Appendix 2 - Historical overview | Specialist Medical Review Council

Historical overview

This ‘Historical Overview’, sets out the background to the current military compensation arrangements as part of a review of the 2004 Military Rehabilitation and Compensation Act undertaken in 2009, which followed concerns expressed by the veteran and ex-service community. A 6 member Steering Committee composed of high level senior officials handed down its findings in a 2011 report entitled Review of Military Compensation Arrangements. This extract is chapter 2 of that report11.

Chapter summary

The Committee examined the evolution of military compensation arrangements in Australia. Since the First World War, successive governments have made it a high priority to provide compensation and related support to veterans and their dependants. Military compensation arrangements have evolved since that time in response to changing situations and a number of reviews. During the 1980s and early 1990s, significant changes were made in the standard of proof, pension eligibility, and compensation arrangements for peacetime service.

Legislation has included the Australian Soldiers' Repatriation Act 1920 (later renamed the Repatriation Act 1920), Veterans’ Entitlements Act 1986 (VEA), Safety, Rehabilitation and Compensation Act 1988 (SRCA), Military Compensation Act 1994, and the current Military Rehabilitation and Compensation Act 2004 (MRCA). The MRCA covers defence service on or after 1 July 2004; the SRCA and VEA cover service before 1 July 2004. The MRCA is the first compensation legislation designed to cover the whole spectrum of military service, and it came into operation following an extensive examination of military compensation arrangements.

The current Review of Military Compensation Arrangements is the latest in a long line of reviews, inquiries and analyses of the compensation arrangements applying to military personnel and their dependants. Such attention demonstrates the sensitive and complex nature of this legislation and the importance given to it by governments.

Introduction

2.1 This chapter sets out some of the historical background to current military compensation arrangements. In what follows, the term ‘military compensation arrangements’ is used in a generic sense, covering the Australian Soldiers' Repatriation Act 1920 (later renamed the Repatriation Act 1920) and subsidiary legislation; its successor, the Veterans’ Entitlements Act 1986 (VEA); the Military Rehabilitation and Compensation Act 2004 (MRCA); and Commonwealth workers’ compensation legislation as and when applied to military personnel (e.g. the Safety, Rehabilitation and Compensation Act 1988 (SRCA) and its antecedent legislation).

Background to the repatriation system

2.2 Since 1914, Australian governments of all political persuasions have made it a high priority to provide compensation and related support to veterans and their dependants. The casualties and widespread social effects of the First World War made this an imperative for Australian governments. The repatriation system, as it was known, became both an important Australian institution and a key public policy issue.

2.3 Large-scale mobilisation in the Second World War led to significant growth of the repatriation system. The system remained in place throughout Australia’s military involvement in Korea, Borneo, Malaya, and Vietnam. In a modified form, it played a role in operations in the First Gulf War, East Timor and the early stages of the Iraq and Afghanistan conflicts.

2.4 Veterans have a special status in Australian society. The compensatory benefits provided to veterans (or their dependants) can be seen as an expression of gratitude by the government of the day, and through it the nation, for their war service.

Legacy of the repatriation system

2.5 The more beneficial aspects of military compensation arrangements have evolved gradually over a long period of time. They have been influenced by a generally sympathetic approach taken by governments and courts to the repatriation system.

2.6 The Repatriation Act 1920 was repealed in 1986, and its successor, the VEA, ceased for the purposes of compensation from 1 July 2004. A number of the policies and processes from the original repatriation system can still be identified in military compensation arrangements today. For example, warlike and non-warlike service (‘operational service’) have the more beneficial standard of proof applied in the assessment of Commonwealth liability; and elements of the Special Rate of pension under the VEA continue in the form of a safety net payment, and are complemented by an increased focus on rehabilitation.

Beyond reasonable doubt standard of proof

2.7 The beyond reasonable doubt standard of proof that applies to operational service is unique to military compensation. It has evolved in the specific context of veterans’ law. As far back as 1929, the Australian Soldiers’ Repatriation Act 1920 was amended to ensure that when veterans made a prima facie case of causation or aggravation due to war service, the onus of proof (that it was not caused by war service) lay with the determining authority, the Repatriation Commission.

