House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Veterans' Affairs and Minister for Defence Personnel, the Honourable Matthew James Keogh MP)

Schedule 1 - Single ongoing Act main amendments

Part 1 - Closing eligibility to DRCA and VEA

Military Rehabilitation and Compensation Act 2004

Items 1 to 3 amend section 3 which describes the general purpose and practices of the Act, to reflect the MRCA as the single ongoing Act going forward, providing compensation coverage for veterans and their dependants. The changes set out that from 1 July 2026, compensation would be provided under the MRCA regardless of nature of service or time of injury and that the DRCA and VEA would be closed to new claims for compensation from that date. It also adds two notes to inform readers that consequential and transitional arrangements are set out in the MC & TPA, Part IA of the DRCA, and Part IA of the VEA.

Item 4 reflects modern drafting practices and inserts the abbreviation VEA in section 3 to replace all references to the Veterans' Entitlements Act 1986.

Items 5 and 8 amend subsection 5(1) to set out that date of commencement means 1 July 2026. A signpost definition for de facto relationship in section 19A, and the abbreviations for the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 and the Veterans' Entitlements Act 1986 are also added.

Item 6 amends subparagraph 5(1)(c)(i) of the definition of partner to insert the updated reference to section 19A, in relation to de facto relationship. (See item 9.)

Item 7 amends the definition of pharmaceutical benefits in subsection 5(1) to replicate the definition from subsection 91(9) of the VEA.

Item 8 – see item 5.

Item 9 repeals the definition of Veterans' Affairs Minister in subsection 5(1) which refers to the Minister administering the VEA. The term is no longer required with the transition to the MRCA as the single ongoing Act.

Item 10 repeals subsection 5(2) in relation to determining a de facto relationship, as the full definition is inserted at new section 19A by the item below.

Item 11 inserts new section 19A to replicate section 11A of the VEA on matters to be considered in forming an opinion on whether a relationship is de facto, where a provision of this Act refers to a partner (as per the amendment by item 6.)

Items 12 to 29 are minor technical updates to adopt the abbreviations of VEA and DRCA.

Item 30 amends subparagraph 438(a)(i) as a consequence of the repeal of the term Veterans' Affairs Minister by item 7.

Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988

Item 32 amends subsection 4(1) to set out that date of commencement means 1 July 2026.

Item 33 inserts new Part IA - Operation of this Act on and after date of commencement, to provide for the operation of the DRCA upon commencement of the Simplification Act.

Section 14AA provides that new claims under Part V (general claim provisions of the DRCA) may not be made on or after the commencement of the Simplification Act. Similarly, there would be no new acute support package instruments made under section 41B from that date, thus closing the provision of such assistance under the DRCA.

Two guidance notes are added to inform readers that new claims for compensation and grants of acute support package could be made under the MRCA instead and that section 88 of the MCTPA deals with pending claims at commencement date.

Items 34 and 35 amend the note at the end of subsection 41B(1) with a technical change and the addition of a note to inform readers that no new instruments could be made under section 41B in relation to acute support package on or after commencement date, as set out in section 14AA.

Item 36 amends subsection 54(1) to insert a note to inform readers that no claims for compensation could be made under section 54 on or after commencement date, as set out in section 14AA.

Item 37 amends subsection 124(1A) to insert a note to inform readers that no claims for compensation could be made under the DRCA with respect to an injury, loss or damage under a predecessor Act to the DRCA on or after commencement date, as set out in section 14AA.

Veterans' Entitlements Act 1986

Item 38 amends subsection 5Q(1) to set out that date of commencement means 1 July 2026.

Item 39 inserts new Part IA - Operation of this Act on and after date of commencement, to provide for the operation of the VEA upon commencement of the Simplification Act.

Subsection 12AA provides that there will no new VEA compensation claims or applications, except for the small cohort of reinstated pensioners and in certain bereavement circumstances. There would also be no acute support package instruments under section 115S from that date, thus closing the provision of such assistance under that Act.

Two notes are added to inform readers that from commencement, certain new claims could be made under the MRCA and that grants of acute support package could also be made under the MRCA instead.

While there would be no new claims or applications, a benefit being paid to a person under these Parts as at commencement date would be preserved under the VEA including indexation arrangements. This allows existing payments to continue without interruption and the person may lodge new claims under the MRCA for which they may be eligible.

There are provisions in other schedules of this Bill to integrate many of these benefits into the MRCA.

Item 40 amends subsection 14(1) to repeal existing notes 1 and 2 referring to claims and dependants, which are no longer necessary. A replacement note is inserted to inform readers that Part II is closed to new claims and applications, as set out in section 12AA.

Item 41 amends subsections 15(1) and (2) which deal with applications for increase in a Part II pension, inserting a guidance note to inform readers that a claim could not be made on or after date of commencement, as set out in section 12AA.

Item 42 amends subsection 111(2) which sets out the procedural requirements for claiming certain benefits, inserting a note to inform readers that a claim could not be made on or after commencement date, except for bereavement payment under section 98AA, as set out in section 12AA.

Items 43 and 44 amend the note at the end of subsection 115S(1) with a technical change and inserts a new note to inform readers that no new instruments could be made under section 115S in relation to acute support package on or after commencement date, as set out in section 12AA.

Part 2 - Opening MRCA to pre-2004 conditions

Division 1 - Accepted DRCA and VEA conditions

Military Rehabilitation and Compensation Act 2004

Items 45 and 46 amend sections 21 and 22 which outline the provisions of Chapter 2 and the approach for the Commission to accept liability for an injury or disease respectively. The changes reflect the addition of the deemed liability provision.

Item 47 inserts new section 24A to provide that if liability for the injury or disease has been accepted under the DRCA or VEA, the Commission is taken to have accepted liability for an injury or disease, and the injury or disease is taken to be a service injury or disease.

Subsection 24A(1) refers to a claim submitted prior to the commencement date, where the primary or review decision on that claim results in DRCA compensation or a pension under Part II or IV of the VEA being payable. In essence, these are decisions that the Commission has accepted liability for one of more conditions that is the subject of the claim.

