Government response to review of military compensation arrangements

Last updated:

15 October 2024

Background on the review
The Report
The Government Response
Outcomes
Main Initiatives
Government response to the Review of Military Compensation Arrangements
Chapter 4 - Unique Nature of Military Service
Chapter 5 - Initial Liability and the Statements of Principles
Chapter 6 - Rehabilitation
Chapter 7 - Transition Management
Chapter 8 - Permanent impairment compensation
Chapter 9 - Death Benefit Provisions
Chapter 10 - Incapacity payments
Chapter 11 - Special Rate Disability Pension (SRDP)
Chapter 12 - Military Superannuation and related compensation issues
Chapter 13 - Ancillary Benefits
Chapter 14 - Treatment provisions
Chapter 15 - Administration
Chapter 16 - Claims
Chapter 17 - Reconsideration and Review
Chapter 18 - Governance arrangements
Chapter 19 - Compensation offsetting between the Veterans’ Entitlements Act and the Safety, Rehabilitation and Compensation Act
Chapter 20 - Ceasing new claims under the Safety, Rehabilitation and Compensation Act
Chapter 21 - Aggravations of conditions accepted under the Veterans’ Entitlements Act related to service after 1 July 2004
Chapter 22 - Permanent impairment claims that cross multiple Acts
Chapter 23 - Other perceived anomalies
Chapter 24 - Treatment cards for Safety, Rehabilitation and Compensation Act clients
Chapter 25 - Non-liability health cover for certain conditions
Chapter 26 - Compassionate payment scheme
Chapter 27 - Coverage for Australian Federal Police
Chapter 28 - Death and disability insurance in the context of military compensation
Chapter 29 - Reconsideration of compensation-related recommendations from the Review of Veterans’ Entitlements
Chapter 30 - Suitability of access to military compensation schemes for non-members
Observation from paragraph 11.43

Background on the review

The Military Rehabilitation and Compensation Act 2004 (MRCA) was introduced to bring together, in one piece of legislation, rehabilitation and compensation provisions for all members of the Australian Defence Force (ADF), cadets, cadet instructors and members of the Reserve Forces, regardless of the type of service performed by the member – peacetime, non-warlike or warlike – for injuries/diseases or deaths from service post 1 July 2004. It adopted the rehabilitation focus and many of the benefit structures of the Safety, Rehabilitation and Compensation Act 1988 (SRCA) and included some desirable features of the Veterans’ Entitlements Act 1986 (VEA). The MRCA is the rehabilitation and compensation scheme that covers ADF members currently serving in Afghanistan and other deployments around the world.

In the lead up to the 2007 Election, we undertook to conduct a review of the MRCA given it had been in place since 2004 and ex-service organisations had raised concerns about some aspects of the Act.

The review was conducted between mid-2009 and February 2011 by a Steering Committee chaired by the Chair of the Military Rehabilitation and Compensation Commission and Secretary of the Department of Veterans’ Affairs (Mr Ian Campbell). The Committee had representatives from the Treasury and the Departments of Defence; Finance and Deregulation; and Education, Employment and Workplace Relations, and an independent expert in compensation law. Considerable consultation occurred with the veteran and defence communities, including ex-service organisations.

The review had broad terms of reference to examine not only the legislation but also supporting policies and the performance of the Departments of Veterans’ Affairs and Defence in administering the Act. It also examined specific issues raised by stakeholders about transition from the SRCA and VEA to the MRCA, and interaction between the VEA and SRCA.

In the 2010 Election we committed to “taking all appropriate action in response to the Review to ensure services and support for veterans and serving members evolve with their needs”.

The Report

The Steering Committee delivered its comprehensive report to me in February 2011. The Review of Military Compensation Arrangements Report is available, in two volumes, on the DVA website.

I released the report in March 2011 and called for feedback from the veteran and defence communities by 30 June 2011. Forty eight individuals and organisations provided written feedback. Further consultation with ex-service organisations and relevant agencies occurred between March and August 2011. The Review was favourably received and most of its recommendations were supported by ex-service organisations. However, in some instances the ex-service organisations do not hold a uniform view or individual organisations had particular concerns with, or qualifications on their support of, certain recommendations.

The report concluded that the objectives of the MRCA are sound. It also confirmed that the unique nature of military service justified rehabilitation and compensation arrangements specific to the needs of the military. However, not unexpectedly given the relative complexity and period of operation of the MRCA (five years before the start of the Review), the Review found opportunities for improvements. It made 108 recommendations ranging from retaining the status quo, support for current initiatives, clarification of policy, further work and monitoring, to legislative change. Of the 108 recommendations, eight comprise four pairs of recommendations where the Committee had divergent views. The subject of these pairs of recommendations are issues that are also significant in the veteran and defence community:

Permanent impairment compensation – service differential;
Compensation following death – service differential;
Permanent impairment compensation across multiple acts; and
Non-liability health care for certain psychiatric conditions.

The Government Response

The Government has allocated $17.4 million over four years to implement the package responding to the Review.

The Government’s response comprises an additional $39.6 million of expenditure over four years. The initiative to issue Repatriation Health Cards to SRCA clients, with long term treatment needs, will generate savings for the Government of $22.2 million over four years through more efficient procedures and use of the DVA fee schedules.

The Government has carefully considered the comprehensive report. It has sought advice from the Military Rehabilitation and Compensation Commission and the Repatriation Commission, which examined the recommendations in depth. The Government also sought feedback on the report and there was considerable discussion at both the departmental and ministerial level with ex-service organisations, other agencies and their Ministers.

Outcomes

The Government will implement 96 recommendations flowing from the 108 recommendations. It has accepted 94 recommendations, either in full, or with modification/enhancement, rejected 11, and deferred its decision on three. Of the 11 rejected, two were replaced with favourable outcomes, four were alternatives presented in the report, and the other five were rejected for various reasons.

Of the 96 recommendations accepted or replaced with favourable outcomes – 53 will result in improvements, 21 require future monitoring and/or further review work and 22 will retain the status quo.

In addition, the Government has agreed to address an anomaly that was identified from an observation in the report, but that was not addressed with a recommendation.

Main Initiatives

The major elements of the Government’s response are:

changing the methodology used to calculate permanent impairment compensation across multiple Acts – the Government has accepted the outcome of a further review by the Military Rehabilitation and Compensation Commission that concluded that the alternative methodology proposed in the report should be adopted. This will include revisiting all calculations involving this methodology made since 1 July 2004 (cost of $33.7m - see note 1);
streamlining access to treatment – Repatriation Health Cards - for specific conditions (white cards) will be issued to beneficiaries under the SRCA with long‑term treatment needs. Use of the cards will attract the DVA fee schedules and card holders will be paid a supplement (formerly known as the pharmaceutical allowance) (saving of $22.2m - see note 1);
increasing the amount of compensation that may be paid for financial advice in relation to certain choices under the MRCA, and extension of the compensation to also cover legal advice utilized in making those choices (cost of $0.24m - see note 1);
improving other benefits for families of current and former ADF members:
- increased flexibility for future wholly dependent partners in the way they receive compensation following the death of an ADF member or former member by allowing them to convert part of their periodic compensation to a lump sum, rather than the existing choice between an ongoing periodic payment or converting the whole amount to an age-based lump sum (cost of $0.58m - see note 1); and
- a one-off increase to the rate of pension payable to eligible dependent children following the death of an ADF member or former member, to realign it with a similar payment made under the SRCA (cost of $0.66m - see note 1);
improving benefits for current and former members of the ADF, including payment of compensation based on stabilisation of each condition, providing earlier compensation for those with multiple conditions (cost of $0.68m - see note 1); and
simplifying access to rehabilitation and compensation benefits for current and former members of the ADF, including:
- reviewing rehabilitation arrangements to ensure that the health and well‑being of ADF injured members and former members of the ADF is maximised; and
- improving education, training and information for current and former members of the ADF and their representatives.

Note 1. Costs/savings are over four years

The Government has also accepted in principle two recommendations for improving reconsideration and review of decisions. This will introduce a single appeal pathway to replace the current dual, alternative pathways. Further work is required to determine the detail of the changes and the financial and resource implications for DVA and the Veterans’ Review Board. These recommendations will be considered in the 2014‑2015 Budget. In this same timeframe, ex-service organisations and legal professionals will be consulted to assist with the development of an advocacy model designed to provide better assistance for those with MRCA, SRCA or multi-Act claims.

