Webinar transcript - Veterans’ Legislation Reform Consultation Pathway
Recorded by the Department of Veterans' Affairs - 26 April 2023
Facilitator: Rach Ranton
Introduction: Alison Frame, DVA Secretary (video)
Presenters: Luke Brown & Simon Hill
Return to the Veterans’ Legislation Reform Consultation Pathway page.
Rach Ranton: Good evening, everyone. My name is Rach Ranton. I'm an Australian Army veteran and it's my pleasure to welcome you here tonight. I'd like to acknowledge current serving members and ex-serving Australian Defence Force members that are joining us here tonight. I'd also like to acknowledge the traditional owners of the land on which we meet and also to recognise and pay my respect to the elders both past and present. Tonight's session is focussed on the Veterans' Entitlements legislation reform pathway. Before we begin, just a few housekeeping tips on how the session will work.
This is a live session and so myself and my fellow presenters can't see or hear you. If you have a question, you can type it at any time into the chat box and we'd love to hear from you, so please do. If you see someone's asked a question that you think is really great, please give it a thumbs up rather than asking it again. And throughout the session we'll take some breaks and answer those questions that had the most thumbs up. If you don't want to ask a question with your name, you can also ask a question anonymously. Any of the questions that we don't get to answer tonight DVA will update on the legislation reform website with answers. As this is a live session, you might find that we have some technical difficulties, and if we do, please bear with us. We'll get up and running again as soon as we possibly can. This session is being recorded and will be published on the Legislation Reform website so you can come back to it at any time if you need to. Now, we'll have a short message from Alison Frame, Secretary of the Department of Veterans' Affairs.
Alison Frame: Hello, everyone. It is a pleasure to welcome you to our session today. My name is Alison Frame, and I'm the Secretary of the Department of Veterans' Affairs. I want to take a moment to acknowledge the service of Australia's serving and ex-serving community and the sacrifices they have made for our country. I would also like to especially acknowledge those attending the session today who are serving or who have served, and thank you for your service. You are why we're here today. These sessions are focussed on the Veterans' Entitlements Legislation Reform Pathway that the Honourable Matt Keogh, Minister for Veterans' Affairs announced on 16th of February this year. The proposed model that will be discussed today has been carefully and thoughtfully developed from previous reviews and feedback from the serving and ex-serving community. This model is not set in stone. However, we as a department are very interested to hear your thoughts and your valuable input will help shape the next steps. We want to work with you to create a new pathway for the Department of Veterans' Affairs and to provide improved, simplified and harmonised support for veterans and their families now and into the future. Thank you.
Rach Ranton: Tonight's session and the broader Veterans' Entitlement Legislation Reform Pathway Consultation is about collaboration and improvement to achieve the best possible outcome for this work, we need your help. Your input is invaluable. This process will take time and that's because we want to get it right. Meaningful and lasting change does take time. I would like to now introduce our two presenters for this evening, both from the Department of Veterans' Affairs, Luke Brown and Simon Hill, who are both Assistant Secretaries of the Legislation Improvement Team. Luke and Simon will now give a brief overview of the background to this work and what the proposed model will look like. After that, we'll take some of your questions.
Luke Brown: Thank you, Rachel. People that know the Veterans' Affairs portfolio well will know that there are currently three major pieces of portfolio legislation that govern compensation and rehabilitation entitlements for veterans. And you'll hear us refer to these several times tonight, obviously. The first is the Veterans' Entitlements Act, 1986 or the VEA. The second is Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 or the DRCA. And the third is the Military Rehabilitation and Compensation Act 2004, or the MRCA. Now, these three acts have accrued over time and created a lot of complexity within the portfolio and the legislative landscape that governs veterans' compensation and rehabilitation entitlements. And really, this complexity was the thing that the Royal Commission was focussed on and recommendation one of its interim report when it delivered that report to the Government in August of last year and what the Royal Commission into Defence and Veteran Suicide was saying in that recommendation really was essentially that the Government needs to harmonise and simplify veteran's legislation.
So the Government responded to that recommendation in September and agreed to that recommendation and as a result has reflected on some previous reviews, recommendations and inquiries, primarily a recommendation or several recommendations made by the Productivity Commission in its 2019 report looking into the veteran's system. And what the Productivity Commission said in that report was it suggested in recommendation 19.1 was a Two Scheme model of entitlements going forward for veterans' compensation and rehabilitation.
The Government has reflected on that and for a number of reasons rejected that model, mainly because it would make the system complex for some veterans who would have a choice under that Two Scheme model, but also have workload implications for the Department of Veterans' Affairs in administering that model. And instead, what the Government, the current Government has put forward as its proposed pathway for legislation reform in relation to veterans' compensation, rehabilitation is a single ongoing veterans' entitlement scheme or a single act going forward.
So as Rachel's outlined, we have a consultation process in place at the moment that kicked off in February of this year when the Minister for Veterans' Affairs, Matt Keogh, put forward the Veterans' Entitlements Reform Consultation Pathway, and we want to hear from the veteran community and their families about this specific proposal. We want to hear about how that proposal can be improved and how it can be implemented eventually on the ground at some point in the future. We want these changes to result in a simpler and sustainable legislative framework.