Subsection 24A(2) provides that accepted conditions, including those arising from claims determined under the DRCA or the VEA, apply for the purposes of the MRCA and the injury or disease is taken to be a service injury or disease. A note informs readers that the person is not required to re-claim, and the Commission is not required to reassess liability for that injury or disease.

Item 48 inserts a note at the end of section 27 that the Commission is taken to have accepted liability for an injury or disease. That is, an injury or disease accepted under the DRCA or VEA is taken to be accepted by the Commission and regarded as a service injury or disease.

Division 2 - Classifying pre-2004 operations

Military Rehabilitation and Compensation Act 2004

Part 1 - Preliminary

Items 50 to 54 replicate in subsection 5(1) a number of definitions from the VEA, which relate to compensation for certain cohorts of the Defence Force or Peacekeeping force and their dependants, and related updates are made to some existing definitions.

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Australian contingent, Australian member, authorised travel, and British nuclear test defence service are drawn from subsection 68(1) of the VEA and are relevant for the purposes of establishing coverage under the MRCA for peacekeeping service contingents (such as police) and for the nuclear test cohort.

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defence service is updated to reference subsection 6(1A) where the expanded explanation of the applicable kinds of service is located.

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Signpost definitions are inserted for domicile and hazardous service which refer readers to section 19B and section 6C respectively.

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member is amended to include a reference to member of a Peacekeeping Force, a new defined term inserted into this subsection.

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operational service, Peacekeeping Force, and peacekeeping service are inserted as signpost definitions, referring readers to sections 444 to 450, and subsections 6A(3) and 6A(1), respectively.

Item 55 inserts a new heading within Chapter 1 to set out Part 2 - Kinds of service to which this Act applies to contain sections 6 to 20 of this Act.

Items 56 to 59 make a number of changes to section 6, which

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provide that defence service is warlike service and non-warlike service, British nuclear test defence service, hazardous service and peacetime service

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extend the meaning of non-warlike service in paragraph 6(1)(b) to include peacekeeping service

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replace paragraph 6(1)(c) to insert peacetime service to mean any other service with the Defence Force that is not warlike service, non-warlike service, British nuclear test defence service, or hazardous service.

Item 60 inserts a number of new sections into Part 2 of Chapter 1.

Section 6A provides the meaning of peacekeeping service and Peacekeeping Force, based on the definitions of these terms in subsections 68(1) and 68(2) of the VEA. In order for a person to have rendered peacekeeping service, they must have served outside Australia as a member of a Peacekeeping Force. A table setting out a list of all declarations of Peacekeeping Forces under section 68(1) of the VEA that are in force and the additional Peacekeeping Forces from Schedule 3 of the VEA is inserted at subsection 6A(3).

To date, those declared to be members of a Peacekeeping Force include mainly members of the ADF and members of Federal, State and Territory Police. Australian employees of the United Nations Organisation or of private or government welfare organisation during a peacekeeping mission are neither part of an Australian contingent nor members of a Peacekeeping Force.

British Nuclear Tests in Australia

Section 6B provides the meaning of British nuclear test defence service, based on section 69B of the VEA. In order for a person to have rendered British nuclear test defence service, they must have been a member of the Defence Force in a nuclear test area or involved in the related activities, at a specified time.

The tables from the VEA which set out the relevant geographic areas and periods are brought into subsections 69B(2) and (3). This is a distinct category of eligible service providing former ADF members who participated in the British nuclear tests and related activities, with compensation entitlements for service-related injury, disease or death, equivalent to those for non-warlike, hazardous service or defence service.

Other provisions

Section 6C provides the meaning of hazardous service, based on subsection 120(7) of the VEA, to be service prior to 1 July 2004 as determined by the Minister of Defence in writing to be hazardous service. This service classification generally involves activities exposing individuals or units to a degree of hazard above and beyond that of normal peacetime service.

Item 61 inserts new section 19B to set out the concept of domicile, replicating section 11B of the VEA. The provision was intended to primarily cover those Australians who were travelling or studying overseas at the time the Second World War broke out, could not return to Australia to enlist in the Australian armed services, and served instead with British, Commonwealth or Allied (BCAL) defence forces. The term is also relevant for determining civilians who may be entitled to prisoner of war payments (See Part 1 of Schedule 2.).

Items 62 and 63 amend subsection 335(1) to reflect the inclusion of British nuclear test defence service and hazardous service under this Act, and that the more beneficial reasonable hypothesis standard of proof would apply to claims relating to these service types, along with warlike and non-warlike service.

Item 64 amends subsection 338(1) to provide a similar change to the items above, that the operation of reasonable hypothesis by reference to SOPs would apply to claims for acceptance of liability for injury, disease or death relating to British nuclear test defence service or hazardous service, as well as warlike and non-warlike service.

Items 65 and 66 amend paragraph 340(2)(c) to include British nuclear test defence service and hazardous service in the requirements for the Commission making a reasonable hypothesis determination overriding a decision of the Authority not propose to make or amend a SOP.

Item 67 insets new Chapter 12 to deal with the application of this Act to operational service.

Section 441 provides a simplified outline of Chapter 12 to note that this Act would apply to operational service as if it were warlike service or non-warlike service. Section 442 replicates definitions from sections 5B and 5C of the VEA that are related to operational service.

In order for a person to have operational service by serving in a defined operational area (listed in new section 451), the person (or their unit or ship) must have been allotted for duty in that area. An instrument of allotment is issued expressly for use in determining eligibility for compensation entitlements.

Subsection 442(2) sets out that an instrument of allotment may be made by the ADF, signed by the Vice Chief of the Defence Force, or the Minister for Defence, depending on the operational area described in the specific item of the table in new section 451.

Subsection 442(3) is inserted to assist readers to note that an instrument of allotment which is administrative in character, is not a legislative instrument and therefore not subject to the operation of the Legislation Act 2003. Items 31(a), (b) and (c) of section 7 of the Legislation (Exemptions and Other Matters) Regulation 2015 cover the corresponding VEA instruments and the same exemption status would be sought for the MRCA.

Subsection 442(4) provides eligibility for the Australian Army Nursing Service, which was formed as part of the Australian Army Medical Corps.

