No. 13 Indexation of MRCA Compensation Rates Effective from 1 July 2006

MILITARY REHABILITATION AND COMPENSATION SCHEME POLICY INSTRUCTION NO. 13

Subject: Indexation of MRCA Compensation Rates Effective from 1 July 2006

1. Purpose

The purpose of this Instruction is to advise of the annual indexation of compensation payments made under the Military Rehabilitation and Compensation Act 2004 (MRCA) effective from 1 July 2006.

2. Payments indexed to the Consumer Price Index (CPI)

Section 404 of the MRCA provides for the indexation of the following payments each 1 July in accordance with increases in the CPI in the 12 months ending on 31 December of the previous year:

• subsection 74(1);
• lump sum for an eligible young person dependent on a person entitled to maximum permanent impairment compensation – subsection 80(2);
• maximum financial advice compensation paid to eligible persons – subsections 82(1) and 206(1) and section 240;
• threshold at which incapacity payments can be commuted to a lump sum – paragraph 138(1)(a);
• maximum weekly household services compensation payment – paragraph 216(b);
• maximum weekly attendant care compensation payment – paragraph 219(b);
• maximum additional death benefit for a wholly dependent partner – subsection 234(2);
• maximum death benefit lump sum for an eligible young person – section 252;
• maximum weekly payment for a wholly or mainly dependent eligible young person – section 254;
• maximum lump sum death benefit for each other dependent – paragraph 263(1)(a);

• maximum lump sum death benefit available for all other dependants – paragraph 263(1)(b);
• funeral compensation - section 267.

The new rates are set out in the table at Attachment 1.

3. Payments indexed to the Labour Price Index

Section 182 in combination with Regulation 19 provides for indexation of pre-cfts pay and civilian daily earnings used to calculate normal earnings for certain incapacity payments each 1 July.  These are made in accordance with movements in the Labour Price Index (Australian Bureau of Statistics reference 6345.0) in the 12 months ending on 31 December of the previous year.  The percentage increase in the in — dex for the period Dece — mber 2004 to December 2005 was 4.1 per cent.  This means that the normal earnings amount used to calculate incapacity payments for those who are affected by this provision should be increased by this percentage effective from 1 July 2006.

4. Payments indexed to increases in ADF pay rates under the ADF Workplace Remuneration Arrangement

Section 183 in combination with Regulation 20 provides for indexation of the remuneration allowance added to the normal earnings of discharged ADF members each 1 July.  This increase is in line with ADF pay rates under the ADF Workplace Remuneration Arrangement for the 12 months ending on 31 December of the previous year.  In the 12 months endi — ng on 31 December 20 — 05, ADF pay rates increased by 2.0% on 2 June 2005.  The remuneration allowance is therefore increased from $114.80 to per week $117.10.

Mark Johnson

National Manager

Compensation Policy

June 2006

MRCA COMPENSATION RATES EFFECTIVE 1 July 2006

*Converts to a maximum lump sum of $339,747.40

** Note that the 2006-07 Budget announced that the maximum level payable for funeral expenses will be increased to $9,000. When the legislative amendments to the SRCA are passed, further advice will be provided.