CHAPTER THIRTY
DISABILITY
COMPENSATION:
CURRENT
30
ARRANGEMENTS AND
A NEW STRUCTURE
INTRODUCTION
30.1 Preceding chapters in this Report examine recommendations made in
earlier independent reviews, claims of erosion in benefits and the adequacy of
current disability compensation payments. The Committee has concluded from
its examination of the issues raised in those chapters that a new approach to
disability compensation is necessary.
30.2 This chapter summarises the Committee’s conclusions and proposes a
disability compensation structure based on modern principles of compensation.
The Committee believes that this structure would provide disability
compensation to Australia’s veterans that is comparable to community
standards. At the same time, it would meet the changing needs of disabled
veterans and their families over time and would provide access to an
appropriate scheme of rehabilitation.
SUMMARY OF CURRENT COMPENSATION PROVISIONS
Disability Pension
30.3 Once an injury or disease has been accepted as either war or defence
related under the Veterans’ Entitlements Act 1986 (VEA) the level of incapacity
Review of Veterans’ Entitlements 617
,Volume 3 Chapter 30
and compensation to be paid as disability pension is assessed by the
Repatriation Commission or its delegates. This assessment is made using the
Guide to the Assessment of Rates of Veterans’ Pensions (GARP).
30.4 The GARP sets out a methodology for measuring the extent of
permanent medical impairment and the effects on a veteran’s lifestyle caused by
accepted disabilities. It also provides rules for converting this measurement to a
degree of incapacity, expressed as a percentage of the general rate pension. A
disability pension may be paid at between 10 and 100 per cent of the general
rate.
30.5 Where this degree of incapacity reaches or exceeds 70 per cent, further
tests are applied to determine if the accepted disabilities alone preclude the
veteran from working. A special rate of pension, commonly referred to as the
totally and permanently incapacitated (TPI) pension, may be paid if a veteran is
unable to work more than eight hours per week. If a veteran is unable to work
for more than 20 hours per week, an intermediate rate of pension set between
the general rate and the special rate is paid.
30.6 Rates of disability pensions are indexed twice yearly to reflect
movements in the Consumer Price Index (CPI). Adjustments for CPI result in
pension increases in March and September each year.
Medical Treatment and Health Care
30.7 Medical treatment, health care and rehabilitation associated with
accepted disabilities are provided to a veteran at Commonwealth expense. A
veteran can also receive treatment for malignant neoplasia, pulmonary
tuberculosis and posttraumatic stress disorder, regardless of whether these
conditions are service related. Eligibility provisions extend health care cover at
two levels, either specifically for accepted disabilities, or for all disabilities and
conditions. War widows and orphans can also receive health care for all
conditions at Commonwealth expense.
30.8 If a veteran dies as a result of accepted disabilities, a war widow’s
pension and/or a dependent orphan’s pension may be payable. These pensions
are paid at fixed rates and are not subject to any income or assets test. Once
granted, the war widow’s pension continues for life, while the dependent
orphan’s pension normally ceases at 16 years of age.
Vocational Rehabilitation
30.9 Vocational rehabilitation is provided under the Veterans’ Vocational
Rehabilitation Scheme (VVRS), which was introduced in May 1998. The Scheme
assists veterans, including those about to leave the Australian Defence Force
618 Review of Veterans’ Entitlements
,Volume 3 Current Arrangements and a New Structure
(ADF), to find or continue in suitable paid employment. It provides an income
safety net for veterans, in receipt of pensions under sections 23 or 24 of the VEA,
or the invalidity service pension, who wish to engage in suitable paid
employment. Participation in the scheme is voluntary.
DISABILITY COMPENSATION ISSUES RAISED IN
SUBMISSIONS
30.10 Disability compensation related issues raised in submissions are
detailed in Chapter 26. Among the general themes identified were concerns
about the adequacy of the special rate pension, particularly for those veterans
with families. In many submissions, these concerns were linked with the
perception that the pension’s value had eroded over time because of
inappropriate benchmarking and indexation.
30.11 Other submissions raised concerns about income support pensions
being inappropriately provided to veterans in order to supplement inadequate
disability compensation payments. This supplementation was also identified as
having an impact on veterans with families. Means testing of family income and
subsequent reduction of income support pensions create a substantial
disincentive for the veteran or his partner to work. Another cause of concern
was the reduction in income support received by those veterans who receive
their income support through the social security system.
30.12 A further concern raised in submissions was the limited amount of
compensation available to a veteran’s partner and children. This was claimed to
be particularly evident where a partner is the veteran’s primary carer or suffers
considerable personal disadvantage because of the veteran’s accepted
disabilities.
