Skip to Content

Compensation and Rehabilitation for Veterans

Draft report - A Better Way to Support Veterans

This draft report was released on 14 December 2018.

You were invited to examine the draft report and to make written submissions by 11 February 2019.

Some questions and answers

We have provided some questions and answers to help inquiry participants better understand the Commission’s draft recommendations.

Read the questions and answers

The final report is expected to be handed to the Australian Government by June 2019.

Under the Productivity Commission Act 1998, the Government is required to table the report in each House of the Parliament within 25 sitting days of receipt.

Download the overview

Download the draft report

  • At a glance
  • Contents

Expand allCollapse all

Key points

  • The veterans’ compensation and rehabilitation system is not fit-for-purpose — it requires fundamental reform. It is out-of-date and is not working in the interests of veterans and their families or the Australian community.
  • The system fails to focus on the lifetime wellbeing of veterans. It is complex (legislatively and administratively), difficult to navigate, inequitable, and it is poorly administered (and has been for decades), which places unwarranted stress on claimants. Some supports are not wellness focused, some are not well targeted and others are archaic, dating back to the 1920s.
  • In 2017-18, the Department of Veterans’ Affairs (DVA) spent $13.2 billion supporting about 166 000 veterans and 117 000 dependants (about $47 000 per client). And while the veteran support system is more generous overall than workers’ compensation schemes for civilians, money alone does not mean it is an effective scheme.
  • The system needs to focus on the wellbeing of veterans over their lifetime. This means more attention to prevention, rehabilitation and transition support, which in turn will produce better outcomes for veterans, their families and the Australian community.
  • To achieve this focus, the system needs to be redesigned based on the best practice features of workers’ compensation and contemporary social insurance schemes.
  • This will require new governance and funding arrangements.
    • A single Ministry for Defence Personnel and Veterans should be established.
    • A new independent statutory agency — the Veteran Services Commission — should be created to administer and oversee the performance of the veteran support system.
    • DVA’s policy responsibility should be transferred to the Department of Defence within a new Veterans Policy Group.
    • An annual premium to fund the expected costs of future claims should be levied on Defence.
  • Responsibility for preparing serving veterans for, and assisting them with, their transition to civilian life should be centralised in a new Joint Transition Command within Defence.
  • DVA’s recent Veteran Centric Reform transformation program is showing early signs of success. It should continue to be rolled out to mid 2021 as planned, but adjusted where necessary to accommodate the proposed reforms.
  • The current system should be simplified by: continuing to make the system easier for clients to access (a complex system does not need to be complex for users), rationalising benefits, harmonising across the Acts (including a single pathway for reviews of decisions, a single test for liability and common assessment processes), and moving to two compensation and rehabilitation schemes by July 2025.
    • Scheme 1 should largely cover an older cohort of veterans with operational service and injuries that occurred before 2004, based on a modified Veterans’ Entitlements Act 1986 (VEA). Scheme 2 should cover all other veterans, based on a modified Military Rehabilitation and Compensation Act 2004 (MRCA), and over time will become the dominant scheme.
  • The way treatments and supports are commissioned and provided to veterans and their families also needs to change. There needs to be more proactive engagement with clients and providers and better oversight of outcomes.
  • The recent decision to expand non-liability coverage to mental health care was a positive one, however, the Veteran Mental Health Strategy needs to be updated urgently with specific attention to suicide prevention and access to supports for veterans.

Media requests

Leonora Nicol, Media Director – 0417 665 443 / 02 6240 3239 /

Media release

A better way to support Veterans and their families

'Australia’s veteran support system needs fundamental reform. It is an outdated, legal and administrative maze which adds to the stress of veterans and is not working in the interest of veterans, their families or the Australian community,' said Commissioner Robert Fitzgerald on release of the Productivity Commission’s draft report, A Better Way to Support Veterans.

The Commission found that while generous (compared to other similar schemes), it is not an effective system.

'Veterans should be getting far better outcomes from the $13.2 billion the Australian community is spending every year to improve veterans’ lives,' said Commissioner Richard Spencer.

The report recommends substantial changes to the veteran support system, including:

  • a new independent Veteran Services Commission to administer and oversee the performance of the system
  • Defence taking on more responsibility for veteran policies and transition support, and paying an insurance premium to encourage better prevention of harm and to fund future claims
  • simplifying the system and streamlining the legislation to create two schemes by 2025 and eventually one.