What we mean by that is we want it simpler for veterans and their families to be able to navigate the system. We want it to be simpler for the department to administer and more be efficient so that we can improve service delivery to veterans and their families. And we want the system to be simpler for other people who are involved in the system. So, for example, advocates who support veterans moving through the system. And importantly, the last principle here on this slide is that there will be no reduction in payments currently or previously received by veterans. And we'll talk more about that as this presentation and this webinar continues tonight. And you'll hear terms such as grandfathering and we'll unpack what that means at some point in the evening.
The diagram here represents the current legislative landscape that I've set out. The three acts that we currently have, the VEA, the DRCA and the MRCA. The VEA essentially is a pension based scheme which traditionally has covered operational type service, overseas service in the ADF up until 30th June 2004, with some peacetime coverage between 1972 and 1994 and residual coverage after that for certain veterans. And then we have the DRCA, which covers traditionally conditions emerging from peacetime service rendered up to 30 June 2004. It also provides some coverage for operational service between 1994 and 2004. So there are periods of dual entitlement, obviously between the VEA and the DRCA. And then a third scheme, the MRCA, which covers all service from 1 July 2004 and like the DRCA, the MRCA is really structured around a traditional compensation model but incorporates elements that recognise the special nature of military service brought over from the Veterans' Entitlements Act.
What the Government has essentially proposed as part of this pathway is that we again move from this three Act system to a system where we have the legacy of the VEA and the DRCA grandfathered in that they will remain operative Acts and payments currently being received or previously received under those Acts will be maintained and continue to be indexed and so forth as they currently are. But then a single ongoing act into the future, which will be the Military Rehabilitation and Compensation Act. So the core elements of the proposal that the Government has put forward for consultation are, as I've already outlined, establishing an improved version of the MRCA at the sole ongoing scheme, closing out the VEA and the DRCA to new compensation claims. And as I've already articulated to grandparenting all existing arrangements under those two previous Acts to ensure there are no reductions in entitlements currently being or previously received by veterans. And those payment rates will be maintained and indexed normally.
So what is essentially being proposed here is that from a future date and the Royal Commission has put forward the date of 1 July 2025, there will be a single ongoing act for all future claims for compensation, and that will be irrespective of when and where the veterans served or what service relates to the injury or illness that is being claimed. This is what we mean by a single act system going forward, and hopefully this will create a simpler system for veterans and their families to navigate and greater clarity and consistency around entitlements for both them and their families and simplify the claims process.
The Government's proposed achieving this through what we refer to as a date of claim approach. Currently, the provisions that govern the interaction between the three pieces of legislation are based on what we would refer to as loosely as a date of injury approach. So to determine whether the VEA, the DRCA or the MRCA currently applies to a claimed injury, disease or death. We have to consider the service that is said to relate to that injury, disease or death that is being claimed. And this means particularly for veterans who have periods of service that say span 1 July 2004 and have eligibility under the VEA, the DRCA and the MRCA, they may claim multiple conditions which have related to different periods of service across that entire span of their service. And some of those claims can be investigated and determined, under one, two or three, in some cases of these pieces of legislation. So it can be incredibly complex for the veteran to understand and incredibly complex for the Department to administer that system.
What is being proposed going forward is that we move from that date of injury approach to, as I say, what is called a date of claim approach. So rather than the service that relates to the claimed injury, disease or death being the determining factor in the piece of legislation that will apply to the condition being claimed, it will be the date that the claim was lodged with the Department that will determine the legislation that applies to the particular claim. In this case, again, I'll use the date that the Royal Commission put forward under recommendation one of its interim report, and that was 1 July 2025. And what we're proposing here, for example, is that for any claim lodged with the Department after 1 July 2025, the MRCA would apply to that claim regardless of the service that relates to the particular claimed injury, disease or death. This again, should make processing claims quicker, more efficient, speed up the time it takes to train staff within the Department. And this will translate into a noticeable, noticeable improvement in the quality of service delivery and claims processing and the experience of veterans moving through the compensation claims system. We're going to unpack some of this in a second with some case studies, but we're just going to pause now to take some questions.
Rach Ranton: Let's have some questions, definitely. So thank you very much, everyone, for sending through your questions. And please, at any time you can push those through to the chat and we'll answer them as we get an opportunity as we take breaks throughout. So the first question I'd like to ask you both is from our chat room, and it is "Will there be a reduction in entitlements or will it take the most beneficial elements from each of the three Acts?"
Simon Hill: So as Luke indicated during his presentation, what the proposed pathway does is actually set the current MRCA as the Act that will sustain moving forward. So the benefit structure that exists in the MRCA is already a conglomeration, if you will, of the entitlements that exist under both the VEA and the DRCA. And it would be that Act, the MRCA from that Royal Commission date of 1 July 2025. That will be the Act under which your claim is determined. So the methodology that's contained within the existing MRCA will be the rules base, if you will, that will apply.
Rach Ranton: And so I think I've definitely had mates ask me about this sort of thing. You know, what could I possibly lose or what might I miss out on when it changes, if it changes?
