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 2012 (1)
The purpose of this instrument is to invite the Minister to specify the rate of weekly interest deemed to accrue on superannuation lump sums of retired employees in receipt of compensation. That rate is then used in a legislated formula to calculate the incapacity benefits payable under sections 21 or 21A of the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act).
Section 21 of the SRC Act applies when the injured employee has received a superannuation lump sum benefit. Section 21A of the SRC Act applies when 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 interest on the lump sum’. That weekly interest is calculated by multiplying the value of the superannuation lump sum benefit by the 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 those rates for the period 1 April 2011 to 31 March 2012 and rounding to two decimal places.
The instrument specifies a rate of 4.48% (rounded from 4.48452%) for the period 1 July 2012 to 30 June 2013.
The rate specified for the period 1 July 2011 to 30 June 2012 was 5.35%.
The Legislative Instrument gives effect to an existing mechanism to update an interest rate in accordance with a prescribed statutory formula. As the mechanism has not changed, no consultation was undertaken. Comcare does advise the Department of Veterans’ Affairs of the proposed new rate so the Department is aware of the likely budgetary impact.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
This 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.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
Bill Shorten
Minister for Employment and Workplace Relations
Overview
The Safety, Rehabilitation and Compensation (Weekly Interest on the Lump Sum) Notice 2012 was enacted by the Minister for Employment and Workplace Relations, Bill Shorten, to address the need for a specified rate of weekly interest on superannuation lump sums for retired employees receiving compensation. This instrument was introduced to update the rate in accordance with a prescribed statutory formula, ensuring it is consistent with the daily 10-year Government Bond rates obtained from the Reserve Bank of Australia. The rate of 4.48% was determined by averaging the rates for the period from 1 April 2011 to 31 March 2012 and rounding to two decimal places. The purpose of this legislative instrument is to facilitate the calculation of incapacity benefits under sections 21 or 21A of the Safety, Rehabilitation and Compensation Act 1988 by reducing the weekly amount by the weekly interest on the lump sum. The instrument is subject to the Legislative Instruments Act 2003, and it does not engage any of the applicable rights or freedoms, thereby maintaining compatibility with human rights as recognised in the Human Rights (Parliamentary Scrutiny) Act 2011.
Scope and Application
The Safety, Rehabilitation and Compensation (Weekly Interest on the Lump Sum) Notice 2012 applies to the calculation of incapacity benefits for injured employees who have received superannuation lump sums, as provided for under sections 21 and 21A of the Safety, Rehabilitation and Compensation Act 1988. The Act pertains to individuals who are retired employees and are receiving compensation, specifically targeting their superannuation lump sum benefits. The instrument's geographic reach is national, given the federal nature of the Act. The Notice specifies a rate of weekly interest to be applied to these lump sums, which influences the formula used to determine the incapacity benefits. This instrument is a legislative tool that updates the interest rate annually, based on the average daily 10-year Government Bond rates over a specified period, and is subject to the Legislative Instruments Act 2003. It does not contain any stated exclusions or exemptions, and its application is consistent across all jurisdictions in Australia. The notice facilitates a mechanism to update the interest rate in line with statutory requirements without necessitating consultation, while ensuring the Department of Veterans' Affairs is informed of the implications for their budgetary considerations.
Key Provisions
The Safety, Rehabilitation and Compensation (Weekly Interest on the Lump Sum) Notice 2012 sets out the mechanism for determining the weekly interest rate on superannuation lump sums for retired employees receiving compensation under the Safety, Rehabilitation and Compensation Act 1988 (SRC Act) (Section 1). This rate is integral in the calculation of incapacity benefits for employees who have received a superannuation lump sum benefit or both a lump sum and pension (Section 21 and Section 21A of the SRC Act). Specifically, the weekly interest on the lump sum is computed by multiplying the lump sum by the specified interest rate and then dividing by 52.
The Notice imposes obligations on the Minister for Employment and Workplace Relations to specify the weekly interest rate for superannuation lump sums (Section 1). This involves obtaining daily 10-year Government Bond rates from the Reserve Bank of Australia for the specified period, averaging these rates, and rounding to two decimal places. For the period 1 July 2012 to 30 June 2013, the Notice specifies a rate of 4.48% (Section 1). The previous rate for the period 1 July 2011 to 30 June 2012 was 5.35%. The Minister must also ensure that the Department of Veterans’ Affairs is informed of the new rate to anticipate its budgetary implications.
Breach of the requirements stipulated in this Notice does not directly result in specific offences, penalties, or civil/criminal consequences as outlined within the Notice itself. However, non-compliance with the SRC Act or any related legislative instruments could lead to penalties under the applicable sections of the Act. It is important to note that the Notice explicitly states its compatibility with human rights, affirming that it does not engage any of the applicable rights or freedoms under the Human Rights (Parliamentary Scrutiny) Act 2011 (Section 6).