Key issues

Introduction

3.1        Submitters raised a number of key issues in relation to the provisions of the bill. These included:

• recognition of the unique nature of military service;
• policy responsibility and future reform;
• policy changes;
• the Henry VIII clause;
• the complexity of current arrangements; and
• consultation issues.

Unique nature of military service

3.2        DVA stated the DRCA was being created by the bill to 'enable the Minister for Veterans' Affairs to solely administer all legislation relating to veterans' entitlements [allowing] the recognition of the unique nature of military service that may not be appropriate for civilians under the SRCA'.[1] It stated:

Separating ADF coverage from the SRCA will provide ADF members with access to a "military specific" compensation and rehabilitation scheme and the Minister with policy responsibility for all three compensation Acts that cover ADF members. It would also enable the Minister and the MRCC to consider changes to the DRCA which recognise the unique nature of military service that may not be appropriate for civilians under the SRCA.[2]

3.3        The Hervey Bay Veterans Advice and Social Centre (HBVSC) highlighted the disadvantages of the current SRCA for veterans:

...SRCA was never designed to recognise the unique nature of military service – It was designed to cover those who work in the public service and that alone. The government at the time decided to revoke coverage under the VEA for 'eligible defence service' to anyone who joined on or after 7 April 1994 and the SRCA was put in place, thus disadvantaging the veteran community astronomically.[3]

3.4        The HBVSC argued that if the DCRA bill will only replicate the SRCA, it will not recognise 'the unique nature of military service when compared to other Commonwealth Employees covered under the current [SRCA]. It proposed that '"eligible defence service" be extended to those with service under the current SRCA until 1 July 2004, in order to recognise the unique nature of military service, and to bring entitlements and benefits to similarity, if not in line, with the VEA and MRCA'.[4]

3.5        However, Mr Brian Briggs, Slater and Gordon Lawyers, questioned the benefits of an entirely separate military compensation system. He argued that moving SRCA under DVA through the DRCA could compound existing problems with the administration of veterans' entitlements. Mr Briggs described DVA as 'currently benefitted by the oversight and assistance of Comcare when dealing with the SRCA. He considered that the removal of this oversight would undermine DVA's ability to efficiently and effectively serve veterans.[5] He stated:

The prospect that the new defence specific DRCA created by the Bill will be aligned with the MRCA is counter-intuitive to the principle that veterans deserve the best standard of access to rehabilitation and compensation the Commonwealth can offer. The Bill opens a pathway to a statutory scheme whereby a veteran will face a longer and more onerous process of proving liability and will ultimately receive less compensation than a Commonwealth public servant with the exact same injuries.[6]

3.6        In particular, he noted the potential impact on case law:

A number of helpful cases have been fought and won in favour of veterans' rights and entitlements under the SRCA. Several of these precedents have rectified unfair and unfavourable DVA decisions regarding veterans' entitlements. As a result, the ability to refer to these important decisions by the courts has given greater certainty to veterans and has improved their access to justice...The threat posed by the DRCA is that these authoritative rulings may no longer apply, especially if the existing SRCA guidelines and policy advices are repealed, amended or revoked...[7]

3.7        DVA confirmed that all the case law and precedents that currently applies to the consideration of claims under the SRCA will continue to apply to DRCA if it comes into force. It stated:

[T]he enactment provisions of the DRCA make it clear that in retrospectively applying the DRCA to the determination of a claim, it will be the version of the SRCA that was applicable at the time the injury or illness was sustained that will be used in the determination of that claim. As such, any case law (whether related to military or civilian employees), which was applicable to the interpretation and determination of the relevant provisions of the SRCA, will continue to apply for the purposes of the same relevant provisions of the DRCA.[8]

3.8        Ms Carolyn Spiers, Principal Legal Advisor for DVA told the committee:

[O]ver time the civilian legislation and AAT or Federal Court cases might go in a different direction. But from day one everything is aligned, as it should be, and we will be applying Canute, Fellowes and Robson as we do today. We will do that post the implementation of DRCA. All policies and procedures that applied in a point in time—as I have said before, all of our policies have been underpinned by the work we have from Comcare—that is the alignment issue for SRCA.[9]