Luke Brown: So, Rachel, we'll get to some case studies in a second that will unpack, I guess, some of the different scenarios. What will change, as Simon said, is that a claim that might have been dealt with under the DRCA today would be dealt with under the MRCA. A claim that might have been dealt with under the VEA today would be dealt with under the MRCA, and there will be differences in outcomes and some of those outcomes people may perceive as not being as favourable today as it would be in the future. But that's going to be highly subjective based on their own personal circumstances and what they value and what they want to get out of their compensation system. So we'll have an example in a second of a of a veteran who's currently covered under the DRCA and the fact that in terms of their permanent impairment compensation and permanent impairment is compensation paid under the DRCA as a lump sum for functional loss impairment in a body system.
What might happen there is the result in terms of the lump sum they receive might be less under the proposed system than what they would get under the current system under the DRCA. And we can explain why that would be the case. But what they might get instead is say eligibility for a gold card. Now DRCA only veterans at the moment cannot access gold cards, there is no gold card eligibility under the DRCA. So individuals will have to make up their own mind and inform themselves about what the changes might mean in their own circumstances.
Obviously, it's the Department's job to help them understand that by providing information, but individuals will have to come to their own conclusion about whether the current system or the proposed system may be better off based on their circumstances. Now, for those people that are concerned about the move to the proposed system, the Government will be flagging these changes well in advance. And I will say that this is a genuine consultation period. There has been no final decision made by the Government on this proposed framework going forward, yet it is it is a proposal.
People who could look at this package will know that it will have significant financial implications for the Government. It will result in more money going out the door to veterans. So it will have to be considered in the budget context. So there will be a final decision that has to be made by the Government on this in, as I say, the budget context, and then there'll be plenty of notice for people to have their claims resolved. For their claims to be lodged prior to the cut over point. So the people that think that the proposal has some elements that concern them, I encourage them to try to understand that better and understand how that's going to apply to their own circumstances and then make a decision about whether they want to lodge their claims today under the current system or hold off because there will be many people that will find much more beneficial outcomes under the proposed system if it if it is finally implemented by the Government.
Rach Ranton: Thank you for answering that, both of you. I've got another question that I think we might just ask quickly before we move into those case studies. If VEA is grandfathered, how would this affect, for example, someone that decides to have a partner in later years? What effects would this have on them being eligible for war widows, entitlements, etc.?
Luke Brown: So for a person who has the eligible service, if for example, they're in receipt of the TPI pension, the Totally and Permanently Incapacitated pension now or prior to the cut over, if this Government proposal does go ahead, they will, under the grandfathered arrangements, retain that TPI pension or their EDA pension or their Disability Compensation payment, whatever it might be under the VEA and that will be grandfathered and indexed normally. And then after the cut over date, any new claims for compensation that they lodge will be dealt with under the MRCA. But in in the case of, say, a TPI, what will be retained is what we refer to as the categories of auto grant entitlements for war widows and war widowers that relate to things like the TPI pension.
What happens there is if a TPI pensioner passes away their spouse is automatically granted the War Widow's pension and the associated gold card. Nothing in this proposal that's been put forward by the Government will disrupt those auto grant entitlements. They will continue to occur. What will be affected potentially is the ability for someone on what we refer to as a general rate of Disability Compensation payments. So 60% of the general rate 70% of the general rate from lodging a claim after the cut over date to have their eligibility for the TPI pension tested. But people, as I say, currently with that eligibility that will be retained and the auto grant eligibility will continue after any cut over if this proposal does take effect.
Rach Ranton: Excellent. Thank you. Is there anything further you wanted to add to that, Simon?
Simon Hill: No. Look, I Luke's covered that.
Rach Ranton: No worries. So the proposed pathway says that one principle will be that there is no reduction in payments to veterans. Can you please confirm if that wording means it covers income support and compensation sums? Does it also include entitlements like the provision of medical and like services, treatments, home modifications, etc.?
Luke Brown: It does. I should make it very clear that things like there are going to be elements of the Veterans' Entitlements Act that aren't going to be affected by this proposal at all. So one of those is income support. We're really focussed here on compensation and rehabilitation entitlements. So when we talk about grandfathering VEA entitlements, we are talking about people retaining their current rates of compensation under the VEA and new claims being dealt with under the MRCA. But there are elements of the VEA that will continue to be operative and undisturbed or uninterrupted by these arrangements. One of those is our income support system or our service pension system and income support supplement and those sorts of things. They will not be affected by the date of claim approach.
There will be no shift in terms of the arrangements for income support now. I mean, there is an issue that the Government will have to address about whether it leaves those provisions in the short term or the longer term in the Veterans' Entitlements Act or shifts them into the Military Rehabilitation and Compensation Act, or has some other legislative solution for those particular entitlements. But the main issue here is that things like income support will be undisturbed by the Government's proposal. That is the focus of consultation at the moment. Some of the other elements of the question, such as treatment, vehicle modifications, they're the types of issues that we'd love to get views on through the consultation process. If people want to put submissions in on those sorts of issues.