Recommendations not supported

The Government has rejected 11 recommendations. Four of these were the alternatives from the pairs of recommendations representing the divergent views in the Committee (ie of the eight recommendations presented, the Government has accepted four and rejected four). The Government rejected a further five for various reasons as outlined in the attached table. In response to two recommendations the Government replaced the recommendation with a favourable outcome.

While the Government has rejected the recommendation to extend non-liability health care for certain psychiatric conditions to those with peacetime service after 1 July 2004, including Reservists, it has accepted the alternative recommendation for Defence and DVA to undertake further work to establish the benefit of, and need for, this care and the most appropriate mechanism for its delivery.

Recommendations deferred

The Government has deferred its response to three recommendations until a later date.

Implementation

DVA will have responsibility for the implementation of the majority of recommendations. While Defence will have sole responsibility for some recommendations, DVA and Defence will jointly be responsible for the implementation of others. Some of these will require DVA and/or Defence to collaborate with other Government agencies to achieve the best outcome for members and former members of the ADF, their dependants and families.

The following table summarises the Government response to all 108 recommendations, plus one observation in the report.

Government response to all 108 recommendations
Outcomes	Number of Recommendations
Outcomes	Subtotal	Progressive Total
Accept
Accept in full	75	75
Accept – with modification or enhancement	19	94
Defer	3	97
Reject
Reject in full	9	106
Replace with a favourable outcome	2	08
Additional matter arising from observation in report	1	109

I would like to thank the members of the Steering Committee for their comprehensive report on their review of the provisions for rehabilitation and compensation for members and former members of the ADF focusing on those with service after 1 July 2004.

I would encourage you all to read the report, as it contains valuable explanations of the military compensation system. I commend to you the Government response to the Review of Military Compensation Arrangements.

The Hon Warren Snowdon, MP
Minister for Veterans’ Affairs
Minister for Defence Science and Personnel
May 2012