2.8 In 1943, the legislation was further amended to lessen the burden on veterans to establish a prima facie case of causation. Veterans were given the benefit of any doubt in relation to the existence of any fact that would be favourable to them, or any question that arose for decision, and it was not necessary for them to furnish proof.

2.9 In 1977, the concept of the standard of proof ‘beyond reasonable doubt’, derived from the standard of proof used in criminal law, was introduced for the first time. This required the determining authority to allow the claim ‘unless it is satisfied, beyond reasonable doubt, that there are insufficient grounds for granting the claim or application or allowing the appeal’. This was intended to ensure that the benefit of any doubt be given to veterans.

2.10 However, in 1981, the High Court found that the beyond reasonable doubt standard meant the same in repatriation law as it did in criminal law.12 The reverse of the criminal standard of proof was to be applied.

2.11 In 1985, the High Court went further, finding that a mere possibility was enough for a claim to succeed unless the Repatriation Commission could be satisfied beyond reasonable doubt that the condition was not related to service.13 Even if there was no evidence, or the evidence was neutral, the claim must succeed.

Reasonable hypothesis

2.12 In response to these High Court decisions, the Australian Government amended the legislation. This provided that a claim should not be accepted unless the material raised a reasonable hypothesis connecting the injury, disease or death to the veteran’s service.

2.13 In 1992 and 1993, the High Court ruled on the meaning of the term ‘reasonable hypothesis’.14 The consequence of these decisions was that the view of a single responsible medical practitioner acting within his or her area of expertise (or a single expert eminent in the field) who supported a claim automatically satisfied the reasonable hypothesis standard of proof.

2.14 Before the High Court decisions of the early to mid 1980s, claims for smoking-related conditions were generally not accepted. But those decisions, along with developments in medical research, led to smoking being linked to a wide range of medical conditions. It became less a matter of establishing the link between smoking and the condition claimed, and more a question of whether or not the commencement of, or increase in, smoking could be connected to service. Given that many of these conditions were directly or closely associated with the cause of death of many veterans, the number of successful claims for the war widow(er)’s pension also increased.

Statements of Principles

2.15 Following the High Court decisions of the early 1990s, the Australian Government established a review led by Professor Peter Baume to examine the repatriation compensation system. The Baume Review reported in March 1994, recommending that:

there should be a single standard of proof — the civil standard of balance of probabilities — for both operational and peacetime service;
there should be provision for veterans with operational service whereby they are given the benefit of any doubt;
an expert medical committee should decide on generalised medical contentions; and
where the predominant cause of a death, injury or disease is not related to war service, the pension should be assessed at a lower rate.

2.16 The Australian Government did not accept Baume’s recommendations relating to the single standard of proof and reducing the rates of certain pensions.

2.17 The Australian Government did, however, establish the Repatriation Medical Authority (RMA) and the Specialist Medical Review Council (SMRC). The RMA was given the power to determine legislative instruments, known as Statements of Principles (SoPs), which set out the factors that cause certain medical conditions under the applicable standard of proof. SoPs are determined by the RMA in accordance with sound medical–scientific evidence. SoPs alone determine what factors could cause a medical condition that is the subject of a claim. The SMRC was set up to review the contents of a SoP (within three months of issue) or a decision by the RMA not to determine a SoP, on application from specified parties. The SoPs continue to be used to determine liability under both the VEA and the MRCA.

2.18 The result of the beneficial standard of proof and the SoPs is that there are substantial numbers of older veterans whose death or condition may be attributed to their service. In other words, many of the health conditions that are part of the normal ageing process are capable of being linked to military service.

2.19 The standards of proof and SoPs will be discussed in further detail in Chapter 5 of this report.

Special Rate of pension

2.20 The Special Rate of pension was introduced in the Australian Soldiers' Repatriation Act 1920 and was granted to veterans who were blinded or totally and permanently incapacitated to such an extent that they could not earn a living wage. The payment was intended to benefit the most seriously disabled veterans, including those who were crippled or paralysed with no hope of restoration to health.