Subsection 442(5) is based on subsection 5R(1) of the VEA and provides the Minister with a power to make a determination deeming a person to have continuous full-time service or to be a member of unit of the Defence Force, whilst the person is undertaking the specified service or activities.

Members of the Australian Army, Navy and Air Force Reserves are generally the subject of continuous full-time service determinations, while the deeming of civilians to be members of the Forces is equivalent to a declared member under section 8(1). Such a determination on its own does not confer eligibility to benefits, but allows a person or persons covered by the determination to meet the continuous full-time service or member of the Defence Force component of the eligibility criteria to an entitlement.

Subsection 442(6) provides that determinations in subsection (5) are not legislative instruments but are administrative in character, and, therefore, not subject to the operation of the Legislation Act 2003. Item 31(d) of section 7 of the Legislation (Exemptions and Other Matters) Regulation 2015 covers the corresponding VEA instruments and the same exemption status would be sought for the MRCA.

Subsection 442(7) provides the end dates for World War 1 and 2 for the purposes of Chapter 12.

Section 443 is based on section 6F of the VEA and provides that persons who have rendered operational service are regarded as persons who have warlike service or non-warlike service under this Act.

Division 1 of Part 3 - Service that is operational service contains provisions which deals with operational service divided by the conflicts or forms of service to which they applied. They replicate sections 6A to 6E, and Schedule 2 of the VEA in the following manner:

Section 444 deals with operational service in the world wars. Subsection (1) includes a table covering certain service by members of the Defence Force. Subsection (2) covers special mission, eligible civilians and members of the Defence Force incapacitated as a result of enemy action. Subsections (3) and (4) set out cut-off dates, after which operational service do not apply.

Section 445 deals with operational service by Australian mariners (as defined in section 442) through employment outside Australia or within Australia. Subsection (7) contains a definition which excludes an external Territory.

Section 446 deals with post World War 2 service in operational areas. A person has operational service if they were allotted for duty in an operational area and have service in the area during a defined period of hostilities. It also applies to a member of a BCAL Defence Force, who was domiciled in Australia before enlistment and the person has rendered continuous full-time service in an operational area.

Section 447 deals with other operational service after World War 2, referring to members or units included in written instruments by the ADF as being assigned for service in Singapore, Japan or North-East Thailand, or attached to the Far East Strategic Reserve, during particular periods. Such determinations which are administrative in character, are not legislative instruments and therefore not subject to the operation of the Legislation Act 2003. Item 31(e) of section 7 of the Legislation (Exemptions and Other Matters) Regulation 2015 covers the corresponding VEA instruments and the same exemption status would be sought for the MRCA.

Section 448 deals with operational service by persons who have been awarded or are eligible to be awarded the specified minesweeping and bomb/mine clearance service awards.

Section 449 deals with certain submarine special operations that were undertaken between 1978 to 1997 which were re-classified as operational service, provided the member who served on such operations was eligible for, or in receipt of, the Australian Service Medal with Clasp 'Special Ops'.

Section 450 deals with operational service in the Korean demilitarised zone and in Vietnam, including on HMAS Vampire or Quickmatch.

Division 2 of Part 3 contains section 451 which lists 17 operational areas, the first being item 1, Korea, commencing on 27 Jun 1950 and the final being item 17, the Red Sea, from 13 to 19 January 1993. The list is based on Schedule 2 of the VEA with renumbering and modernised drafting practices in relation to geographic coordinates references.

Division 3 - Retesting claims

Military Rehabilitation and Compensation Act 2004

Items 68 and 69 amend subsection 319(1) to insert a note to inform readers that for claims rejected under the VEA or DRCA, an application may be made for consideration under the MRCA, provided the claimant can present new evidence to support their claim.

Item 70 amends section 322 to make clear the interactions between the claim provisions under this Act and claims made under the DRCA or the VEA before commencement date.

New subsection (5A) precludes a claim under this Act for an injury or disease while a claim under the DRCA or VEA in respect of the same injury or disease has not yet been finally determined. A claim is finally determined when a claimant has no possible further avenue for any form of appeal. New subsection (5B) requires that a claim for acceptance of liability for an injury or disease previously claimed under the DRCA or VEA must be supported by new evidence.

These amendments are consistent with the principles that already apply to "MRCA only" claims to facilitate timely and efficient resolution of claims.

Division 4 - Needs assessment

Military Rehabilitation and Compensation Act 2004

Item 71 inserts a note to inform readers that subsection 325(2) means that a needs assessment must be carried out before a compensation determination is made under this Act, including where liability for an injury or disease has been accepted under the DRCA or VEA.

Division 5 – Service injury, service disease and service death arising from treatment

Military Rehabilitation and Compensation Act 2004

Items 72 to 77 amend section 29, which deals with the unintended consequences of medical treatment. To provide clarity and remove inequities that currently exist between the DRCA and this Act, the limitation that the medical treatment is for a previously accepted service injury or disease is removed. The effect is that where a person receives medical treatment paid for by the Commonwealth, and as an unintended consequence of that treatment, the person incurs an injury, the resultant injury or disease is a service injury or service disease, irrespective of whether the original condition being treated was compensable. This connection also follows for a treatment injury that result in death. This change applies to accepting liability for an unintended injury or disease caused by treatment, aggravated by treatment, and an unintended death caused by treatment.

Part 3 - Other amendments

Division 1 - Permanent impairment

Military Rehabilitation and Compensation Act 2004

Items 78 and 79 amend section 68 to set out the date of effect rules regarding entitlement to compensation for permanent impairment. Subsection 68(3) clarifies how to determine when a person's entitlement commences. That is, the date of effect for the condition is the latter of the date of the liability claim, and the date that condition became permanent and stable according to the estimate by the person's treating doctor.

Item 80 amends section 71 to repeal and replace existing subsection (3) and to insert new subsections (4) and (5) to set out the same approach for determining the date of effect where an additional payment is made for compensation for another condition, or a worsening of an existing condition. New subsection (6) makes clear that in working out the amount of additional compensation, that permanent impairment payments under the DRCA and pensions under Part II or IV of the VEA are taken into account.

