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Veterans' Affairs Legislation Amendment (Omnibus) Bill 2018



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ISSN 1328-8091

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BILLS DIGEST NO. 33, 2018-19 17 OCTOBER 2018

Veterans’ Affairs Legislation Amendment (Omnibus) Bill 2018 Owen Griffiths Law and Bills Digest Section

Contents

Purpose of the Bill ........................................................... 2

Structure of the Bill ......................................................... 2

Background ..................................................................... 2

Committee consideration ................................................ 2

Senate Standing Committee for the Selection of Bills .............................................................................. 2

Senate Standing Committee for the Scrutiny of Bills .............................................................................. 3

Policy position of non-government parties/independents...................................................... 3

Position of major interest groups..................................... 3

Financial implications ...................................................... 3

Statement of Compatibility with Human Rights................ 3

Parliamentary Joint Committee on Human Rights ..... 3 Key issues and provisions ................................................ 3

Schedule 1—Claims by Chief of Defence Force on behalf of persons.................................................. 3

Schedule 2—Obtaining information ......................... 5

MRCC may obtain information ................................ 5

Self-incrimination .................................................... 7

Schedule 3—Exempt lump sums ............................... 7

Date introduced: 20 September 2018

House: House of Representatives

Portfolio: Veterans' Affairs

Commencement: The day after Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at October 2018.

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Purpose of the Bill The purpose of the Veterans’ Affairs Legislation Amendment (Omnibus) Bill 2018 (the Bill) is to make amendments to the Military Rehabilitation and Compensation Act 2004 (MRCA), the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA) and the Veterans’ Entitlements Act 1986 (VEA).

In his second reading speech the Minister for Veterans’ Affairs, Darren Chester, stated that the Bill:

… demonstrates the commitment this government made in 2016 and 2017 to put veterans first and continues on measures we introduced earlier this year under the Veterans' Affairs Legislation Amendment (Veteran-centric Reforms No.1) Act 2018 and the Veterans' Affairs Legislation Amendment (Veteran-centric Reforms No.2) Act 2018.

The Bill is designed to improve outcomes for serving Australian Defence Force members, veterans and their families, and will ensure that essential services are available to veterans when they need it. 1

Structure of the Bill The amendments of the Bill are contained in three schedules:

• Schedule 1 amends the MRCA to enable the Chief of the Defence Force (CDF) to make a claim for liability on behalf of a currently serving member of the Australian Defence Force (ADF)

• Schedule 2 amends the DRCA to enable the Military Rehabilitation and Compensation Commission (MRCC) to obtain information from third parties and

• Schedule 3 amends the VEA to allow certain exempt lump sum determinations made by the Secretary of the Department of Social Services (DSS) to apply to Department of Veterans’ Affairs (DVA) income support clients.

Background The three pieces of legislation to be amended by the Bill provide the legislative framework for compensation and rehabilitation support to veterans and their dependants. The MRCA, the DRCA and the VEA each have different eligibility requirements and provide different levels of support to veterans. As noted in the Minister’s second reading speech, there have been a series of recent changes to this legislative framework including amendments to support ‘veteran-centric’ reforms to the operations of DVA.2

The compensation and rehabilitation arrangements for veterans are currently the subject of an inquiry by the Productivity Commission. The draft report of the Productivity Commission’s inquiry is due to be released in December 2018.3

Committee consideration

Senate Standing Committee for the Selection of Bills On 19 September 2018, the Senate Standing Committee for Selection of Bills deferred consideration of the Bill until its next meeting.4

1. D Chester, ‘Second reading speech: Veterans' Affairs Legislation Amendment (Omnibus) Bill 2018’, House of Representatives, Debates, (proof), 20 September 2018, p. 31. 2. For example, Veterans’ Affairs Legislation Amendment (Veteran-centric Reforms No. 1) Act 2018, Veterans’ Affairs Legislation Amendment (Veteran-centric Reforms No. 2) Act 2018. 3. Productivity Commission (PC), Compensation and rehabilitation for veterans, PC website. 4. Senate Standing Committee for Selection of Bills, Report, 11, 2018, The Senate, 20 September 2018.

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Senate Standing Committee for the Scrutiny of Bills At the time of writing, the Senate Standing Committee for the Scrutiny of Bills has not commented on the Bill.

