House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Veterans' Affairs and Minister for Defence Personnel, The Honourable Andrew Gee MP)

OUTLINE AND FINANCIAL IMPACT

This Bill gives effect to the Government's response to the Review commissioned by the Prime Minister into the Totally and Permanently Incapacitated (TPI) Payment which was undertaken by Mr David Tune AO PSM. It also responds to recommendation 15.1 of the Productivity Commission's review - A Better Way to Support Veterans.

It exempts certain Department of Veterans' Affairs payments known collectively as Adjusted Disability Pension (ADP) from the social security income test under the Social Security Act 1991, repeals the collective definition of ADP from the Veterans' Entitlements Act 1986 (VEA) and as a result of the social security income test exemption removes the need for the Defence Force Income Support Allowance (DFISA) as social security payments will increase as a result of the exemption. This Bill also repeals the operation and definition of the DFISA and DFISA Bonus from the VEA and consequentially removes all references to it from Commonwealth primary legislation.

The Bill also establishes a two-year non-liability rehabilitation pilot in response to Recommendation 6.3 from the Productivity Commission's Report 'A Better Way to Support Veterans'. The pilot seeks to foster cultural change, encouraging early, and voluntarily participation in rehabilitation

Schedule 1 - Exempting adjusted disability pension from the social security income test and removal of Defence Force Income Support Allowance.

The amendments in Schedule 1 will exempt the following payments, known as 'adjusted disability pension, from the income test in the Social Security Act 1991:

a)

a pension under Part II or IV (other than a pension that is payable under section 30 to a dependant of a deceased veteran);

b)

a "saved" pension payable 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);

c)

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

d)

a payment of a Special Rate Disability Pension under Part 6 of Chapter 4 of the Military Rehabilitation and Compensation Act 2004.

Due to the exemption of these payments from the Social Security Act 1991, veterans in receipt of the 'adjusted disability pension' will have an increase in social security payments, and the DFISA will become redundant. This Schedule of amendments will make consequential amendments to various Commonwealth Acts and also amend the VEA to remove all references to DFISA, DFISA Bonus and other DFISA like payments.

Schedule 2 - Increased rent assistance

The 'disability income rent test' results in severely disabled veterans receiving less rent assistance than those with a lower level of disability, because of the amount of compensation they receive. The Government is removing this test as it is inequitable. This will allow rent assistance to be paid without regard to veterans' level of impairment and their corresponding amount of disability income.

Schedule 3 - Removing references to disability pension

The third Schedule will amend the VEA by removing the references to the payments currently referred to as 'disability pension' to clarify that the money is a compensation payment and should not be confused with social security payments such as disability support pensions.

Schedule 4 - Indexation of above general rates

Schedule 4 will change the way certain pensions are indexed. Currently the Extreme Disablement Pension Adjustment (EDA), Intermediate Rate and Special Rate (colloquially known as TPI payment) of pensions by way of compensation are split into two components for indexation purposes and each is indexed separately. These amendments will combine both indexation requirements. This change will enable a simplification of the legislation and the indexation process. Depending on the rounding of figures, this may result in indexation increases to these rates being 10 cents per fortnight less at some indexation points. The first indexation point after commencement will be 20 September 2022.

Schedule 5 - Non-liability rehabilitation pilot

Schedule 5 will establish a pilot of non-liability rehabilitation. Currently, veterans have to wait until their initial liability claim is accepted before they can access rehabilitation. These amendments will provide veterans with access to the rehabilitation support they need without the requirement to have lodged a compensation claim. This pilot is intended to raise awareness of the benefits of early engagement with rehabilitation and encourage veterans to participate voluntarily.

Financial Impact

The first four measures will cost $33.3 million over four years. The Pilot program for the provision of non-liability rehabilitation will cost $2.3 million over four years including post-implementation evaluation.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

VETERANS' AFFAIRS LEGISLATION AMENDMENT (EXEMPTING DISABILITY PAYMENTS FROM INCOME TESTING AND OTHER MEASURES) BILL 2021

Veterans' Affairs Legislation Amendment (Exempting Disability Payments from Income Testing and Other Measures) Bill 2021 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Schedule 1 - Exempting disability payments from the social security income test and removal of Defence Force Income Support Allowance (DFISA)

Overview of the Schedule

The amendments proposed to be made by Schedule 1 amend the Social Security Act 1991 to exclude certain payments made under the Veterans' Entitlements Act 1986 (VEA) and the Military, Rehabilitation and Compensation Act 2004 (MRCA) from the social security income test. These amendments will ensure that the Defence Force Income Support Allowance currently referred to as DFISA will be made redundant as they will instead receive an increase in their social security payments as the adjusted disability payments made by Department of Veterans' Affairs will no longer impact the social security entitlements of veterans in receipt of these payments.

DFISA is currently paid to persons whose social security pension or benefit (social security payment) under social security law is reduced, including to nil, because the compensation, pension and payments (together known as the adjusted disability payments) have been included as ordinary income in assessing the rate of the social security payment.

As a consequence of these amendments the DFISA payments will become redundant. As these payments will be exempt from the income test under social security law, no person applying for entitlements under social security law will have their primary payment affected by their entitlement to certain compensation, pensions and payments under the VEA and MRCA.

Human rights implications

Schedule 1 of the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

This Schedule amends the Social Security Act 1991 to provide that certain Department of Veterans' Affairs payments are exempt income for the purposes of the social security income test.

This Schedule engages the right of everyone to social security in Article 9 of the International Covenant on Economic, Social and Cultural Rights.

The right to social security requires that a system be established under domestic law, and that public authorities must take responsibility for the effective administration of the system. The social security scheme must provide a minimum essential level of benefits to all individuals and families that will enable them to acquire at least essential health care, basic shelter and housing, water and sanitation, foodstuffs, and the most basic forms of education.

These amendments will operate beneficially as this group of payments paid by Department of Veterans' Affairs will no longer be taken into account when assessing a person's entitlement or rate of social security under the social security income test. This will mean that those veterans and their partners in receipt of these Department of Veterans' Affairs payments will receive the same, or a higher rate, of payment. This Schedule is therefore consistent with the promotion of the right to social security.

Conclusion

This Schedule is compatible with human rights as it supports a person's right to social security.

Schedule 2 - Increased rent assistance

Overview of the Schedule

The amendments proposed to be made by Schedule 2 amend the VEA to remove the disability income rent test as it applies to persons with a 'disability pension', or as per the amendments made in Schedule 3, persons with a 'pension by way of compensation'. The disability income rent test is the method of calculating the amount by which a person's rent assistance is reduced because of the amount of adjusted disability pension paid to the veteran or their partner.

The current disability income rent test results in veterans with a high level of compensation as a result of their service related injuries or diseases receiving less rent assistance than those with a lower level of disability, because of the amount of compensation they receive.