Items 81to 86 amend section 77 consequential to the changes above, to allow the date of effect to be backdated to the nearest month where it is based on the estimation of the person's medical doctor of when that condition became permanent and stable. This applies for commencement of entitlement to weekly permanent impairment compensation and additional weekly compensation.

Division 2 – Incapacity Payments

Military Rehabilitation and Compensation Act 2004

Items 87 to 91 amend subsections 85(1), 86(1), 87(1) and 118(1) to insert a note under each subsection to inform readers that under section 24A, the Commission is deemed to have accepted liability for the person's injury or disease in certain circumstances.

The notes make clear that compensation is payable if a person's incapacity to undertake service as a Defence member or to undertake work, is as a result of an injury or disease for which liability has been accepted by the Commission, including an accepted service injury or disease under the VEA or DRCA.

Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988

These amendments relate to the closure of provisions relating to incapacity payments under the DRCA. A number of amendments are made to Part X – Transitional provisions, which provides for persons who were entitled to compensation under repealed Commonwealth workers' compensation legislation to preserve those arrangements and allow the small number of recipients to remain entitled under the DRCA. (Schedule 7 provides for the transition of incapacity payments recipients to the arrangements under the MRCA from the date of commencement.)

Items 92 and 93 repeal the definitions of compensation leave and pre determination period in subsection 4(1), which are terms used in section 116 for the calculation of incapacity payments and that section is repealed by item 101.

Items 94 and 95 amend the definition of relevant amount in subsection 13(1) which provides for the annual indexation of the relevant rate of certain payments made under various sections of the DRCA. References to subsections 19(7), (8) or (9) are omitted, as they are no longer necessary, with incapacity payments to be indexed according to the provisions of the MRCA.

Item 96 repeal Divisions 3 and 6 of Part II, as they are no longer necessary, with incapacity payments to be administered according to the provisions of the MRCA.

Items 97 and 98 amend section 41B to omit subsections (3) and (4) to preclude new grants of acute support package under the DRCA. A technical consequential change is made to subsection (2). Ongoing access to the acute support package is provided under subsections 268B(2) to (6) of the MRCA. (See also Schedule 7 in relation to the continuity of an acute package granted under section 41B prior to commencement date.)

Items 99 and 100 amends the definition of determination in section 60, to omit references to sections 19, 20, 21, 21A, 22, 30 and 31 which deal with incapacity payments. These are no longer necessary, with incapacity payments determinations to be made under the MRCA and subject to the review arrangements under that Act. (See also Schedule 3.)

Item 101 repeals sections 112A and 112B which deal with funding appropriation for the payment of incapacity compensation. Sections 116 and 120, which deal with compassionate leave and notice of departure from Australia are also repealed. These provisions are no longer necessary, with incapacity payments to be administered according to the provisions of the MRCA.

Item 102 amends subsections 124(6) and (7) to omit references to sections 19, 20, 21, 22 or 31, as incapacity payments will be administered according to the provisions of the MRCA. The effect is that the transitional arrangement in section 124 remains operational for compensation with respect to the death of an employee.

Items 103, 104 and 105 amend section 132A, which deals with compensation for former employees under age 65 who are capable of earning in suitable employment. Paragraph 132A (2)(b) is amended such that section 20 as in force prior to the commencement of the Simplification Act would operate for the purposes of calculating the comparison amount of compensation, for those former employees in receipt of a superannuation pension.

Paragraph 132A (3)(b) is amended such that section 19 as in force prior to the commencement of the Simplification Act would operate for the purposes of calculating the comparison amount of compensation, for those former employees not in receipt of a superannuation pension.

Subsection 132A(4) is amended such that the specified paragraphs of subsection 19(4) as in force prior to the commencement of the Simplification Act would operate in relation to the tests the Commission is to consider, in determining a person's incapacity for work and the amount the person is able to earn per week.

Item 106 amends the definition of minimum earnings in subsection 133(2) such that section 19 as in force prior to the commencement of the Simplification Act would operate to set a minimum benefit that would be payable.

Item 107 amends the definition of specified number in subsection 137(5) such that the number specified by the Minister in subsection 30(2) as in force prior to the commencement of the Simplification Act would be applicable for the calculation in a redemption request from a former employee.

Veterans' Entitlements Act 1986

Item 108 inserts new subsection 30D(2A) to clarify the operation of the offsetting provisions with respect to the effect of MRCA incapacity payments on DCP. The VEA benefit structure does not draw a distinction between payments for function loss and the loss of earning capacity and the reference to the 'same incapacity' in the offsetting provisions creates uncertainty and potentially inequitable outcomes. The changes reflect the preferred approach that MRCA incapacity payments be excluded from offsetting general rate DCP.

The revised provisions will provide where a person receives both MRCA incapacity payments and a pension under Part II or IV, that the offsetting provisions:

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do not apply where DCP is payable at the general rate pension

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do apply where above general rate is payable but the reduction is limited and the resulting DCP cannot not be less than the percentage of general rate pension that corresponds to the person's degree of incapacity, as determined by the Commission under section 21A.

Above general rate pensions include the EDA and DCP at the Intermediate rate, special rate, and temporary special rate.

Division 3 - Liability restrictions on tobacco use

Military Rehabilitation and Compensation Act 2004

Item 109 amends section 36 to replicate the restrictions set out in subsections 8(6), 9(7) and 70(9A) of the VEA to ensure that veterans who would have been able to link the use of tobacco products prior to 1998 to their ADF service under the VEA, could continue to do so under the MRCA. It would remain the case that a claim relating to smoking that commenced or increased thereafter cannot be found to be service related.

Division 4 - Medical event on duty

Military Rehabilitation and Compensation Act 2004

Item 110 inserts new paragraph 27(da) in relation to the definition of service injury, that an injury can be accepted on the basis that it occurred while the person was on duty as a member, regardless of whether or not the injury was a result of the member's duties. The approach is broadly modelled on section 6 of the DRCA, for an injury that took place 'in the course of employment'. This would allow conditions such as heart attacks and other acute occurrences to be accepted as service related under the MRCA, as they are under the DRCA.