3.9        Correspondence was also provided from Ms Liz Cosson AM CSC, in her capacity as the Acting Chair of the Military Rehabilitation and Compensation Commission, which included an assurance that 'when the DRCA commences, all of the relevant case law developed with respect to the [SRCA] will continue to apply to the equivalent DRCA provisions, until a body of DRCA specific case law is developed'. She stated '[t]he DRCA is not an attempt to circumvent existing SRCA case law'.[10]

Policy responsibility and future reform

3.10      The Minister described the changes as 'a foundational step towards broader reform being undertaken by [DVA] to significantly improve services for veterans and their families by re-engineering DVA business processes'. He stated '[t]o enable this veteran-centric reform to occur, it is essential that policy responsibility for relevant legislation sits with the Minister for Veterans' Affairs'.[11]

3.11      Similarly, DVA stated the DRCA was being created by the bill to 'enable the Minister for Veterans' Affairs to solely administer all legislation relating to veterans' entitlements [allowing] the recognition of the unique nature of military service that may not be appropriate for civilians under the SRCA'.[12] Ms Spiers stated:

[T]he benefit of this is that once the minister has policy control of the three compensation pieces of legislation— because SRCA will no longer apply; it will be DRCA, VEA and MRCA in the new regime—that will give him opportunities to start examining streamlining, simplification and alignment of legislation.[13]

3.12      Some witnesses at the public hearing expressed anxiety regarding the transparency and direction of future legislative reform the bill was intended to facilitate. For example, Mr Thornton questioned why proposed measures to harmonise arrangements were not available for consideration simultaneously with the bill.[14] Colonel David Jamison from the Alliance of Defence Service Organisations (ADSO) stated:

When you have three distinct acts, all with their own little wrinkles and components, it is only natural that the department will try to harmonise its processes and the provisions made to veterans...There is great potential—more than great potential, and I believe it will probably happen—that in the harmonisation of the provisions of support available to veterans, the lowest common denominator will become the standard.[15]

3.13      In its submission DVA indicated that '[t]here will be appropriate consultation with the veteran and Defence communities on any areas of potential alignment between the DRCA and the MRCA'.[16] It confirmed that '[t]here has been no formal discussion about changes that might be made to the DRCA after commencement'.[17] At the public hearing, DVA officials outlined that departmental consideration of 'harmonisation, streamlining and simplification' options if the bill was passed was still embryonic. Ms Spiers commented:

We have put together some ideas. They are obviously not conclusive, but the first step in any potential changes to legislation is to look at the range of issues that could be covered off—issues of cost and equity...Because we cannot have one act, what we are aiming to do is, where appropriate and possible, to look at options of streamlining and alignment. So it really is early days.[18]

Policy changes

3.14      DVA described preserving the current entitlements for veterans as 'the first priority of the Bill'. It stated that '[w]here there are changes to definitions or amendments to clauses, these have been done to eliminate any doubt as to whom the Bill applies or clarify the means by which the Bill operates'.[19] DVA stated that the 'DRCA will be a replica of the SRCA as exists at the point in time at which the DRCA provisions commence, which is expected to be 1 July 2017'. This is affirmed by the EM which indicated the bill is 'expected to have no financial impact'.

