Tasmanian Liberal Party Conference Adopts
Restoration of DVA Disability Pension Parity Motion
Bill Kaine, chairman of the ‘Tasmanian Ex-Service & Service Support Association’ and all others involved in the motion and background material, research and those devoted to securing justice for DVA Disability rate members and former members of the ADF and their families deserve our unequivocal wholehearted support and appreciation in the compilation of this motion and carrying it to fruition. This momentous political breakthrough is an inspiration to us all to continue the now over four year campaign for the restoration of DVA Disability pension rate parity that existed prior to September 2009.
The ADSO/Fair Go team must also be congratulated in carrying the DVA DPs issue since ADSOs inception and their continued support is essential in building upon this significant step in regaining dignity for our disabled that being treated as equals in the country they defended will bring.
DVA DISABILITY PENSIONS – RESTORATION OF LOST PARITY WITH THAT OF AGE AND OTHER COMMONWEALTH PENSIONS
The Motion and Rationale below, along with the attached Briefing Notes, were placed on the Agenda of the Tasmanian Liberal State Council on Sunday 27th October 2013. It was carried un-opposed.
That the Government remove the remaining level of erosion to the value of Veterans Disability Pensions by adjusting Veterans Disability Pensions (including general rate, EDA, intermediate rate, temporary special rate and special rate) to recover the loss in parity relative to that of the Age and the Service Pensions that was made in 2009. This structural adjustment is necessary for DVA Disability Pensions to remain relevant to further increases in Australian community wage/income levels as recommended by the Harmer Review.
Disability payments for ex-service members of the Australian Defence Force continue to be indexed against the Consumer Price Index, an index that has been recognised as not being a true cost of living adjustment for many years. In 2007 the Parliament recognised this in relation to Veteran Disability Pensioners and provided a “one off” catch up increase and also brought their indexation arrangements into line with the other pensions. This action had bi-partisan support.
This “one off” increase did not fully recover the erosion suffered by Veteran Disability Pensioners particularly in the previous 10 years when revised indexation arrangements were introduced for Age and Service Pensions.
Changes to the Age Pension announced in the 2009/2010 budget were designed to address particular concerns for our most disadvantaged elderly community members. However, the exclusion of the Veterans Disability Pensions from that Budget initiative further accentuated the existing disparity for Veterans Disability Pensioners who have suffered a disability as a result of their service to the Nation and has meant that the relative value of Veterans Disability Pensions measured against the other pensions has diminished.
We, as a Nation, owe those who have suffered disabilities as a result of their military service a debt of gratitude and we should ensure that compensation payments for those injuries are properly and adequately compensated.
In his address to the Legacy Clubs of Australia 2013 National Conference in Brisbane on the 18th October our Prime Minister, The Hon. Tony Abbott MP, stated:
“We cannot ask our young men and women to put themselves in harm’s way for our country if we don’t ensure that we give them the best possible care on their return”.
“It’s important that we give our Defence forces what they need to do their job. It’s particularly important that we give our veterans what they need to live a decent life and what they need to appropriately acknowledge and honour their service to our country.”
DVA DISABILITY PENSIONS
RESTORATION OF LOST PARITY WITH THAT OF AGE AND OTHER COMMONWEALTH PENSIONS
For the reader who is not aware, in 2007 and with bipartisan support, the Australian Parliament recognised that the Disability Pensions paid to those ex-service men and women who had suffered disabilities as a result of their service in the Australian Defence Force had not kept up with the true cost of living and voted for a “one-off” catch up increase with future indexation to be linked to other Commonwealth Pensions such as the ‘Age Pension’.
However, after the Harmer Review in 2009 the Labor Government increased the ‘Age’ and other pensions by 2.7%, but this increase was denied to those in receipt of the DVA Disability Pensions. As a consequence, all of those members in receipt of such payments have suffered a substantial loss in the purchasing power of their pensions (relative to other Australian pensioners) from that date and this has compounded in the years since that decision. By way of example, the most disadvantaged of this group, those on the Totally & Permanently Incapacitated (TPI) rate, are being short-changed by around $3,300 per annum.
In mid-2012 DVA calculated that an increase of 11.4% for the Disability Pension would then have been needed to attain parity with other Commonwealth Pensions. This amounted to around $175m per year over the forward estimates.