Item 111 inserts a guidance note at the end of section 27 to inform readers that certain service injury and service disease circumstances are not to be assessed by reference to SOPs under sections 338 and 339. They include:

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where the Commission is satisfied that an injury was sustained because of an accident that would not have occurred but for the person performing duty

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an injury that was sustained while the person was on duty, whether or not as a result of performing that duty

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an injury that was sustained from an accident that occurred while the person was travelling to or from a place where they perform duty.

The note aligns with the amendment to subsections 338(1) and 339(1) by items 114 and 115.

Item 112 inserts new paragraph 28(1)(ea) in relation to the definition of service death, that similar to item 110 for a service injury, a death can be accepted on the basis that it occurred while the person was on duty as a member, regardless of whether or not the death was a result of the member's duties. The approach is broadly modelled on section 6 of the DRCA, for a death which occurs 'in the course of employment'.

Item 113 inserts a guidance note at the end of subsection 28(1) to inform readers that certain service death circumstances are not to be assessed by reference to SOPs under section 338 (reasonable hypothesis) and section 339 (reasonable satisfaction). They include:

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where Commission is satisfied that the death was due to an accident (such as a vehicle turnover) that would not have occurred but for the person performing duty

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where the death occurred while the person was on duty, whether or not as a result of performing that duty

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where the death resulted from an accident that occurred while the person was travelling to or from a place where they perform duty.

The note aligns with the amendment to subsections 338(1) and 339(1) by items 114 and 115.

Item 114 amends subsection 338(1) in relation to the operation of reasonable hypothesis to exclude the specified provisions from the requirement of being assessed by reference to SOPs. Those provisions, including new paragraphs 27(da) and 28(1)(e), refer to an injury or death which occurred while the person was on duty as a member (or but for the member being on duty).

The nature of these occurrences would be determined independent of SOPs. The claimant would not need to show that the injury arose out of their Defence service but would need to establish that it occurred while they were on duty as a member.

Item 115 makes changes to subsection 339(1), on the same basis as item 114.

Division 5 - Posthumous permanent impairment (PI) payments

Military Rehabilitation and Compensation Act 2004

Item 116 repeals and replaces subsection 78(7) to insert provisions giving a legal personal representative the option to convert the weekly rate of PI compensation that would have been payable to the deceased member to a lump sum, excluding any compensation for lifestyle effects. A posthumous conversion is only available where the member had before they died, submitted the claim, and did not make a choice to convert their weekly compensation payment.

A note is inserted to inform readers that section 321 provides for a claim to continue to have effect after the claimant dies. Where a person makes a claim and then dies, their legal personal representative may make a claim for any compensation (including for PI compensation) that could have been payable up until the date of death.

The legal personal representative must make the choice to convert the compensation to a lump sum within six months of being notified of the weekly amount, which is the same interval that applies to members/formers members.

The conversion formula specifies that the lump sum is to exclude any compensation for the effects of a service injury or disease on the lifestyle of the deceased member. The conversion would use tables provided by the Australian Government Actuary, using the age of the person at their date of death, applied to 100 per cent of the weekly amount.

The outcome is that where a weekly amount of compensation would have been payable, instead of the sum of those amounts from the date of effect to the date the person died, the weekly payment (excluding lifestyle effects) converted to an adjusted age-based lump sum could be paid to the estate. This would potentially provide families of a deceased person with additional financial support.

Items 117 and 118 amend section 79 to make clear that the provisions for the payment of a lump sum and interest apply to conversions including choices made by a legal personal representative.

Item 119 repeals and replaces note 1 in subsection 321(2) to inform readers that the legal personal representative has the option to convert the periodic payment that is payable to a lump sum.

Division 6 - Overpayments and debts

Military Rehabilitation and Compensation Act 2004

Item 120 amends paragraphs 415(1)(a), (b) and (c) to insert references to the DRCA, enabling the recovery under the MRCA of amounts of compensation that were overpaid under the DRCA. The objective is to bring forward into the MRCA the recovery power under section 114 of the DRCA, despite the repeal of operative sections that provided compensation and benefits.

Item 121 amends subsection 415(4) to insert a reference to the DRCA, enabling the recovery amount to be deducted from payments made to, or for the benefit of, the person under the DRCA, as well as the MRCA.

Item 122 amends paragraph 416(1)(a) to extend the requirement on a person who is a member of a Commonwealth superannuation scheme to notify the Commission of their retirement, where the person is receiving or is entitled to receive compensation under the DRCA, as well the MRCA. The amendment replicates section 114A of the DRCA, which enables an overpayment of compensation to be recovered directly from the superannuation fund if required.

Item 123 amends subsections 428(1) and 429(1), to insert references to the DRCA in relation to a debt that is due to the Commonwealth arising from the DRCA, as well as the MRCA. The amendment replicates the effect of sections 428 and 429 of the DRCA, whereby the Commission has the discretion to write off, or to waive the right to recover from a person, the whole or a part of a debt due to the Commonwealth.

Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988

Item 124 amends the definition of determination in section 60 to omit the reference to paragraph 114B(5)(a), consequential to the repeal of that provision by the item below.

Item 125 repeal sections 114 to 114D which deal with the recovery of overpayments, and the Commission's discretion to write off or waive debts. These provisions are no longer necessary, as the arrangements are consolidated under the MRCA.

Division 7 - Payment to solicitor's trust account

Item 126 repeals and replaces subsection 430(3D), removing the requirement that the payment account must be maintained by the compensation recipient, or by the recipient jointly or in common with another person.

In Hansen vs Military Rehabilitation and Compensation Commission [2007] QSC 360, Mullins J held the view that section 430 is permissive and does not prohibit the Commission making the payment to the solicitors' trust account as requested and authorised by the applicant who has full capacity.

The revised wording of subsection 430(3D) is intended to avoid any confusion and is consistent with the outcome of Hansen. The practice of making payments to a nominated third-party is already available under the DRCA and this amendment would allow a consistent approach where a person may authorise for their MRCA compensation to be made to a third party, such as their legal representative.

This change does not affect payments to trustees under section 432. If a trustee has been appointed on behalf of the client under section 432, the payments must be made to the trustee.

