EXPLANATORY STATEMENT
Safety, Rehabilitation and Compensation Act 1988
Issued by the Minister for Employment and Workplace Relations
Notice of a Disallowable Instrument
Safety, Rehabilitation and Compensation
(Weekly Interest on the Lump Sum) Notice 2009
The purpose of the instrument to which this Explanatory Statement relates, is to specify the rate of weekly interest on the lump sum to be used in calculating compensation in respect of incapacity for work resulting from an injury, payable under section 21 or 21A of the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act).
Section 21 of the SRC Act applies where the injured employee has received a superannuation lump sum benefit. Section 21A of the SRC Act applies where the injured employee has received both a superannuation lump sum benefit and superannuation pension. In both cases, the weekly amount of the incapacity benefit is reduced by the weekly value of the superannuation lump sum benefit. That weekly value is calculated by multiplying the value of the superannuation lump sum benefit by the interest rate specified by the Minister and dividing the result by 52.
The instrument is a legislative instrument subject to the Legislative Instruments Act 2003.
This rate is derived by obtaining the daily 10 year Government Bond rates from the Reserve Bank of Australia, averaging them for the period 1 April 2008 to 31 March 2009 and rounding to two decimal places.
The instrument specifies a rate of 5.35% (rounded from 5.354% for the period 1 July 2009 to 30 June 2010.
The rate specified for the period 1 July 2007 to 30 June 2008 was 6.08%.
Overview
The Safety, Rehabilitation and Compensation (Weekly Interest on the Lump Sum) Notice 2009, issued under the Safety, Rehabilitation and Compensation Act 1988, aims to establish the rate of weekly interest on the lump sum used in calculating compensation for incapacity due to work-related injuries. This legislative instrument, governed by the Legislative Instruments Act 2003, responds to the need to provide a consistent and legally defined method for determining the weekly value of superannuation lump sum benefits in compensation calculations. The rate is determined by averaging daily 10-year Government Bond rates from the Reserve Bank of Australia over a specified period and rounding to two decimal places. For the period 1 July 2009 to 30 June 2010, the specified interest rate is 5.35%, derived from the average daily rates from 1 April 2008 to 31 March 2009. This legislative notice ensures clarity and consistency in the application of interest rates to lump sum benefits in workers' compensation claims.
Scope and Application
The Safety, Rehabilitation and Compensation (Weekly Interest on the Lump Sum) Notice 2009, issued under the Safety, Rehabilitation and Compensation Act 1988, specifies the rate of weekly interest applicable to the calculation of compensation for incapacity due to injury. This Act applies to employees who have received a superannuation lump sum benefit and those who have received both a lump sum and a pension, as outlined in sections 21 and 21A of the Act, respectively. The weekly incapacity benefit for these employees is adjusted by deducting the weekly value of their superannuation benefits, which is determined by the interest rate set by the Minister. The rate for the period of 1 July 2009 to 30 June 2010 is set at 5.35%, derived from the average daily 10-year Government Bond rates from the Reserve Bank of Australia for the period 1 April 2008 to 31 March 2009, rounded to two decimal places. This legislative instrument is subject to the Legislative Instruments Act 2003 and serves to provide a transparent and consistent method for calculating the interest applied to superannuation lump sum benefits in compensation claims.
Key Provisions
The Safety, Rehabilitation and Compensation (Weekly Interest on the Lump Sum) Notice 2009 provides the specific rate of weekly interest on a lump sum to be applied when calculating compensation for incapacity due to injury under the Safety, Rehabilitation and Compensation Act 1988 (SRC Act). This rate is used to determine the weekly value of a superannuation lump sum benefit received by an injured employee, which in turn reduces the weekly amount of the incapacity benefit payable under sections 21 and 21A of the SRC Act. To calculate this weekly value, the lump sum benefit value is multiplied by the interest rate specified in the Notice and then divided by 52 (sections 21 and 21A).
This legislative instrument obligates entities and parties governed by the SRC Act to use the specified interest rate when calculating the weekly value of a lump sum benefit in the context of compensation for incapacity resulting from injury. It ensures that the weekly interest rate applied is consistent and based on a reliable financial benchmark, which in this case is the daily 10 year Government Bond rates from the Reserve Bank of Australia. For the period 1 July 2009 to 30 June 2010, the Notice specifies a rate of 5.35%, derived from the average of daily rates from 1 April 2008 to 31 March 2009 and rounded to two decimal places.
Failure to comply with the provisions of the Notice could potentially lead to incorrect calculations of the incapacity benefit, either overstating or understating the amount due. Although the Notice does not explicitly outline penalties for non-compliance, any miscalculation resulting from not adhering to the specified interest rate could be subject to review and correction by the relevant authorities. The implications could include financial discrepancies that may need to be rectified, potentially leading to legal challenges or disputes regarding the accuracy of the compensation provided.