Policy position of non-government parties/independents At the time of writing, non-government parties and independents do not appear to have commented on the Bill.

Position of major interest groups At the time of writing, no major interest groups appear to have commented on the Bill.

Financial implications The Explanatory Memorandum states that there will be no financial impact.5

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.6

Parliamentary Joint Committee on Human Rights In Report 11 of 2018, the Parliamentary Joint Committee on Human Rights concluded that the Bill does not raise human rights concerns.7

Key issues and provisions

Schedule 1—Claims by Chief of Defence Force on behalf of persons The MRCA provides for rehabilitation and compensation support to current and former members of the ADF, as well as Cadets, Cadet Officers, Instructors and others who are injured in the course of their duties on or after 1 July 2004.8 Claims for liability made under the MRCA are determined by the Military Rehabilitation and Compensation Commission (MRCC).9

The amendments in Schedule 1 will amend the MRCA to enable the CDF to make a claim for liability on behalf of a serving member of the ADF where the member has suffered a service injury or service disease and approves the CDF making the claim.10

Currently, subsection 319(3) of the MRCA requires the MRCC to give copies of certain claims relating to service injuries and deaths to the CDF. Item 1 will make a consequential amendment to this subsection to remove this requirement where the claim is being made by the CDF on behalf of the person making the claim.

5. Explanatory Memorandum, Veterans’ Affairs Legislation Amendment (Omnibus) Bill 2018, p. ii. 6. The Statement of Compatibility with Human Rights can be found at page iii of the Explanatory Memorandum to the Bill. 7. Parliamentary Joint Committee on Human Rights, Report, 11, 2018, 17 October 2018, p. 72. 8. Department of Veterans’ Affairs (DVA), ‘Factsheet MRC01 - Overview of the Military Rehabilitation and Compensation Act

2004 (MRCA)’, DVA website. 9. The functions of the MRCC are outlined in section 362 of the MRCA. 10. The CDF and the Secretary of the Department of Defence have joint responsibility for the administration of the Defence Force

(at the direction of the Minister) under section 10 of the Defence Act 1903. Given this broad administrative function and that paragraph 320(2)(a) of the MRCA permits claims to be made by others ‘with the person’s approval’, the CDF may already have the authority to make an MRCA claim on behalf of a serving member of the ADF (where the member approves).

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Section 320 outlines which persons may make claims under the MRCA and the persons who may make claims ‘on behalf’ of these persons (such as legal personal representatives or parents).11 In particular, paragraph 320(2)(a) provides that a claim may be made on behalf of a person ‘with the person’s approval’.

Item 2 will insert proposed subsections 320(2A) and 320(2B) into the MRCA.

Proposed subsection 320(2A) will provide that, without limiting paragraph 320(2)(a), the person may approve the CDF making a claim on behalf of the person if:

• the person is a member of the ADF and

• the claim is for acceptance of liability by the MRCC for a service injury or service disease.12

Proposed subsection 320(2B) clarifies that where approval is given by the person for the CDF to make a claim on their behalf, the CDF is not required to make the claim. The Explanatory Memorandum states this clarification ensures that proposed subsection 320(2A) will operate on a ‘discretionary’ basis and notes that it will not prevent the member, or another person authorised under section 320, from making a claim for liability.13

In his second reading speech, Minister Chester stated:

This amendment would provide an alternative way that a claim for liability may be made. In some cases, it may facilitate an earlier acceptance of liability. The amendment is intended to benefit veterans by minimising some of the difficulties that may be encountered when making an initial claim for liability some time after the injury was sustained or the disease contracted.

Veterans will also benefit in having their future claims for related diseases and conditions that manifest after their service more easily accepted. For example, if DVA accepts a knee injury at the time of the injury via a claim from the CDF, accepting osteoarthritis of the knee in the future will be much easier.

DVA will be able to use the additional claim data at the point of injury to better inform decisions around trends in injuries and onset of other conditions. This may inform later policy on simplifying and streamlining the claims process. 14

DVA’s webpage concerning the amendments states:

These amendments are intended to streamline the claims process and reduce red-tape between the Department of Defence and the Department of Veterans’ Affairs and reduce overall time taken to process members’ subsequent claims for services and support in the future by dealing with liability early and efficiently.