3.15      However, the Office of Parliamentary Counsel (OPC) noted that '[t]here are amendments in Schedule 1 that cannot be described as merely consequential and that change the policy in the SRCA'. These included:

• item 23 which applies to ailments or aggravations of ailments that are contributed to, to a significant (rather than material) degree, by a Defence Force member's employment;
• item 48 which repeals two functions of the Military Rehabilitation and Compensation Commission (MRCC) (the function requiring the MRCC to maintain contact with the Safety, Rehabilitation and Compensation Commission (the SRCC) and incidental functions;
• item 49 which removes the prohibition on MRCC taking action in a court or tribunal if Comcare or the SRCC has required that MRCC not take the action;
• item 50 which removes the power of Comcare to make an approved guide under section 28 and gives that power to the MRCC; and
• item 53 which removes the requirement for the MRCC or the Chief of the Defence Force to consult Comcare before nominating a person to provide a rehabilitation program for an employee.[20]

3.16      The ASDO outlined that it has been 'assured by the Government and DVA that the Bill contains no changes which will operate to degrade or de minimis the current beneficial entitlements available under the [SRCA]'. However, despite this assurance it was alert to the possibility that 'even with the best intentions, there could be a gradual eroding of levels of support as DVA seeks to "harmonise" the benefits provided by the three separate rehabilitation schemes (VEA; MRCA and DRCA) and introduce more efficient departmental processes'. ADSO stated that '[t]here is already one specific example where this appears to be the case with the provision of aids for hearing impaired veterans.[21]

3.17      Mr Briggs noted that section 89B in the SRCA would not be replicated under the DRCA. This section deals with the functions of the Safety, Rehabilitation and Compensation Commission (SRCC). In particular it provides that one of the functions of the SRCC is 'to ensure that, as far as practicable, there is equity of outcomes resulting from administrative practices and procedures used by Comcare and a licensee in the performance of their respective functions'.

3.18      DVA told the committee that the section has not been duplicated into the new version of the DRCA, because it is a specific function of the Safety, Rehabilitation and Compensation Commission. Ms Spiers from DVA noted that 'the reason why we are looking at excising the military from SRCA is that we did not actually want the then Comcare bill that was being proposed to apply to the military'. She noted the Military Rehabilitation and Compensation Commission (MRCC) is to be responsible for the administration purely of the DRCA.[22]

3.19      On notice, DVA stated that there would be no impact on claimants under the DRCA as a consequence of the repeal of the section:

The requirements set out in paragraph 89B(a) of the SRCA which were imposed on the MRCC by way of the reference to that provision in subsection 142(5) were in effect the same requirements for the MRCC that are set out in paragraph 142(2)(a) of the DRCA which requires the MRCC: 'to be guided by equity, good conscience and the substantial merits of the case'.[23]

3.20      Mr Briggs foresaw a number of negative policy changes in the future arising from the DRCA. In particular:

[T]he Military Rehabilitation and Compensation Commission, were previously constrained by Comcare, with SRCA being governed by that body. MRCC will, therefore, now reign supreme and can make policy decisions—amend, revoke and introduce whatever it sees fit to do...[T]his absolute control will result in a new permanent-impairment guide for DRCA members, more in line with the GARP M guide as opposed to the more beneficial Comcare guide for claims lodged after 28 February 2006.

3.21      Mr Briggs argued that there were advantages for veterans with Comcare controlling administration of the SRCA:

Comcare is a larger scheme. It has far more employees. It also has these checks and balances over MRCC. Those checks and balances make sure that equity of decisions occurs. It has far more employees on its books; there are far more court cases decided. The Comcare guide part 2 is better for the military. Comcare having control is a way of keeping MRCC fettered.[24]

Henry VIII clause

3.22      Item 45 of Schedule 1 creates a new section 121B that gives the regulations the power to modify the Act to ensure that no person (except the Commonwealth) is disadvantaged by the enactment of DRCA. Commonly known as a Henry VIII clause, this refers to a provision in legislation which gives the power for regulations to be made which amend, repeal or are inconsistent with the primary legislation. Henry VIII clauses are frequently considered controversial as they allow the executive government the power to make regulations which can modify the application of legislation without sufficient parliamentary oversight.

3.23      The EM provides:

The regulations to be made under new section 121B may require a retrospective application and are intended to operate in a purely beneficial way to deal with any anomalies that may arise where there is a retrospective application of the [DRCA] which will need to refer to the earlier version of the [SRCA] that applied at the time for which eligibility is being determined.

