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.