EXPLANATORY STATEMENT
Military Rehabilitation and Compensation (Small Amounts of Compensation—Definition of Specified Number) Instrument 2026
EMPOWERING PROVISION
The Military Rehabilitation and Compensation Commission (the Commission) makes this instrument under subsection 138(3) of the Military Rehabilitation and Compensation Act 2004 (the Act).
PURPOSE
This instrument replaces the Military Rehabilitation and Compensation (Specification in Relation to Definition of Specified Number) Instrument 2015 (the 2015 instrument) due to its upcoming expiry. On 1 April 2026, the 2015 instrument will “sunset” (expire) unless re-made.
OVERVIEW
The Department of Veterans’ Affairs (DVA) has reviewed the 2015 instrument and found it is still required. Accordingly, the 2015 instrument has been re-made and the instrument is the same in substance as the 2015 instrument it replaces.
Section 138 of the Act provides for the conversion of small amounts of weekly incapacity payments into a lump sum payment. Under the Act, if a person is receiving incapacity payments less than an indexed ceiling amount, has another form of income (work or superannuation) and the degree of their incapacity is unlikely to change, the person may choose to receive this lump sum instead of weekly payments.
The intention of this provision is to reduce the cost to the Commonwealth of administering incapacity payments and to provide a person with the benefit of access to a lump sum rather than a relatively small weekly benefit.
The lump sum amount is calculated using the formula contained in subsection 138(3) of the Act. This formula is the same that is used under section 30 of the Safety, Rehabilitation and Compensation Act 1988 (the SRCA) and uses a specified number in the calculation. The specified number means the number specified in writing by the Commission.
BACKGROUND
When the Act was introduced into the Parliament, the original policy settings for application of this formula utilised a Consumer Price Index indexation factor called the “specified number”, being 0.03 (or 3%). This approximates the amount of interest that could be earned on a lump sum, to account for the interest that may be reasonably accrued.
The “specified number” replicated the same number defined in the instrument authorised under section 30 of the SRCA (which operates in much the same way as section 138 of the MRCA).
EXPLANATION OF PROVISIONS
Section 1 states the name of the instrument: The Military Rehabilitation and Compensation (Small Amounts of Compensation—Definition of Specified Number) Instrument 2026.
Section 2 provides that the instrument commences on the day after it is registered.
Section 3 sets out the authority for the Commission to make the instrument, namely subsection 138(3) of the Act.
Section 4 provides that the 2015 instrument is repealed.
Section 5 sets out the definitions used in the instrument.
Section 6 provides that the definition of “specified number” in subsection 138(3) of the Act is 0.03.
Consultation
In making the instrument under the Act, no specific consultation has been undertaken with veteran stakeholders. This is because DVA has maintained alignment with the 2015 instrument and not changed the specified number in the instrument it replaces. As there are no changes to the policy enabled by the instrument under the Act, there are also no changes to outcomes for those entitled to benefits under the Act that might otherwise be required to be communicated more broadly. Consultation with veteran stakeholders was also considered unnecessary due to the technical nature of the policy enabled by the instrument i.e. a specified number used in a formula in the Act, to calculate a lump sum amount.
DVA did however consult with the Department of Employment and Workplace Relations (DEWR) to determine whether changes were being considered in relation to the instrument authorised under section 30 of the SRCA; the Safety, Rehabilitation and Compensation (Specified Number for Redemption of Compensation) Instrument 2019. As no changes were indicated, and to ensure serving and ex-serving members of the ADF entitled to incapacity payments are assessed in similar terms as civilian employees receiving incapacity payments under the SRCA, DVA also determined no changes were needed for the new instrument under the Act.
Documents incorporated by reference
There are no documents incorporated by reference.
Human rights implications
This instrument is compatible with the human rights and freedoms recognised or declared under section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. A full statement of compatibility is set out in Attachment A.
Making the instrument
The instrument is made by the Military Rehabilitation and Compensation Commission.
Approved by
Military Rehabilitation and Compensation Commission
Rule-maker
Attachment A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Military Rehabilitation and Compensation (Small Amounts of Compensation—Definition of Specified Number) Instrument 2026
This Disallowable Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (the recognised rights).
Overview of the Disallowable Legislative Instrument
The Military Rehabilitation and Compensation (Small Amounts of Compensation—Definition of Specified Number) Instrument 2026 (the Instrument) replaces the Military Rehabilitation and Compensation (Specification in Relation to Definition of Specified Number) Instrument 2015 (the 2015 instrument) for the purposes of the definition of “specified number” in subsection 138(3) of the Military Rehabilitation and Compensation Act 2004 due to the 2015 instrument sunsetting (expiring) on 1 April 2026.
Human rights implications
This Instrument does not engage an applicable right or freedom. It merely supplies a component (i.e. a specified number) in a process to calculate a lump sum.
Conclusion
This Instrument does not engage a human right.
Military Rehabilitation and Compensation Commission
Rule-Maker