'The system needs to be redesigned so it focuses on the wellbeing of veterans over their lifetime and pays more attention to prevention, rehabilitation and transition support. It needs to be brought more in line with best practice features of workers’ compensation and contemporary social insurance schemes,' said Robert Fitzgerald.

'Good transition support and services are key. Many contemporary veterans are in their mid-to late twenties when they discharge and have the rest of their lives ahead of them,' said Commissioner Robert Fitzgerald.

The report found that rates of mental illness among ex-serving veterans are high, with about one third of recently transitioned personnel reporting high to very high levels of psychological distress. 'The mental health strategy for veterans needs urgent updating, with a continued focus on suicide prevention,' said Commissioner Richard Spencer.

'We have set out an ambitious pathway to reform which will see better outcomes for veterans and their families, while ensuring no veteran will lose their current entitlements,' said Commissioner Robert Fitzgerald.

The Commission would like feedback on its draft report, and will be holding public hearings in early 2019. To comment on the report or register to attend a public hearing, you should go to the Commission’s website at:

Media requests

Leonora Nicol, Media Director – 0417 665 443 / 02 6240 3239 /

Video: A Better Way to Support Veterans

Transcript of video

We’re reviewing Australia’s veteran support system, during which we’ve talked to a lot of veterans. We’ve talked to their family members, widows and widowers — and many serving ADF members.

Every veteran has a different story to tell, but one thing most agreed on, is that the current system doesn’t work well.

The compensation system is a complex maze, and the stress of trying to navigate it is unacceptable.

There is very little in the way of effective transition services, and they are poorly coordinated.

[Visual text]:

  • 6000 ADF members transition to civilian life every year

And given that those leaving the ADF today are likely to be in their mid to late twenties, with the rest of their life ahead of them — this isn’t good enough.

Veterans need assistance to transition to civilian life, getting it right is critical.

[Visual text]:

  • High rates of mental health conditions in the ex-serving community

We need to bring together all the supports, including rehabilitation, during this critical phase.

[Visual text]:

  • Health
  • Employment
  • Social support
  • Income
  • Education
  • Housing

The current mental health strategy is inadequate, and suicide prevention must be a key focus, especially post discharge.

[Visual text]:

  • The suicide rate for ex-serving men under the age of 30 is twice that of Australian men the same age

Our draft report on improving the veteran support system makes some bold recommendations to make it simpler and more contemporary.

[Visual text]:

  • Streamlined
  • Well governed
  • Wellbeing focus
  • Fit for purpose
  • Responsive

While military life is inherently dangerous, reducing preventable injuries in service is a starting point.

[Visual text]:

  • 18% leave under medical discharge

So we want Defence to play a greater role in both prevention and transition.

There would be better coordination of defence and veterans policy, with responsibility coming under one Ministry and one Department.

A new, independent agency would be created to oversee a modern, simplified, veteran-focused system.

[Visual text]:

  • Veteran Services Commission

It would draw on best practices from similar compensation schemes, be responsive and dedicated to successful outcomes.

The legislation and administration would be made simpler, fairer, and there would be only two compensation schemes.

One mainly for current older veterans, and the other mainly for younger veterans.

[Visual text]:

Scheme 1

  • older veterans
  • pension based

Scheme 2

  • rehabilitation-focused
  • modern

Some benefits would be modernised, but no veteran would lose their current entitlements in this new system.

[Visual text]:

  • all existing entitlements remain
  • continued support from ex-service organisations

The changes we recommend mean all veterans would have a system that is easier to navigate, and provides them with the services that they need, when they need them.

[Visual text]:

  • A better system

We would like to hear from people on what they think about our ideas to improve Australia’s veteran support system.

