

 

Part IV of the VEA deals with pensions for certain members of the Defence Force and for members of a Peacekeeping Force and their dependants.

 

The groups of persons covered under Part IV are:

 

·         Members of the Forces including those with hazardous service;

·         ADF members of a Peacekeeping Force; and

·         Australian Federal Police members of a Peacekeeping Force.

 

Following the commencement of the MRCA on 1 July 2004, the VEA will cease to provide compensation for a defence-caused injury, disease or death that:

 

·         occurs on or after 1 July 2004; and

·         relates to service rendered by a member of the Forces or an ADF member of a Peacekeeping Force on or after, or before, and on or after, 1 July 2004.

 

All compensation coverage for these members will be under the MRCA. The new Military Rehabilitation and Compensation Scheme under the MRCA is designed to provide compensation coverage for the specific needs of the ADF for all future service.

 

Members of the Australian Federal Police (AFP) have also been involved in peacekeeping operations since 1947.  Normal compensation coverage for the AFP is provided for under the SRCA.  However, in addition, AFP members are currently covered under the VEA when serving as part of a Peacekeeping Force. 

 

As the new Military Rehabilitation and Compensation Scheme under the MRCA is a military specific scheme, AFP peacekeeping members will not be covered under the MRCA.  The Minister for Justice and Customs is currently considering options for the development of a scheme that will replace the VEA to cover AFP members when they are deployed overseas on peacekeeping missions.  Until a new scheme is operational, it is intended that compensation coverage for AFP members for peacekeeping service on or after 1 July 2004 will remain under the VEA.

 

Explanation of the Changes

 

Amendments are being made to both the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004 (CTPA) and the VEA. 

 

The CTPA has inserted a new section 9A in the VEA which will cease liability under Part II of the VEA, for members of the ADF with war-like or non-warlike service for a war-caused injury, disease or death that occurs on or after the commencement of the MRCA and that relates to service rendered by a member of the ADF on or after, or before, and on or after, 1 July 2004. 

 

The amendments will insert a new section 70A, similar to section 9A of the VEA in Part IV of the VEA to put beyond doubt that there will be no liability under the VEA for defence-caused injuries, diseases and deaths that occur on or after 1 July 2004

and that relate to service rendered on or after, or before, and on or after, 1 July 2004.

 

This action makes clear the intent that all ADF compensation for service injuries, diseases and deaths on or after 1 July 2004 will be covered under the MRCA.  This includes circumstances where:

 

·         the ADF member enlisted before 22 May 1986 (the date of commencement of the VEA) and rendered continuous full-time service on or after 1 July 2004 where the service is peacetime defence service (ie. not war-like or non-warlike service); or

·         the ADF member (who enlisted at any time) rendered peacekeeping service as part of a Peacekeeping Force described in an item in Schedule 3 to the VEA, or served in a force that is designated by the Minister for Veterans’ Affairs, by notice in the Gazette , as a Peacekeeping Force for the purposes of Part IV of the VEA; and

·         the ADF member suffers from an injury, disease or death that occurs on or after 1 July 2004 and relates to service rendered on or after, or before, and on or after, 1 July 2004.

 

Explanation of the Items

 

Items 1 to 4 amend the Notes in a number of provisions of the CTPA by omitting reference to “section 9A” and substituting the words “sections 9A and 70A”. 

 

These Notes specify that compensation benefits for injury, disease or death under the VEA will not be available in respect of service on or after 1 July 2004.  This is achieved through the insertion of sections 9A and 70A into the VEA.

 

Items 5 and 6 amend the VEA.

 

Item 5 adds a Note at the end of subsections 70(4), (5) and (5A).

 

The Note directs the reader to new section 70A and provides that on or after 1 July 2004 compensation will be provided under the MRCA instead of the VEA for most new defence-caused injuries, diseases and deaths.

 

Item 6 inserts a new section 70A after section 70.

 

Subsection 70A(1) will cease liability under the VEA for a defence-caused injury, disease or death of a member of the Forces or any other member (or former member) of the Defence Force that occurs on or after 1 July 2004 and where the injury, disease or death:

 

·         relates to service rendered on or after 1 July 2004; or

·         relates to a continuous period or contiguous periods of service which spanned a period before 1 July 2004 and on or after 1 July 2004.

 

Instead, compensation for such service injury, disease and death will be provided under the MRCA.

 

Subsection 70A(2) will cease liability under the VEA for aggravations of and material contributions to an injury or disease of a member of the Forces or any other member (or former member) of the Defence Force if the aggravation or material contribution occurs on or after 1 July 2004 and:

 

·         it relates to service rendered on or after 1 July 2004; or

·         it relates to a continuous period or contiguous periods of service which spanned a period before 1 July 2004 and on or after 1 July 2004; and

·         the member has lodged a claim for the aggravation or material contribution under the MRCA.

 

Instead, compensation for the service aggravation or service material contribution will be provided under the MRCA.

 

Subsection 70A(3) will make it clear that the MRCA will cover service before and on or after 1 July 2004 if it comprises a continuous period or contiguous periods both before and on or after that date.

 

Commencement

 

Subclause 2(1) provides that this Schedule commences at the same time as section 3 of the MRCA.  Section 3 of the MRCA has been Proclaimed to commence on 1 July 2004.