EXPLANATORY STATEMENT
Safety, Rehabilitation and Compensation Act 1988
Issued by the Minister for Employment
Safety, Rehabilitation and Compensation
(Weekly Interest on the Lump Sum) Notice 2016
The purpose of this instrument is for the Minister to specify, pursuant to subsection 21(5) of the Safety, Rehabilitation and Compensation Act 1988 (SRC Act), the rate of weekly interest deemed to accrue on the (superannuation) lump sum of retired employees in receipt of compensation. That rate is then used in a statutory formula to calculate the incapacity benefits payable under sections 21 or 21A of the SRC Act. As the rate can only be specified for a 12 month period, a new rate needs to be specified each year.
Section 21 of the SRC Act applies when the injured employee has received a lump sum benefit. Section 21A of the SRC Act applies when the injured employee 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, under subsection 21(5) of the SRC Act, and dividing the result by 52.
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 2015 to 31 March 2016 and rounding to two decimal places. Over this period the average 10 year Government Bond rate has been calculated to be 2.72 per cent.
Therefore the instrument specifies a rate of 2.72 per cent for the period 1 July 2016 to 30 June 2017.
The rate specified for the period 1 July 2015 to 30 June 2016 was 3.26 per cent.
Consultation
This instrument is a legislative instrument for the purposes of the Legislation Act 2003. Consultation was not undertaken in relation to this instrument as required under section 17 of the Legislation Act, 2003. Where consultation has not been undertaken, section 15 of the Legislation Act 2003 requires an explanation of why the consultation was not undertaken. The proposal is minor in nature and does not have regulatory impacts on businesses, community organisations or individuals.
Routine specification of the interest rate to be applied on the (superannuation) lump sum of retired employees 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. Given that this instrument is of a minor nature and does not alter existing arrangements, consultation under section 17 of the Legislation Act 2003 was considered not appropriate and reasonably practicable.
Regulation Impact Statement
The Office of Best Practice Regulation has advised that no Regulatory Impact Statement is required (OBPR ID 20920).
Statement of Compatibility with Human Rights
This instrument is compatible with the human rights and freedoms recognised or declared by the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. A Statement of Compatibility with Human Rights follows.
Overview
The Safety, Rehabilitation and Compensation (Weekly Interest on the Lump Sum) Notice 2016 was enacted to address the need for a consistent and systematic method of calculating the weekly interest on the superannuation lump sum of retired employees receiving compensation under the Safety, Rehabilitation and Compensation Act 1988. This notice was issued by the Minister for Employment, providing a statutory framework for the annual specification of the interest rate applied to lump sum benefits. This approach ensures that incapacity benefits are adjusted appropriately to reflect the earning potential of the lump sum over time. The notice specifies the interest rate for a 12-month period, with the rate for 1 July 2016 to 30 June 2017 set at 2.72 percent, derived from the average 10-year Government Bond rates for the preceding year. The policy objective is to maintain fairness and predictability in the calculation of incapacity benefits for injured employees.
Scope and Application
The Safety, Rehabilitation and Compensation (Weekly Interest on the Lump Sum) Notice 2016 applies to retired employees who have received a lump sum benefit and those who have received both a lump sum benefit and a superannuation pension under the Safety, Rehabilitation and Compensation Act 1988. It pertains specifically to the calculation of incapacity benefits, which are reduced by the weekly interest on the lump sum. The instrument sets a rate of 2.72 per cent for the period 1 July 2016 to 30 June 2017, used in the statutory formula to determine the weekly interest on the lump sum. This rate is derived from the average 10 year Government Bond rates from the Reserve Bank of Australia, ensuring a consistent and established method of calculation. The Notice operates under the Commonwealth jurisdiction and is subject to the provisions of the Legislation Act 2003, indicating its legislative authority and the procedural framework governing its creation.
Key Provisions
The Safety, Rehabilitation and Compensation (Weekly Interest on the Lump Sum) Notice 2016 specifies the rate of weekly interest that accrues on the lump sum of retired employees receiving compensation, as stipulated in section 21(5) of the Safety, Rehabilitation and Compensation Act 1988 (SRC Act). This rate, which is 2.72 per cent for the period from 1 July 2016 to 30 June 2017, is derived from the average daily 10 year Government Bond rates from the Reserve Bank of Australia over the period from 1 April 2015 to 31 March 2016. This rate is integral to calculating the weekly incapacity benefits payable under sections 21 or 21A of the SRC Act, which are reduced by the weekly interest on the lump sum.
The Act imposes specific obligations on parties and entities involved in the compensation process. For instance, section 21 of the SRC Act applies when an injured employee receives a lump sum benefit, and section 21A applies when the employee receives both a lump sum benefit and a superannuation pension. The weekly interest on the lump sum is calculated by multiplying the lump sum's value by the interest rate specified by the Minister and dividing the result by 52. This calculation is essential in determining the weekly incapacity benefits that the injured employee is entitled to receive.
There are no specific offences, penalties, or civil/criminal consequences mentioned in the Notice for the breach of the interest rate specifications. However, non-compliance with the statutory requirements for calculating incapacity benefits could potentially lead to disputes or legal challenges regarding the accuracy of the benefits paid, which could result in litigation. The Notice itself does not specify penalties but relies on the broader provisions of the SRC Act to address any compliance issues.