The amendments will mean that those veterans with high levels of compensation as a result of their service related injuries or diseases will have the same rent test applied as the test that currently applies to entitled persons under the Social Security Act 1991. This test is based on the amount of rent paid above the prescribed threshold and whether entitled persons are privately renting. It will no longer be based on how much compensation payment a person receives.

Currently some of those who receive a pension by way of compensation receive less rent assistance than those veterans not receiving this type of pension. This is because the amount of adjusted disability pension, exceeds the income support pension "Rent Assistance Free Area" (RAFA) for a single pensioner of $180.00 per fortnight or $320.00 per fortnight for a couple. As a result, the rate of rent assistance is reduced by 50 cents in the dollar for each dollar of adjusted disability pension income that exceeds $180.00 for a single pensioner or $320.00 for a couple.

These amendments commence on 1 January 2022.

Human rights implications

Right to Social Security

The amendments proposed to be made by Schedule 3 engage Article 9 of the International Covenant of Economic Social and Cultural Rights (ICESCR). Article 9 of the ICESCR states "State Parties ... recognise the right of everyone to social security, including social insurance".

The amendments promote the right to social security by removing the VEA disability income test, which means that veterans with high levels of compensation as a result of their service related injuries or diseases will have the same rent test applied as is currently applied to entitled persons under the Social Security Act 1991.

Right to an Adequate Standard of living

The right of everyone to an adequate standard of living provided by Article 11 of the ICESCR requires states to take adequate steps to ensure continuous improvements of living conditions for the individual and their family.

The amendments made under Schedule 1 will increase the rate of rent assistance to a number of veterans, and will also provide that rent assistance is available to some veterans that were previously ineligible due to their pension rate under the VEA.

It is envisaged that this increase rate of rent assistance to some veterans will increase their standard of living.

Conclusion

This Schedule is compatible with the Right to Social Security as it promotes the access to social security by removing the disability income rent test which will increase the rent assistance provided and in some cases provide rent assistance to veterans who were previously not able to receive rent assistance.

This Schedule is compatible with the Right to an Adequate Standard of living as it promotes the access to an increase in rental assistance by removing the Disability Income Rent Test which will increase the rent assistance provided and in some cases provide rent assistance to veterans who were previously not able to receive rent assistance.

Schedule 3 - Removing references to disability pension

Overview of the Schedule

The amendments proposed to be made by Schedule 3 amend the VEA to remove references to 'disability pension' from the VEA. This will clarify the nature of the payment, which is not an income support pension or welfare, but is instead a compensation payment. This will not affect a veteran's payments.

These amendments commence on 1 January 2022.

Human rights implications

This Schedule does not engage any of the applicable rights or freedoms.

Conclusion

This Schedule is compatible with human rights as it does not raise any human rights issues.

Schedule 4 - Indexation of above general rates

Overview of the Schedule

The amendments proposed to be made by Schedule 4 will change the way certain pensions are indexed.

Currently the Extreme Disablement Pension Adjustment (EDA), Intermediate Rate and Special Rate (colloquially known as TPI payment) of pensions by way of compensation are split into two components for indexation purposes and each is indexed separately. The amendments in Schedule 4 will change the way these rates are indexed, so that the whole payment is indexed at once, rather than in two components.

The split indexation mechanism was introduced in 2004 when a different indexation mechanism was introduced for the 'above general rate' component, but it is now redundant as the indexation mechanisms were aligned in 2008.

These amendments commence on 1 July 2022.

Human rights implications

Right to Social Security

The amendments proposed to be made by Schedule 4 engage Article 9 of the International Covenant of Economic Social and Cultural Rights (ICESCR). Article 9 of the ICESCR states "State Parties ... recognise the right of everyone to social security, including social insurance".

The amendments under Schedule 4 will ensure that the relevant pensions by way of compensation will continue to be indexed taking account of the Consumer Price Index (CPI), the Pensioner and Beneficiary Living Cost Index (PBLCI) and the Male Total Average Weekly Earnings (MTAWE) benchmark. The primary outcome of this calculation is that indexation will be calculated as a whole rather than in two parts. This may result in the indexation increase being 10 cents per fortnight lower at some indexation points than they would otherwise be if this amendment does not take place.

Conclusion

This Schedule is compatible with the Right to Social Security as it continues to promote access to social security by way of ensuring that pensions by way of compensation will be indexed in line with the CPI in a logical and consistent manner.

Schedule 5 -Non-liability rehabilitation pilot

Overview of the Schedule

The amendments proposed to be made by Schedule 5 will establish a pilot of non-liability rehabilitation. Currently, veterans have to wait until their initial liability claim is accepted before they can access rehabilitation, which can take some time. The amendments in Schedule 5 will provide access to rehabilitation support without requiring veterans to have lodged a compensation claim.

This pilot is intended to raise awareness of the benefits of early engagement with rehabilitation, and encourage veterans to participate voluntarily by 'un-coupling' access to rehabilitation support from compensation liability. The Pilot will target veterans who have an identified need for rehabilitation, who are not currently participating in rehabilitation through the Department of Veterans' Affairs, and who are not in receipt of incapacity payments.

These amendments commence on 1 January 2022.

Human rights implications

Right to Health

The amendments proposed to be made by Schedule 5 engage Article 12(1) of the International Covenant of Economic Social and Cultural Rights (ICESCR). Article 12(1) of the ICESCR states this "right must be understood as a right to the enjoyment of a variety of facilities, goods, services and conditions necessary for the individual to realise his or her highest attainable standard of health".

The amendments promote the right to health by establishing a pilot providing access to rehabilitation without the need to establish liability, for more timely delivery of services.

Conclusion

This Schedule is compatible with the right to health as it promotes the access to rehabilitation without the need to establish liability, for more timely delivery of services.

VETERANS' AFFAIRS LEGISLATION AMENDMENT (EXEMPTING DISABILITY PAYMENTS FROM INCOME TESTING AND OTHER MEASURES) BILL 2021

This Explanatory Memorandum uses the following abbreviations and acronyms:

NOTES ON CLAUSES

Clause 1 sets out how the new Act is to be cited - that is, as the Veterans' Affairs Legislation Amendment (Exempting Disability Payments from Income Testing and Other Measures) Act 2021.

Clause 2 provides a table setting out the commencement dates of the various sections in, and Schedules to, the new Act.

Clause 3 provides that each Act in a Schedule is amended or repealed as set out in that Schedule, and any other item in a Schedule to the Bill has effect according to its terms.