Government response to the Review of Military Compensation Arrangements

Government response to the Review of Military Compensation Arrangements
Recommendation	Status	Response
Back to top Chapter 4 - Unique Nature of Military Service
4.1 The Military Rehabilitation and Compensation Commission (MRCC) should constantly monitor and review the Military Rehabilitation and Compensation Act 2004 (MRCA) to ensure it appropriately reflects and recognises the unique nature of military service.	Accept	The Government accepts this recommendation. This action will ensure that the MRCA continues to have the ability to provide rehabilitation and compensation appropriate for the unique nature of military service for which it was designed.
4.2 The MRCC should periodically review developments in Australian workers’ compensation jurisdictions and international military compensation arrangements at least every five years to ensure the MRCA’s financial benefits and associated policies and procedures remain contemporary.	Accept	The Government accepts this recommendation. These continuing reviews, at least every five years, will ensure that the MRCA remains contemporary with reference to civilian work health and safety laws, including workers’ compensation, as well as international military compensation arrangements while acknowledging any changes in the nature of ADF service.
4.3 Department of Veterans’ Affairs (DVA) representation and participation on the Heads of Workers’ Compensation Authorities continues.	Accept	The Government accepts this recommendation. Continued participation in the Heads of Workers’ Compensation Authorities provides the opportunity for DVA to contribute to discussions with senior representatives of Australian and New Zealand peak bodies responsible for workers’ compensation, and be informed about planned developments.
Back to top Chapter 5 - Initial Liability and the Statements of Principles
5.1 There should be no change to the current Statements of Principles regime.	Accept	The Government accepts this recommendation. The Statements of Principles (SoPs) are legislative instruments that set out the factors which can connect particular injuries, diseases or death with service. SoPs are determined by the Repatriation Medical Authority (RMA). SoPs state what factors could cause a medical condition that is the subject of a claim. In order for a claim to succeed at least one of the SoP factors must be related to service. The Government is satisfied that the strengths of the SoPs regime lie in the consistency of outcomes and reliance on sound medical scientific evidence.
5.2 The MRCC should monitor the situation in relation to injuries sustained by members at the time they are rendering defence service to ensure that the MRCA liability provisions are operating fairly.	Accept	The Government accepts this recommendation. The Government is satisfied that the current requirements for causal relationship between the injury and service, and not just a temporal relationship, is valid and appropriate. However, accepting this recommendation confers a responsibility on the MRCC to monitor the operation of the liability provisions.
5.3 The MRCC should review its policy in relation to off-duty personal fitness regimes, and consider whether, in light of relevant case law, it is appropriate to deny liability for injuries sustained or diseases contracted as a result of sporting activities that are not part of a formal training program designed by an Australian Defence Force (ADF) Physical Training Instructor.	Accept	The Government accepts this recommendation. This recommendation provides recognition of the high level of fitness required of members of the ADF, both permanent members and Reserve members. It will be appropriate for DVA to liaise with Defence about Defence’s policies so that consistent and complementary policy is developed by the MRCC for injuries arising from both sporting activities and personal fitness regimes.
5.4 Information Technology (IT) systems should be improved to monitor and report information relating to the application of the exclusion provisions under the MRCA.	Accept	The Government accepts this recommendation. The development of improved IT systems with the capability to record and report on liability determination outcomes, where the exclusion provisions have been considered, will provide more transparency of the decision making process.
Back to top Chapter 6 - Rehabilitation
6.1 Research into rehabilitation, and the formulation of the research outcomes into improved policies and practices in the ADF and DVA, be continued.	Accept	The Government accepts this recommendation. This recommendation acknowledges DVA’s active research into its rehabilitation services and best practice in rehabilitation. It also encourages inclusion of research outcomes into improved policies and practices in DVA and the ADF.
6.2 DVA rehabilitation pamphlets and websites should highlight the MRCC policies on vocational training aimed at restoring potential, based on individual abilities and assessed capacity; examples (de-identified) of successful vocational programs undertaken by former ADF members should be publicised.	Accept	The Government accepts this recommendation. This recommendation is aimed at improving the information available to former ADF members about opportunities for vocational training.
6.3 Rehabilitation providers should be fully briefed on the opportunities available for vocational training under MRCC rehabilitation.	Accept	In accepting this recommendation the Government acknowledges that an opportunity exists to ensure that rehabilitation providers understand the unique circumstances of members and former members of the ADF and the range of opportunities that the MRCC will provide to assist injured personnel to return to work, where possible. Rehabilitation providers need to understand that the MRCC policy may differ from the policies of other compensation jurisdictions.
6.4 DVA should improve the information in its pamphlets and on the website on the availability of holistic assistance, including psychosocial services, in addition to the traditional and important role of job-related programs.	Accept	The Government accepts this recommendation. This recommendation is aimed at improving knowledge about all of the support that can be provided by DVA through rehabilitation programs. In addition to job‑related (vocational) programs, DVA rehabilitation services include referral to community support services, basic skills training, lifestyle programs, attendant care services, drug and alcohol management programs, and household aids and appliances for daily living which are provided to meet an assessed need.
6.5 Performance reports for the MRCC should be expanded to show the volume and outcomes for relevant subcategories of holistic rehabilitation.	Accept	The Government accepts this recommendation. Implementation of this recommendation will ensure that DVA provides the MRCC with a broader range of data on rehabilitation outcomes.
6.6 The Australian Defence Organisation (Defence) and DVA should develop options to further the aim of early intervention and ensure that the timing and effectiveness of rehabilitation are improved, and provide advice to government.	Accept	The Government accepts this recommendation. This tasks DVA and Defence to consider options for providing timely and effective rehabilitation in the interests of improved rehabilitation outcomes. DVA and Defence are asked to provide further advice to Government.
6.7 The ADF Rehabilitation Program should provide performance reports on ADF rehabilitation assessments and program outcomes to assist the MRCC to fulfil its functions under the MRCA.	Accept	The Government accepts this recommendation. The MRCA defines the responsibilities of the MRCC, which includes functions associated with minimising the duration and severity of service injuries and diseases, as well as promoting return to suitable work, for both members and former members of the ADF. While the MRCC is not the rehabilitation authority for members of the ADF, it requires reports from the ADF Rehabilitation Program to assist in fulfilling its functions under the MRCA.
6.8 A long-term study of the effectiveness of MRCA rehabilitation arrangements within both the ADF and DVA, with respect to the level of rehabilitation services needed and the importance of the nexus with incapacity payments, should be undertaken.	Accept	The Government accepts this recommendation and DVA will work with Defence in conducting a long-term study into the effectiveness of the range of rehabilitation offered by the ADF Rehabilitation Program and DVA. An important part of the study will be an investigation of the role of incapacity payments as an incentive, or disincentive, to participation in whole of person rehabilitation that culminates in return to work, where possible. This study will commence from 1 July 2013.
Back to top Chapter 7 - Transition Management
7.1 Defence and DVA continue the current initiatives addressing the strategic objective to provide a seamless transition.	Accept	The Government accepts this recommendation. This recommendation acknowledges and encourages the initiatives being implemented by DVA and Defence, individually and jointly, that are contributing to a seamless transition for members separating from the ADF, either voluntarily or on the basis of medical discharge.
7.2 The responsibilities assigned in the MRCA to the Service Chiefs should be redesignated to the Chief of the Defence Force (CDF) as a means of achieving greater consistency and oversight through tri-Service administration.	Accept	The Government accepts this recommendation. The implementation of this recommendation to amend the MRCA to reassign responsibilities from the relevant Service Chief to the Chief of Defence Force (with powers to delegate and sub-delegate) will improve consistency across the three services. This includes the responsibilities assigned to the rehabilitation authority and the management of transition to civilian life. Implementation will be from 1 July 2013 subject to the passage of legislative amendment.
7.3 Section 39 of the MRCA should be amended to allow the appointment of the MRCC as the rehabilitation authority on the recommendation of the CDF, thus adopting the same discretion as applies under section 279 for the MRCC to take over responsibility for arrangements for treating diseases and injuries after considering advice from the Service Chief.	Accept with modification	The Government accepts this recommendation with the modification that the section of the MRCA to be amended should not be cited as this could interfere with achieving the appropriate legislative amendment. The intent of the recommendation is to provide flexibility in the timing of the transfer of responsibility for rehabilitation for discharging members to account for individual needs. Implementation will be from 1 July 2013, subject to the passage of legislative amendment.
7.4 Section 64 of the MRCA should similarly be amended, to allow earlier appointment of a transition advisory case manager.	Accept with modification	The Government accepts this recommendation with the modification that the section of the MRCA to be amended should not be cited as this could interfere with achieving the appropriate legislative amendment. The intent of this recommendation is to provide flexibility in the timing of the appointment of a transition advisory case manager. Implementation will be from 1 July 2013, subject to the passage of legislative amendment.
7.5 Section 39 of the MRCA be amended to allocate to the CDF the responsibility as rehabilitation authority for serving part-time Reservists.	Accept with modification	The Government accepts this recommendation with a technical modification. The specific section of the MRCA should not be included so that legislative amendment is not restricted. In accepting this recommendation, the Government acknowledges that it is important for the CDF to have visibility of the care being provided to Reservists not undertaking continuous full-time service. Implementation for this recommendation will be from 1 July 2013, subject to legislation being passed.
7.6 Section 64 of the MRCA be amended to include part-time Reservists in the required group to be offered a transition advisory case manager.	Accept with modification	The Government accepts this recommendation with the modification that the section of the MRCA to be amended should not be cited as this could interfere with achieving the appropriate legislative amendment. The intent of this recommendation is to make provision for a Reservist, irrespective of their type of service, to be offered a transition advisory case manager to assist with transition out of the ADF. This service is of particular importance when the separation is involuntary (on medical grounds). Implementation will be from 1 July 2013, subject to the passage of legislative amendment.
7.7 Ex-service organisation (ESO) pension officers who have access to ADF members should have a demonstrated understanding of the MRCA and transition and rehabilitation programs.	Accept with modification	The Government accepts this recommendation. The Government has asked DVA to scope a more professional advocacy service for claims under the MRCA and Safety, Rehabilitation and Compensation Act 1988 (SRCA) and multiple Act claims, to complement the existing network of ESO pension officers. Implementation is expected from 1 July 2014 in conjunction with a single appeal pathway for MRCA, as per Recommendation 17.1.
7.8 DVA initiatives for MRCA training and accreditation of staff be considered for extension to Defence transition and advisory officers, and to ESO pension officers and advocates.	Accept	The Government accepts this recommendation and DVA will work with Defence to provide opportunities for Defence transition and advisory officers to receive training and accreditation, as well as continuing to work with the ESO pension officers. This will be included in the scoping work planned with Recommendation 7.7.