30.13 Other issues raised were:
• the perceived inadequacy of benefits provided to war widows and the
significant drop in household income when a TPI veteran dies;
• disparity in the levels of compensation received by older veterans in receipt
of the special rate disability pension and those who receive the extreme
disablement adjustment (EDA):
• pharmaceutical benefits co-payments made by veterans; and
• the current level of the funeral benefit.
Review of Veterans’ Entitlements 619
, Volume 3 Chapter 30
EROSION, ADEQUACY AND STRUCTURE OF BENEFITS
Erosion of Benefits
30.14 As indicated in Chapter 29, the Committee found no evidence of
significant erosion in the total compensation available to TPI veterans. The
Committee concluded that a combination of the special rate benefit and
maximum rate service pension is near to, or in some cases above, post-tax Male
Total Average Weekly Earnings (MTAWE), a position maintained over many
years.
Adequacy
30.15 In framing its conclusion on erosion of benefits (see Chapter 29), the
Committee also noted that MTAWE is a generous measure of average earnings
across the Australian workforce. Accordingly, this benchmark could be seen as
representing an adequate income level for average Australians.
30.16 Impressions gained by the Committee during public consultations
suggest that pension adequacy is mainly an issue for veterans with family
responsibilities.
Structure
30.17 The Committee formed the opinion that the inherent inequities of the
VEA disability compensation system arise largely from the use of income
support pensions to supplement compensation payments.
Means Testing
30.18 The Committee agrees that an above general rate disability
compensation structure containing a means-tested income support element is a
significant disincentive for a disabled veteran or partner to work and to
supplement family income. It is desirable, where practicable, that compensation
not be the sole income of a disabled veteran and his family. A veteran who is
receiving compensation for a reduced capacity to work should be encouraged
and supported to earn income within the assessed capability. The veteran’s
partner should also be encouraged to work.
Disability Pension Regarded as Income
30.19 The Committee’s conclusion in Chapter 29, that the current level of total
compensation benefit granted to a special rate veteran is broadly adequate over
a lifetime, was based on that level of benefit being available to a veteran with
qualifying service. However, a veteran without qualifying service receives a
620 Review of Veterans’ Entitlements
DISABILITY
COMPENSATION:
CURRENT
30
ARRANGEMENTS AND
A NEW STRUCTURE
INTRODUCTION
30.1 Preceding chapters in this Report examine recommendations made in
earlier independent reviews, claims of erosion in benefits and the adequacy of
current disability compensation payments. The Committee has concluded from
its examination of the issues raised in those chapters that a new approach to
disability compensation is necessary.
30.2 This chapter summarises the Committee’s conclusions and proposes a
disability compensation structure based on modern principles of compensation.
The Committee believes that this structure would provide disability
compensation to Australia’s veterans that is comparable to community
standards. At the same time, it would meet the changing needs of disabled
veterans and their families over time and would provide access to an
appropriate scheme of rehabilitation.
SUMMARY OF CURRENT COMPENSATION PROVISIONS
Disability Pension
30.3 Once an injury or disease has been accepted as either war or defence
related under the Veterans’ Entitlements Act 1986 (VEA) the level of incapacity
Review of Veterans’ Entitlements 617
,Volume 3 Chapter 30
and compensation to be paid as disability pension is assessed by the
Repatriation Commission or its delegates. This assessment is made using the
Guide to the Assessment of Rates of Veterans’ Pensions (GARP).
30.4 The GARP sets out a methodology for measuring the extent of
permanent medical impairment and the effects on a veteran’s lifestyle caused by
accepted disabilities. It also provides rules for converting this measurement to a
degree of incapacity, expressed as a percentage of the general rate pension. A
disability pension may be paid at between 10 and 100 per cent of the general
rate.
30.5 Where this degree of incapacity reaches or exceeds 70 per cent, further
tests are applied to determine if the accepted disabilities alone preclude the
veteran from working. A special rate of pension, commonly referred to as the
totally and permanently incapacitated (TPI) pension, may be paid if a veteran is
unable to work more than eight hours per week. If a veteran is unable to work
for more than 20 hours per week, an intermediate rate of pension set between
the general rate and the special rate is paid.
30.6 Rates of disability pensions are indexed twice yearly to reflect
movements in the Consumer Price Index (CPI). Adjustments for CPI result in
pension increases in March and September each year.