That limitation is expressed in subsection 121B(2). The Minister must seek only to make the regulations to protect the entitlements of those covered by the [DRCA] and to ensure that 'no person is disadvantaged by the enactment of this Act'. This clause is expressly for the benefit of those persons covered by the [DRCA] and is not to be read to provide any advantage to the Commonwealth.

The inclusion of this provision provides the flexibility required to deal with any disadvantage that may otherwise occur to a Defence Force member in the application (for the purposes of the [DRCA]) of an earlier version of the [SRCA] and any application, saving or transitional provisions which were applicable to that earlier version of the [SRCA].[25]

3.24      DVA stated that the Henry VIII clause will 'provide the Minister for Veterans' Affairs with the ability to ensure that individual clients are not disadvantaged by the enactment of the DRCA in the application (for the purposes of the DRCA) of an earlier version of the SRCA and any application, saving or transitional provisions which were applicable to that earlier version of the SRCA'.[26] Ms Spiers noted:

[F]rom day one after royal assent to DRCA it would be business as usual for any clients that have SRCA coverage. They would then have DRCA coverage. And if by virtue of looking at any aspects of that administration there is an adverse impact on an individual, or a cohort or all of them then that is when the minister would be advised to exercise the Henry VIII clause to correct whatever that adverse impact is.[27]

3.25      DVA explained that 'in applying the DRCA to a claim for compensation, it is the version of the SRCA, and any relevant legislative instrument, that applied at the time of the injury which is used in determining liability for compensation':

Since its introduction, the SRCA has been amended by 68 Acts with 33 having made amendments which would have impacted upon ADF members. Included in some of those amending Acts were application, transitional and saving provisions which will also continue to be applicable for the purposes of the DRCA.

In recognition of the complexity of retrospectively administering an Act with so many iterations, the Australian Government Solicitor (AGS) advised that the inclusion of a "Henry VIII clause" would provide a remedy for any adverse consequences that may arise from the unique manner in which the DRCA was enacted.

AGS recommended that regulations to modify the operation of the DRCA could only be made under the clause "if the Minister certified to the Governor-General that he or she is satisfied that such a modification is necessary or desirable to ensure the re-enactment of the DRC Act does not place any person other than the Commonwealth at a disadvantage".

The additional benefit of including such a clause is that it would avoid the need to go back to the Parliament for any amendments to the DRCA.[28]

3.26      DVA noted that 'policy changes that require legislation to implement them would be subject to the standard legislative parliamentary process as exists for changes to any other Act'.[29]

3.27      However, Mr Briggs characterised the bill as conferring 'unfettered power onto the Department of Veterans' Affairs and the Military Rehabilitation and Compensation Commission ('MRCC')'. He noted:

In the previous Senate Inquiry into veteran suicide, many submissions noted the defective administrative process in claiming entitlements. I do not consider that allowing the DVA to have complete and total control of military compensation to be a wise move. Medical claims have been challenged by the DVA in many cases, and with the monopoly the Department has over veterans' health this creates a power imbalance

3.28      Further, Mr Briggs observed that '[i]f the DRCA is meant to be a simple duplication of the SRCA it begs the question as to why this specific clause, which is not present in the SRCA, was inserted into this Bill':

This clause...is a substantive alteration to existing law. The granting of legislative power to the Minister to modify the operation of the Act is an unacceptable instance of unrestrained power being placed in the hands of a single department or individual.[30]

3.29      Some witnesses told the committee they had mixed views on the Henry VIII clause. While the intention to assist veterans who are disadvantaged by legislative changes was supported, there continued to be misgivings regarding the broad power granted to the Minister and the potential lessening of parliamentary oversight.[31] For example, Colonel Jamison stated:

We agree this provision has been included to potentially benefit veterans, but it is a double-edged sword and has the distinct potential to allow regulations that have the opposite effect. Bearing this in mind, there is also a distinct lack of checks and balances in this aspect of the act, as parliament will not have oversight of these regulations.[32]