The consultation process, the submission process is open till the 12th of May. The thinking on those sorts of things at the moment is if you stay with your entitlement solely under the Veterans' Entitlements Act, you will continue to receive the supports that are available under the Veterans' Entitlements Act. So the VEA Vehicle Assistance Scheme will continue to apply to you. The treatment principles that apply under the VEA will continue to apply to you, but if you then lodge a claim after the cut over date that essentially is dealt with under the MRCA and attracts compensation under the MRCA, then the suggestion would be that you shift into the MRCA's arrangements for those sorts of those sorts of things. So for example, you might shift into the MRCA Vehicle Assistance Scheme or shift into the MRCA treatment arrangements which have some differences compared to the VEA.
Rach Ranton: Excellent. We might take one more question before we go to those case studies. So if a claim is submitted now, will it be delayed if the new process is being implemented?
Simon Hill: No. So the new process won't have an impact on when your claim is determined. If you have a current claim in the system it will be determined under the existing rule base under the existing rules. So if you're making a claim that's relevant to your VEA condition it will be determined under the VEA, similarly, if it's related to a DRCA condition or DRCA service it'll be determined under the DRCA. So this will only impact on claims that are received after the cut over date. And as we've indicated earlier, the cut over date is estimated to be in line with the Royal Commission recommendation 1 July 25. So hopefully that answers the question.
Rach Ranton: Okay. Excellent. Thanks, everyone, for your questions. Please keep sending them through because we will have another question break before we wrap up this session. I'm going to hand back to Luke and Simon to take us through some case study examples. All the case studies that you see will be available on the Legislation Reform website. The link will be in the chat at the end of the session.
Luke Brown: So I think these case studies are quite helpful in terms of translating what is a fairly high level concept in the date of claim approach to the single ongoing act into some concrete examples of how this will work in real life. Again, if the Government's proposal goes ahead. So the first example we've got here is Julie, and Julie is a 39 year old serving member, two accepted conditions under the MRCA for which she's received previously around $46,000 in permanent impairment payments, so permanent impairment lump sums. Again, that compensation for functional loss, things like loss of range of movement or neurological impairment, those sorts of things. And with Julie, she's only got service after 1 July 2004.
The point here is that she's already covered under the MRCA. All her service is already covered under the MRCA. Any future claims that Julie puts in will be under the MRCA, whether it be under the current system that we have now or the proposed system going forward. So, this is the vast majority of claims coming in to DVA at the moment, 60 to 70% of claims coming in result in an outcome under the MRCA. And those claims will be unaffected by this proposal directly. But what Julie will see as a result of this proposed legislation pathway, if it goes ahead in the future, is she'll set a DVA unshackled from the burden of having to administer three pieces of legislation and she'll see more focus on service delivery and more focus on her claims as they move through that MRCA system. So while she won't have any direct benefit from the amendments that are being proposed, she will be dealing with a Department of Veterans' Affairs that's much improved because of the reduced complexity in the system.
The second case study here is Gabby. Now, Gabby is a veteran with peacetime service prior to 1 July 2004. So she has coverage currently under the DRCA. She has an accepted condition under the DRCA and she's currently in receipt of incapacity payments for that condition. Now, incapacity payments are income maintenance or income replacement compensation payments paid fortnightly. And they're really based primarily on pre-injury earnings of the veteran. Now, in this case, Gabby's incapacity payments under the current system sit at about $2,000 per fortnight. In the proposed system, Gabby's incapacity payments would move under the MRCA, they would start to be processed under the MRCA. And what that would mean for Gabby is that a 5% notional superannuation contribution that's currently deducted due to legislative requirements under the DRCA would cease to be deducted. And in addition, she would receive a remuneration loading allowance, which is available under the MRCA, but not available currently under the DRCA. And this would result in Gabby's incapacity payments actually increasing per fortnight to just over $2,500, as I say, per fortnight. So Gabby will notice an increase in that income maintenance compensation that she's currently being received if the Government's proposal was to go ahead.
Roger's a veteran here that touches on an issue that we were explaining before in relation to one of the questions, Rachel, about potential detriment under the scheme. And this is where I was trying to articulate it will sometimes come down to what the veteran values in terms of what they want out of the scheme and just a subjective judgement about what's best for them. Now, under the DRCA at the moment, permanent impairment compensation payments are not capped. And this is due to some case law that developed in the mid-2000s. What can essentially happen under the DRCA is that permanent impairment payments can continue to be received by the veteran and they will add together and they're not capped, they don't reach a maximum amount.
And this is very different to how it works under both the VEA and the MRCA, where compensation payments do reach a maximum amount per veteran. So in this case, Roger has DRCA only service and he's got six separate conditions accepted under the DRCA. And for those six separate conditions, he's received about $376,000 in lump sum payments. And that essentially equates to what would be 115% of the maximum amount per condition under the DRCA. Now, under the current system, if he were to lodge another claim under the DRCA, another permanent impairment claim under the DRCA, he would receive potentially an additional $34,000 in permanent impairment lump sum based on the condition that we have him claiming in this scenario. Under the proposed system that the Government has put forward for consultation, the MRCA has a cap. And as Roger would be brought into the MRCA that cap would be applied to him. And it would be unlikely in Roger's circumstances that he would receive an additional lump sum payment under the MRCA because he has already reached that cap under the MRCA.
