EXPLANATORY STATEMENT
Safety, Rehabilitation and Compensation (Defence-related Claims) (Weekly Interest on the Lump Sum) Notice 2018 (Instrument 2018 No. M63)
EMPOWERING PROVISION
Subsection 21(5) of the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (the DRCA).
PURPOSE
The attached instrument (Instrument 2018 No M63) specifies the rate which is used for the purposes of the definition of “weekly interest on the lump sum” in the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988(the SRCA).
Subsection 21(5) of the DRCA allows the Minister to specify the rate that applies for a period of 12 months commencing on 1 July in any year, for the purposes of the definition of “weekly interest on the lump sum” in subsection 21(3) and subsection 21A(3).
Section 21 of the DRCA applies when the injured Australian Defence Force (ADF) member has received a lump sum benefit. Section 21A of the DRCA applies when the injured ADF member has received both a lump sum benefit and superannuation pension. In both cases, the weekly amount of the incapacity benefit is reduced by the weekly interest on the lump sum.
The weekly interest amount is calculated by multiplying the value of the lump sum benefit by the interest rate specified by the Minister, by this instrument, and dividing the result by 52.
This instrument specifies the rate of 2.64 per cent as the applicable interest rate for the period 1 July 2018 to 30 June 2019.
This rate has been derived by obtaining the daily 10 year Government Bond rates from the Reserve Bank of Australia, averaging them for the period 1 April 2017 to 31 March 2018 and rounding to two decimal places. Over this period, the average 10 year Government Bond rate has been calculated to be 2.64 per cent.
This is the first such instrument to be made under the DRCA and specifies the same interest rate as is specified under an equivalent instrument to be made for the same period under the SRCA.
The DRCA, which is a re-enacted version of the SRCA, was created by the Safety, Rehabilitation and Compensation Legislation Amendment (Defence Force) Act 2017. The DRCA commenced on 12 October 2017 and is modified to apply to members of the Defence Force and their dependants in relation to rehabilitation, treatment and compensation matters. Prior to 12 October 2017, employees who were members of the ADF were covered by the Safety, Rehabilitation and Compensation Act 1988.
The instrument will commence on 1 July 2018 and will be repealed at the start of 1 July 2019.
CONSULTATION
Section 17 of the Legislation Act 2003 requires the rule-maker to be satisfied that any consultation that is considered appropriate and reasonably practicable to undertake, has been undertaken.
Consultation was undertaken with the Department of Jobs and Small Business to ensure a consistent rate to the rate specified in the instrument administered by that Department under equivalent provisions of the SRCA.
Routine specification of the interest rate to be applied on the (superannuation) lump sum has been determined in accordance with a well-established method, the Government Bond rates, for a number of years. This method of calculating the weekly interest rate has not changed and is well known.
Further consultation was not considered necessary as the proposal is minor in nature and does not have regulatory impacts on businesses, community organisations or individuals.
In these circumstances it is considered that the requirements of section 17 of the Legislation Act 2003 have been met.
RETROSPECTIVITY
None.
DOCUMENTS INCORPORATED-BY-REFERENCE
None.
REGULATORY IMPACT
None.
HUMAN RIGHTS STATEMENT
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
The attached legislative instrument is consistent with human rights, in particular the rights of persons with a disability.
Rights of persons with a disability
The rights of people with a disability are set out in the Convention on the Rights of Persons with Disabilities. Article 26 requires countries to organise and strengthen rehabilitation programs for people with disability, particularly in health, employment, education and social services.
Overview
The purpose of this legislative instrument is to specify the annual rate of weekly interest deemed to accrue on the (superannuation) lump sum of retired ADF members who are in receipt of compensation under the DRCA.
Where a retired injured ADF member has received a lump sum benefit under a superannuation scheme, the weekly amount of the incapacity benefit payable under section 21 or 21A is reduced by the weekly interest on the lump sum.
The instrument specifies a rate of 2.64 per cent per annum for the period 1 July 2018 to 30 June 2019 as the interest on the lump sum.
Conclusion
The attached instrument supports provisions in the Act that are used for calculating compensation for ADF members who are incapacitated for work as a result of injury.
It ensures an equitable amount of weekly compensation is payable to injured ADF members who are also in receipt of a superannuation pension or a lump sum benefit under a superannuation scheme. In this way, it can be said to be compatible with the Rights of Persons with Disabilities.
Accordingly, the attached instrument is considered to be “human rights compatible”.
Minister for Veterans’ Affairs
Rule-Maker
Attachment A
FURTHER EXPLANATION OF PROVISIONS
Section 1
This section provides that the name of the instrument is the Safety, Rehabilitation and Compensation (Defence-related Claims) (Weekly Interest on the Lump Sum) Notice 2018.
Section 2
This section provides that the instrument is to commence on 1 July 2018.
Section 3
This section provides that the instrument is repealed at the start of 1 July 2019.
Section 4
This section sets out the primary legislation that authorises the making of the instrument, namely, subsection 21(5) of the DRCA.
Section 5
This section specifies the rate of interest for the purposes of the definition of weekly interest on the lump sum in subsections 21(3) and 21A(3) of the DRCA. The specified rate is 2.64 per cent per annum.