7.9 The role of each person who deals with a member going through transition, such as a case manager or case coordinator, should be clearly explained to the member.	Accept	The Government accepts this recommendation. This recommendation acknowledges that a member of the ADF undergoing transition from the ADF to civilian life, and possibly to the care of DVA (in the case of medical discharge) will have to deal with a number of different people, from Defence and DVA, who have specific roles in the process. However, the need for different people and their roles may be confusing to the transitioning member. Implementing this recommendation will see better information products and communication of the purpose and roles of everybody involved in the transition process.
7.10 In the event of any possible future changes to transition management, comprehensive monthly performance reports on transition services to the MRCC by either DVA or Defence should be maintained.	Accept with modification	The Government accepts this recommendation with qualification. At the time of writing the report, DVA was still operating a voluntary Transition Management Service, on behalf of Defence, for those members discharging on medical grounds. On 1 October 2011, Defence resumed responsibility for all transition services, therefore, the implementation of this recommendation will be the responsibility of Defence to provide comprehensive monthly performance reports on transition services to the MRCC.
7.11 The transition pages of the Defence and DVA websites be refined to better meet the needs of ADF members planning their transition to civilian life.	Accept	The Government accepts this recommendation. This recommendation is a response to criticism of the dissemination and clarity of information available on transition from the ADF to civilian life, whether voluntary or involuntary (including medical discharge).
Back to top Chapter 8 - Permanent impairment compensation
8.1 The existing permanent impairment compensation differential for warlike and non-warlike service, as opposed to peacetime service, be maintained.	Accept	The Government accepts this recommendation to retain a service differential. The Government acknowledges that there are divergent views in the veteran community about having a service differential, however it is the Government’s view that it confirms its gratitude and recognition of the nature of warlike and non-warlike service (formerly known as operational service) where personnel are intentionally exposed to harm from belligerent enemy or dissident forces.
8.2(a) The Government considers: a model that revises the current differential, by having a standard 10 per cent permanent impairment differential for 71 or more impairment points (and for death benefits, see Chapter 9) — favoured by DVA and Department of Defence representatives and Mr Peter Sutherland; or	Reject	The Government rejects this recommendation, preferring the alternative in Recommendation 8.2(b). There was no unanimous support in the veteran and defence communities to support a change to the status quo.
8.2(b) The Government considers: not altering the current arrangements, noting the issues associated with removing the existing differential and the range of views in the broader veteran community — favoured by the Department of Finance and Deregulation (Finance), the Treasury and Department of Education, Employment and Workplace Relations (DEEWR) representatives.	Accept	The Government accepts the recommendation that the current arrangements be retained. As noted above, in the response to Recommendation 8.1, the existing differential confirms the Government’s gratitude and recognition of the nature of warlike and non-warlike service.
8.3 Permanent impairment compensation under the MRCA continues to be paid either by way of periodic payments or an age-based lump sum payment, or a combination of the two.	Accept	The Government accepts this recommendation. This recommendation retains the election by eligible MRCA beneficiaries to convert all or part of a periodic permanent impairment payment into an age-based lump sum. The conversion of the periodic payment to a lump sum utilises Life Tables produced by the Government Actuary with the aim of ensuring that a person receives the same amount of compensation, irrespective of the method of payment.
8.4 Claimants continue to be allowed six months to make an election to receive an age-based lump sum in lieu of periodic payments, and the MRCC should provide clear policy and guidelines regarding what constitutes ‘special circumstances’ for the purposes of an extension.	Accept	The Government accepts this recommendation. The statutory time period allowed to make this choice can be extended by the MRCC in ‘special circumstances’ and this decision is reviewable. Policy and guidelines will be prepared by 1 July 2013.
8.5 The whole person impairment methodology continues to be applied under the MRCA.	Accept	The Government accepts this recommendation to continue to apply the whole person impairment methodology. The whole person impairment methodology combines the impairment resulting from all conditions caused by military service and ensures that compensation does not exceed 100 per cent of the whole person. This methodology is used in calculating the rate of disability pension under the VEA.
8.6 The date of effect for commencement of periodic permanent impairment compensation payments under the MRCA be on the basis of each accepted condition rather than all accepted conditions.	Accept	The Government accepts this recommendation as it will allow the earlier payment of compensation for permanent impairment under the MRCA, for those with more than one accepted condition (under the SRCA, VEA or MRCA), where not all have stabilised to their lowest level of impairment expected after all reasonable rehabilitative treatment. This initiative will also allow the lifestyle effects of the impairment to be compensated at an earlier date. This is an improvement on current access to compensation where all conditions have to be stable before the lifestyle impact can be compensated. This recommendation will be implemented, prospectively, from 1 July 2013, subject to legislation being passed.
8.7 Decision makers make greater use of the interim permanent impairment compensation provisions of the MRCA.	Accept with enhancement	The Government accepts this recommendation with enhancement. An interim payment of compensation for permanent impairment can be made when the medical evidence can predict a final minimum level of impairment that is above the relevant threshold. Currently, there is no payment of lifestyle effect compensation until the condition has stabilised. The enhancement to this recommendation is to allow the payment of a minimum imputed lifestyle effect, from the tables in Chapter 23 of GARP M, that matches the level of impairment. When the condition stabilises, the compensation for both the impairment and lifestyle effects will be adjusted. This recommendation will be implemented, prospectively, from 1 July 2013, subject to legislation being passed.
8.8 No changes be made to existing provisions relating to the limit on damages against the Commonwealth or other liable parties for non-economic loss.	Accept	The Government accepts this recommendation. This recommendation supports the position that the MRCA should take precedence over the common law as the system for seeking non-economic loss compensation for most, if not all, conditions related to defence service. The MRCA provides generous benefits, many of which are payable, as needed, for life.
8.9 No changes be made to existing provisions relating to the choice to institute action for damages against the Commonwealth or other liable parties for non-economic loss.	Accept	The Government accepts this recommendation. The choice to institute common law action should only be available where permanent impairment compensation is payable.
Back to top Chapter 9 - Death Benefit Provisions
9.1 The lump sum payment, as prescribed at subsection 234(4) of the MRCA, paid in lieu of the pension equivalent to the Veterans’ Entitlements Act 1986 (VEA) war widow(er)’s pension, and the additional death benefit (ADB), as prescribed at subsection 234(2), be combined.	Reject	The Government rejects this recommendation. Although designed to simplify the benefits payable to a wholly dependent partner following death, there were concerns raised by some ex-service organisations.
9.2 The proposed new lump sum payment be age-based in a manner consistent with the existing lump sum prescribed at subsection 234(4) of the MRCA and indexed in accordance with the Wage Price Index.	Reject	The Government rejects this recommendation, as it was conditional on the acceptance of Recommendation 9.1 that has been rejected.
9.3 Dependent partners be offered the one-off choice of converting either the whole of the lump sum payment, 75 per cent, 50 per cent or 25 per cent thereof, into a lifetime pension (tax free).	Accept with modification	The Government accepts the basis of this recommendation in that it offers flexibility for the wholly dependent partner to choose the way in which to receive compensation following death. As written, the recommendation was conditional on the acceptance of Recommendation 9.1, however the Government is proposing a similar range of flexibility by offering the capacity for a one-time election to convert 25, 50, 75 or 100 percent of the periodic payment compensation into an age-based lump sum. This new provision will replicate the provisions available to those in receipt of permanent impairment payments for 20 percent or more of the maximum permanent impairment compensation. There will be no change to the period of time in which to make a choice. This recommendation will be implemented prospectively to existing dependants in receipt of periodic payments and new claims from 1 July 2013, subject to legislation being passed.
9.4(a) The Government considers: if recommendation 8.2(a) in Chapter 8 is accepted, that the lump sum death benefit be increased by 10 per cent for deaths related to warlike or non-warlike service — favoured by DVA and Defence representatives, and Peter Sutherland; or	Reject	As this recommendation was conditional on the Government accepting Recommendation 8.2(a), Recommendation 9.4(a) is rejected. Our response reflects the fact that there was no unanimous support in the veteran and defence communities to support a change to the status quo.
9.4(b) The Government considers: if recommendation 8.2(b) in Chapter 8 is accepted, that no change be made to current death benefit arrangements, which do not currently differentiate between the nature of the partner’s death — favoured by the departments of Finance and Deregulation, Treasury and DEEWR representatives.	Accept	The Government accepts the recommendation that the current arrangements be retained, and there was no unanimous support to change the status quo.
9.5 The proposed new lump sum payment be reduced by an amount equivalent to the ADB for deaths relating to those categories of members or former members who would not be eligible for the lump sum payment prescribed at subsection 234(2) of the MRCA.	Reject	The Government rejects this recommendation, as it was conditional on the acceptance of Recommendation 9.1 that has been rejected. There is no change to the current provisions where the additional lump sum (also known as the additional death benefit (ADB)) is only payable when the cause of death is linked to service. This lump sum is not payable with other compensation following death where the deceased member or former member was eligible for, or in receipt of, Special Rate Disability Pension or permanent impairment compensation at 80 or more impairment points.
9.6 The MRCA’s current pension rate for dependent children prescribed at sections 253 and 254 be maintained.	Reject but replace with favourable outcome	The Government rejects Recommendation 9.6. It has decided upon a one-time increase to the pensions prescribed at sections 253 and 254 so that they re-align with the corresponding payments for dependent children paid under the SRCA. The Government acknowledges that, at the commencement of the MRCA, the rates under the SRCA and MRCA were the same, however, changes to the SRCA in 2008 resulted in a break in the relativity. The new rates will be introduced on 1 July 2013, subject to legislation being passed.
9.7 The MRCC consider further the question of compensation for former partners and provide advice to the Government, taking account of whole-of-government issues and legal matters.	Accept	The Government accepts this recommendation. This recommendation will allow the MRCC to further consider whether a former partner should be entitled to compensation following the death of a member.
9.8 The amount of compensation for financial advice provided under sections 81, 202 and 239 of the MRCA be increased to at least $2,400 and continue to be indexed by the CPI.	Accept with enhancement	The Government accepts this recommendation to increase the amount of compensation provided under sections 81, 202 and 239 of the MRCA to $2,400. This compensation is payable for financial advice provided by a suitably qualified financial adviser when that advice relates to the choices about benefits related to permanent impairment (lump sum or periodic payment); the choice between SRDP and incapacity payments and the choice by wholly dependent partners between periodic payments and lump sum. The Government has decided to offer additional flexibility within the new limit to pay for advice received from a legally qualified person, when it relates to the choices previously described. The new limit and the new criteria will apply from 1 July 2013, subject to legislation being passed.
Back to top Chapter 10 - Incapacity payments
10.1 No change be made to the current approach used to calculate normal earnings (NE) under the MRCA to account for career progression.	Accept	The Government accepts this recommendation. Incapacity payments are calculated based on “normal earnings” (NE) which for a former member is the salary at date of discharge. This recommendation responds to the calls to adjust the NE to account for career progression that might have occurred, but for the injury. Adjusting payments to account for career progression would be arbitrary and require speculation on likely career progression. An important principle of compensation for inability to work is that the compensation for lost wages as a result of injury reflects that employee’s wage level at the time of injury.