Schedule 1 - Exempting disability payments from the social security income test and removal of Defence Force Income Support Allowance (DFISA)

Outline of Schedule

Schedule 1 sets out the relevant changes to the social security law and consequential changes to Commonwealth legislation. Changes to the Social Security law will exempt certain payments made under the VEA and the Military, Rehabilitation and Compensation Act 2004 from the social security income test under the Social Security Act. The following payments, known as 'adjusted disability pension', will be exempt from the social security income test:

a)

a pension under Part II or IV of the VEA (other than a pension that is payable under section 30 to a dependant of a deceased veteran);

b)

a "saved" pension payable 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);

c)

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

d)

a payment of a Special Rate Disability Pension under Part 6 of Chapter 4 of the Military Rehabilitation and Compensation Act 2004.

As a consequence of these changes, the Defence Force Income Support Allowance can be removed, as it will no longer be required. Persons will no longer have their social security payments affected by 'adjusted disability pension' payments being assessed as part of their income. This means that eligible persons will have an increase in their social security payment.

Background and Context

On 2 April 2019, the Prime Minister directed the Secretary of the Department of the Prime Minister and Cabinet to commission and oversee an evaluation of the Australian Federation of Totally and Permanently Incapacitated Ex Servicemen and Women Limited's (TPI Federation) position that an increase in the Special Rate of Disability Pension (colloquially known as the Totally and Permanently Incapacitated (TPI) payment) under the VEA is needed to remedy a downward trend in its value relative to wages since the 1950s.

Mr David Tune AO PSM was appointed as the lead independent reviewer. All recommendations made by the Independent Review into the TPI Payment were accepted by Government. In Budget 2020-21, on 6 October 2020, the Government announced a number of initiatives which included simplifying payment arrangements by exempting adjusted disability pension from the social security income test removing the need for the DFISA and removing the disability income rent test.

DFISA is an income support payment paid by the Department of Veterans' Affairs. It was introduced as a response to the 2003 Report of the Review of Veterans' Entitlements (Clarke Review). It provides for a payment where a person, due to their adjusted disability pension, has their social security payment reduced (including to nil). This is because 'adjusted disability pensions' had not been exempt from the income test under social security law.

The DFISA is paid on the basis of the difference between the rate of an income support payment paid under the Social Security Act, and what the payment would be if 'adjusted disability pension' were exempt from the assessment, but included in the calculation of any rent assistance entitlements.

As the 'adjusted disability pension' will now be exempt from the income test under social security law, the amount of income support payment that a person would receive will be increased. This makes the DFISA redundant. As a consequence the DFISA will be removed.

Schedule 1 commences on 1 January 2022.

Explanation of the changes

A New Tax System (Family Assistance) Act 1999

Item 1 repeals current paragraph 7(haa) of Schedule 3. This paragraph currently makes reference to DFISA as being a tax free pension or benefit for the purposes of adjusted taxable income in relation to the calculation of family tax benefit, schoolkids bonus and child care subsidy. As DFISA will be repealed after the commencement of this schedule, it no longer needs to be referred to in this section.

Item 2 is a savings provision ensuring that current paragraph 7(haa) of Schedule 3 continues to apply to DFISA payments made before, on or after commencement of this schedule. This ensures that any payment of DFISA after 1 January will continue to be treated as a tax free pension or benefit for the purposes of adjusted taxable income in relation to the calculation of family tax benefit, schoolkids bonus and child care subsidy. This is needed as it is possible that DFISA will be paid after 1 January 2022 where, for example, the Department of Veterans' Affairs reassesses an individual's previous entitlement. The intention is that if DFISA is paid for a period prior to 1 January 2022 that it will be treated as if it had been paid prior to 1 January 2022 and counted against the income year for which it was received.

Child Support (Assessment) Act 1989

Item 3 repeals current paragraph (g) which defines DFISA as a tax free pension or benefit in subsection 5(1) for the purposes of assessing child support. This paragraph currently makes reference to DFISA and will not be needed as DFISA will be repealed after the commencement of this schedule.

Item 4 is a savings provision ensuring that current paragraph (g) of the definition of tax free pension or benefit in subsection 5(1) continues to apply to DFISA payments made before, on or after commencement of this schedule. This ensures that any payment of DFISA made before, on or after 1 January 2022 will continue to be treated as a tax free pension or benefit for the purposes of child support assessment. This is needed as it is possible that DFISA will be paid after 1 January 2022 in relation to a claim for a period prior to 1 January 2022. The intention is that if DFISA is paid for a period prior to 1 January 2022 that it will be treated as if it had been paid prior to 1 January 2022.

Child Support (Registration and Collection) Act 1988

Item 5 is a consequential amendment that amends subparagraph 72AC(1)(b)(iva) by omitting '1986 or' and substituting '1986'. This is a consequential amendment resulting from the repeal of the following subparagraph so that 72AC(1)(b)(iva) is the last subparagraph in that paragraph.

Item 6 repeals subparagraph 72AC(1)(b )(v). This paragraph currently operates to enable deductions to be made from DFISA in order to collect a person's child support or carer debt. As DFISA will no longer be paid, deductions cannot be requested from DFISA amounts.

Item 7 is a savings provision ensuring that subparagraph 72AC(1)(b)(v) continues to apply to DFISA payments made before, on or after commencement of this schedule. This ensures that deductions from DFISA payments made after 1 January 2022 can still occur. This is needed as it is possible that DFISA will be paid after 1 January 2022 in relation to a claim for a period prior to 1 January 2022. The intention is that if DFISA is paid for a claim period prior to 1 January 2022, but after 1 January 2022 that deductions from a person's DFISA payment can still occur after 1 January 2022, if that is when the DFSIA payment/s are made.

Farm Household Support Act 2014

The Farm Household Support Act 2014 (FHSA) provides a mechanism to implement the Farm Household Allowance (FHA), an income support payment for farmers and their partners who are in financial hardship.

While the FHA is not a social security payment under the social security law, under the FHSA the FHA is treated as if it were a social security payment.

Therefore the FHA aligns where possible with the social security law to ensure that farmers are treated equitably and have access to the same benefits and services as other income support recipients.

Section 95 modifies the general operation of the Social Security Act for FHA purposes. Item 1 currently modifies the definition of 'excluded amounts - general' in subsection 8(8) of the Social Security Act to include a reference to an adjusted disability pension.

This reference needs to be removed as it would be inconsistent with the amendments being made in Items 21, 22 and 25 of this Schedule to the Social Security Act.

Item 8 repeals table item 1 in section 95.

Section 95 of the FHSA sets out a table that modifies the operation of particular provisions of the Social Security Act for FHA purposes. These modification are made because while provisions in the Social Security Act are similar to those of the FHSA, they are not directly applicable. As a result of the modifications made by section 95, the listed provision in the Social Security Act can be applied to the FHA, avoiding the need to include a separate provision in the Act.

Item 1 of the table modifies the definition of 'excluded amounts - general' in subsection 8(8) of the Social Security Act to include a reference to an 'adjusted disability pension' (within the meaning of section 118NA of the VEA) for the purposes of the FHSA.

