Military Rehabilitation and Compensation (Small Amounts of Compensation—Definition of Specified Number) Instrument 2026

Administered by Department of Veterans' Affairs

Legislation au F2026L00157 In force Legislative Instrument

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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

Overview

The Military Rehabilitation and Compensation (Small Amounts of Compensation—Definition of Specified Number) Instrument 2026 was enacted to address the impending expiry of the 2015 instrument, which was set to "sunset" on 1 April 2026. This instrument, made by the Military Rehabilitation and Compensation Commission under subsection 138(3) of the Military Rehabilitation and Compensation Act 2004, aims to maintain the continuity of the policy that allows for the conversion of small amounts of weekly incapacity payments into a lump sum for eligible recipients. The original policy settings for the application of this formula used a Consumer Price Index indexation factor, specifically 0.03 (or 3%), to approximate the interest that could be earned on a lump sum. This approach aims to reduce administrative costs for the Commonwealth and to provide recipients with a lump sum benefit rather than small weekly payments. The Department of Veterans’ Affairs reviewed the 2015 instrument and determined that it was still required, leading to the re-making of the 2026 instrument, which retains the same substance and specified number as its predecessor.

Scope and Application

The Military Rehabilitation and Compensation (Small Amounts of Compensation—Definition of Specified Number) Instrument 2026 applies to individuals receiving incapacity payments under the Military Rehabilitation and Compensation Act 2004. This legislation is designed to provide compensation to members of the Australian Defence Force (ADF) who are injured or suffer from diseases related to their service. The instrument specifically pertains to the calculation of a lump sum payment for those receiving incapacity payments of less than a certain indexed ceiling amount, which is intended to reduce the administrative cost to the Commonwealth and offer recipients the benefit of a lump sum instead of smaller weekly payments. The instrument is applicable across Australia, as it is a Commonwealth instrument. While it does not exclude any particular groups or entities, it specifically targets those whose circumstances fit the criteria set out in the Act. The instrument does not introduce new exclusions, exemptions, or thresholds beyond those already defined in the Act, but it does provide for the re-making of the definition of the "specified number" used in the lump sum calculation, ensuring continuity with the previous instrument.

Key Provisions

The Military Rehabilitation and Compensation (Small Amounts of Compensation—Definition of Specified Number) Instrument 2026 primarily replaces the 2015 instrument (Sections 1 and 4) to maintain the definition of the "specified number" used in calculating lump sum payments for incapacity under the Military Rehabilitation and Compensation Act 2004. The instrument stipulates that the specified number remains 0.03 (Section 6). The instrument takes effect on the day following its registration (Section 2) and is made under the authority of subsection 138(3) of the Act (Section 3). The Military Rehabilitation and Compensation Commission is obligated to re-make the instrument due to the expiration of the 2015 instrument. This re-making ensures continuity in the application of the specified number, which is crucial for the accurate calculation of lump sum payments for incapacity. The Department of Veterans' Affairs reviewed the necessity of the 2015 instrument and confirmed its continued relevance. Additionally, the Commission must ensure that the instrument aligns with the Safety, Rehabilitation and Compensation Act 1988 to maintain consistency in the treatment of incapacity payments for both military and civilian recipients. The instrument imposes several requirements on the parties involved. Firstly, it mandates that the specified number used in the calculation of lump sum payments for incapacity remains at 0.03. This consistency ensures that the calculations for lump sum payments remain unchanged and that the benefits provided to veterans remain stable. The Commission must ensure the instrument is registered and comes into effect as specified, thereby maintaining legal continuity. Furthermore, the Department of Veterans' Affairs must monitor and review the ongoing relevance of the specified number to adapt to any future policy changes. Breaches of the provisions within this instrument do not explicitly outline specific offences or penalties in the explanatory statement. However, any failure to comply with the requirements set forth by the instrument could potentially lead to incorrect calculations of lump sum payments, which might result in legal disputes or administrative corrections. Although no specific penalties are mentioned, the consequences of non-compliance could include financial discrepancies for recipients or the need for retrospective adjustments, which might require further legislative action or administrative intervention to rectify. The precise legal consequences would depend on the context and the nature of the non-compliance.

Legal classification tags

Area of Law
Military Law
Instrument
Instrument
Concepts
Definitions & Interpretation
Commencement Provisions
Repeal & Amendment
Catchwords
Specified Number

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.