2.21 In the early 1980s, several Federal Court decisions15 were seen as undermining the original intention of the Special Rate. Some veterans were granted the Special Rate of pension even though they had enjoyed a full working life. Some commentators remarked that the Special Rate of pension was seen as a type of retirement benefit16.

2.22 In 1985, the old provisions were replaced with provisions similar to those currently in the VEA to tighten up the criteria. It was restated that the Special Rate of pension was designed for severely disabled veterans of a relatively young age who could never go back to work and could never hope to support themselves or their families, or put away money for their old age.

2.23 Before 1994, there were no special rules for veterans who were older than 65 years. In 1994, restrictive rules for veterans aged over 65 years were introduced.

2.24 In 1997, the introduction of the Veterans’ Vocational Rehabilitation Scheme (VVRS) resulted in further changes. The VVRS is a totally voluntary scheme to assist veterans to find or continue in suitable employment.

2.25 The Special Rate Disability Pension (SRDP) under the MRCA is linked to the amount of the Special Rate of pension under the VEA. However, the eligibility criteria have a number of important differences. The SRDP paid under the MRCA is also subject to a number of offsets, including offsets against Commonwealth superannuation payments.

2.26 The SRDP is discussed in further detail in Chapter 11 of this report. Superannuation offsetting is discussed in further detail in Chapter 12 of this report.

Peacetime service compensation arrangements

2.27 At the same time as the repatriation system was being established, workers’ compensation legislation in Australia was developing. The original Commonwealth scheme — forerunner to the SRCA — and the first state schemes were all in place by 1914, albeit in much more restricted forms than today. When the repatriation system was introduced, the Commonwealth Parliament had already accepted the principle of statutory workers’ compensation and had passed legislation to that effect.

2.28 For many years, peacetime compensation coverage for military personnel was provided under the Defence Act 1903 and the Naval Defence Act 1910. From 1949, Australian Defence Force (ADF) members were given formal access to Commonwealth workers’ compensation legislation.

2.29 Compensation pensions under the VEA were generally more beneficial for ADF members engaged on ‘active service’ or who ‘served in a theatre of war and incurred danger from the enemy’, than the entitlements provided for those on peacetime service.

2.30 Governments arguably saw it as appropriate and necessary to provide a higher level of compensation and support to veterans, as a means of recognising their service in engaging with enemy forces in defence of Australia.

Dual eligibility post-Vietnam War

2.31 Until the early 1970s, the repatriation system and the compensation arrangements for ADF members on peacetime service were effectively two separate systems. What is now known as operational service was covered under the repatriation stream, and peacetime service in Australia was covered under the Commonwealth employees’ compensation stream.

2.32 This changed in 1973 when the Australian Government extended the Repatriation Act 1920 to peacetime service, subject to a qualifying period of three years. This change was significant because governments had, for many years, thought of the repatriation system as exclusive to war service, and the change was not consistent with the history of Australia’s military compensation arrangements.

2.33 Compensation for peacetime service was also still available under the Compensation (Commonwealth Government Employees) Act 1971, which created a system of ‘dual eligibility’.

2.34 his meant that those injured on peacetime service could choose between different benefits provided by two separate Acts, whereas those on operational service were restricted to one Act. The decision to combine these two systems began the complexity and confusion that was to characterise military compensation arrangements for years.

2.35 The introduction of the SRCA in 1988 was especially significant because of the pre-eminent role it gave to rehabilitation and helping injured employees return to the workforce. Enactment of the SRCA resulted in the two preceding Acts — the Commonwealth Employees’ Compensation Act 1930 and the Compensation (Commonwealth Government Employees) Act 1971 — being repealed.

2.36 However, Part X of the SRCA gives employees and former employees of the Commonwealth, who are covered by the earlier Acts, the right to claim compensation under the SRCA as if the 1930 and 1971 Act continued to operate. This provision includes ADF members and former members. Thus, the SRCA is effectively three pieces of legislation.