So Roger would not receive an additional permanent impairment lump sum if he was to lodge that claim under the MRCA, under the proposed system. But what Roger will be considered for is a gold card. So if he suffered a deterioration in his conditions or he's got a new condition and he has claimed that under the MRCA, under this proposal he would be reassessed, his impairment would be reassessed under the MRCA, and if he was to reach the required impairment points or the required level of impairment under the MRCA for a gold card, he would then be awarded that gold card. Now, that's a big change for Roger because currently veterans with DRCA only service cannot receive gold cards under that particular Act. So again, it really comes down, as I say, Rachel, to the judgement that Roger makes about what's better for him in his particular circumstances.
Now, Greg is a deceased veteran with service under the VEA only, eligible service under the VEA. And Greg's left behind a partner and a child. In this scenario, because Greg's death is service related, so it's different to the TPI auto grant category I was talking about earlier, in this scenario, Greg's partner lodges the claim for compensation, and if it was dealt with under the VEA today, Greg's partner would receive the War Widow's pension, which is - I have to point out that these are rates prior to the 20th of March this year. So these rates have shifted a little bit, but based on the pre 20 March rates, Greg's partner would receive the War Widow's pension, which is currently $1,044 per fortnight, and then there would be some payments in respect of Greg's child, the orphan's pension and an education allowance under the VCES, the Veteran's Children's Education Scheme, and both the partner and the child would receive the gold card in the case of the child until they turn 25 if they remained in full time education. And funeral benefit under the Veteran's Entitlements Act of up to $2,000.
If this claim was to be lodged under the proposed system, Greg's partner would continue to be eligible for essentially the War Widow's pension. It is called the Wholly Dependent Partner payment under the MRCA, and it's exactly the same rate. But in this case, Greg's partner would have an opportunity to convert that to a lump sum. And that lump sum amount in this case, based on Greg's partner's age, and we've got the age there at 50, that periodic payment would convert to a lump sum of $640,000. In addition to that, there's an additional death benefit that's payable under the MRCA, which is an amount of $143,000 or almost $144,000. And of course the gold card. So there would be lump sum compensation available to Greg's partner that currently isn't available under the VEA if the proposal were to go ahead to assess these claims under the MRCA at some point in the future. In addition there's amounts payable in respect of Greg's children, there's a lump sum of $96,000, almost $97,000, which would be payable in respect of Greg's child.
In this case, access to an education allowance under the MRCA Education Scheme would remain available. There would be fortnightly periodic compensation payments in respect of the child of $322. And again, the gold card available to the child while they remained in full time education. But another big change here is that instead of the $2,000, that's available as a funeral benefit, the MRCA offers a reimbursement of up to $13,000, which Greg's partner would be able to access in terms of funeral benefits.
So the last case study we've got here is a service related death and this time, a service related death of a veteran with service under the DRCA only. And in this case, the veteran is leaving behind a partner aged 39 and three dependent children. We've got the headline figure here of what's available currently under the DRCA, and that's a bit over $950,000 in total lump sum compensation. And that's comprised of some amounts that we've articulated below in the box, light green box $507,000 in respect of the partner. $29,000 per child, close to $30,000 per child, and then some additional payments that are available under the Defence Act.
There's $66,000 available under the Defence Act. And then in respect to the partner and then $96/97,000 available in respect of the children under the Defence Act. There's also an additional fortnightly payment that can be paid in respect to the children, which is $328 per fortnight. And the funeral benefit under the DRCA is very similar to the funeral benefit under the MRCA, up to $13,000 available as a reimbursement under the DRCA. Now if this claim is to be dealt with under the proposed system going forward, say the MRCA, Joe's partner, would be eligible in this case for a greater total lump sum. And we've got the greater total lump sum there of $1.149 million plus. And the big change here in terms of Joe's partner is that unlike the DRCA, where there are no gold cards available, Joe's partner would be eligible for the gold card under the MRCA in respect of Joe's death. Again, the amounts are broken up there, the $1.149 million broken up below. The War Widow's pension or the equivalent of the War Widow's pension, again called a Wholly Dependent Partner's payment under the MRCA, which can be converted to a lump sum of nearly $700,000, an additional death benefit of $161,000 in this case. And then in $96/97,000 payable per child in respect of Joe's children in this case we would have $322 per fortnight, a gold card and access to the education scheme while the children remain in full time education and until they turn 25 and again an amount of $13,000 available in terms of funeral benefits under the MRCA. So they're really the case studies that we hope and these case studies are available on our website, which hopefully someone's posted in the comments field.
Rach Ranton: Yes, there is.
Luke Brown: There are actually several more case studies available on the website as well. If people want to go and have a look at those and understand more scenarios in which these changes will have an impact on claims being lodged under the proposed system compared to how they will be treated under the current system.
