Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Assistant Minister for Defence) Share this | Hansard source

The Full Federal Court's 2020 decision in Commissioner of Taxation v Douglas, commonly referred to now as the Douglas case, has created an unintended consequence for the means test applied to certain military invalidity benefit payments under existing legislation. These affected payments are invalidity benefits under the Military Superannuation and Benefits Scheme and the Defence Force Retirement and Death Benefits Scheme. Both schemes are now closed. The Social Services and Other Legislation Amendment (Military Invalidity Payments Means Testing) Bill 2024 is required to ensure that veterans are no worse off following the Douglas decision.

Given the commitment that our military personnel make to serving our nation, we have a moral obligation to ensure that, when they retire from the Australian Defence Force, we look after them and, certainly in situations such as this, that they are no worse off because of the unintended consequences of this case. It's important to fix this problem, to give veterans certainty, to maintain equity in the system and to ensure fairness in the way income support recipients are means-tested and their payment rates determined. It's vital to remember that these benefits are received by veterans who have served our country, and we owe it to them to ensure that legislation supports them in a fair and equitable manner.

The government needs to amend legislation to ensure a clear and fair legal basis for assessing these payments within the income support system. This system provides targeted support to those who need it based on their income levels and circumstances. A key principle is to provide similar levels of support to people with similar means of supporting themselves. To maintain the system's equity and fairness to other income support recipients, these invalidity payments need to be assessed in line with how similar sources of income are assessed for other recipients.

This bill aims to ensure that veterans and their partners continue to receive income support at a rate that aligns with the original intent of the legislation and policy before the Douglas decision and is consistent with entitlements for other income support recipients, including other veterans, under existing arrangements.

The bill creates a new category of income stream in the Social Security Act and Veterans' Entitlements Act and a means-testing treatment designed to mirror the assessments obtained from the previous treatment before the Douglas decision. It inserts a new income stream classification and assessment regime under the Social Security Act and the Veterans' Entitlements Act. These new provisions aim to ensure the same assessment of income of invalidity payments and continued exemption of the invalidity payments from the assets test. This ensures that veterans and/or their partners receive a level of support consistent with the original intent of the legislation and policy, before the unexpected findings of the Douglas decision.

This bill also preserves the validity of all relevant historical income and asset assessments relating to affected payments. Importantly, the changes to the bill do not alter the income tax benefits from the Douglas decision for veterans and/or their partners. This approach ensures these military invalidity benefits continue to be treated similarly in the means test for other comparable types of income. This bill also ensures that veterans receiving military invalidity benefits will receive similar income support outcomes as other veterans with retirement benefits from the same military schemes and other Australians with similar income levels.

By passing this bill, we aim to maintain fairness and equity within the income support system and demonstrate our ongoing commitment to supporting our veterans, who have served our nation. We owe it to them to get this right, and that's what this bill does.

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