Further, the amendments may alleviate some of the difficulties that may be encountered by veterans when making an initial claim for liability sometime after the injury was sustained or the disease contracted. Where the claim for liability is made reasonably contemporaneously as a result of being made by the CDF, there will likely be greater evidence available to support the claim, which will likely enable faster initial liability decisions to be made.

15

11. The terms legal personal representative and parent are defined in section 5 of the MRCA. 12. The main definitions of service injury and service disease are outlined in section 27 of the MRCA. 13. Explanatory Memorandum, op. cit., p. 4. 14. D Chester, ‘Second reading speech: Veterans' Affairs Legislation Amendment (Omnibus) Bill 2018’, op. cit., p. 31. 15. DVA, ‘Schedule 1 - Claims by Chief of Defence Force on behalf of persons’, DVA website.

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The CDF has command and administrative functions over the ADF and, accordingly, has substantial resources available to him or her.16 How these resources may be applied to MRCA claims made by the CDF on behalf of ADF members is not clear. In this context, it is notable that there are no factors included in the Bill’s amendments to guide the CDF’s exercise of this discretionary power.

Item 3 provides that the amendment of section 320 only applies to service injuries sustained, and service diseases contracted, ‘on or after commencement’.

Schedule 2—Obtaining information Like the MRCA, the key decisions in relation to defence-related claims under the DRCA are made by the MRCC. The amendments in Schedule 2 will enable the MRCC to obtain information from government agencies and third parties when determining a claim for compensation. The Explanatory Memorandum states:

The amendments to section 151 of the DRCA would ensure the ‘Obtaining information’ provisions are similar to those within the MRCA. Section 406 of the MRCA was modelled on the sections 128 and 129 of the Veterans’ Entitlements Act 1986. This amendment would align the power to obtain information across the three Acts.

17

Currently, section 151 of the DRCA provides that the MRCC may, by notice in writing, require the Secretary of the Department of Defence, Secretary of the Department of Veterans’ Affairs or the CDF to give the MRCC documents or information ‘required for the purposes of the Act’.

In relation to the Schedule 2 amendments, the Minister for Veterans’ Affairs stated:

Veterans can be adversely affected when information critical to their claim is not provided by third parties. These provisions will provide veterans and their families with easier access to information relevant to their compensation claims.

The provisions will require Commonwealth, state or territory departments, authorities and other persons, such as current or former treatment providers, or other parties to provide information on request of the commission. This will ensure that the commission has access to all the information necessary to make decisions on claims.

18

Item 1 repeals section 151 and substitutes proposed section 151 titled ‘MRCC may obtain information etc.’ and proposed section 151AA titled ‘Self-incrimination’. The Explanatory Memorandum notes that these amendments largely replicate the provisions in the MRCA which relate to the MRCC’s powers to obtain information.19

MRCC may obtain information Proposed subsection 151(1) provides that the MRCC can give written notice to ‘any person’ requiring them for the purposes of the Act to:

• provide the MRCC (or a specified staff member assisting the MRCC) such information as the MRCC requires

• produce to the MRCC (or a specified staff member assisting the MRCC) any documents in the custody or under the control of the person or

• appear before a specified staff member assisting the MRCC to answer questions.

16. Sections 9 and 10 of the Defence Act. 17. Explanatory Memorandum, op. cit., p. 5. 18. D Chester, ‘Second reading speech: Veterans' Affairs Legislation Amendment (Omnibus) Bill 2018’, op. cit., pp. 31-32. 19. Explanatory Memorandum, op. cit., pp. 5-8. These are sections 406 and 407 of the MRCA.

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To avoid doubt, proposed subsection 151(2) clarifies that the person given a notice can be:

• the Secretary of the Defence Department

• the Secretary of the Department (DVA)

• the CDF or

• a person employed in, or in connection, with a Department of the Commonwealth, a state or territory or by any authority of the Commonwealth, a state or territory.

The MRCC’s written notices to provide information or documents must specify the period and manner in which the person must comply (proposed paragraph 151(3)(a)). The period must be at least 14 days after the notice is given (proposed subsection 151(4)). Written notices to appear before a specified staff member assisting the MRCC to answer questions must specify the time and place (proposed paragraph 151(3)(b)).