2.37 In April 1994, the Military Compensation Act 1994 was enacted. It introduced dual eligibility between the VEA and the SRCA for members on operational, peacekeeping or hazardous service. This added another significant layer of complexity to military compensation.

2.38 At the same time, it removed dual eligibility under the VEA and SRCA for members on peacetime service. With the exception of those who enlisted before May 1986 and served on continuous full-time service (CFTS) for three or more years, or who enlisted after May 1986 and served until April 1994, members on peacetime service were covered by only the SRCA from 1994 onwards. The table below demonstrates the complexity in compensation coverage for the ADF following the 1994 changes.

**Table 2.1 Military compensation coverage before 1 July 2004**
Type of Service	Key Date
7 December 1972	22 May1986	7 April 1994
CFTS before 22 May 1956	SRCA and VEA
CFTS on or after 22 May 1986 and less than 3 years before 7 April 1994	Not applicable	SRCA
CFTS on or after 22 May 1986 and greater than or equal to 3 years CFTS before 7 April 1994	Not applicable	SRCA and VEA	SRCA
CFTS on or after 7 April 1994	Not applicable	SRCA
Warlike service (including service in operational areas)	VEA	SRCA and VEA
Non-warlike (including peacekeeping and hazardous) service	SRCA and VEA
Part-time Reservist service	SRCA

CFTS = Continuous full-time service, SRCA = Safety, Rehabilitation and Compensation Act 1988, VEA = Veterans’ Entitlements Act 1986

Black Hawk helicopter accident and the Tanzer Review

2.39 On 12 June 1996, two Black Hawk helicopters collided and crashed at the High Range Training Area near Townsville, resulting in the deaths of 18 Australian Regular Army members and injuries to a further 12 members.

2.40 This accident focused public and political attention on the differences in military compensation benefits that applied to ADF members killed or injured in the same incident or circumstances. The dates of enlistment of those killed or injured determined whether they or their dependants were eligible for compensation under the VEA and the SRCA, or only under the SRCA.

2.41 Following the Black Hawk helicopter accident, an interdepartmental inquiry into compensation for ADF members was established. The principal outcome was an increase in the benefits pertaining to death and severe injury for ADF members covered by the SRCA under a Defence Act 1903 determination, together with a number of criticisms about the adequacy of existing arrangements.

2.42 This inquiry was followed by the Tanzer Review, an independent review established to develop options for a single, self-contained compensation scheme encompassing all service short of declared war.

2.43 The recommendations of the Tanzer Review led to the Australian Government establishing a new military compensation scheme, the MRCA. This scheme is premised on modern compensation principles, including an increased focus on rehabilitation, and also maintains some important VEA features.

Development of the Military Rehabilitation and Compensation Act

2.44 Following the Australian Government’s consideration of the Tanzer report, a ‘Briefing Paper on the New Military Compensation Scheme’ was prepared in March 2000 by the Department of Defence, in consultation with the Department of Veterans’ Affairs (DVA). DVA undertook a program of briefings with ex-service organisations (ESOs) and departmental officials.

2.45 After the 2001 election, the momentum was renewed to develop the new single scheme. The briefing paper was revised and reissued in February 2002 with the following key features for the new single scheme:

application to all military service, both in Australia and overseas;
a better focus on military-specific requirements;
a more integrated approach to management of safety, rehabilitation, resettlement and compensation;
a basis in best-practice principles;
prospective operation, with existing entitlements (under the VEA or SRCA) preserved for conditions arising before the commencement date of the new scheme;
a benefits structure based on the current SRCA, plus the Defence Determinations, and additional benefits under the VEA;
use of the VEA SoPs to determine initial liability, and the Guide to Assessment of Rates of Veterans’ Pensions (GARP) to assess the lump sum for permanent impairments;
removal of dual entitlements then existing between SRCA/VEA; and
a dedicated regulatory body for the new scheme.

2.46 An ESO Working Group (ESOWG) representing the nine major organisations was formed to review the proposals for the new scheme, and six meetings were held between April and September 2002. Meetings were chaired by the President of the Repatriation Commission, and also attended by the other members of the Commission and senior Defence officers. ESOs also provided papers on particular issues of concern and, at the end of the process, a full set of the Departmental and ESO papers was issued to participants. Two organisations representing the Special Air Service and peacekeepers were later added to the ESOWG. ESO presidents and ESOWG members were briefed on developments with the new scheme at a meeting with the Repatriation Commission in March 2003.