This item is no longer needed as DFISA will no longer exist, and that would mean that the term 'adjusted disability pension' will be made redundant.

Item 9 is a savings provision ensuring that table item 1 in section 95 continues to apply as in force prior to the commencement of the item, in relation to working out if a person is qualified for farm household allowance is payable to a person, or working out the rate of a person's farm household allowance, in respect of the days occurring before the commencement of the item.

This ensures that any assessments made under the FHSA after 1 January 2022 will continue to be undertaken in the same way. This is needed as it is possible that DFISA will be paid after 1 January 2022 in relation to a claim for a period prior to 1 January 2022.

Income Tax Assessment Act 1936

These amendments to the Income Tax Assessment Act 1936 (ITAA36) omit references to DFISA and DFISA support allowances for income tax purposes.

Item 10 amends subparagraph 160AAAA(2)(c)(ii).

Section 160AAAA provides for a tax rebate for low income aged persons and pensioners, where that taxpayer is an individual (other than in the capacity as a trustee), of an amount ascertained in regulations, if the taxpayer satisfies certain conditions in subsections 160AAAA(2) and (3).

One of these conditions in subparagraph 160AAAA(2)(c)(ii) includes a reference to the assessable income of the taxpayer, of the year of income, that includes an amount of 'Service pension, carer service pension, income support supplement or Defence Force Income Support Allowance (within the meaning of the Veterans' Entitlements Act 1986) or a DFISA-like payment mentioned in Division 4 of Part VIIAB of that Act'.

Item 10 omits the reference to 'income support supplement or Defence Force Income Support Allowance (within the meaning of the VEA) or a DFISA-like payment mentioned in Division 4 of Part VIIAB of that Act' and substitutes 'or income support supplement under the Veterans' Entitlements Act 1986'.

This is because neither the DFISA nor a DFISA-like payment will exist. As a consequence of this change a technical amendment is made as 'income support supplement under the Veterans' Entitlements Act 1986' is now the last payment listed in this subparagraph.

Item 11 amends subparagraph 160AAAB(2)(c)(ii) by omitting 'income support supplement or Defence Force Income Support Allowance (within the meaning of the Veterans' Entitlements Act 1986) or a DFISA-like payment mentioned in Division 4 of Part VIIAB of that Act' and substituting 'or income support supplement under the Veterans' Entitlements Act 1986'.

Section 160AAAB of the ITAA36 refers to a provision of tax rebate, of an amount ascertained in regulations, for trustees assessed under section 98 of the ITAA36 where they are a trustee for a beneficiary that is a low income aged person or pensioner and satisfy certain conditions in subsections 160AAAB(2) and (3).

Paragraph 160AAAB(2)(c) provides that one of the current conditions for a trustee who is liable to be assessed under section 98 of the ITAA36 in respect of a beneficiary's share of the net income of the trust estate, is they are entitled to a rebate of tax in the trustee's assessment in respect of income, where the assessable income of the beneficiary includes an amount of: 'service pension, carer service pension, income support supplement of DFISA or a DFISA-like payment mentioned in Division 4 of Part VIIAB of the Veterans' Entitlements Act 1986'.

As neither DFISA nor a DFISA-like payment will exist the amendment removes those references. As a consequence of these changes a technical amendment has been made so that 'income support supplement under the Veterans' Entitlements Act 1986' is now the last payment in subparagraph 160AAAB(2)(c)(ii).

Item 12 is a technical amendment. It amends paragraph 202EA(5)(ia) by omitting '1986 or' and substituting '1986'. Because item 13 repeals paragraph 202EA(5)(j), paragraph 202EA(5)(ia) becomes the last on the list.

Section 202EA provides that a person who is a person being paid a pension or benefit referred to in subsection (5) is taken to have quoted his or her tax file number (TFN) in a TFN declaration, if a statement is made in the declaration to the effect that the person is being paid such a pension or benefit.

Item 13 repeals paragraph 202EA(5)(j). This paragraph currently makes reference to DFISA and will not be needed as DFISA will no longer exist.

Item 14 is a savings provision. It ensures that current section 160AAAA, section 160AAAB and paragraph 202EA(5)(j) continue to apply to any payment of DFISA after 1 January 2022. This ensures that there is not any adverse effect for DFISA payments made after 1 January 2022, in respect of a period before 1 January 2022.

Income Tax Assessment Act 1997

These amendments to the Income Tax Assessment Act 1997 (ITAA97) omit references to DFISA and DFISA support allowances for income tax purposes.

Items 15 omits 'DFISA bonus and DFISA bonus bereavement payment' from the table item headed 'social security or like payments' in section 11-15.

Subdivision 11-A of the ITAA97 provides a Guide to lists of classes of exempt income. Section 11-15 provides for a list of ordinary or statutory income which is exempt from income tax. As 'DFISA bonus and DFISA bonus bereavement payment' will no longer exist, the item is no longer needed in this list.

Item 16 to 18 omit references to 'DFISA', 'DFISA bonus' and 'DFISA bonus bereavement payment' from section 52-65 including paragraph (1)(a), subsection (1A) and table item 5A.1.

Division 52 provides that certain payments made under various Acts are wholly or partially exempt from income tax.

Section 52-65 provides that certain veterans' affairs payments including the 'DFISA', 'DFISA bonus' and 'DFISA bonus bereavement payment' are exempt from income tax.

The amendments in items 16 to 18 remove references to DFISA, DFISA bonus and DFISA bonus bereavement payment as these will no longer exist.

The substitution in item 16 is a technical amendment, so subparagraph (1)(a) now refers only to 'payments of pension bonus or pension bonus bereavement payment'.

Likewise, item 17 omits references to the DFISA bonus and DFISA bonus bereavement payment from subsection (1A) and substitutes replacement text. The substituted text continues the exemption of payments of pension bonus and pension bonus bereavement payment under Part IIIAB of the Veterans Entitlements Act 1986 from income tax.

Item 18 repeals table item 5A.1, in relation to the DFISA which will no longer exist.

Item 19 repeals table item 5A of section 52-75 removes a reference to DFISA which will no longer exist.

Item 20 is a savings provision. It ensures that current subsection 52-65(1A) and item 5A.1 in section 52-65 continue to apply to any payment of DFISA after 1 January 2022. This is needed as there may be payments of DFISA made after 1 January 2022 in relation to a period of time prior to 1 January 2022.

Social Security Act 1991

Items 21-22 insert a social security income test exemption for VEA Disability Compensation Payment (formerly known as Disability Pension) and Saved Pensions under the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986. Currently these payments are treated as income for social security purposes and impact a veteran's entitlement to social security. This exemption will enable veterans to receive the full benefit of these payments without impacting their entitlement to social security. Currently, DFISA is paid to top up the amount of social security that a veteran in receipt of these Department of Veterans' Affairs payments would receive if these amounts had been exempted from the social security income test. Once these payments and the others inserted at item 25 of this Schedule are exempted under the social security income test, veterans in receipt of these payments will have an increase in their social security payments. Consequentially, DFISA will be redundant. This is because the veteran's social security entitlement will increase equivalent to the amount of DFISA that had been paid prior to the exemption of these payments.