3.30      DVA officers at the public hearing noted that the regulation under proposed new section 121B would be 'disallowable and must be brought before both houses of parliament and sit for 15 sitting days of parliament before they come into operation'. Ms Spiers from DVA believed this was 'more than adequate time' for any discussion about the effect of the regulations.[33]

3.31      The appropriateness of Henry VIII provisions in proposed legislation is often the focus of the Senate Standing Committee for Scrutiny of Bills (Scrutiny Committee). The Scrutiny Committee has a number of roles in assessing proposed legislation including whether bills contain any inappropriate delegation of legislative powers and whether the exercise of legislative powers is subject to sufficient parliamentary scrutiny.[34] On 23 November 2016, the Scrutiny Committee stated that it had no comment on the bill.[35]

Complexity of current arrangements

3.32      The complexity of the current veteran compensation and rehabilitation arrangements was highlighted by a number of submitters and witnesses. Several pointed to the content of submissions received by the committee's inquiry into suicide by veterans and ex-service personnel. For example, Ms Andrea Josephs considered that another piece of legislation will 'only complicate and confuse an already difficult system to navigate'. She highlighted the challenges for veterans and delegates to apply the impacts of these multi-faceted legislative Acts and the difficulty involved in payments to veterans. Ms Josephs commented:

Human Services does not have the same system as DVA or [Commonwealth Superannuation Corporation] and they struggle to understand where to allot the various different payments to their own system in Centrelink and you can on any given day ring to discuss your payments and the Centrelink Officers have no idea what a Veteran is talking about as their system does not reflect the same definitions of Military Payments.[36]

3.33      Mr Peter Thornton asked the committee to appreciate 'the considerable mishmash of complex parameters and interleaving of periods of eligibility (or not) that Veterans, ESOs and the DVA have had to contend with over time in the framing, assessing and satisfying of compensation claims under any number of schemes'. He emphasised 'the proposed DRCA does nothing to reduce this complexity or introduce beneficial legislation'.[37] He proposed two measures to address these issues:

1. Amend SRCA/DRCA and VEA legislation so as to extend dual eligibility, as was originally intended from 1973, to the effective date of MRCA, that being 1 July 2004...
2. Provide immediate and reciprocal eligibility rights (without application of the veteran or their representative(s)) to SRCA/DRCA/VEA gold card holders under the VEA and the equivalent threshold classification under the current SRCA.[38]

3.34      Mr Thornton considered that a reduction in complexity would be 'a very positive outcome'. He observed that the current arrangements also impose a burden on the DVA staff responsible for assessing claims:

They have to sit there and try and pinpoint whether the fellow is eligible under that, whether that date is consistent. Then they have to work out whether it is operational service, peacetime service or hazardous service. I can go on and on and on, but the reality is that the whole thing has just become so complex, and it is overlaid with significant changes.[39]

3.35      Commenting more broadly, the ADSO noted that '[t]he complexity of the military rehabilitation and compensation structure is such that the [ADSO] will continue to advocate vigorously for the creation of a single purpose veteran-specific legislation for veterans and families to eliminate the current complexity and the inherent adversarial processes that are deeply ingrained in the VEA 1986 and MRCA 2004'.[40]

3.36      The Department of Defence also described the current legislative arrangements for rehabilitation and compensation for current and former ADF members as 'complex'. It stated:

Coverage is provided under three separate acts and the administration of these acts is split between two ministerial portfolios which adds complexity and complicates efforts to reform the way in which care and support is accessed and delivered.