10.2 Because many of the issues raised in relation to incapacity payments under the MRCA also relate to the administration of incapacity payments in other state, territory and Commonwealth jurisdictions, as well as whole-of-government superannuation issues, a cross-agency working group should be established to conduct more detailed analysis of existing incapacity payment provisions under the MRCA and provide advice to the MRCC on: the relationship between the current incapacity payments structure and effective vocational and psychosocial rehabilitation; options for implementing more efficient methods of determining NE in respect of ADF pay and pay-related allowances; options for simplifying payments to long-term incapacity payees, who have little prospect of returning to the workforce; and the practicality and implications of redefining NE for self-employed Reservists employed on continuous full-time service	Accept	The Government accepts this recommendation. The proposed cross-agency working group will examine the issues raised about incapacity payments, including their relationship with effective rehabilitation and other payments and provisions, and identify opportunities to streamline calculation and payments. The issues identified in the recommendation are not unique to the MRCA and the Government sees that there will be value from DVA working with other jurisdictions and agencies.
Back to top Chapter 11 - Special Rate Disability Pension (SRDP)
11.1 The MRCA be amended to address the lack of employment history restrictions on applications for the Special Rate Disability Pension (SRDP) after age 65.	Defer	The Government defers its decision on this recommendation. The recommendation refers to “employment history restrictions after age 65”, which is a reference to eligibility criteria under the VEA for those over the age of 65. The Government believes that it is appropriate for this issue to be considered, with the other eligibility criteria for SRDP, in the review of SRDP proposed in Recommendation 11.2.
11.2 All aspects of the SRDP, including its relevance, eligibility criteria and the effectiveness of rehabilitation, should be evaluated as more data become available, or after a further 5 years.	Accept with modification	The Government accepts this recommendation with a modification on the timing of the review and evaluation of all aspects of the Special Rate Disability Pension (SRDP). In light of additional information obtained since the release of the report, and the need to consider another recommendation from Chapter 11 in the context of all aspects of the SRDP, the MRCC has decided that this review and evaluation should be undertaken within the next two years.
11.3 SRDP recipients and SRDP-eligible former members should have automatic eligibility for invalidity service pension in the same manner as recipients of the Special Rate of pension under the VEA.	Accept with modification	The Government accepts this recommendation with the addition of the words “who have qualifying service for service pension purposes” to clarify that the “automatic eligibility” is a reference to the former member not requiring additional evidence of incapacity for work, if they are eligible for, or receiving, SRDP. This recommendation will be implemented on 1 July 2013, subject to a legislative instrument.
11.4 The rate of offset of Commonwealth superannuation against the SRDP should be retained at 60 cents in the dollar until age 60, and after age 60 the offset should be increased to 70 cents in the dollar to take account of the reduced taxation on superannuation benefits after that age.	Reject	The Government rejects this recommendation. Taxation changes are only one of a number of variable factors that have impacted on SRDP since 2004. The Government believes that the existing rate of offset should be retained for all ages.
Back to top Chapter 12 - Military Superannuation and related compensation issues
12.1 The offset of incapacity payments and the SRDP by the Commonwealth-funded superannuation received by the member should continue.	Accept	The Government accepts this recommendation. This retains the principle that the Government should not make duplicate income maintenance payments to the same person through superannuation and compensation. The Commonwealth‑funded superannuation benefits that are offset against incapacity payments or SRDP are not the contributions made by the individual.
12.2 The definition of Commonwealth superannuation under the MRCA should be amended to exclude licensed corporations and include Commonwealth payments into retirement savings accounts, in line with the Safety, Rehabilitation and Compensation Act 1988 (SRCA) definition.	Accept	The Government accepts this recommendation. It will ensure that relevant Commonwealth funded superannuation can be offset against incapacity payments and SRDP so that the Government is not paying two income sources to the one person. This recommendation will be implemented on 1 July 2013, subject to legislation being passed.
12.3 The MRCA should be amended to apply superannuation offsetting against incapacity payments for current members who are in receipt of Commonwealth-funded superannuation payments, as well as former members (for example, former Permanent Force members who later become part-time Reservists).	Accept	The Government accepts this recommendation. Superannuation offsetting of incapacity payments should apply to current members of the ADF in receipt of Commonwealth superannuation, as well as former members on the grounds of equity. At this time DVA has not been able to identify anyone receiving incapacity payments who will be affected by this change, therefore it is not expected that there will be any savings achieved in the forecast period. This recommendation will be implemented on 1 July 2013, subject to the passage of legislation.
12.4 The payment by the Australian Government of an employer’s contribution on incapacity payments for former ADF members not able to work because of their compensable conditions (including former cadets and Reservists not covered by military superannuation) should be considered as part of the cross-agency working group on incapacity payments (see recommendation 10.2).	Accept	The Government accepts this recommendation which will see this issue considered by the cross-agency working group established under Recommendation 10.2 from this Review. There is a clear distinction between wages/salary, that attract both employee and employer contributions to a superannuation fund, and compensation for incapacity for work and therefore the ability to earn a wage/salary. The latter are not paid by an employer, however those receiving incapacity payments are concerned about their inability to build retirement income, and are seeking contributions to a superannuation fund. This is not unique to military compensation.
12.5 The scope for streamlining the administration of superannuation and compensation invalidity and death benefits, by aligning legislative definitions and consolidating service delivery, should be further considered across government.	Accept	The Government accepts this recommendation. The legislative and administrative responsibilities of both ComSuper and DVA are unique and complex and there are interactions between the benefits paid by both agencies. This consideration, across government, provides the mechanism to scope opportunities for streamlining the administration of superannuation and compensation invalidity and death benefits by aligning legislative definitions and consolidating service delivery.
Back to top Chapter 13 - Ancillary Benefits
13.1 The MRCC develop guidelines on when household services and attendant care compensation may be paid to the spouse or other household member under the MRCA and the SRCA.	Accept	The Government accepts this recommendation. Guidelines would assist delegates and eligible persons by providing increased certainty and consistency about the circumstances under which it is appropriate to pay compensation to the spouse of other household members. Guidelines should be developed by the MRCC.
13.2 The MRCA Treatment Principles be amended to provide that: where a person is eligible to be both compensated for household services under section 214 of the MRCA and receive domestic assistance and home and garden maintenance under the Treatment Principles, they may only receive the compensation payable under section 214; and where a person is eligible to be both compensated for attendant care under section 217 of the MRCA and receive personal care under the Treatment Principles, they may only receive the compensation payable under section 217.	Accept	The Government accepts this recommendation. The recommendation would remove the potential for an overlap in access to services that can be provided under the MRCA Treatment Principles and the MRCA Home Care program for members and former members of the ADF. Wholly dependent partners will continue to access their services through the MRCA Home Care Program. There are no losers from the implementation of this recommendation. Implementation will be from 1 July 2013, subject to legislative amendment.
13.3 No change be made to the weekly statutory limit for reimbursement for household services or attendant care under the MRCA.	Defer	The Government will defer a decision on this recommendation until after DVA has concluded a review of the needs of severely wounded/injured members and former members, and their families.
Back to top Chapter 14 - Treatment provisions
14.1 The MRCC should continue to encourage a stronger review mechanism for the issue of Repatriation Health Cards, and should conduct ongoing quality assurance reviews of decisions to retain clients on reimbursement of treatment costs (Treatment Pathway 1).	Accept	The Government accepts this recommendation. Treatment Pathway 2 (where treatment is provided via a Repatriation Health Card) has cost, workload and treatment management advantages. This recommendation addresses data that suggests that former members are being retained on Treatment Pathway 1 (reimbursement pathway) for longer than necessary.
14.2 The MRCC should review the need for the dual treatment pathways approach in three years time, with a review strategy to be developed in the near term.	Accept	The Government accepts this recommendation. It responds to calls for a single treatment pathway to reduce complexity. More data is required to determine the implications of such an approach and a review strategy should be developed to provide the mechanism for gathering the evidence in advance of the MRCC review in 2015.
14.3 The MRCC should review the need for former members with both VEA and MRCA entitlements to hold multiple cards and, if necessary, seek legislative change for greater simplicity.	Accept	The Government accepts this recommendation. Currently, former members are only issued with a single Repatriation Health Card (white or Gold) with which to access treatment, for their VEA or MRCA accepted conditions, and other card related benefits. Implementing this recommendation will provide legislative clarity and support current practice/systems which prevent multiple cards being issued to a single person. There is another recommendation in Chapter 24 that proposes providing eligible SRCA beneficiaries with access to the Repatriation Health Card system and so this clarification will be timely. Implementation will be from 1 July 2013, subject to legislative amendment.
Back to top Chapter 15 - Administration
15.1 DVA continues to improve both the quality and timeliness of its compensation claims processing under the SRCA and the MRCA, as well as its client service.	Accept	The Government accepts this recommendation. DVA should continue current initiatives to improve both quality and timeliness of compensation claims processing and client service.
15.2 DVA continues to identify better Key Performance Indicators (KPIs), particularly for time taken to process (TTTP) claims.	Accept	The Government accepts this recommendation. The recommendation acknowledges that DVA is working to identify appropriate KPIs for measuring the outcomes and outputs of its claims processing work.
15.3 The Military Rehabilitation and Compensation Commission (MRCC) should monitor the timeliness for the conduct of needs assessments, with adjustments where the client is unable to be contacted.	Accept	The Government accepts this recommendation. The MRCA requires a Needs Assessment to be conducted prior to the payment of any compensation or provision of rehabilitation services. Conducting the Needs Assessments in a timely manner is important as it allows a member’s priority needs to be addressed.
15.4 The KPI for time taken to process (TTTP) should be adjusted for permanent impairment compensation cases awaiting stabilisation.	Accept	The Government accepts this recommendation. The KPI for TTTP is distorted by the requirement for a condition to be stable before permanent impairment compensation is payable. Currently, it is a requirement that all conditions being assessed for permanent impairment compensation must be stable before compensation can be paid under the MRCA. There are other recommendations in Chapter 8 of the Review that deal with the requirements for stability of the condition prior to compensation being paid. The Government has accepted Recommendations 8.6 and 8.7.
15.5 DVA implements the recommendations from the recent internal audit and consultant reviews of TTTP and quality decision making and, in doing so, address the concerns outlined in submissions on staffing and claims processing.	Accept	The Government accepts this recommendation. DVA should incorporate the recommendations from these audits and reports in the work that it is doing to improve the quality of claims and effective use of staff resources for claims processing.