Items 23-24 repeal the social security income test exemption of DFISA as it will no longer be paid, meaning it will no longer need to be exempted for social security purposes. Item 23 is a consequential amendment resulting from the omitting of subparagraph 8(8)(y)(x) by item 24 of this Schedule.

Item 25 inserts a social security income test exemption for payments of MRCA Special Rate Disability Pension and MRCA Permanent Impairment payment. Currently, these payments are treated as income for social security purposes and impact a veteran's entitlement to social security. This exemption will enable veterans to receive the full benefit of these payments without impacting their entitlement to social security. DFISA is paid to top up the amount of social security that a veteran in receipt of these Department of Veterans' Affairs payments would receive if these amounts had been exempted from the social security income test. Item 25 along with the amendments made by items 21 and 22 of this Schedule render DFISA redundant. Instead veterans in receipt of these payments will have an increase in their social security payments and a veteran's social security entitlement will increase by an amount equivalent to the amount of DFISA that had been paid prior to the exemption of these payments.

Item 26 removes the definition of both Defence Force Income Support Allowance and DFISA. As DFISA is being repealed there is no further need for these definitions.

Item 27 repeals subsection 23(1D) which operated to maintain payability of a social security pension or benefit despite a nil rate for recipients of VEA Disability Compensation Payment (formerly known as Disability Pension), Saved Pensions under the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986, MRCA Special Rate Disability Pension and MRCA Permanent Impairment payments whose social security payments were reduced to nil as a result of these Department of Veterans' Affairs payments not being exempt for social security income test purposes. The provisions also ensured a veteran in receipt of these payments was treated as a social security recipient for the purposes of determining eligibility for other payments and benefits such as concession cards and allowances. As these payments will now be exempt from the social security income test, this adjustment for a nil rate period is no longer required.

Item 28 repeals the note to paragraph 92C(e) directing the reader to the adjustment for nil rate at subsection 23(1D).

Item 29 is a consequential amendment which amends subparagraph 92C(f)(ii) by omitting "Act or;" and substituting "Act" at item 30 of this Schedule. This is a consequential amendment resulting from the repeal of the following subparagraph so that subparagraph 92C(f)(ii) is the last subparagraph in that paragraph.

Item 30 repeals subparagraph 92C(f)(iii) which currently operates to exclude DFISA bonus recipients from being eligible for pension bonus. As DFISA bonus will no longer be paid after the commencement of this schedule, it no longer needs to be referred to in this subparagraph.

Item 31 repeals the reference to DFISA as income at Point 1071A-4 (paragraph (cb)). Point 1071A-4 sets out the definition of income in relation to calculating 'allowable income' for the Health Care Card Income Test Calculator. As DFISA will no longer be paid, it no longer needs to be included as income for Health Care Card Income Test purposes.

Item 32 repeals the reference to DFISA from subparagraph 1134(1)(e)(ia) in relation to calculating pension loans scheme amounts. Currently the section operates to deduct DFISA amounts from the calculation, however as DFISA will no longer be paid this section will not be required after the commencement of this schedule.

Items 33- 34 repeal references to DFISA from subclause 146(3) of Schedule 1A and substitutes a new calculation method without reference to DFISA. These items also repeal subclause 146(6) of Schedule 1A that clarifies that clause 146 of Schedule 1A has no impact on calculations of DFISA under the VEA.

Currently subclause 146(3) sets out a comparison between a rate that would be payable to a person in accordance with the transitional arrangements and the rate that would be payable to that person as if the transitional arrangements had not been enacted with the addition of DFISA in the daily amount calculation.

The new subclause removes the references to DFISA from the provisional calculation.

The repeal of subclause 146(6) of Schedule 1A removes the clarification that clause 146 of Schedule 1A has no impact on calculations of DFISA under the VEA. This subclause will become redundant as DFISA will no longer be paid and instead veterans will have an increase in their social security, meaning that subclause 146 cannot impact on DFISA calculation as DFISA will no longer exist after the commencement of this schedule.

Item 35 provides application and savings provisions. Subitem 35 (1) provides the insertion of the social security income test exemptions for VEA Disability Compensation Payment (formerly known as Disability Pension), Saved Pensions under the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986, payments of MRCA Special Rate Disability Pension and MRCA Permanent Impairment payment under Subparagraphs 8(8)(y)(ia) and (ib) and paragraphs 8(8)(zoa) and (zob) apply in respect of working out social security qualification, payability or rate in respect of days on or after commencement.

Subitem 35(2) ensures the that the social security income test exemption for DFISA will continue to operate under subparagraph 8(8)(y)(x) for payments of DFISA made before, on or after that commencement of this item.

Subitem 35(3) ensures that the adjusted nil rate period created by subsection 23(1D) will continue to apply on and after commencement of this item in relation to a day occurring before that commencement on which adjusted disability pension (within the meaning of section 118NA of the VEA as in force immediately before that commencement) was payable to a person or a person's partner.

Subitem 35(4) ensures that those in receipt of DFISA Bonus are prevented from accessing Pension Bonus under subparagraph 92C(f)(iii), in relation to payments of DFISA made before, on or after commencement of this item.

Subitem 35(5) operates to include DFISA in the Low Income Health Care Card income test at point 1071A-4, in relation to payments of DFISA made before, on or after commencement of this item.

Subitem 35(6) operates to exclude DFISA from the calculation of a person's pension loans scheme pension rate for days before commencement in relation to payments of DFISA made before, on or after that commencement of this item.

Subitem 35(7) operates to maintain DFISA in relation to working out a person's provisional transitional annual payment rate in relation to a day before the commencement of this item.

Social Security (Administration) Act 1999

Item 36 this is a consequential amendment which amends section 123TC (paragraph (ea)) by omitting "payment or;" and substituting "payment". This is a consequential amendment resulting from the repeal of the following subparagraph, so that (ea) is the last subparagraph in that paragraph.

Item 37 repeals the reference to DFISA from section 123TC (paragraph (f)) in relation to the definition of a category H welfare payment). Under the Vulnerable welfare payment recipient and Voluntary income management measures, receipt of a category H payment under section 123TC determines whether an income support recipient is subject to income management.

Item 38 is a consequential amendment which amends paragraph section 123TC (paragraph (da) of the definition of category R welfare payment) by omitting "payment or;" and substituting "payment". This is a consequential amendment resulting from the repeal of the following subparagraph, so that (da) is the last subparagraph in that paragraph.