Division 8 - Common law damages

Military Rehabilitation and Compensation Act 2004

Item 127 amends subsection 389(5) to update the cap from $110,000 to $177,000, for the maximum amount that a member or a former member can recover, should they elect to sue the Commonwealth or a potentially liable member at common law for damages for non-economic loss in the circumstances set out in subsection 389(5).

Division 9 - Information Sharing

Military Rehabilitation and Compensation Act 2004

Item 128 amends subsection 5(1) to add the definition of the Australian Defence Force as is defined in the Defence Act 1903.

Item 131 inserts new section 407A to allow the Department of Defence and the ADF to disclose information to the Commission for the purpose of assisting the Commission to perform its functions, duties or exercise its powers and includes protection against claims of breach of confidence. It also inserts new section 407B which allows the Commission to use or disclose information if the use or disclosure is for the purposes of the Commission performing its functions, duties or exercising its powers.

The changes are designed to consolidate, standardise and simplify the authority for information exchange between Defence, the ADF and the Commissions, and are considered reasonable and necessary to support the Commission to perform its function of determining entitlements for veterans. It will allow efficient investigation and determination of compensation claims, and the provision of appropriate services in a timely manner.

While the provisions authorise disclosure for the extensive purposes and functions of the Commission and the use of information so disclosed, there is appropriate safeguard as there is scope for Defence and the ADF to determine that disclosure is appropriate and relevant, depending on the nature or quality of the particular information under consideration.

Items 132, 133, and 134 amend subsections 409(2) and (2A) to authorise the Commission, and staff assisting the Commission, to give information to a specified person or agency for the purposes of the VEA and DRCA, as well as the MRCA.

The table in subsection (2A) specifies receiving parties and the purpose for which information may be provided. Items 1 and 2 of the table refer to the provision of information to Defence and the ADF respectively, which allows certain information relating to claims to be provided.

Item 135 amends paragraph (b) of the definition of receiving Commonwealth body in relation to the National Disability Insurance Scheme to omit an outdated reference.

Item 136 inserts new section 409A to operate alongside section 331 which applies with respect to a MRCA claim, setting out the requirement for the Commission to provide certain documents relating to a claim or application made under the VEA to the CDF or the applicant. Section 143 of the DRCA obviates the need to extend this provision to claims and applications under that Act.

The proposed provision complies with Australian Privacy Principle 12.1 in relation to providing an individual access to their personal information. Claim information provided to the CDF assists with maintaining visibility of the physical and health status of all ADF personnel.

Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988

Item 137 repeal sections 151, 151AA and 151A which deal with the authority of the Commission to obtain and to provide information under the DRCA. These provisions are no longer necessary, as the arrangements are consolidated under the MRCA.

Division 10 - Offsetting

Military Rehabilitation and Compensation Act 2004

Items 138 and 139 amend section 386 which the outline the provisions of Chapter 10, to reflect that a compensable loss includes payment of compensation under the DRCA and Parts II and IV of the VEA. This Chapter deals with liabilities arising apart from this Act, the DRCA and the VEA.

Items 140, 141 and 142 amend subsections 388(5) to expand the scope of compensation such that section 388 would apply to a dependant who receives damages in respect of the service death and who has already received compensation under this Act or the DRCA, or a Part II or IV pension under the VEA.

Paragraph (5)(a) is repealed and updated to set out the total compensation amount includes the listed payments under the DRCA and the VEA, as well as the MRCA, for the purpose of determining the amount the dependant is liable to repay the Commonwealth. Subsection (6) is updated in a similar manner to preclude compensation in respect of the service death following the payment of damages.

Items 143 and 144 amend paragraphs 389(1)(a) and (4)(b) in relation to the choice for a member/former member to elect to sue the Commonwealth or a potentially liable member at common law for damages for non-economic loss. The option is updated to apply if compensation payable for permanent impairment under this Act or the DRCA has not been paid, and no impairment compensation under these Acts will be paid once an election to sue is made.

Items 145 repeals and replaces paragraph 390(1)(a) to set out the circumstances when a person is required to advise the Commission if they institute proceedings against the Commonwealth or a potentially liable member. The existing reference to the types of MRCA compensation being payable is restated at subparagraph (a)(i), with DRCA compensation added at subparagraph (a)(ii), and a Part II or IV pension under the VEA at subparagraph (a)(iii). A failure to notify of such damages may lead to subsequent overpayment of compensation and necessitate recovery action from the person or a dependant.

Item 146 repeals and replaces paragraphs 391(1)(a) and 392(1)(a) to expand the scope of compensation - cause of action, to include relevant payments under the VEA and the DRCA for the purposes of requiring notice of common law claims against third parties and the application of Division 2 of Part 3 of Chapter 10.

The notice requirement on claims for damages and the circumstances when the Commission could take over common law action against third parties, would apply in relation to compensation paid/payable for:

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a service injury, service disease or service death under the MRCA;

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the loss or damage to a medical aid under the MRCA;

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an injury, disease or death of a person under the DRCA;

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the loss of, or damage to, certain property under the DRCA (such as an artificial limb, medical appliance); or

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an injury, disease or death of a person under Part II or IV of the VEA.

Items 147 to 151 are technical amendments complementary to item 147, making clear that section 397 applies to a VEA pension and compensation under the DRCA, as well as the MRCA.

Where the Commission makes or takes over the person's (the plaintiff's) claim against a third party, section 397 would empower the Commission to suspend the payment of compensation or pension for the relevant injury, disease, death, or loss until the plaintiff complies with a reasonable requirement of the Commission in relation to the claim. This provision operates only as a last resort to encourage compliance. Treatment cannot be suspended, recognising that such suspension could pose a health risk to the plaintiff.

Item 152 repeals and replaces paragraphs 398(2)(a) to expand the scope of compensation to include relevant payments under the VEA and the DRCA to be deducted from damages awarded or agreed upon, where the Commission has taken over or made a claim on the plaintiff's behalf.