Creating a standalone version of the [SRCA] for Australian Defence Force members, and the [DRCA] is seen as a positive step in reducing this complexity...[41]

3.37      In particular, it noted that reducing complexity would 'allow the Minister to pursue future amendments aimed at bringing the [DRCA] into closer alignment with the [MRCA], reducing complexity in the legislation itself and in the way the Acts are administered'.[42]

Consultation issues

3.38      In his second reading speech, Minister Tehan highlighted that the development of a standalone SRCA for ADF members and veterans 'was announced by government nearly two years ago, during which time DVA has been consulting with Defence and ex-service representatives (both of which have been supportive of a standalone act)'.[43]

3.39      DVA outlined its consultation processes regarding the change to a 'standalone act' including with the ex-service organisation round table (ESORT). DVA officials conducted briefings on 24 March 2015 and 12 May 2015 with ESORT members and an information sheet concerning the planned excision of Part IX of the SRCA was provided.[44] However, the federal election caused an interruption to consultations and led to a change in the legislative proposals.

3.40      Proposed changes were also discussed in an article in Vetaffairs, a DVA publication for veterans mentioned the creation of the standalone act.[45] There was also a series of meetings after the bill was introduced on 10 November 2016, 24 November 2016, 2 December 2016, and 3 March 2017. However, DVA officials conceded that ESORT members did not have access to the provisions of the bill until 9 November 2016, the day it was introduced into the Parliament.[46]

3.41      Ms Pat McCabe, President of the TPI Federation and a member of ESORT, considered that the bill was not really brought to ESORT's notice as being a piece of legislation that was due to be passed'.[47] Representatives from the ADSO highlighted the lack of resources available to ex-service organisations to assess and analyse proposed legislation. Colonel David Jamison (Rtd) observed:

DFWA and its partners are voluntary associations dependent on contributions from members and donations from the general public. As such, we have limited access to personnel and financial resources and are no match for the considerable expertise and taxpayer funds available to government departments and instrumentalities...In relation to DRCA, this situation has impacted the way we have approached this bill.

3.42      The HBVSC also suggested the transparency of consultation processes was inadequate, noting that the minutes of the ESORT meetings are confidential and not distributed.[48]

3.43      Mr Briggs observed that lawyers representing claimants were generally unrepresented in DVA consultation processes on legislative changes. He observed that he had 'lost faith' in the consultation process.[49] Mr Briggs argued that 'restricting of consultation to organisations that are higher up in the chain of command such as ESORT and Defence does not paint a holistic picture of the effects of these reforms [and] excludes the opinions of those who are at the heart of the system and those who will be most deeply affected'. Further:

Consultation would normally [include] some involvement in the process where you have the ability to influence the decision or the outcome. In this instance, consultation says, 'We've already drafted this legislation.' And they go to some of these ex-service organisations. They are volunteers; they are not lawyers. They are not trained to take legislation apart. They just sit back and accept what the minister says in the explanatory memorandum. But when you start delving in and peeling off the layers of the onion, all of a sudden you are in tears.[50]

3.44      Mr Briggs also questioned the pace of the bill's development:

This apparent urgency surrounding the enactment of the DRCA appears ill advised and erring on the side of recklessness. There is little reason for legislation such as the DRCA to be of an urgent nature. On the contrary, due to its far reaching effects and the nature of the communities affected by its enactment, any attempts at varying legislation dealing with military compensation and the operation of the scheme should be approached with caution and care. Furthermore, such changes should only be made subsequent to comprehensive consultations with the Defence community and advocates.[51]

3.45      DVA officers told the committee they had viewed the bill as a 'non-controversial piece of legislation' and indicated they did 'not expect to see the level of concern and anxiety' in the veteran community. However, DVA acknowledged that 'people have some uncertainty' and committed to examine 'what further consultation [DVA] need to have with the veteran community to assure them'.[52]

3.46      In terms of future consultation on the changes, DVA stated that the 'transition to the DRCA will be accompanied by the provision of information to all of the various parties which may be impacted by the change'. In particular, the veteran community would be provided with information about the process to inform DVA of any areas where it is considered that the application of DRCA operates to the detriment of the claimant in comparison to the operation of SRCA prior to the commencement of DRCA. Further, information on the transition to the DRCA will also be provided to DVA staff, with a focus on claims, frontline and phone staff. The representatives of ex-service organisations and advocates will be able to raise any concerns about the application of the DRCA with DVA staff.[53]

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