Item 39 repeals the reference to DFISA from section 123TC (paragraph (e)) in relation to the definition of a category R welfare payment. Under the Cape York Welfare Reform, a category R payment under section 123TC of the Social Security (Administration) Act 1999 determines if an income support recipient or their partner is subject to income management.

Item 40 removes a reference to DFISA from Subparagraph 123TK(1)(a)(i). This section has the effect of determining if a social security recipient is an "eligible recipient" for the purposes of income management under the Long-term Welfare Payment Recipients Measures.

Item 41 repeals the reference to DFISA from section 124D (subparagraph (c)(i) of the definition of 'schooling requirement payment'). This section determines payments that attract attendance monitoring for schooling requirements by Northern Territory Government Truancy Officers or Services Australia social workers in certain communities. As DFISA will no longer be paid it will no longer attract schooling requirement attendance monitoring.

Item 42 is a savings provision that ensures that despite the amendments made by this Schedule, Parts 3B and 3C of the Act continue to apply to DFISA payments made before, on or after commencement of this schedule. This means that those who receive DFISA relating to a period prior to 1 January 2022 will still be subject to income management or subject to schooling requirements as a result of their receipt of DFISA for days prior to commencement.

Veterans' Entitlements Act 1986

As noted above, the purpose of these amendments is to remove references to DFISA because they are made redundant due to changes to the Social Security Act .

The changes to the Social Security Act that are introduced in items 21, 22 and 25 of Schedule 1 of this Bill ensure that under social security law certain pensions, benefits and payments, currently referred to as an 'adjusted disability pension', will no longer be included for the purposes of income test.

These pensions, benefits and payments are:

a)

a pension under Part II or IV of the Veterans' Entitlements Act 1986 (other than a pension that is payable under section 30 to a dependant of a deceased veteran);

b)

a pension payable 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);

c)

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

d)

a payment of a Special Rate Disability Pension under Part 6 of Chapter 4 of the Military Rehabilitation and Compensation Act 2004.

DFISA and DFISA-like payments are income support payments currently made by Department of Veterans' Affairs as a payment to persons whose social security payment is reduced or not payable because of their 'adjusted disability pension'.

Because a person's social security pension or benefit (social security payment) will no longer include an assessment of these pensions, benefits and payments, the eligible person will no longer have their relevant Department of Veterans' Affairs payment effect the assessment of their social security payment. This makes DFISA and DFISA-like payments redundant.

It should be noted that a person's social security payment will increase as a result of their 'adjusted disability pension' not being included as part of their assessment of income.

Items 43 to 56 repeal references to, and definitions of, 'Defence Force Income Support Allowance', 'DFISA', 'DFISA bonus' and 'DFISA bonus bereavement payment'.

Item 57 repeals Part VIIAB of the VEA. Part VIIAB of the VEA currently provides for the payment of DFISA. As a result of the exempting of payments from being considered as income for the purpose of the Social Security Act DFISA will become redundant. With DFISA redundant there is no need for Part VIIAB and this Bill will omit this Part of the VEA. There is no need for any references to that Part.

Items 58 to 62 repeal references to sections and references related to 'Defence Force Income Support Allowance', 'DFISA', 'DFISA bonus' and 'DFISA bonus bereavement payment'.

Item 63 provides for application and transitional provisions. The effect of these provisions are to ensure that DFISA payments (including the DFISA bonus and the DFISA bonus bereavement payment) will continue to be payable where they would have otherwise been payable to a person in relation to a day occurring before the commencement of the Schedule.

This means that those who receive DFISA and related payments relating to a period prior to 1 January 2022 will still be eligible for DFISA and related payments even where they receive those payments after 1 January 2022.

Schedule 2 - Increased rent assistance

Outline of Schedule

Schedule 2 sets out amendments to the VEA that provide that the disability income rent test should be abolished. This will allow veterans with an 'above general rate' payment, who are privately renting, to receive Commonwealth Rent Assistance.

Background and Context

Both the VEA and the social security law provide rent assistance. Both have a rent threshold rate below which there is no rent assistance payable. The amendments are not intended to change this rate. In addition both the VEA and social security law have a maximum amount of rent assistance that can be paid. These amendments are not intended to change this amount.

Currently there is a disability income rent test under the VEA. The disability income rent test operates to reduce the amount of rent assistance payable to Department of Veterans' Affairs disability income recipients who pay private rent. There is no equivalent test under the social security law, although a social security payment recipient's Defence Force Income Support Allowance (DFISA) payment may be reduced by the disability income rent test (under the VEA).

The intention is to remove the disability income rent test so that a veteran receiving a pension by way of compensation will receive the same level of rent assistance as they would receive if they were on income support under social security law.

The effect of the current disability income rent test is that the greater the veteran's impairment, the less rent assistance is payable. A TPI veteran may be unable to receive any rent assistance because the disability income rent test reduces the rate of rent assistance payable to nil. This means that that TPI veterans who are renting continue to receive no rent assistance.

Schedule 2 commences on 1 January 2022.

Explanation of the changes

Veterans' Entitlements Act 1986

Items 1 and 2 repeal notes in subsection 5H(8) and paragraph 5H(8)(e) of the Veterans' Entitlements Act 1986 and substitute new notes that do not make reference to 'rent assistance'.

The amendments in items 1 and 2 clarify that a payment, that is payment of pension by way of compensation, is not counted in working the amount of rent assistance a person is entitled to, which is currently the exception to the general rule of not counting the pension by way of compensation as income.

In effect, these provisions, with the other amendments made in this Schedule, allow veterans who receive a pension by way of compensation, who are privately renting, to receive Commonwealth Rent Assistance.

Items 3 and 4 omit references to 'income support supplement' and substitute 'income support supplement or veteran payment' from the table provided under section 59A of the Veterans' Entitlements Act 1986.

Section 59A provides for a table that sets out amounts of payment that are to indexed or adjusted under Part IIIB Division 18 of the Act, the relevant abbreviation used in referring to that indexed or adjusted amount, and the provisions in which that amount is to be found.

The amendments in items 3 and 4 are technical amendments that ensure that all relevant types of income support payments, which includes the veteran payment, are covered.

Item 5 repeals the item in the table provided under section 59A of the Veterans' Entitlements Act 1986 to 'rent assistance free area'. This is a technical amendment because this item is no longer required as Item 12 below repeals SCH6-C15. SCH6-C15 provides the current basis for the calculation of a person's 'rent assistance free area'.

Items 6 to 12 repeal relevant points in Schedule 6 to the Veterans' Entitlements Act 1986 that provide for the method of calculating the rate of rent assistance in relation to a person who has a pension by way of compensation. This means that persons with a pension by way of compensation do not have a specific set of rules that carve out how 'rent assistance' is calculated in reference to their income.