15.6 DVA and Defence continue to modernise their business processes and IT systems for SRCA and MRCA compensation-related processing and management systems, including scope for client lodgement and monitoring of claims, and IT links between DVA and Defence.	Accept	The Government accepts this recommendation. DVA and Defence will continue to work together to develop compatible and complementary IT systems and processes that will be considered within each agency’s IT strategic plans.
Back to top Chapter 16 - Claims
16.1 The MRCC should consider a modular approach for claims under the MRCA, dealing firstly with initial liability and needs assessment (subject to clarification of policies and practices after the Federal Court decision on Irwin v. Military Rehabilitation and Compensation Commission [2009] FCAFC 33 (20 March 2009)).	Accept	The Government accepts this recommendation. A modular approach would simplify the claims process by firstly dealing with the question of initial liability and Needs Assessment and then addressing claims that will satisfy the identified needs.
16.2 For serving members, the ADF should provide information on the circumstances of the incident from which the initial liability claim arises, and related health and rehabilitation issues, with the claim for liability.	Accept	The Government accepts this recommendation. Provision of this information by the ADF, for serving members, would expedite claims processing and contribute to lower times taken to process, but more importantly, speedier access to benefits.
16.3 The MRCC should consider a shortened MRCA claim form to be available for claimants who have service only after 1 July 2004 and have all the accompanying ADF endorsements, incident reports, medical and service records.	Accept	The Government accepts this recommendation. The MRCA covers all service after 1 July 2004, and some information required for those with entitlements under more than one Act is not required from those who have service only after 1 July 2004.
16.4 The average lag time between injury or exposure and lodgement of a claim for compensation should be reduced for ADF safety and compensation evidential purposes; the MRCC should establish a KPI to be reported on by Defence so that the efforts to reduce the time lag can be monitored on an annual basis and reported in the MRCC annual report.	Accept	The Government accepts this recommendation. Reducing the time between injury and claim would assist the ADF to better manage workplace safety issues and the evidence required to support a claim will be more readily available.
16.5 The MRCC should establish a KPI for the timeliness of provision of information by Defence to support compensation claims, and this KPI be monitored and reported in the MRCC annual report.	Accept	The Government accepts this recommendation. Timely access to information, in the control of Defence, that is required in the investigation of a claim for initial liability or compensation is essential to allow timely outcomes of claims.
16.6 Reporting provisions (to Parliament) for times taken to process initial liability and permanent impairment compensation claims, with adjustment for times not within MRCC control, be developed for the MRCC similar to those being considered for Comcare under the SRCA.	Defer	The Government defers a decision on this recommendation for 12 months. The amendments to the SRCA to introduce statutory time limits for processing claims received Royal Assent in December 2011, but the regulations required to implement the reporting have not yet been developed. In the next 12 months, DVA will have the opportunity to observe the effects of the change and provide advice to the Government about the Comcare experience, and other DVA initiatives underway to improve times taken to process claims.
Back to top Chapter 17 - Reconsideration and Review
17.1 The MRCA determining system be refined to a single appeal path to the Veterans’ Review Board (VRB) and then the Administrative Appeals Tribunal (AAT) [now known as the Administrative Review Tribunal (ART)], as a means of a more timely review that is less complex and less costly.	Accept	The Government accepts this recommendation in principle but defers its response (along with a response to Recommendation 17.2) pending the outcome of consultation with stakeholders and full consideration of the detail and implications of this complex change. The planned implementation date is 1 July 2014, subject to consultation with stakeholders, further decision by Government in the 2014 Budget, and legislative change.
17.2 Internal reconsideration by the MRCC be the first step in the review process, and the process for section 31 reviews under the VEA be adopted, to help ensure the quality of decisions that are considered by the VRB and reduce VRB workloads and costs.	Accept	The Government accepts this recommendation in principle but defers its response (along with its response to Recommendation 17.1) pending the outcome of consultation with stakeholders, consideration of resource and other implications and a further decision in the 2014 Budget.
17.3 There be access to a case conference process by the VRB so that, wherever possible, the key questions and relevant evidence are established as early as possible and the hearings can proceed without any unnecessary delay.	Accept	The Government accepts this recommendation. Case conferencing is part of the Alternative Dispute Resolution (ADR) process, increasingly used in the broader legal community. The VRB issued a General Practice Direction (GPD) in January 2011 allowing the VRB to refer a case to an ADR process, including conferencing or neutral evaluation.
17.4 In advance of the adoption of a single path, a formal service level agreement between the MRCC and the VRB be negotiated to define a comprehensive case conference process within current legislation.	Accept with modification	The Government accepts this recommendation with the modification that the VRB and the MRCC should establish agreed national administrative and procedural arrangements, including case conferencing and other alternative dispute mechanisms, designed to improve timeliness. To respect the independence of the VRB, this recommendation will be achieved by mechanisms other than a formal service level agreement. The arrangements are to be in place before 1 July 2014.
17.5 The MRCA be amended to provide the VRB with explicit powers to remit a matter to the MRCC for needs assessment and compensation.	Accept	The Government accepts this recommendation. This will overcome the current situation where the VRB has to adjourn a case to ask a delegate of the MRCC to conduct investigations and relay the evidence to the VRB. The implementation date is 1 July 2013, subject to legislation being passed.
Back to top Chapter 18 - Governance arrangements
18.1 The Minister for Veterans’ Affairs continues to be responsible for administering the MRCA.	Accept	The Government accepts this recommendation that continues the current arrangements with the Minister for Veterans’ Affairs being responsible for administering the MRCA.
18.2 Subject to section 7 of the Occupational Health and Safety Act 1991 (OHS Act), service within the ADF continues to come under the OHS Act and be regulated by the Safety, Rehabilitation and Compensation Commission, Comcare and the Australian Radiation Protection and Nuclear Safety Agency.	Accept with modification	The Government accepts this recommendation with the necessary modification that acknowledges that on 1 January 2012 the OHS Act was replaced by the Work Health and Safety Act 2011 (WHS Act). This continues the existing governance arrangements for work health and safety. Section 12D of the WHS Act is the equivalent of section 7 of the OHS Act, Comcare is now the regulator for the WHS Act and the Australian Radiation Protection and Nuclear Safety Agency is the regulator for the Australian Radiation Protection and Nuclear Safety Act 1998.
18.3 Greater effort and resources be devoted by Defence and DVA to introduce comprehensive and effective management information systems for occupational health and safety and military compensation within and between both agencies.	Accept with modification	The Government accepts this recommendation as it acknowledges the relationship between work health and safety issues and subsequent compensation claims. Defence and DVA will continue to work together to ensure that complementary systems are developed that improve information management within the two agencies. The Government acknowledges that the term “occupational health and safety” has been replaced by “work health and safety” from 1 January 2012.
18.4 The Government consider expanding the membership of the MRCC by including a second member nominated by the Minister for Defence from the Department of Defence or the ADF, given the advantages this would bring for both Defence and the MRCC, especially in facilitating improvements in information sharing between DVA and Defence.	Accept	The Government accepts this recommendation. This additional member will increase the MRCC from five members to six. The MRCC was established by the MRCA and has responsibility for administering the MRCA and claims for defence related claims under the SRCA. The additional member will be appointed as soon as practicable after the passage of the required legislative amendment.
18.5 Defence and DVA jointly determine the most appropriate mechanism for regulating their relationship, including defining their respective roles and responsibilities, in relation to the future administration of the MRCA.	Accept	The Government accepts this recommendation. Defence, as the employer, and DVA staff, under delegation from the MRCC as the administrator of the employee compensation scheme, have different responsibilities, but common goals. It is essential that they work collaboratively to improve effectiveness and accountability.
Back to top Chapter 19 - Compensation offsetting between the Veterans’ Entitlements Act and the Safety, Rehabilitation and Compensation Act
19.1 Existing offsetting arrangements be maintained.	Accept	The Government accepts this recommendation that refers to maintaining the offsetting of compensation received for the same incapacity under the VEA and the SRCA.
19.2 Ongoing efforts by DVA aimed at improving advice to clients regarding the effect offsetting provisions will have on their compensation entitlements be continued.	Accept	The Government accepts this recommendation that supports ongoing work within DVA aimed at improving advice to clients regarding the effect offsetting provisions (between the VEA and SRCA) on their compensation entitlements.
19.3 DVA should examine the viability of providing claimants with the option to repay the actuarial value of a lump sum previously received under the SRCA at the time an offset of a pension is determined under the VEA, taking into account the benefits of increased flexibility while maintaining simplicity.	Reject	The Government rejects this recommendation. Examination of the recommendation identified that the veteran/widow(er) would need a considerable amount of money up front to repay the actuarial value of a lump sum previously received under the SRCA, in order to receive a full VEA pension without offset.
Back to top Chapter 20 - Ceasing new claims under the Safety, Rehabilitation and Compensation Act
20.1 The date of injury approach be maintained and no action be taken to cease future claims under the Safety, Rehabilitation and Compensation Act 1988 (SRCA) by treating them as claims under the Military Rehabilitation and Compensation Act 2004 (MRCA).	Accept	The Government accepts this recommendation, and the conclusion of the Review that, at this time, there are too many complex, sensitive and potentially controversial issues that would need to be overcome to move away from the date of injury approach to decide which Act is applicable for rehabilitation and compensation for an injury. The date of injury approach sees injuries caused by service before 1 July 2004 addressed under the SRCA (where that service does not give rise to an entitlement under the VEA), and injuries caused by service after 1 July 2004 addressed under the MRCA.
20.2 DVA and Defence undertake more education of claimants and ESO representatives on the three pieces of legislation that govern military compensation and continue to simplify the front-end claims process for potential claimants.	Accept	The Government accepts this recommendation. Such an education process will be designed to ensure that those with eligibility under more than one of the three Acts administered by DVA (VEA, SRCA and MRCA) – and their representatives – understand the potential interaction between benefits received under each Act. This recommendation will be implemented in association with Recommendation 28.1 after all legislation changes arising from the Review have been made.
Back to top Chapter 21 - Aggravations of conditions accepted under the Veterans’ Entitlements Act related to service after 1 July 2004
21.1 The section 12 election provisions be removed. The election provisions should be replaced with provisions that stipulate that all aggravations of a condition accepted under the VEA that relate to service after 1 July 2004 be the subject of an application for increase under the VEA, and cannot be claimed under the MRCA.	Accept	The Government accepts this recommendation. Implementation of this recommendation will simplify the claims process for a person with an aggravation (by service after 1 July 2004) of a condition already accepted under the VEA. This will be implemented from 1 July 2013, subject to legislation being passed.
Back to top Chapter 22 - Permanent impairment claims that cross multiple Acts
22.1 Recognising the complexity of the transitional arrangements, there be an education campaign in conjunction with ESOs to facilitate greater understanding of the arrangements and ensure claimants are aware of the effect that these provisions may have on their compensation.	Accept with modification	The Government accepts this recommendation, noting that the reference to “transitional arrangements” in the recommendation is a reference to the provisions for calculating permanent impairment compensation under the MRCA, where previous compensation has previously been received under the VEA and/or SRCA. This situation might be described as transitional permanent impairment compensation or permanent impairment across multiple Acts. The education campaign will occur in conjunction with implementation of Recommendation 28.1.
