EXPLANATORY STATEMENT
Military Rehabilitation and Compensation Act (Section 204A(2) amount) Instrument 2013
EMPOWERING PROVISION
Section 204A(2) of the Military Rehabilitation and Compensation Act 2004 (the Act).
PURPOSE
The attached instrument (2013 No. MRCC 40) sets out the formula for working out the amount of overpayment where a person has previously received a lump sum compensation payment under section 138 of the Act and later chooses to receive Special Rate Disability Pension (SRDP).
An overpayment would occur in these circumstances because the lump sum compensation payment and the SRDP essentially cover the same incapacity of a person and if the person received both types of compensation, he or she would be receiving a double-payment.
Accordingly, the Act deems an amount of the lump sum compensation payment to be an overpayment and provides that the amount is to be worked out in accordance with a legislative instrument. The attached legislative instrument contains the formula for working out the amount of overpayment.
Essentially the instrument reduces the lump sum compensation payment to a daily amount and provides that the lump sum compensation payment paid to a person for the period before SRDP is paid is to be deducted from the overall lump sum compensation payment and the amount remaining is the overpayment.
BACKGROUND
The attached instrument gives effect to the Government decision in response to the Review of Military Compensation Arrangements to expand the eligibility criteria for SRDP.
The Government agreed that a person who otherwise meets the eligibility criteria of subsection 199(1) of the Act (eligibility to choose to receive SRDP instead of weekly compensation under Division 2, Part 4 of the Act), but who is not receiving weekly compensation under Division 2, Part 4, because the person converted their weekly payment to a lump sum compensation payment under section 138 of the Act, or whose weekly compensation payment is reduced under section 126 of the Act to nil due to receipt of Commonwealth superannuation, should be eligible for SRDP.
As the potential for an overpayment would arise where the person has previously received a lump sum compensation payment under section 138 of the Act, subsection 204A(2) of the Act provides a means for working out the amount of overpayment, namely as set out in a legislative instrument. The attached legislative instrument sets out the manner in which an overpayment is to be worked out.
CONSULTATION
Yes. The Steering Committee for the Review of Military Compensation Arrangements consulted the Veteran and Defence Community. Consultation was via Australian Defence Force base public meetings, a dedicated WebPage, Ex Service Organisations working party meetings and correspondence.
DOCUMENTS INCORPORATED-BY-REFERENCE
No.
HUMAN RIGHTS STATEMENT
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
The instrument does engage an applicable right or freedom. It relates to the right to social security in article 9 of the International Covenant on Economic, Social and Cultural Rights. The right to social security requires, among other things, the right to a minimum essential level of benefits for all individuals and families that will enable them to acquire at least essential health care, basic shelter and housing, water and sanitation, foodstuffs, and the most basic forms of education.
The instrument is part of the process under the Act that ensures a person does not receive double and unintended compensation for the same incapacity. Essentially the process negatives a previous benefit where a person chooses to receive a different benefit but one covering the same incapacity of the person as was covered by the previous benefit. Generally speaking the previous benefit is deemed to be an overpayment and is recoverable from the beneficiary – usually as a deduction from the new benefit.
The UN Committee on Economic Social and Cultural Rights has stated that qualifying conditions for benefits must be reasonable, proportionate and transparent.
It is considered that the process whereby a person essentially exchanges one benefit for another is reasonable because it prevents a double payment thereby protecting the public revenue. Further, the process is careful to ensure that only the part of the previous benefit that “doubles up” with the new benefit is recoverable as an overpayment. That part of the previous benefit that was paid before the doubling up with the new benefit is not affected by the relevant process.
CONCLUSION
The instrument is compatible with the right to social security because the process of which it is part affects the right in a reasonable, proportionate and transparent way.
Military Rehabilitation and Compensation Commission
Rule-Maker
FURTHER EXPLANATION
Items Explanation
1. sets out the name of the instrument.
2. provides that the instrument commences on 1 July 2013.
Schedule
The Schedule sets out the manner in which the amount (overpayment) is to be worked out for the purposes of section 204A(2) of the Act.