Explanatory Memorandum
(Circulated by authority of the Minister for Veterans' Affairs and Minister for Defence Personnel, the Honourable Matthew James Keogh MP)Attachment A Impact Analysis - Executive Summary
Currently, there are three pieces of primary legislation governing veterans' compensation and rehabilitation, the VEA, the DRCA and the MRCA.
Various Government and independent reviews over recent years have identified that the legislative framework governing veterans' compensation and rehabilitation is too complex and that it requires simplification. The Royal Commission into Defence and Veteran Suicide (RCDVS) has heard that the complexity contributes to claims processing delays and uncertainty for veterans and families as to what they may be entitled to as current or former serving members of the ADF. It is also accepted that the current legislative complexity contributes to poor physical and mental health outcomes for veterans and families in need of support. The current three schemes have fundamental structural differences which often result in very different and seemingly inequitable compensation outcomes for veterans with similar conditions or injuries.
In its Interim Report of August 2022, the Royal Commission into Defence and Veteran Suicide (Royal Commission) described the current legislative framework as: "so complicated that it adversely affects the mental health of some veterans and can be a contributing factor to suicidality." The Interim Report made 13 recommendations, the first of which urged the Australian Government to develop and implement legislation to simplify and harmonise the framework for veterans' compensation, rehabilitation, and other entitlements. On 26 September 2022, the Australian Government responded to the Royal Commission's 13 recommendations. As part of its response the Government agreed to simplify the legislative framework.
Reforming the veterans' legislative framework must make the system easier to navigate for veterans and families with an increased focus on rehabilitation and lifetime wellbeing while continuing to deliver compensation outcomes.
Key reform objectives can be summarised as:
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- creating a simpler compensation system that is easier for veterans and families to navigate
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- enhancement of veteran wellbeing by reducing stresses associated with engagement with the compensation system and providing more timely access to benefits
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- alignment of benefit types and eligibility for those benefits
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- reduction in administrative burden.
Four options were considered during the policy development process:
Option 1 (non-regulatory) - to maintain the status quo and retain the current tri-Act system with no structural legislative change or minor amendment.
Option 2 - to maintain the status quo while making small-scale improvements that do not require large scale Government investment in legislative change or system redesign and can be implemented at a policy level or by minor legislative amendment. This option would allow for alignment of certain benefits and services across the primary Acts with no major structural legislative change.
Option 3 - to move to a two-scheme approach, as put forward by the Productivity Commission in its 2019 report "A Better Way to Support Veterans" (Productivity Commission 2019 report). This option would deliver compensation and rehabilitation under two schemes — the current VEA with some modifications ('Scheme 1') and a modified MRCA that incorporates aspects of the DRCA ('Scheme 2'). This option would require legislative change.
Option 4 articulates that from a future date the VEA and DRCA would be closed to claims and all claims received would be determined under the MRCA as the single ongoing Act. The MRCA would provide coverage for all future claims for compensation irrespective of when and where the veteran served, or when their injury or illness occurred. This option also seeks to implement further improvements to the veterans' support system such as aligning benefits across compensation and rehabilitation legislation. Implementation of Option 4 would require action by government in implementing major legislative change.
Maintaining the status quo (Option 1) has no additional benefit for veterans or families. It would not contribute to simplifying the current complex legislative landscape of the veterans' compensation system and will not address the problem of legislative complexity. Option 1 provides no net benefit.
There is limited benefit in continuing to make only small-scale improvements (Option 2). These improvements may allow for alignment of certain benefits and services across the primary Acts, but do not address the underlying complexities of the current legislative framework.
Reducing the number of Acts from three to two (Option 3) would result in some simplification of the veterans' legislation framework, compared with the current tri-Act system. However, it would only partially address the underlying inequity issues of the current system and may well create a new range of complexities in the veterans' entitlements system because some veterans would likely be faced with a complex choice as to which system they should be covered under. Any benefit brought about by reducing the number of Acts from three to two would be offset by added complexities.
All claims from a future date being assessed under an improved version of the MRCA (Option 4) would result in a significantly simpler legislative landscape. The MRCA is the most contemporary military compensation scheme that covers all current members. It was designed to recognise the unique nature of employment and service within the ADF and incorporates desirable elements of both the DRCA and VEA schemes. It also focuses on wellbeing and building the capacity of veterans to return to employment and participate in activities of daily living. Option 4 also provides the ability to align many veteran and dependant benefits, ameliorating the notion of inequitable treatment of veterans across the different Acts.
Option 4 is recommended as the best option. This option provides the greatest alignment with the policy objectives and principles and positions the Government to consider further streamlining of administrative systems as more veterans transition to the new scheme. The move to the MRCA as the single ongoing Act is broadly supported by key stakeholder groups due to the alignment of benefits, simplification of the legislative framework, reduction of barriers to veterans accessing entitlements and more contemporary nature of benefits. Multi criteria analysis also points to this approach as the most beneficial in terms of reduction in regulatory burden and it is the most likely option to achieve the key objectives of reform.