Paragraph 398(2)(a) is restructured and sets out the amounts to be deducted according to the causes of action mentioned in paragraph 392(a). That is:

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for a claim mentioned in subparagraph 392(1)(a)(i) or (ii), the existing provision which includes compensation for non-economic loss, income replacement payments, treatment and rehabilitation under this Act, relating to the plaintiff is replicated. Subparagraph 398(2)(a)(i) continues to exclude those payments that are reimbursements for costs incurred by the person, allowances to cover expenses, or compensation payments made to the plaintiff in relation to their dependants.

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for a claim mentioned in subparagraph 392(1)(a)(iii) or (iv), compensation amounts paid to the plaintiff under the DRCA before the payment of damages;

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for a claim mentioned in subparagraph 392(1)(a)(v), compensation amounts paid to the plaintiff under Part II or Part IV of the VEA before the payment of damages.

Items 153 and 154 are technical amendments and make clear that paragraph 398(3)(b) applies to compensation under the MRCA, the DRCA or pensions under Part II or IV of the VEA.

The outcome is that the plaintiff is not entitled to any further compensation under the MRCA, the DRCA or the VEA until the amount of compensation that would have been payable equals the amount of damages that has been recovered. The intention is that the plaintiff cannot receive double payments for the same injury, disease, death or loss and can only resume compensation payments once the damages have been exhausted.

Item 155 amends the heading to Division 3 of Part 3 of Chapter 10 to reflect the expanded coverage and that the provisions on the effect of recovering damages apply to entitlements beyond this Act, to include the DRCA and VEA.

Item 156 repeals and replaces paragraphs 399(a) to expand the scope of compensation - cause of action. The amendment is similar in operation to item 146, except that it applies where the person or a dependant recovers damages (including the settlement of a claim) from a third party, rather than when the Commission takes over common law action against third parties.

Paragraph 399(a) is re-structured to set out that Division 3 would apply in relation to compensation payable in respect of:

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a service injury, service disease or service death under the MRCA;

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the loss or damage to a medical aid under the MRCA;

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an injury, disease or death of a person under the DRCA;

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the loss of, or damage to, certain property under the DRCA (such as an artificial limb, medical appliance); or

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an injury, disease or death of a person under Part II or IV of the VEA.

Items 157 and 158 amend the heading to section 401 and paragraph 401(1)(a) to reflect the expanded coverage and that the repayment of compensation apply to entitlements beyond this Act and includes the DRCA and VEA.

Item 159 repeals and replaces paragraph 401(2)(a) in a similar manner to item 152, setting out the amounts under the MRCA, DRCA and VEA to be deducted according to the causes of action. That is:

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for a claim mentioned in subparagraph 392(1)(a)(i) or (ii), the existing provision which includes compensation for non-economic loss, income replacement payments, treatment and rehabilitation under this Act, relating to the plaintiff is replicated. Subparagraph 398(2)(a)(i) continues to exclude those payments that are reimbursements for costs incurred by the person, allowances to cover expenses, or compensation payments made to the plaintiff in relation to his or her dependants.

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for a claim mentioned in subparagraph 392(1)(a)(iii) or (iv), compensation amounts paid to the plaintiff under the DRCA before the payment of damages

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for a claim mentioned in subparagraph 392(1)(a)(v), compensation amounts paid to the plaintiff under Part II or Part IV of the VEA before the payment of damages.

Item 160 amends subsection 410(3) to provide that the repayment only applies to so much of the damages in respect of which compensation is payable under the DRCA, the VEA, as well as the MRCA, as determined by the Commission.

Items 161 amends the heading to section 402 to reflect the expanded coverage to entitlements beyond this Act.

Items 162 and 163 amend subsection 402(1) to make clear that section 402 applies to preclude compensation after damages are recovered in respect of the cause of action, regardless of whether or not MRCA or DRCA compensation, or a VEA pension under Part II or IV had been paid, to or for the benefit of the person, for that cause of action.

Item 164 repeals and replaces subsection 404(2) to set out the types of compensation that are not payable after the day on which the damages are recovered. The existing reference to MRCA compensation (and the exceptions) is restated at paragraph (2)(a), with DRCA compensation added at paragraph (2)(b), and a Part II or IV pension under the VEA at paragraph (2)(c).

Item 165 inserts new paragraphs 403(1)(aa) and 403(1)(ab) to provide circumstances where DRCA compensation and VEA pensions have been paid respectively, that the Commission may pursue the recovery of damages against a third party (the defendant).

The outcome is that besides MRCA compensation having been paid, section 403 is also applicable where a third party (the defendant) appears to the Commission to be liable to pay damages in respect of:

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an injury or death of a person, or the loss of, or damage to, certain property, for which compensation has been paid under the DRCA

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an injury, disease or death of a person, for which a pension has been paid under Part II or IV of the VEA.

Item 166 repeals and replaces paragraph 403(3)(b) to provide the compensation amounts to be compared against the amount of the damages as per paragraph 403(3)(a), as the defendant is to pay the Commonwealth whichever amount is the lesser. The compensation paid excludes the same classes of payments listed under section 398.

Division 11 - Rehabilitation

Military Rehabilitation and Compensation Act 2004

Item 167 amends subsections 43(1), 55(1) and 62(1) to insert a note under each subsection to inform readers that under section 24A, the Commission is deemed to have accepted liability for the person's injury or disease in certain circumstances.

The notes make clear that the provision of rehabilitation programs, related alterations, aids and appliances, and assistance in finding suitable work, applies to a person who has liability accepted for an injury or disease, including an accepted service injury or disease under the VEA or DRCA.

Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988

Item 168 repeals the definitions of approved program provider and rehabilitation authority in subsection 4(1), as the terms are no longer necessary with the consolidation of rehabilitation provisions under the MRCA.

Item 169 amends subsection 4(1) to insert the defined term transferred DRCA rehabilitation program to preserve an existing DRCA rehabilitation program on or after date of commencement, until completion or it is otherwise ceased or varied by the rehabilitation authority. Upon a re-assessment being undertaken, a new rehabilitation program would be prepared and be provided under the MRCA.

Item 170 amends subparagraphs 6(1)(f(iii) and (g)(iii) to extend coverage to include a transferred DRCA rehabilitation program, such that an injury that was sustained while the person was at, or travelling to or from, a place for the purpose of participating in such a program, is deemed to be a service-related injury.