22.2(a) The Government consider that: the MRCC be asked to review the current method of calculating transitional permanent impairment compensation claims, noting the arguments that it produces unintended consequences that are not appropriate — favoured by DVA and Defence representatives and Mr Peter Sutherland; or	Accept with enhancement	The Government accepts this recommendation and further agrees that the methodology should be changed and to adopt and fund the alternative methodology that was presented in the appendix to Chapter 22 of the report, as recommended by the MRCC. This new methodology will be applied both prospectively and retrospectively. Where application of the new methodology results in a lower amount of compensation, the existing rate of MRCA permanent impairment compensation will apply until a new assessment, results in a higher amount. The planned implementation date is 1 July 2013, subject to a legislative instrument, with retrospective reassessments to be made over two and a half years from January 2014.
22.2(b) The Government consider that: the current method be retained, noting the arguments that outcomes under the current method are intended and appropriate — favoured by the Finance, the Treasury and DEEWR representatives.	Reject	The Government rejects this recommendation, having accepted the alternative in Recommendation 22.2(a), and being satisfied that the outcome of the review by the MRCC confirmed that the current methodology produced unintended outcomes and concluded that the best methodology is the alternative proposed in the report.
Back to top Chapter 23 - Other perceived anomalies
23.1 No change is necessary to adjust benefits between the applicable Acts, as these differences are not unintended. This relates specifically to: household and attendant care services under the VEA; the Motor Vehicle Compensation Scheme under the MRCA; lump sum payments for VEA recipients; MRCA telephone allowances; private vehicle travel for treatment expenses; funeral benefits; fortnightly payments for child dependants under the VEA; education allowances under the SRCA; the MRCA benefits derived from specific impairment levels; and the automatic grant of death benefits for dependants of deceased prisoners of war.	Accept with modification	The Government accepts this recommendation with qualification that the MRCA telephone allowance has been replaced by the payment known as the MRCA supplement. The Government is satisfied that the differences between Acts examined are all justifiable differences and not anomalies, and, therefore, status quo remains.
Back to top Chapter 24 - Treatment cards for Safety, Rehabilitation and Compensation Act clients
24.1 Repatriation Health Cards – For Specific Conditions (White Cards) for specific conditions be issued to Part XI defence-related claimants under the SRCA to achieve consistency in treatment arrangements for all former ADF members. Cards should be provided subject to a needs assessment showing long-term treatment needs, and the current reimbursement arrangements for the treatment of short-term conditions should be retained.	Accept	The Government accepts this recommendation. Implementation of this recommendation will result in a consistent method of access for medical treatment for all former members of the ADF whose conditions accepted under the VEA, SRCA and MRCA are chronic and there is evidence of long-term treatment needs. Issuing a Repatriation Health Card – For Specific Conditions (White Card) to SRCA clients will simplify access to treatment for them and simplify administration for providers, particularly for those former members with conditions accepted under more than one Act. This recommendation will require consultation with the medical and allied health provider communities, and IT systems changes within DVA. The planned implementation date for this initiative is 10 December 2013, subject to legislation being passed.
24.2 The DVA fee schedule be adopted for treatment provided to defence-related claimants under Part XI of the SRCA.	Accept	The Government accepts this recommendation, which flows from Recommendation 24.1. This recommendation will result in a common fee for treatment of conditions irrespective of the Act that the treatment is provided under. The planned implementation date for this initiative is 10 December 2013, subject to legislation being passed.
24.3 The supplementary payment for pharmaceuticals be extended to defence-related claimants under Part XI of the SRCA with White Cards.	Accept	The Government accepts this recommendation, associated with Recommendation 24.1. The supplement is designed to offset, in part, the pharmaceutical co-payment required under the Repatriation Pharmaceutical Benefits Scheme. The planned implementation date for this initiative is 10 December 2013, subject to legislation being passed.
Back to top Chapter 25 - Non-liability health cover for certain conditions
25.1(a) The Government consider: providing non-liability health cover under the MRCA for certain psychiatric conditions to all former members of the ADF and part-time Reservists who have served after 1 July 2004 — favoured by DVA and Defence representatives and Mr Peter Sutherland; or	Reject	The Government rejects this recommendation, preferring the alternative provided in recommendation 25.1(b). The Government acknowledges that those former members with warlike or non‑warlike service after 1 July 2004 already have access to non‑liability health care for certain psychiatric conditions via provision in the VEA.
25.1(b) The Government consider: requesting Defence and DVA to gather further evidence to establish both the benefit and need of additional psychiatric care, separate to the existing general health services, for former members of the ADF and part-time Reservists who have served after 1 July 2004. If benefit and need are established, then options could be presented to the Government to deliver such health coverage outside of compensation legislation — favoured by the Finance, the Treasury and DEEWR representatives.	Accept	The Government accepts this recommendation in preference to the alternative provided in Recommendation 25.1(a). The Government is asking Defence and DVA to gather further evidence to establish both the benefit and need for additional psychiatric care for those former members of the ADF and part-time Reservists with peacetime service after 1 July 2004. The departments will report back to Government, including options for the best mechanism for addressing any identified need.
Back to top Chapter 26 - Compassionate payment scheme
26.1 An Australian Defence Force (ADF) compassionate payment scheme should not be introduced.	Accept	The Government accepts this recommendation and the response should be read in conjunction with the response to Recommendation 26.2. The outcome is that a compassionate payment scheme will not be introduced.
26.2 The payment of compensation to families in relation to the service-related deaths of ADF members continue to be managed by the Australian Defence Organisation in accordance with existing arrangements as considered appropriate to the circumstances.	Accept	The Government accepts this recommendation for the Australian Defence Organisation to continue making compensation payments, on a case‑by‑case ex‑gratia basis, to non-dependent parents and other close family members following the death of a member of the ADF in service.
Back to top Chapter 27 - Coverage for Australian Federal Police
27.1 Australian Federal Police members not be given access to the MRCA.	Accept	The Government accepts this recommendation. It is not appropriate to provide access to Australian Federal Police (AFP) members to a scheme that has been designed to provide for the unique nature of military service.
Back to top Chapter 28 - Death and disability insurance in the context of military compensation
28.1 Defence and DVA jointly undertake a comprehensive communication strategy aimed at providing education to serving members of the ADF on the full range of financial benefits provided under the MRCA and military superannuation.	Accept	The Government accepts this recommendation. This recommendation recognises the complexity that exists for a member (or former member) of the ADF who may be eligible for compensation under one or more of the three Acts administered by DVA (VEA, SRCA and MRCA), and at time of transition from the ADF (to civilian life) either voluntarily, or involuntarily (medical discharge), will also have an entitlement from the relevant military superannuation scheme administered by ComSuper. The proposed communication strategy will be implemented following the passage of all legislative changes arising from the Review. It would also include information proposed in Recommendations 20.2 and 22.1.
28.2 Defence should work to resolve the insurance issue external to the Review process.	Accept	The Government accepts this recommendation. The Government is satisfied that the benefits provided by the MRCA are generous and it is, therefore, appropriate that the issue of death and disability insurance should be resolved by Defence.
Back to top Chapter 29 - Reconsideration of compensation-related recommendations from the Review of Veterans’ Entitlements
29.1 No further action is required on the unimplemented recommendations of the Review of Veterans’ Entitlements (Clarke Review) referred to this Committee.	Accept	The Government accepts this recommendation. It is satisfied that no further action is required on the 22 unimplemented recommendations of the Review of Veterans’ Entitlements (Clarke Review) referred to the Review of Military Compensation Arrangements.
29.2 DVA, the Repatriation Commission and MRCC review the Veterans' Vocational Rehabilitation Service with the aim of improving rehabilitation options for those who have eligibility under the VEA and are younger than 50 years.	Accept with enhancement	The Government accepts this recommendation with enhancement, that DVA, the Repatriation Commission and MRCC will review the delivery of rehabilitation services under the VEA, SRCA and MRCA, with a specific focus on those under the age of 50 with VEA eligibility. This review would provide the opportunity to address rehabilitation gaps for VEA beneficiaries, who currently only have access to a voluntary scheme, and could present the opportunity for early rehabilitation intervention, irrespective of the Act that covers the service when the injury occurred. The review will commence from 1 July 2012.
Back to top Chapter 30 - Suitability of access to military compensation schemes for non-members
30.1 Members undergoing career transition assistance and personnel holding honorary ranks should be defined under the MRCA as ‘members’.	Accept with enhancement	The Government accepts this recommendation with enhancement. In addition to the groups specified, the Government agrees that authorised representatives of philanthropic organisations, in support of the ADF, will be defined in the MRCA as ‘members’. This will provide certainty about access to rehabilitation and compensation for these defined groups who are currently given access to the MRCA via Ministerial determination. Implementation will be from 1 July 2013, subject to legislation being passed.
30.2 Civilians required to support the ADF, who are not Commonwealth, state or territory government employees and do not have statutory workers’ compensation cover, be provided with access to the MRCA where they are: integrated with the ADF in an area of operations; employed and subject to military command and control; and subject to the relevant provisions of the Defence Force Discipline Act 1982.	Reject but replace with favourable outcome	The Government rejects this recommendation. In lieu of this recommendation, and as further recognition of the unique nature of military service deserving its own rehabilitation and compensation scheme (the MRCA), the Government agrees the following overarching principles for use in determining who should have access to the MRCA. These principles are: MRCA coverage should be provided to those defined in the MRCA as a “member”. Government employees should use their existing statutory rehabilitation and compensation cover, unless the Minister for Defence has made a declaration under section 8 of MRCA. Other civilians working independently in the same location as the ADF will be expected to have their own workers’ compensation coverage. Further work needs to be undertaken to develop a fourth principle covering the mechanism for providing compensation coverage for other civilians, in support roles to the ADF, and currently given access to the MRCA through a section 8 determination. It should be noted that existing determinations under s8 of MRCA will preserve access for those people currently covered by these determinations for past periods. The Departments of Defence, Education, Employment and Workplace Relations and Veterans’ Affairs will report back to Government before the end of the 2012 calendar year with details of the final principle.
Back to top Observation from paragraph 11.43
Eligibility for Special Rate Disability Pension (SRDP) when not in receipt of incapacity payments.	Accept	The Government agrees that those former members who have either redeemed small incapacity payments under s138 of the MRCA or whose incapacity payments have been reduced to nil purely because of the value of Commonwealth superannuation, can still be found eligible for SRDP, if all other SRDP criteria are met. The first part addresses an anomaly that a person who had an entitlement to receive incapacity payments until age 65 as an ongoing payment could be found to not be receiving that payment because it had in effect been cashed out. The second part provides equity of access for ancillary benefits, associated with being found SRDP eligible, for a person who is incapacitated for work, but not receiving incapacity payments purely because of the value of their Commonwealth funded superannuation/invalidity benefits. Implementation will be from 1 July 2013, subject to legislation being passed.