Rach Ranton: Thank you. And I think case studies are always a great way to be able to try and understand how it might apply to people in different circumstances or who are currently in one model and might move into another. Very helpful. So let's answer a few more of the questions. So there's a couple I can tick off straight away. "Can we have a copy of the presentation?" Yes, it will be on the website. "Is this being recorded? It should be." Yes, it will be on the website. Let's move into some of the ones that are a bit more complicated. So one of the questions that came through was around hoping the legislation will include provisions for treatment fees to be set off CPI or similar. Did you guys want to make a comment about that?
Luke Brown: Well, it won't at this stage. It's not part of the proposed pathway that's been put forward by the Government. So treatment fees are really set by the Government, not by DVA. They have to be considered in the budget context. And we know that there are growing concerns about doctors, accepting doctors, allied health professionals, other specialists accepting white or gold cards at the moment in accordance with the DVA fee schedule. And of course, we know that the DVA fee schedule is set at a higher rate than the Medicare fee schedule. In some cases I think that higher rate is about 140/145% higher than the Medicare fee schedule. But in return for that higher rate, doctors are not permitted to charge an out of pocket expense to the veteran in return for that service. And the Government is very aware that there are growing concerns about doctors not being prepared to provide a service under the DVA fee schedule at the moment, and that's currently being addressed by the Government in terms of a Whole of Government consideration in conjunction with potential changes to the Medicare fee schedule. So nothing in this consultation, sorry, nothing in the pathway that's the subject of this consultation process will at this stage affect the setting of those fee schedules. But the Government's very aware of that issue and is considering that outside of this legislation process.
Rach Ranton: Thank you. There's a question around "will we have the opportunity to review draft legislation and is there any indication of the timing of that?"
Simon Hill: Well, I'd say the Royal Commission made some, in its recommendation one, did make some fairly ambitious timeframes for the Government to act on the introduction of legislation for the simplification and harmonisation of the veterans' entitlement system. To that end, certainly depending on what happens from this consultation period, we would then be looking to, as Luke indicated, go back to Government to get a final decision of Government and then look to have legislation drafted prior to introduction into Parliament. Then that affords the Government to two opportunities.
So it can either do pre-drafts or it could do an exposure draft of the legislation. And the Minister has previously indicated that some of these consultations around the country that he is of the view that that would be an appropriate course of action. So we will undertake some consultation on the actual draft legislation itself. But similarly, the Australian Parliament has the ability to refer new legislation to committee for review and the opportunity for submissions to be received by impacted stakeholders. So it may well be that the legislation once introduced is also referred to committee, but certainly, as I said, the Minister has indicated his intention is to seek authority to do an exposure draft of the legislation and consult on that legislation itself.
Rach Ranton: So had a few people here who were commenting that I keep hearing "can be" not "will be". Why is this?
Simon Hill: Because no decision has been taken yet.
Rach Ranton: Yep.
Simon Hill: This is a proposed pathway that's been put forward by the Government in response to the interim report from the Royal Commission. The proposal talks about what can be rather than what we will be, because there has been no formal decision taken by Government and there has been no formal action in the Australian Parliament to pass legislation to change the framework.
Rach Ranton: So nothing is decided.
Simon Hill: Nothing is set in stone. This is genuine consultation. We need to hear from our veteran community about the things that impact them and what's important to them. The Government has put forward a framework, if you will, a pathway, it is we're moving to a single act. That single act is the MRCA. How can we do that? And how can we transition people and understand the nuances of transitioning people to the MRCA moving forward.
Rach Ranton: And I think, Luke, you mentioned before that if people have got ideas around things that they feel like should be fleshed out into MRCA or look different or things that they've experienced that they think should be included within MRCA, they should absolutely submit that through to us.
Luke Brown: Yes, certainly they should. So as Simon says, there's been no legislation drafted or being drafted at this stage to give effect to this proposed reform. That's the subject of consultation today. The Royal Commission, as Simon said, and recommendation one, would like to see that legislation drafted by the end of this calendar year and that's what we're working towards. But the MRCA is an Act that currently exists. So the MRCA is an Act that you can go and look at now and you can understand it. There's information about it on DVA's website. So there's certainly an opportunity for people to go and look at the MRCA and understand how that works and inform themselves on that and then decide whether there are improvements or changes that are required to the MRCA to make this reform proposal workable in the future. And those are the sorts of things that we expect we will get some submissions on.
Rach Ranton: There's another question here asking if there's any scope to extend consultation beyond 12 May. The consultation period is comparatively short compared to the complexity of the existing legislation. I think the time frame you've given there might be why this one is a little compressed.
Simon Hill: Yes. So there's competing forces here. One is the Government's desire, as it has indicated in its response to the interim report, to meet the timeframes as set out by the Royal Commission. But in saying that it will be a decision for Government to decide if it chooses to extend the period at this stage we are working towards the 12th of May as being the date for formal submissions to be received because that then affords us the opportunity to consider that feedback, collate it and consider it, and for the Government to consider it in terms of its final decision making on the pathway moving forward in the introduction, the drafting and introduction of legislation.
Luke Brown: I just saw a question there Rachel about 85-2 treatment.