2.47 An Exposure Draft of the Military Rehabilitation and Compensation Bill 2003 (MRCB) was prepared by the Office of Parliamentary Counsel and released in June 2003 for consideration by the wider community. ESOWG members were briefed on the day of release. An extensive round of presentations followed for ADF, Defence and DVA staff, and the ex-service community, at each major base and office in Australia, as well as for ADF members serving in East Timor.

2.48 A number of important changes were made as a result of the consultation process on the Exposure Draft in June–September 2003:

withdrawal of the proposal to offset future payments of the Special Rate of pension under the VEA by the value of any Commonwealth superannuation received (this had been strongly opposed by ESOs);
removal of an exclusion from the Commonwealth’s liability to pay compensation where a person is injured or contracts a disease as a result of reasonable disciplinary action;
relaxation of requirements for eligibility for the SRDP safety net payment to cover those who are unable to work more than 10 hours per week (no hours were stated in the Exposure Draft) — this removed the disincentive for a person receiving the safety net payment to return to some part-time work;
extension of the time allowed to choose between a lump sum and weekly payments from three months to six months;
removal of the bar on receiving more than one weekly death benefit payment where the partner is widowed a second time; and
inclusion of a further choice of receiving part lump sum and part periodic payments for permanent impairment.

2.49 Following consideration of the comments on the Exposure Draft, the MRCB and the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Bill 2003 were tabled in the House of Representatives on 4 December 2003. The ESOWG met on several occasions during 2004 to discuss the new arrangements and the preparation of rehabilitation principles and protocols.

2.50 The MRCB was listed for review by the Senate Committee on Foreign Affairs, Defence and Trade. Submissions were sought by the Senate for response by 30 January 2004, and hearings were held in Perth, Canberra and Melbourne on 23–25 February 2004. The Bill was passed with amendments, resulting from the Senate Inquiry, to ensure that all death benefits were the same, regardless of the nature of service; and changes that made the VRB available to all ADF members, regardless of the type of service that gave rise to the claim.

2.51 The MRCA commenced operation on 1 July 2004.

Conclusions

2.52 The MRCA, which had bipartisan support, is the first compensation legislation specifically designed to cover the whole spectrum of military service. The MRCA came into operation on 1 July 2004, after approximately seven years of examining military compensation arrangements.

2.53 The MRCA’s introduction was a pragmatic response to the complexity of military compensation arrangements in the mid 1990s. It was a significant change to Australia’s military compensation arrangements; perhaps the most significant change since the inception of the repatriation system. However, changing from a complex system with a number of different pieces of legislation to a single Act would be difficult, particularly in relation to transitional arrangements and offsetting.

2.54 This Review of Military Compensation Arrangements is the latest in a long line of reviews, inquiries and analyses of the compensation arrangements that apply to military personnel and their dependants, undertaken on behalf of the Australian Government. Such attention underlines the sensitive and complex nature of this legislation, and the importance given to it by governments since the inception of the repatriation system in the aftermath of the First World War.

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11http://www.dva.gov.au/consultation-and-grants/reviews/review-military-compensation-arrangements/implementation-activities

12Repatriation Commission v. Law (1981) 147 CLR 635.

13Repatriation Commission v. O’Brien (1985) 155 CLR 422.

14Bushell v. Repatriation Commission (1992) 175 CLR 408 and Byrnes v. Repatriation Commission (1993) HCA

15Bowman v. Repatriation Commission (1981) ALR 556; Smith, K.K. v. Repatriation Commission (1982) 1 RPD 238; Delkou v. Repatriation Commission (1984) 2 RPD 327.

16Bruce Topperwein with Nicky Langhorne, ‘Special Rate of Disability Pension: Analysis of the legislation and case-law concerning the special rate of pension’, VeRBosity, Special Edition, 2003, p.6.