The MRCC can require that information or answers be verified by, or given on, oath or affirmation and either orally or in writing (proposed subsection 151(5)) and the staff member to whom information or answers are verified or given may administer the oath or affirmation (proposed subsection 151(6)).

However, proposed subsection 151(7) of the DRCA clarifies that the section does not require a person to give information, produce a document or give evidence if, in doing so, the person would contravene a law of the Commonwealth (not being a law of a territory). The proposed note after this subsection provides that a person cannot be prevented by a law of a state or territory from giving information, producing documents or giving evidence for the purposes of the Act.

Proposed subsection 151(8) provides that proposed section 151 will bind the Crown in each of its capacities but does not make it liable to be prosecuted for an offence.

Proposed subsection 151(9) provides that it is an offence if a person fails to comply with a notice. The penalty is 10 penalty units ($2,100).20 This is a strict liability offence (proposed subsection 151(10)) which means that no fault element needs to be proved for this offence, but that the defence of mistake of fact is available.21

Proposed subsection 151(11) provides that the offence will not apply ‘to the extent that the person is not capable of complying with the notice’. The note below states that the defendant bears the evidentiary burden in relation to this matter.22 The Explanatory Memorandum states that under subsection 13.3(6) of the Criminal Code Act 1995 (Criminal Code) the evidential burden means the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist.23

The Explanatory Memorandum states that the purpose of the provision is to ‘ensure timely compliance where the MRCC has provided a written notice to require information’. It notes that DVA clients ‘may be adversely affected where information critical to their claim is not provided by third parties within a reasonable time’.24

20. The value of one penalty unit is $210 under section 4AA of the Crimes Act 1914 (subject to indexation commencing on 1 July 2020). 21. See section 6.1 of the Criminal Code. 22. See section 13.3 of the Criminal Code. 23. Explanatory Memorandum, op. cit., p. 7. 24. Ibid.

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Self-incrimination Proposed subsection 151AA(1) of the DRCA provides that persons are not excused from providing information or evidence or producing a document to the MRCC under proposed section 151 on the ground that it ‘might tend to incriminate the individual or expose the individual to a penalty’. However, proposed subsection 151AA(2) provides that the following are not admissible in evidence against the individual in any proceedings:

• the information or evidence given or the document produced

• giving the information or evidence or producing the document and

• any information, document or thing obtained as a direct or indirect consequence of giving the information or evidence or producing the document.25

The exception to this broad exclusion is proceedings for offences against sections 137.1 and 137.2 of the Criminal Code, which are offences for providing false or misleading information or false and misleading documents.

The Explanatory Memorandum notes the amendments create a legal obligation on a person to provide the information required by the MRCC in a notice, but also ‘ensures where that information is provided it cannot be used against the person in any criminal proceedings with the exception of where the person provided false or misleading documents or information’.26

Item 2 inserts proposed subsection 151A(1AA) into section 151A which deals with the MRCC giving information. The amendment will provide that nothing in a law of a state or territory operates to prevent a person from giving information, producing documents or giving evidence for the purposes of the Act. The Explanatory Memorandum states that this proposed subsection has the same purpose and effect as subsection 409(1) of the MRCA.27

Item 3 provides the amendments made by Schedule 2 apply in relation to a notice given under proposed subsection 151(1) ‘… on or after commencement of this item’.

Schedule 3—Exempt lump sums Access to support under the VEA may depend on a test of income and assets.28 The key change made by the amendments in Schedule 3 is to section 5H of the VEA which contains income test definitions. Currently, subsection 5H(12) provides the definition of exempt lump sum. This provides that an amount received by a person is an exempt lump sum (that is, it is not included in the calculation of a person’s income for the purposes of determining whether they meet the income test) if:

• it is not a periodic amount

• it is not income from remunerative work undertaken by the person and

• it is an amount, or one of a class of amounts, that the Repatriation Commission determines to be an exempt lump sum.