Rach Ranton: Oh yeah, yeah. Yeah, absolutely. So "will the current 85-2 treatment of cancer and psych conditions continue?".
Luke Brown: Yeah. So I was talking about the income support system essentially remaining undisturbed by this current proposal. There are other elements, again, under the VEA that will remain undisturbed and this question's about what we refer to as Non-Liability Health Care, which is provided under subsection 85-2 of the VEA, and that will certainly continue in the form that it's currently in at the moment. It won't be disturbed at all by the proposed arrangements that the Government's put forward for consultation or it's not disturbed at under the current proposal as it's been put forward. So Non-Liability Health Care will continue and again there's a question for the Government to consider about whether that remains under 85-2 of the or is shifted to the MRCA at some point in the future. But the main point is that Non-Liability Health Care will continue to be delivered as it currently is today.
Rach Ranton: Great. Thank you. Thanks for continuing to shoot through questions. Please do. And if there's any that we don't get to by the end of the session, they'll be answered and those answers will be posted on the Legislation Reform website. There's one that's come through. Is the legislation going to be updated to allow MRCA TPIs to be recognised for Disability Support Pension as to meeting the manifest medical conditions?
Simon Hill: So certainly this is a known existing issue. Certainly the TPIs under the VEA had taken to automatically meet the work test manifest, if you will, for eligibility for the Disability Support Pension. And that's not currently true of Special Rate Disability pensions under the MRCA. Generally speaking, though, Services Australia does have some arrangements with us where they'll look at the evidence that we have and hopefully arrive at an outcome for the veteran, which means that they are taken to meet the work test for Disability Support Pension. The question, though is this issue isn't driven by the veteran's legislation. It's actually an issue within the Department of Social Services and it is an ongoing issue. It's an ongoing issue that the Department is consulting with social services about and I know the Minister is interested in in the issue and finding a resolution, but per se, it's not directly related to the MRCA legislation. It's an arrangement and we need to, you know, continue those discussions to hopefully arrive at a proposition that, says MRCA SRDP eligible veterans would be treated the same way as VEA TPI veterans are treated by Services Australia.
Rach Ranton: Great. Thank you. Another participant has asked the question if a VEA accepted condition has an aggravation claimed for after 1 July 2025, will that be under MRCA or VEA? If under VEA, how would the accepted VEA conditions be aligned with the MRCA requirements?
Luke Brown: So we have a case study actually on the website which deals with this exact scenario. The answer is that the aggravation or deterioration would be dealt with under the MRCA of those VEA accepted conditions. So the Disability Compensation payment that's paid in respect of the underlying condition or the original condition would continue to be paid and indexed under the grandfathering arrangements. But the additional impairment from it might be in the aggravation and or another service related condition, but in this case the aggravation of that condition would be compensated under the MRCA as a permanent impairment payment. For that component, the impairment relating to the aggravated component of the condition, a permanent impairment payment would be calculated for that impairment. And then the veteran would have an opportunity to convert that payment into a lump sum. So they will have that opportunity, which they don't have under the VEA at the moment.
In terms of the actual assessment process, it would probably look something very much like the assessment process potentially used under Chapter 25 of GARP M at the moment. That's pretty technical, but GARP M is the legislative instrument that we use to do impairment assessments under the MRCA and Chapter 25 is currently used to work out MRCA permanent impairment entitlements for people that have pre-existing VEA and DRCA conditions. Now that Chapter 25 I'm referring to will need some amendments to deal with that particular scenario. Currently, you can't have an aggravation of a VEA accepted condition accepted under the MRCA that can't occur under the current transitional arrangements. So we will have to make new assessment processes. We'll put your impairment assessment processes in place for that particular scenario, but it will be the residual impairment relating to the aggravation that will be compensated under the MRCA with either a periodic payment being paid or the option to convert part or whole of that periodic payment into a lump sum. And the original VEA condition will continue to be compensated under the VEA and that payment will not be disturbed.
Simon Hill: So for those people who are looking at the case studies, I believe it might be Mary. Mary is the example case study that Luke alluded to on the website that talks about this very scenario.
Rach Ranton: And this term grandfathered or grandparented. That's come up quite a bit. So that's around holding a place in time and a marker and things don't change for people who have already existed and have claims within that system.
Luke Brown: Yeah. So in that case, though, that Simon's referring to the particular veterans on 40% of the general rate under the VEA, if they were to lodge their claim today, it would be an application for increase, an AFI, and they might go up to say 60% of the general rate as a result of that. But what will happen is that, as you say, Rachel, there'll be a marker, a line in the sand where that 40% is what the veteran continues to receive under the Veterans' Entitlements Act in that particular scenario. And that additional amount would move over to the MRCA. And in the case that we've got on the on the website, the periodic payment that particular veteran can receive roughly equates, it's actually a little bit more than what they would get for that application for increase under the VEA. Plus they have the additional availability of a lump sum if that is a feature of the system, that would be attractive to them.
Rach Ranton: So I think we've got time for one or two final questions. One that's had a few upvotes. Won't the legislation be simpler without SoPs and without the VRB?