The effect of these measures is that the general rules of rent assistance will apply to persons with a pension by way of compensation, and their pension by way of compensation will not be included in working out the amount of rent assistance a person is entitled to. This means that persons will not have their entitlement to rent assistance reduced by their pension by way of compensation.

Item 13 provides that the amendments to Schedule 6 to the Veterans' Entitlements Act 1986 made by Schedule 2 will apply on and from 1 January 2022, the date Schedule 2 of this Bill commences.

Schedule 3 - Removing references to disability pension

Outline of Schedule

The amendments in Schedule 3 will amend the VEA to remove references to a 'disability pension' and substitute references that clarify the nature of the payment as compensation, rather than income support.

Background and Context

On 2 April 2019, the Prime Minister directed the Secretary of the Department of the Prime Minister and Cabinet to commission and oversee a review proposed by the Australian Federation of Totally and Permanently Incapacitated Ex Servicemen and Women Limited (TPI Federation). The TPI Federation proposed an increase in the Special Rate of Disability Pension (colloquially known as the Totally and Permanently Incapacitated (TPI) payment) under the VEA was needed to remedy a downward trend in its value relative to wages since the 1950s.

Mr David Tune AO PSM was appointed as the lead independent reviewer. All recommendations made by the Independent Review into the TPI Payment (the Review) were accepted by Government. In Budget 2020-21, on 6 October 2020, the Government announced a number of initiatives which included simplifying payment arrangements by removing the need for the DFISA, exempting adjusted disability pension from the social security income test and abolishing the rent test.

The Review also recommended that a change is implemented in terminology and language in legislation, guidelines and policy documents to no longer refer to the TPI pension as a 'pension' but as a 'payment'. The Review noted that some stakeholders are concerned that the term 'pension' implies welfare instead of compensation.

The amendments implement this recommendation to some extent, including clarifying the nature of pension by way of compensation, rather than by means of welfare. This will also be captured in guidelines and policy documents.

However, the word "pension" has not been removed throughout the VEA. It is important to recognise that it is not only the Commonwealth that provides benefits to veterans and their dependants. Various State, Territory and local government laws and regulations also provide for benefits and discounts for veterans and their families. These laws and regulations refer to veterans and their families in a variety of different ways, including referring to "pensions under the VEA". Similarly, private businesses and charities may target "pensioners". There is a risk that removing the word "pension" could mean these benefits and discounts would no longer flow to veterans and their families. A hypothetical example would be that a person with a TPI payment, that did not otherwise hold another pension source, may be ineligible for discounts to pensioners.

The amendments in Schedule 3 are generally technical amendments to implement the necessary changes to remove references to 'disability pension'. Schedule 3 commences on 1 January 2022.

Explanation of the changes

Veterans' Entitlements Act 1986

Items 1 to 2 amend paragraphs 5H(1)(b) and (8)(ea) of the VEA to remove references to 'disability pension' and provide for new wording the relevant payments which are referred to in the items below as 'pension by way of compensation'.

Paragraph 5H(1)(b) sets out income test definitions and includes what is currently known as a 'disability pension' should be included as part of a person's 'adjusted income', for the purpose of assessment of the rate of an income support supplement.

Paragraph 5H(8)(ea) provides that certain forms of compensation under Division 5A of the Part II or under section 74 are not income, to the extent that those payments reduce what is currently known as a 'disability pension' that is payable to a person under Part II or Part IV of the VEA.

These references to 'disability pension' will be replaced by statements that relate to compensation payments made under the relevant parts of the VEA and the relevant payments made under the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986.

Item 3 will repeal the definition of a 'disability pension' under the VEA. Given the purpose of the amendments proposed in Schedule 3 is to remove references to a 'disability pension' from the VEA, a definition statement is no longer needed.

References to a 'disability pension' will be replaced throughout the Act with other references that better describe the payment.

Items 4 to 6, 8 to 12 and item 22 amend relevant headings throughout the VEA to remove references to 'disability pension'.

These headings are substituted with new words that refer to 'pensions by way of compensation', or otherwise clarify the purpose of the relevant section.

Item 7 and items 13 to 21 amend the VEA by omitting reference to a 'disability pension' however described, and substituting new words that otherwise describe the pension by way of compensation under Parts II and IV of the Act.

Schedule 4 - Indexation of above general rates

Outline of Schedule

The amendments in Schedule 4 will change the way certain pensions are indexed. The amendments will index the whole of the 'above general rate' pension by way of compensation at once, rather than separately index the 'general rate' and the 'above general rate' components of the pension by way of compensation.

Background and Context

Schedule 4 will change the way certain pensions are indexed. Currently the Extreme Disablement Pension Adjustment (EDA), Intermediate Rate and Special Rate (colloquially known as TPI payment) of pensions by way of compensation are split into two components for indexation purposes and each is indexed separately. This split mechanism was introduced in 2004 when a different indexation mechanism was introduced for the 'above general rate' component, but it is now redundant as the indexation mechanisms were aligned in 2008.

This change will enable a simplification of the legislation and the indexation process. The first indexation point after commencement is 20 September 2022. Indexation will continue to occur every 20 March and 20 September thereafter.

Schedule 4 commences on 1 July 2022.

Explanation of the changes

Veterans' Entitlements Act 1986

Item 1 repeals the current provision at subsection 198(5E) for the indexation of 'above general rate' Disability Payment and substitutes a new provision for indexation.

Section 198 provides for the variation by means indexation of rates of certain payments. This includes the 'general rate' at subsection (5DA) and the 'above general rate' at subsection (5E).

The current method to work out the 'above general rate' of indexation requires working out the difference between the 'above general rate' and the 'general rate' on the day before the adjustment day, then multiply that by the Pension MBR factor (worked out under section 59LA) on the adjustment day, and finally adding that figure (rounded up to the nearest $0.10) to the 'general rate' as set out in subsection (5DA) on adjustment date.

This amendment simplifies the process so that the indexed amount is now the 'above general rate' on the day before the adjustment multiplied by the Pension MBR factor (worked out under section 59LA) on the adjustment day.

This will result in a simplified process for working out indexation. It may result in the indexation increase at some adjustment dates being $0.10 per fortnight lower, because the calculation to round up to the nearest $0.10 is now undertaken once, rather than twice.

Item 2 applies the changes made in item 1 to each adjustment day that occurs after the commencement of item 2.

Schedule 4 is set to commence on 1 July 2022. The first adjustment day to be affected by the changes will occur on 20 September 2022. This is when the new method of indexation calculation will be implemented.

Schedule 5 - Non-Liability rehabilitation pilot

Outline of Schedule

Currently, veterans have to wait until their initial liability claim is accepted before they can access rehabilitation, which can take some time. The amendments in Schedule 5 will provide access to rehabilitation support without requiring veterans to have lodged a compensation claim to establish liability.