[Visual text]:

  • Read our recommendations

So drop us a brief comment or submission on our website,

  • Preliminaries: Cover, Copyright and publication detail, Opportunity for further comment, Terms of reference, Foreword, Contents and Abbreviations
  • Overview
    • Key points
    • 1 About the veteran support system
    • 2 What we have been asked to do and our approach
    • 3 What objectives for a veteran support system?
    • 4 Why reform is needed
    • 5 A better way to support veterans and their families
  • Draft recommendations, findings and information requests
  • Chapter 1 About this inquiry
    • 1.1 What has the Commission been asked to do?
    • 1.2 What the inquiry covers
    • 1.3 Who are veterans?
    • 1.4 The Commission’s approach
  • Chapter 2 Military service and the veteran community
    • 2.1 The Australian military
    • 2.2 A profile of the veteran community
  • Chapter 3 The veteran support system
    • 3.1 How the system of veteran support evolved
    • 3.2 An overview of the system today
    • 3.3 The system’s cost and client mix
  • Chapter 4 Objectives and design principles
    • 4.1 What should the objectives of the veteran support system be?
    • 4.2 Best practice features of other schemes
    • 4.3 What principles should underpin the support system?
    • 4.4 Some policy design issues
    • 4.5 Summing up
  • Chapter 5 Preventing injury and illness
    • 5.1 Why preventing injury and illness is so important
    • 5.2 Regulatory framework governing the WHS of ADF personnel
    • 5.3 How is WHS delivered in the ADF?
    • 5.4 ADF work health and safety outcomes
    • 5.5 Scope to improve WHS outcomes further
  • Chapter 6 Rehabilitation and wellness services
    • 6.1 About rehabilitation
    • 6.2 What rehabilitation services are available to serving and ex-serving ADF members?
    • 6.3 How effective are rehabilitation services?
    • 6.4 Ways to improve rehabilitation services
  • Chapter 7 Transitioning to civilian life after military service
    • 7.1 Why transitioning well matters
    • 7.2 What do we know about those leaving the ADF?
    • 7.3 There are many disparate strands of transition support ...
    • 7.4 ... and many initiatives to improve transition ...
    • 7.5 ... but the path to civilian life remains hard to follow
    • 7.6 A new Joint Transition Command
    • 7.7 Preparing for post service careers
    • 7.8 Preparing veterans for other aspects of civilian life
    • 7.9 Education and training for post service careers
    • 7.10 Other transition issues
  • Chapter 8 Initial liability assessment
    • 8.1 Steps involved in establishing initial liability
    • 8.2 Some concerns about the SoPs and standards
    • 8.3 Options for reform
  • Chapter 9 Claims administration and processing
    • 9.1 Good intentions but poor execution
    • 9.2 Veteran Centric Reform — a vehicle for change
    • 9.3 Some early signs of success
    • 9.4 But there is still room for improvement
    • 9.5 Will Veteran Centric Reform succeed?
    • 9.6 ESOs and advocacy
  • Chapter 10 Reviews
    • 10.1 Why do review processes matter?
    • 10.2 How the review processes work
    • 10.3 Why is there a high rate of variation on review?
    • 10.4 Unnecessary complexity and duplication
    • 10.5 An ‘adversarial approach’?
    • 10.6 A best practice system
    • 10.7 Other issues
  • Chapter 11 Governance and funding
    • 11.1 An overview of the governance arrangements
    • 11.2 Institutional separation — Defence and DVA
    • 11.3 Where is the strategic policy?
    • 11.4 The Commission’s proposed path forward
    • 11.5 Funding the new veteran support system
  • Chapter 12 The compensation package
    • 12.1 Compensation for veterans and their families
    • 12.2 Evaluating the package of compensation
    • 12.3 Reforming the compensation package
  • Chapter 13 Compensation for an impairment
    • 13.1 Impairment compensation
    • 13.2 Compensation for economic loss
    • 13.3 Benefits for dependants
  • Chapter 14 Streamlining and simplifying additional payments
    • 14.1 The benefits and costs of additional payments
    • 14.2 Options for reform
  • Chapter 15 Health care
    • 15.1 Health care — an original feature of veterans’ support
    • 15.2 What does the veteran health system cover?
    • 15.3 Who should be eligible for DVA health cards?
    • 15.4 What is DVA doing to promote good health care for veterans?
  • Chapter 16 Data and evidence
    • 16.1 Persistent gaps in data and evidence on veterans and veterans’ supports
    • 16.2 Collecting data on the effect of veterans’ programs
    • 16.3 Alignment with the design principles
    • 16.4 Making better use of existing data
    • 16.5 Action is required to improve evidence
  • Chapter 17 Bringing it all together
    • 17.1 Addressing legislative complexity
    • 17.2 A timeline for reform
    • 17.3 The future veteran support system
  • Appendix A Conduct of the inquiry
  • References

Printed copies

Printed copies of this report can be purchased from Canprint Communications.