The Repatriation Commission is the body responsible for the administration of the VEA and its range of compensation and income support pensions, allowances, rehabilitation and other

25. The first two dot points provide what is referred to as a ‘use immunity’, while the third provides a ‘derivative use immunity’. 26. Explanatory Memorandum, op. cit., p. 7. 27. Ibid., p. 8. 28. DVA, ‘Factsheet IS87 - Income Test Overview’, DVA website.

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healthcare services.29 The DVA website includes a list of the determinations made under subsection 5H(12) regarding exempt lump sums.30

Item 3 adds to the definition of exempt lump sum by inserting proposed subsection 5H(12A). This provides:

An amount received by a person is also an exempt lump sum if the amount is an exempt lump sum within the meaning of subsection 8(1) of the Social Security Act 1991.

Subsection 8(1) of the Social Security Act 1991 contains a definition of exempt lump sum for the purposes of that legislation which is similar to the definition in subsection 5H(12) in the VEA.

The Minister for Veterans’ Affairs considered that the Bill’s amendments to the VEA would improve DVA’s administrative practices ‘concerning income support clients and the exempting of certain lump sum payments from the income test’. He stated:

The amendments to the Veterans' Entitlements Act 1986 would allow certain exempt lump sum determinations made by the secretary for social services to apply to income support clients where the determination is consistent with Department of Veterans' Affairs legislation and policy…

Under the new arrangements, [the Department of Social Services] will advise DVA of its determination, which will be applied to DVA income support clients without the requirement to register an additional instrument. 31

The Explanatory Memorandum states:

The amendments proposed to be made by Schedule 3 would amend the Veterans’ Entitlements Act 1986 (VEA) to ensure that exempt lump sum determinations made by the Secretary of the Department of Social Services (DSS) will apply as exempt lump sums from the income test that applies to DVA income support clients.

The Repatriation Commission often implements separate, yet identical, exempt lump sum determinations for payments that have already been exempted under the Social Security Act 1991 made by the Secretary of DSS. This places an unnecessary burden on DVA which could be removed by allowing exempt lump sum determinations made by DSS to apply to DVA income support clients where the exemption is consistent with the VEA.

This change will mean impacted veterans do not have to wait for the DVA instrument to be made [to] gain the benefit of the exemption. 32

The DVA webpage concerning these amendments provides a further explanation:

These amendments will amend the Veterans’ Entitlements Act 1986 (VEA) to allow certain exempt lump sum determinations made by the Secretary of the Department of Social Services to apply to Department of Veterans’ Affairs (DVA) income support clients.

The determination would create an exemption of certain lump sums from the income test that applies to DVA income support clients. Where a DVA client is on an income support payment and also receives a lump sum payment that is exempt from the income test the income test is calculated without taking that lump sum into account.

29. The functions of the Repatriation Commission are outlined in section 180 of the VEA. 30. DVA, ‘Exempt Lump Sum Determinations that have been made’, DVA website. 31. D Chester, ‘Second reading speech: Veterans' Affairs Legislation Amendment (Omnibus) Bill 2018’, op. cit., p. 32. 32. Explanatory Memorandum, op. cit., p. ii.

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There will be no impact on the client or the assessing of the income test. 33

Most of the other amendments in Schedule 3 make consequential changes which add references to proposed subsection 5H(12A) where existing sections already refer to subsection 5H(12).

Item 1 amends the definition of exempt lump sum in subsection 5H(1) by adding a reference to proposed subsection 5H(12A). Item 2 makes a similar change to a note under definition of ordinary income by also adding a reference to proposed subsection 5H(12A).

Section 5Q provides a dictionary of terms for the VEA. Item 4 amends the entry for exempt lump sum in subsection 5Q(1) to add a reference to proposed subsection 5H(12A).

Currently section 52ZZM of the VEA deals with the attribution of ordinary income of a company or trust for the purposes of means tests. Item 5 amends subparagraph 52ZZM(1)(c)(iii) to add a reference to proposed subsection 5H(12A). Item 6 makes a similar amendment to subparagraph 52ZZZM(1)(c)(iii). Section 52ZZZM deals with the net income of a primary production enterprise.

Item 7 addresses the application of the amendments made by Schedule 3. These apply in relation to ‘an amount received’ on or after the commencement of the item.

33. DVA, ‘Schedule 3 - Exempt lump sums’, DVA website.

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