The Australian Government commenced the first of three rounds of public consultation regarding the reform of veterans' legislation in October 2022. While the three rounds were conducted as discrete intervals, engagement with organisations and individuals continued between and outside of these periods to ensure all relevant feedback was captured and to ensure that stakeholder groups were well informed regarding progress of the reform agenda. The consultation processes ultimately informed the drafting and modification of the Veterans' Entitlements, Treatment and Support (Simplification and Harmonisation) Bill 2024 for introduction to Parliament.
An initial round of consultation on the Royal Commission recommendation and related Productivity Commission recommendations was undertaken from 17 October 2022 to 14 November 2022. On 17 October 2022, the Minister for Veterans' Affairs, the Hon Matt Keogh MP, announced the consultation process and invited submissions. Much of the feedback related to individual concerns with current claims, supports or personal circumstances. However, there was strong overall support for legislative simplification and harmonisation.
The outcomes of the initial round of consultation informed a proposed pathway developed by Government to simplify veterans' compensation and rehabilitation legislation. The proposed Pathway entailed:
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- establishing an improved MRCA as the sole ongoing scheme
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- closing out the VEA and DRCA to new compensation related claims
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- grandparenting all existing arrangements to ensure there is no reduction in entitlements currently being or previously received by veterans.
On 16 February 2023, the Minister for Veterans' Affairs, the Hon Matt Keogh MP, announced the commencement of public consultation on this proposed Pathway. The consultation period ran from 16 February 2023 to 12 May 2023. Formal written submissions were invited on the proposed Pathway.
The feedback provided by stakeholders in both rounds of consultation informed a submission to Government in the second half of 2023 on the way forward. This resulted in the drafting of the Veterans' Entitlements, Treatment and Support (Simplification and Harmonisation) Bill 2024. Some of the key elements arising from the consultation processes that were incorporated into the draft legislation include:
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- the safeguarding of current veteran and dependant entitlements by grandparenting existing payments
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- recognition under the new Act of previously determined compensable conditions, with no need to re-establish liability
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- continuation of the automatic eligibility for benefits for those dependants whose partner died while they had permanent impairments of more than 80 points or were eligible for the MRCA Special Rate Disability Pension
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- retention of two standards of proof when applying the SOPs
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- inclusion of the ADA in the MRCA to replicate the EDA payment under the VEA to veterans who are of pension age and have high levels of incapacity due to service conditions,
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- legislating the ability to prescribe conditions subject to presumptive liability
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- an exception to the prohibition of acceptance of liability under the MRCA for conditions related to service caused by tobacco use
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- inclusion of the ability to accept liability under the MRCA by establishing a temporal connection between defence service and a medical condition.
The exposure draft legislation encompassing feedback from the previous consultation periods was released for public comment on 28 February 2024.
This consultation round revealed broad general support for legislation to be consolidated into a single ongoing Act, with many organisations and individuals agreeing that this approach would achieve the desired outcome of simplifying the legislative system. Submissions expressed support for the expanded and equitable access to benefits, such as DRCA veterans gaining access to children's education schemes and potential eligibility for Gold Cards. Support was also expressed for the MRCA as the single ongoing Act because of its greater focus on rehabilitation.
Feedback was also received on matters that were considered out of scope. These included: further expansion to benefits and services beyond those considered directly connected to simplification and harmonisation; changes to coverage of cohorts beyond those already covered in the existing legislation; and changes to the underlying principles of the assessment methodology.
Changes were made to the draft legislation based on the feedback received, including; transitioning existing DRCA incapacity recipients into the MRCA from commencement; clarifying the meaning of the term veteran; amending the offsetting arrangements between incapacity payments and Disability Compensation Payments; and providing new legislative protections for vulnerable veterans accessing lump sums.
If the Veterans' Entitlements, Treatment and Support (Simplification and Harmonisation) Bill 2024 is passed by Parliament, DVA will design and execute a comprehensive implementation plan to ensure a smooth transition to the new system. This will include further consultation with internal and external stakeholders. Implementation including ICT delivery is fully funded through the 2023-24 MYEFO. DVA will monitor and evaluate the implementation and outcomes to gauge effectiveness and to ensure they align with the objectives and success metrics outlined in Chapter 2.
The new legislation is not scheduled to be operational until 1 July 2026 providing sufficient lead time to develop robust implementation and evaluation plans. Similarly, this timeline will allow veterans, advocates, and other stakeholders time to familiarise themselves with the new system and make informed decisions regarding the submission of claims under the current scheme or new arrangements. It is important to note that DVA is resourced to respond to any spikes in claims either prior to or post commencement.
Legislating to cover veterans' compensation and rehabilitation matters under a single ongoing Act will consolidate over 100 years of piecemeal legislation reform. This improvement will be critical in improving access to equitable benefit and services for veterans and families into the future.
The full published version of the Impact Analysis can be found on the Office of Impact Analysis website at
https://oia.pmc.gov.au/published-impact-analyses-and-reports
(Office of Impact Analysis ID: OBPR22-03734).