In a letter to Peter Thornton1, a letter that was widely distributed throughout the serving and ex-service community, Senator Ronaldson stated:
‘From day one, the Coalition has acknowledged the situation facing disabled veterans following the Harmer Review. Just as our 2007 indexation legislation (supported by Labor) covered all veteran disability pensioners, so too would any post-Harmer change in indexation arrangements need to apply to all veteran disability pensioners.’
Furthermore, Senator Ronaldson noted that DVA had advised “the numbers of disability pensioners are expected to reduce by 5% per year over the forward estimates.” DVA used this assumed percentage decline in generating specific budget projections for the loss of parity, resulting in a projected mortality rate of 19,593 Disability Pensioners (i.e. over the forward estimates 2008 – 2012), while the actual mortality rate during that period was in fact 23,667. This actual observed figure resulted in a much higher decline of an additional 4,074 recipients (approximately 20% higher)2.
The observed higher mortality rate was consistent with the independent statistical analysis and projections provided earlier this year by Mr. Peter Thornton who is an economist and independent commentator; a high level analysis that Thornton used to petition both the then Government and Opposition in an effort to restore the lost parity of DVA disability pensions. Here is one such specific table from Thornton’s analysis3.
DVA DISABILITY PENSIONERS – The Restoration of Parity and the Misnomer of Cost
© Peter Thornton 2013
While it is understood that DVA used a mortality rate of around 5%, the actual mortality figures from DVA (as cited by Thornton) indicate that the cost of restoring the equivalent of the lost parity for DVA disability pensioners, to reflect the relative one-off increase from the Harmer Review for income support payments, would be significantly less over the forward estimates than that claimed by the former DVA Minister in July 2013. That notwithstanding, DVA
statistics as at December 2012 indicate that there were 108,060 disability recipients with an average age of 70.6 years in receipt of Disability Pensions, and as per the table above, 23,993 disability recipients are projected to die over the next four years.
Therefore, it is reasonable to conclude that the demographic figures and statistical probabilities reinforce the argument that given the magnitude and expected decline in DVA recipient numbers that there appears indeed to be excess capacity within the current and projected DVA budget (i.e. over the forward estimates) to cover the additional cost to fix the pension parity issue. Attachment A to this document provides further reinforcement of the true nature of the demographics involved with the decline in recipient numbers being rather intuitive.
To support this contention the Department itself, even with its own “conservative” demographic analysis as it pertains to disability pensioners alone, provides a footnote at the bottom of its latest costed projection, stating:
‘The net impact will be nil on a whole of Government basis.’ 4
Perhaps to amplify this point even further, in December 2012 there were 89,363 War Widows with an average age of 84.3 years who were in receipt of War Widows Pensions paid by DVA and of these 31,360 (35% of recipients) were expected to die over the next 4 years of the forward estimates5.In calendar year 2013 it is expected there will be an expected decline of approximately 8,200 War Widows. Given that the War Widow’s pension is $820.70/fn including the clean energy supplement, then the expected decline would render a budgetary offset of approximately $175M in the first year and that is without taking into account other consequential offsets such as the yearly cost of the Gold Card, possible income support payments and other allowances and facilities. In all probability, the $175M is probably closer to $350M when you consider the totality of the situation of just this recipient group alone6.
Also, when you consider that a portion of the TPI compensation is for “pain and suffering” (i.e. $420/fn as at 1 March 2012); then the magnitude of the disparity between the economic loss of the disability pension and that of the minimum wage is even starker (i.e. when you consider that the balance of the compensation for “economic loss” is only $762/fn, as compared to the fortnightly minimum wage of approximately $1,276 (or 59% of the minimum wage) requiring many DVA Disability Pensioners to draw upon additional income support / welfare supplementation, then such a situation only highlights just how inadequate the compensation really is7.
With the foregoing in mind, any suggestion now that to fix the pension parity is too costly or unaffordable would be considered rather disingenuous by many DVA recipients who are trying to survive of welfare level income.
The 2009 Harmer Review’s findings that would clearly underpin a Veteran’s rightful claim for a pension parity structural adjustment of $3,300pa (i.e. an adjustment to the base of the TPI pension and other income related disability pensions on a pro-rata basis) would certainly help to bridge this significant gap!
Irrespective of the numbers presented above, the issue of pension parity should be a matter of principled policy stemming from the 2007 agreement with Veterans and not one of cost!
CHAIRMAN – TASMANIAN EX-SERVICE & SERVICE SUPPORT ASSOCIATION