Luke Brown: So, I mean, that is something that people could form a view on and certainly lodge a submission in respect to those two issues. But just to be clear, the current proposal that's been put forward for consultation by the Government would retain both the Statements of Principles system that we currently have under the MRCA and also retain the Veterans' Review Board as the first port of call for external review within the MRCA. If you go to the website, you'll also see that the Government has proposed there will be some decision making that continues to occur under the DRCA under the current arrangements, particularly in relation to some of the grandfathered benefits. And the Government has actually proposed to extend the role of the Veterans' Review Board over DRCA matters under the new system as well. So the Government at this stage is not inclined to remove the VRB from the system, but in fact extend its role so that it also has a place in the DRCA system as the as the first port of external review in that particular piece of legislation, which it doesn't do at the moment. But yes, again, the Statements Of Principles as they sit in the MRCA will be contained under that will be retained under the current proposal as well.
Simon Hill: I think it's important to add that the Veterans' Review Board is a quick, efficient, low cost jurisdiction for veterans to have their appeals heard. The VRB's introduction of the alternate dispute resolution process in 2018, I think, has certainly led to many appeals being determined in a very timely manner, whereas the current Administrative Appeals Tribunal is not as efficient, nor is it low cost.
Rach Ranton: Another one that's had a few votes. Why aren't MRCA payments classified as tax exempt and non asset tested when they are tax exempt and non-method tested under the VEA?
Luke Brown: So some MRCA certainly are. So, for example, the permanent impairment payments that we've been referring to throughout the evening, they roughly do equate to in some ways Disability Compensation payments under the VEA. They are not taxed. They're not held in means test assessments in the Social Security Act. What is different under the MRCA, is the MRCA has another compensation stream available, which is known as incapacity payments, and I referred to them in one of the examples I used before. I think it was Gabby. What incapacity payments are essentially economic loss compensation payments, which are calculated based on the veteran's pre-injury salary in most cases. And in the case of those particular payments, they are taxable. In most cases, they can be tax free if the underlying income they're based on was tax free. So for example, if it was a tax free pay related allowance that's being compensated, then that component is not generally taxed. They are not necessarily held in means tested arrangements, but they do essentially get offset dollar for dollar against income support payments. So they are sort of means tested in a way, but it's not strictly technically means testing. But those incapacity payments aren't available. There's not equivalent really of those incapacity payments under the VEA. So they're a separate sort of entity that exist solely under the MRCA with no equivalency, really under the VEA. But certainly the permanent impairment payments under the MRCA are treated very much as an equivalent of the Disability Compensation payments under the VEA.
Simon Hill: And it should be treated in means testing arrangements the same way.
Luke Brown: Yes. When I say that they're not included in Social Security means testing, I should be clear that they are considered in things like adjusted taxable income and child support arrangements and those sorts of things.
Rach Ranton: We might take one final question. Is there any plans to support advocates to understand and work with the reformed legislation so they're ready to work with the new provisions once in place?
Simon Hill: So this probably has a multifaceted answer, and I'll start first. We have a webinar specifically targeting advocates next week to talk them through the proposal. We are engaging through the ATDP team to ensure that advocates are aware, are appraised of the proposed pathway we would intend once the legislation is drafted to bring them in and talk to them as part of the consultation on the exposure draft to get them to understand what's changed. Noting that for advocates a lot of this is actually quite straightforward in terms of what we're talking about, and all of our training packages will be updated. Now from the feedback we've received during our consultation, I've actually had a number of advocates come up and say to me, we actually think this would be better. This would be better for advocates moving forward.
Advocates will be able to assist veterans engage in a single system of support. One of the greatest complexities and one of the greatest difficulties in maintaining advocates in the system today is the sheer complexity that they're having to deal with, because many veterans are fronting up, seeking support and rightly seeking support when they have coverage under two or three pieces of legislation. So by simplifying and harmonising it, we're actually presenting a new world, if you will, which will be simpler for advocates to engage with, simpler for advocates to provide advice to veterans, simpler for veterans. So that's actually an outcome, a simpler system. But certainly advocates will be informed and training packages will be adjusted, etc. But noting, as Luke pointed out earlier, that this is based on the MRCA and the MRCA that exists today. Now that doesn't pick up, obviously the transitional rules and we will look at focusing targeting that explicitly.
Rach Ranton: Excellent. Thank you both for your extensive answers on that. And thanks, everybody for asking such a broad range of questions. It's great to see you so engaged in the process. And absolutely, it's up to veterans to talk about what they need and how they want it to work and give that feedback so that they can inform what goes forward from here. If your question did not get answered by Luke and Simon in the chat or in the chat. Please keep an eye on the legislation review website. Where more answers will be uploaded after this session. I want to thank everyone for joining us this evening. This webinar is one of many that DVA and the Minister for Veterans' Affairs is holding with the veteran community. If you'd like to know more or seek an update, please consult the website. You can email your suggestions to Legislation.Reform [at] DVA.gov.au. You can also fax or post your suggestions as well. Written submissions are invited up till the 12th of May 2023.
Thank you all again for your valuable input.