Medical Treatment and Health Care
30.7 Medical treatment, health care and rehabilitation associated with
accepted disabilities are provided to a veteran at Commonwealth expense. A
veteran can also receive treatment for malignant neoplasia, pulmonary
tuberculosis and posttraumatic stress disorder, regardless of whether these
conditions are service related. Eligibility provisions extend health care cover at
two levels, either specifically for accepted disabilities, or for all disabilities and
conditions. War widows and orphans can also receive health care for all
conditions at Commonwealth expense.
30.8 If a veteran dies as a result of accepted disabilities, a war widow’s
pension and/or a dependent orphan’s pension may be payable. These pensions
are paid at fixed rates and are not subject to any income or assets test. Once
granted, the war widow’s pension continues for life, while the dependent
orphan’s pension normally ceases at 16 years of age.
Vocational Rehabilitation
30.9 Vocational rehabilitation is provided under the Veterans’ Vocational
Rehabilitation Scheme (VVRS), which was introduced in May 1998. The Scheme
assists veterans, including those about to leave the Australian Defence Force
618 Review of Veterans’ Entitlements
,Volume 3 Current Arrangements and a New Structure
(ADF), to find or continue in suitable paid employment. It provides an income
safety net for veterans, in receipt of pensions under sections 23 or 24 of the VEA,
or the invalidity service pension, who wish to engage in suitable paid
employment. Participation in the scheme is voluntary.
DISABILITY COMPENSATION ISSUES RAISED IN
SUBMISSIONS
30.10 Disability compensation related issues raised in submissions are
detailed in Chapter 26. Among the general themes identified were concerns
about the adequacy of the special rate pension, particularly for those veterans
with families. In many submissions, these concerns were linked with the
perception that the pension’s value had eroded over time because of
inappropriate benchmarking and indexation.
30.11 Other submissions raised concerns about income support pensions
being inappropriately provided to veterans in order to supplement inadequate
disability compensation payments. This supplementation was also identified as
having an impact on veterans with families. Means testing of family income and
subsequent reduction of income support pensions create a substantial
disincentive for the veteran or his partner to work. Another cause of concern
was the reduction in income support received by those veterans who receive
their income support through the social security system.
30.12 A further concern raised in submissions was the limited amount of
compensation available to a veteran’s partner and children. This was claimed to
be particularly evident where a partner is the veteran’s primary carer or suffers
considerable personal disadvantage because of the veteran’s accepted
disabilities.
30.13 Other issues raised were:
• the perceived inadequacy of benefits provided to war widows and the
significant drop in household income when a TPI veteran dies;
• disparity in the levels of compensation received by older veterans in receipt
of the special rate disability pension and those who receive the extreme
disablement adjustment (EDA):
• pharmaceutical benefits co-payments made by veterans; and
• the current level of the funeral benefit.
Review of Veterans’ Entitlements 619
, Volume 3 Chapter 30
EROSION, ADEQUACY AND STRUCTURE OF BENEFITS
Erosion of Benefits
30.14 As indicated in Chapter 29, the Committee found no evidence of
significant erosion in the total compensation available to TPI veterans. The
Committee concluded that a combination of the special rate benefit and
maximum rate service pension is near to, or in some cases above, post-tax Male
Total Average Weekly Earnings (MTAWE), a position maintained over many
years.
Adequacy
30.15 In framing its conclusion on erosion of benefits (see Chapter 29), the
Committee also noted that MTAWE is a generous measure of average earnings
across the Australian workforce. Accordingly, this benchmark could be seen as
representing an adequate income level for average Australians.
30.16 Impressions gained by the Committee during public consultations
suggest that pension adequacy is mainly an issue for veterans with family
responsibilities.
Structure
30.17 The Committee formed the opinion that the inherent inequities of the
VEA disability compensation system arise largely from the use of income
support pensions to supplement compensation payments.
Means Testing
30.18 The Committee agrees that an above general rate disability
compensation structure containing a means-tested income support element is a
significant disincentive for a disabled veteran or partner to work and to
supplement family income. It is desirable, where practicable, that compensation
not be the sole income of a disabled veteran and his family. A veteran who is
receiving compensation for a reduced capacity to work should be encouraged
and supported to earn income within the assessed capability. The veteran’s
partner should also be encouraged to work.
Disability Pension Regarded as Income
30.19 The Committee’s conclusion in Chapter 29, that the current level of total
compensation benefit granted to a special rate veteran is broadly adequate over
a lifetime, was based on that level of benefit being available to a veteran with
qualifying service. However, a veteran without qualifying service receives a
620 Review of Veterans’ Entitlements