Item 171 repeals Part III which contains the provisions relating to rehabilitation for members and former members of the ADF. The provisions are no longer necessary, and they are very similar to those contained in Chapter 3 of the MRCA.

Item 172 omits references to sections 36, 37 or 39 in the definition of determination in section 60, consequential to the repeal of Part III of this Act.

Item 173 repeals the definition of reviewable decision in section 60, as the term no longer has effect, consequential to the repeal of Part III and changes to section 60 in Schedule 3 - Review Pathway.

Item 174 repeals sections 146 and 148 which set out the administrative arrangements relating to the rehabilitation authority and rehabilitation program, as the sections are no longer necessary, with the consolidation of the provisions under the MRCA.

Item 175 repeals subsection 160(1A) regarding appropriation for an employment support scheme, consequential to the repeal of Part III of this Act.

Veterans' Entitlements Act 1986

Items 176 and 177 amend section 5Q(1) to insert a signpost definition for transferred VEA rehabilitation program referring readers to subsection 115A(1) and repeals the definition of Veterans' Vocational Rehabilitation Scheme which is effectively superseded.

Items 178, 179, and 180 amend subsection 24(5A), subsection 24A(2) and paragraph 37AAA(b) to replace references to VVRS with references to transferred VEA rehabilitation program. The intent is that veterans working under such a program remains eligible for special rate and intermediate rate of disability compensation pension, and invalidity service pension respectively.

Item 181 amends subsection 115A(1) to insert the defined term transferred VEA rehabilitation program to preserve an existing VEA rehabilitation program on or after date of commencement, until completion or it is otherwise ceased or varied by the rehabilitation authority. Upon a re-assessment being undertaken, a new rehabilitation program would be prepared and be provided under the MRCA.

Items 182, 184, 185, 186, and 187 update provisions including definitions in Part VIA - Rehabilitation to refer to the transferred VEA rehabilitation program instead of the VVRS. The intent is to allow the VVRS safety net arrangements for various VEA pensions to have effect for rehabilitation programs that are transitioned to the MRCA under the Simplification Act. The updated references include:

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unaffected pension rate as defined in subsection 115A(1), to be the veteran's rate of DCP but for their participation in a transferred VEA rehabilitation program

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subsection 115C(1) which provides for veterans to retain the rates of pension they would otherwise have received if they were not undertaking rehabilitation, subject to sections 115D or 115G

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subsections 115D(1) and (1A), which provide for intermediate rate veterans who work more than 20 hours per week, and special rate veterans who work more than 8 hours a week, as a result of participating in a transferred VEA rehabilitation program, to be eligible for the safety net formula

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initial period and pension rate on commencement as defined in subsection 115D(7), to apply from, or as at the commencement of the veteran's transferred VEA rehabilitation program

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subsection 115G(1) which provides for an excluded income amount in relation to invalidity service pensions, to have effect from the commencement of the veteran's transferred VEA rehabilitation program

Item 183 repeals section 115B which enables the establishment of the VVRS, as the Scheme would be closed to new entrants.

Items 184 to 187 – see item 182.

Items 188 to 193 amend section 115H, which provides for the recovery of rehabilitation costs from another source of compensation or damages received that the Commission considers to be similar in nature to the compensable injury or disease for which rehabilitation was provided. Subsections (1) and (2), paragraphs (4)(a), (4)(b), (5)(a), (5)(b) and subsection 115H(6) are updated to omit references to the VVRS and to refer to VEA rehabilitation program (as inserted by item 166) to maintain the broad scope of costs that may be recovered, without being limited by amendments in this Schedule or the commencement of the Simplification Act.

Item 194 inserts subsection 115H(8) to establish the encompassing term VEA rehabilitation program for a transferred VEA rehabilitation program or a rehabilitation program under the VEA undertaken before commencement date that was not a transferred program.

Items 195 and 196 update the VVRS references in subsection 115L(1) and paragraph 115L(3)(c) to refer to VEA rehabilitation program for the purposes of the Commission making a determination as to the amount of the cost of, or incidental to, a transferred or non-transferred rehabilitation program. This determination operates as prima facie evidence that this was the recoverable cost.

Item 197 repeals paragraph 199(da) regarding appropriation for payments under the VVRS, consequential to the closure of the Scheme to new entrants under this Act and existing participants of a transferred program would be provided for under the MRCA.

Division 12 - Motor vehicle compensation scheme

Military Rehabilitation and Compensation Act 2004

Item 198 inserts new paragraph 212(1)(ba) to set out that the MVCS as determined by the Commission excludes a person who is participating in the VEA Vehicle Assistance Scheme. The intent is to make clear that the scope of vehicle compensation available under the MRCA does not duplicate assistance that a person is accessing through the VEA scheme.

Item 199 amends subsection 212(1) to insert a note to inform readers that under section 24A, the Commission is deemed to have accepted liability for the person's injury or disease in certain circumstances.

The note makes clear that compensation relating to motor vehicles is payable if a person has an impairment and need for such compensation, as a result of an injury or disease for which liability has been accepted by the Commission, including an accepted service injury or disease under the VEA or DRCA.

Division 13 – Financial and legal advice

Military Rehabilitation and Compensation Act 2004

Item 200 inserts new paragraph 423(d) to provide that the Consolidated Revenue Fund is appropriated for compensation in relation to financial and legal advice that is obtained as required under the instrument determined by the Commission in section 424M.

Item 201 inserts new Part 5B to contain section 424M, which provides the Commission with a power to determine an instrument regarding mandatory financial and/or legal advice. The provision will supplement existing provisions where advice must be obtained prior to the person making the choice to receive SRDP instead of incapacity payments. Circumstances where advice is optional include permanent impairment compensation at 50 or more impairment points and compensation for a wholly dependent partner.

The instrument-making power allows the Commission to determine the circumstances that mandatory advice should apply. The Commonwealth would cover the cost of legal and financial advice obtained in the prescribed circumstances.

The intent is not to preclude access to a person's access to compensation but to ensure the person is adequately informed about the financial or legal consequences of decisions that potentially involve significant amounts of compensation and complex interaction with superannuation and other compensation arrangements.