Government response to review of military compensation arrangements

On this page

Background on the review

The Report

The Government Response

Outcomes

Main Initiatives

Note 1. Costs/savings are over four years

Recommendations not supported

Recommendations deferred

Implementation

Government response to the Review of Military Compensation Arrangements

Chapter 4 - Unique Nature of Military Service

Chapter 5 - Initial Liability and the Statements of Principles

Chapter 6 - Rehabilitation

Chapter 7 - Transition Management

Chapter 8 - Permanent impairment compensation

Chapter 9 - Death Benefit Provisions

Chapter 10 - Incapacity payments

Chapter 11 - Special Rate Disability Pension (SRDP)

Chapter 13 - Ancillary Benefits

Chapter 14 - Treatment provisions

Chapter 15 - Administration

Chapter 16 - Claims

Chapter 17 - Reconsideration and Review

Chapter 18 - Governance arrangements

Chapter 19 - Compensation offsetting between the Veterans’ Entitlements Act and the Safety, Rehabilitation and Compensation Act

Chapter 20 - Ceasing new claims under the Safety, Rehabilitation and Compensation Act

Chapter 22 - Permanent impairment claims that cross multiple Acts

Chapter 23 - Other perceived anomalies

Chapter 24 - Treatment cards for Safety, Rehabilitation and Compensation Act clients

Chapter 25 - Non-liability health cover for certain conditions

Chapter 26 - Compassionate payment scheme

Chapter 27 - Coverage for Australian Federal Police

Chapter 28 - Death and disability insurance in the context of military compensation

Chapter 30 - Suitability of access to military compensation schemes for non-members

Observation from paragraph 11.43

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Government response to review of military compensation arrangements

On this page

Background on the review

The Report

The Government Response

Outcomes

Main Initiatives

Note 1. Costs/savings are over four years

Recommendations not supported

Recommendations deferred

Implementation

Government response to the Review of Military Compensation Arrangements

Chapter 4 - Unique Nature of Military Service

Chapter 5 - Initial Liability and the Statements of Principles

Chapter 6 - Rehabilitation

Chapter 7 - Transition Management

Chapter 8 - Permanent impairment compensation

Chapter 9 - Death Benefit Provisions

Chapter 10 - Incapacity payments

Chapter 11 - Special Rate Disability Pension (SRDP)

Chapter 12 - Military Superannuation and related compensation issues

Chapter 13 - Ancillary Benefits

Chapter 14 - Treatment provisions

Chapter 15 - Administration

Chapter 16 - Claims

Chapter 17 - Reconsideration and Review

Chapter 18 - Governance arrangements

Chapter 19 - Compensation offsetting between the Veterans’ Entitlements Act and the Safety, Rehabilitation and Compensation Act

Chapter 20 - Ceasing new claims under the Safety, Rehabilitation and Compensation Act

Chapter 21 - Aggravations of conditions accepted under the Veterans’ Entitlements Act related to service after 1 July 2004

Chapter 22 - Permanent impairment claims that cross multiple Acts

Chapter 23 - Other perceived anomalies

Chapter 24 - Treatment cards for Safety, Rehabilitation and Compensation Act clients

Chapter 25 - Non-liability health cover for certain conditions

Chapter 26 - Compassionate payment scheme

Chapter 27 - Coverage for Australian Federal Police

Chapter 28 - Death and disability insurance in the context of military compensation

Chapter 29 - Reconsideration of compensation-related recommendations from the Review of Veterans’ Entitlements

Chapter 30 - Suitability of access to military compensation schemes for non-members

Observation from paragraph 11.43

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