This pilot is intended to raise awareness of the benefits of early engagement with rehabilitation, and encourage veterans to participate voluntarily by 'un-coupling' access to rehabilitation support from compensation liability. The Pilot will target veterans who have an identified need for rehabilitation, who are not currently participating in rehabilitation through the Department of Veterans' Affairs, and who are not in receipt of incapacity payments.

These amendments commence on 1 January 2022.

Background and Context

Currently a veteran under the MRCA or the DRCA must have a liability claim accepted or be eligible for Veteran Payment before Department of Veterans' Affairs rehabilitation can be provided. There can be a lengthy liability and claims process before a claim is accepted, which impacts when rehabilitation can commence, and this may influence attitudes towards partaking in Department of Veterans' Affairs rehabilitation and delays commencement of services.

The two-year pilot will commence on 1 January 2022, and will offer non-liability rehabilitation as an additional pathway alongside the existing rehabilitation programs under the MRCA and DRCA. (Persons with eligibility under the VEA can already access support through the Veterans' Vocational Rehabilitation Scheme without submitting a claim as long as they meet the service eligibility requirements.)

At the conclusion of the pilot, evaluation will occur of whether better and more-timely outcomes can be achieved for participants undertaking Department of Veterans' Affairs rehabilitation when it is "un-coupled" from the liability/compensation framework.

A new Part 2A will be inserted into the MRCA to give effect to this pilot, with the aim of providing rehabilitation support to certain current and former ADF members. The pilot will target veterans who have an identified need for rehabilitation, who have not yet participated in Department of Veterans' Affairs rehabilitation, and who are not in receipt of incapacity payments. It is intended that the Military Rehabilitation and Compensation Commission (MRCC) will prescribe, by legislative instrument, details on accessing of rehabilitation services under the Pilot.

The proposed amendments enabling the pilot will reflect Department of Veterans' Affairs' whole-of-person approach, supporting rehabilitation needs that may relate to transition from military service to civilian employment, or psychosocial barriers that are affecting an individual's capacity to fully participate in work and community life. The pilot will seek to encourage and empower veterans to improve their health and wellbeing through rehabilitation.

Explanation of the changes

Military Rehabilitation and Compensation Act 2004

Item 1 inserts a new paragraph (aa) into section 3 of the MRCA which is the simplified outline of the Act that describes the provision of rehabilitation under the Act.

Item 2 inserts two new paragraphs into the simplified outline of the Chapter to reflect the provision of rehabilitation programs for members and former members, either through claiming for acceptance of liability, or on a non-liability basis which is not having to make a claim or establish a link to a service injury or disease.

Item 3 inserts a new paragraph into the simplified outline of the Chapter to reflect a new part in this Chapter containing the pilot which will be providing access to non-liability rehabilitation.

Item 4 replaces the current heading to Part 2 of the Act to reflect that this Part is now not the only Part that will be providing for Rehabilitation. It distinguishes between the general provision for rehabilitation and the rehabilitation that will be provided for by the new Part 2A which will be inserted to provide the legislative basis for the pilot.

Item 5 inserts the new Part 2A into the Act. It contains the substance of the new Part.

a)

Section 53A contains the simplified outline of this Part. It sets out the fact that this Pilot is providing non-liability rehabilitation for certain members or former members, to whom this Part applies, and the types of rehabilitation provided by this pilot.

b)

Section 53B deals with the persons to whom this Part will apply. It contains a number of subsections as follows:

a.

Subsection 53B(1) sets out the criteria for the persons who will be eligible for rehabilitation under this pilot, in a manner similar to current subsection 43(3). It specifies the target group as members and former members not having to make a claim, and limits the former members covered by the pilot to those who were a member on or after 1 December 1988. This reflects the intent to provide access to the more recent cohort covered by the DRCA, and that it is not duplicating the Veterans' Vocational Rehabilitation Scheme available under the VEA. A determination under subsection 53B (1)(d) that this Part applies to an individual (for access to Non- liability rehabilitation pilot) only has effect for the duration of the pilot.

b.

Subsections 53B(2) deals with the determination that can be made by the Commission under 53B (1)(d). They make it clear that the determination on individuals who may take part in the pilot is not a legislative instrument.

c.

Subsection 53B(3) makes it clear that there is no requirement for linkage to a service injury or disease to be eligible for this pilot thus reinforcing that access is on a non-liability basis.

d.

Subsection 53B(4) provides that certain provisions of the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004 do not apply for the purposes of this Part. These provisions applied the Act to certain injuries, diseases and deaths. As this pilot is not requiring the presence of a service injury or service disease these provisions do not apply for the purposes of this Part.

c)

Section 53C contains a number of subsections setting out details concerning the provision of rehabilitation under this pilot. They are as follows:

a.

Subsection 53C(1) provides that a rehabilitation program under the pilot may consist of vocational assessment and rehabilitation and/or psycho-social training. This clarifies that not all of the usual Department of Veterans' Affairs rehabilitation services are available under this pilot.

b.

Subsection 53C(2) clarifies that if the design or provision of a rehabilitation program under the pilot requires some degree of expertise that this can be obtained, and that relevant information may be taken into account, consistent with the existing protocols in Chapter 3. .

c.

Subsection 53C(3) makes provision for limits and conditions to be imposed on the rehabilitation programs provided by Department of Veterans' Affairs under this part. It clarifies that these limits can include a financial limit on a program. These limits and conditions may be determined in an instrument under subsection 53D. These limits are intended to ensure that as many people as possible benefit from the pilot to the greatest extent possible under the pilot.

d.

Subsection 53C(4) makes it clear that the cost of a rehabilitation program under this Part is to be paid by the Commonwealth.

e.

Subsection 53C(5) dis-applies section 38 from the rehabilitation provided under this Part. This reflects the shorter duration and targeted nature of the pilot and that it will not be aiming to achieve the same outcome as the full rehabilitation services usually provided. The focus of the pilot is to identify whether better and more timely outcomes can be achieved when access to rehabilitation support is provided earlier, and without the requirement to establish liability or to make a compensation claim.

d)

Section 53D sets out details concerning the legislative instrument. They are as follows:

a.

Paragraph 53D(1)(a) makes reference to paragraph 53B(1)(c), setting out that the MRCC has a discretion to determine that only specified persons are part of the pilot. This is appropriate given the trial nature of the program and to allow suitable participants to be identified throughout the course of the two-year pilot.

b.

Paragraphs 53D(1)(b)-(1)(c) make references to subsection 53C(3), setting out that the MRCC has the discretion to determine appropriate conditions and limits.

c.

Subsection 53D(2) provides for the determination made under 53D(1) to also include matters relating to an approved program provider or other matters specified by the Commission. This enables a flexible and responsive mechanism for the MRCC to set out relevant considerations in the provision of rehabilitation support under the pilot to meet the rehabilitation needs of relevant members and former members without delay.