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This document outlines the policy for handling overpayments made under the Military Rehabilitation and Compensation Act 2004 (MRCA) and the Safety, Rehabilitation and Compensation (Defence-related claims) Act 1988 (DRCA). The intended audience of the document are delegates, and those who manage overpayments made to veterans and their dependants.
Once it has been established that an overpayment has taken place, and the amount of that overpayment has been calculated, the overpayment must either be:
- written off; or
This document outlines the Military Rehabilitation and Compensation Commission’s (MRCC) policy on when each of these options should be pursued. The policy is high level and strategic in nature. It is designed to provide guidance to allow maximum flexibility for business areas to manage overpayments where supported by the provisions in the VEA and the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The policy takes into account DVA’s obligation to pursue the recovery of public money owed to the Commonwealth and sets out circumstances in which it may be appropriate to waive or write off a debt to the Commonwealth.
This document does not provide guidance on the following:
- establishing that an overpayment has taken place;
- procedures for the calculation of an overpayment;
- procedures for calculating the correct payment of a client; or
- procedures for the recovery, write off and waiver of overpayments.
For information on these consult the relevant procedural documents managed by the Client Benefits division.
What is an overpayment?
Generally speaking, an overpayment will occur when a client is paid more than they are legally entitled. Such an overpayment creates a debt for that person, which is owed to the Commonwealth.
Overpayments made to a client under MRCA or the DRCA are recoverable by the Commonwealth, or the Military Rehabilitation and Compensation Commission (the MRCC), in a court, as a debt due to the Commonwealth (subsection 415(3) of the MRCA and subsection 114(1) of the DRCA).
Overpayments can also be recovered by way of a deduction being made from an amount payable to or for the benefit of the client (subsection 415(4) of the MRCA and subsection 114(2) of the DRCA). However, an overpayment made to a client under the MRCA can only be recovered by way of a deduction being made to an amount payable to that person under MRCA, and an overpayment made to a client under DRCA can only be recovered by way of a deduction being made to amount payable to that person under DRCA.
Recovery, write off and waiver
A debt must be raised and then either recovered, written off, or waived. It must not be ignored. As discussed below, DVA has a legal obligation to pursue the recovery of a debt under the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) unless a specified exception applies.
Recovery of overpayments is important to ensure that clients receive the correct rate of payment and that inappropriately, incorrectly or unlawfully paid Commonwealth money is recovered by the Commonwealth. This allows DVA to make sure its clients receive all the lawful financial entitlements that are justifiable and consistent with the relevant statutory requirements.
Write off stops recovery action for an undefined period. At any time, the write off can be reversed and recovery proceedings can begin where the client’s financial circumstances change and recovery may be possible. Unlike a waiver, write off does not extinguish the debt.
Waiver amounts to a permanent bar to the future recovery of the debt. Once the debt has been waived, recovery of the debt cannot be pursued at a later date.
If a debt is written off or waived under the MRCA or DRCA, the PGPA Rule requirement to recover the monies owed to the Commonwealth will not apply.
Does the MRCC have a preference for dealing with an overpayment?
The policy of the MRCC is that delegates should first consider recovery then, if appropriate, write-off, then waiver.
Unless there is sufficiently good reason, an overpayment must be recovered. If there are such reasons, a write off must be considered in the first instance. Only if there is a sufficiently good reason why a write off is not appropriate should a delegate consider full or partial-waiver of the debt.
This document outlines the conditions for when a write off can be undertaken rather than recovery, and the circumstances for when a waiver is to be preferred over write off.
A debt can be written off or waived in part or in whole. That part of a debt that is neither written off nor waived must be recovered.
The PGPA Act
The Public Governance, Performance and Accountability Act 2013 (PGPA Act) imposes obligations on the accountable authority of a non-corporate entity. That is the Secretary of DVA. The MRCC is a body corporate that is taken to be a part of the Department for the purposes of the PGPA Act (s 363(3)(b) of the MRCA).Members of the MRCC are officials of DVA for the purposes of the PGPA and therefore are subject to the PGPA requirements to deal with Commonwealth monies and resources ethically and responsibly.
While the PGPA Act provides a backdrop to the management of Commonwealth monies, officers recovering overpayments, or writing off or waving debts under the MRCA or DRCA are exercising powers under those Acts not the PGPA Act. They will be delegates of the MRCC under the MRCA or the DRCA.
Section 11 of the PGPA Rule provides:
The accountable authority of a non-corporate Commonwealth entity must pursue recovery of each debt for which the accountable authority is responsible unless:
(a) the accountable authority considers that it is not economical to pursue recovery of the debt; or
(b) the accountable authority is satisfied that the debt is not legally recoverable; or
(c) the debt has been written off as authorised by an Act.
The write off provisions in the MRCA and DRCA are authorisations contemplated in paragraph (c). This means that where a debt has been written off under the MRCA or DRCA, the Secretary is not required to pursue the recovery of the debt under s 11 of the PGPA Rule, while the debt remains written-off or deferred.
Section 11 does not mention waiver as when a debt has been waived the debt no longer exists and section 11 will not apply.
Section 63 of the PGPA Act provides the authority for the Finance Minister to waive the right of the Commonwealth to recover amounts that are due and owing to it. This waiver power operates separately to the waiver powers in the MRCA and the DRCA. If the Finance Minister waives a debt under the PGPA Act, the debt is taken to no longer exist and there is no longer a debt to be pursued under the PGPA Rule or the MRCA or DRCA.