Foreign Affairs, Defence and Trade Committee
Wednesday 15 February 2012
Senator WRIGHT: Good evening, gentlemen. Thank you for your time tonight. I have some questions regarding the BEST funding. Based on the recommendation of the review of DVA funded ESO, advocacy and welfare services final report of December 2010, I understand that funding to organisation under the Building Excellence in Support and Training program, the BEST program, will be cut by up to 30 per cent at 1 July 2012. Based on that background, I have a few questions. The first one—
Mr Campbell: Perhaps I could make one comment, which might change the questions slightly. The actual decrease in the BEST program occurred on 1 July 2011. While organisations may be claiming particular percentage decreases, the actual decrease in the BEST program for that year was 25 per cent. There are carry-over issues, but the base funding for BEST was $4 million and it was decreased to $3 million. There are carry-overs et cetera that change things for different areas. And it was from 1 July 2011 not 2012.
Senator WRIGHT: Thank you for that. I am not sure whether I was given erroneous information or whether it was just a typo. I appreciate that the future budget has not yet been handed down, but are there any cuts from the previous budget that are scheduled to take effect as of 1 July 2012?
Mr Farrelly: There are no further cuts to the BEST funding forecast or to be carried through from the previous budget. It was a one-time cut.
Senator WRIGHT: Have the number of claims made under the BEST program increased or decreased over the past five years?
Mr Farrelly: When you say 'claims' do you mean applications for funding or claims lodged by ex-service organisations?
Senator WRIGHT: The latter.
Mr Farrelly: The number of claims lodged by ESOs have reduced, broadly in line with the cut. I will give you some recent figures. For example, in 2006-07, the number of claims that were lodged by ESO or other representatives was around 17,300. The figure for 2010-11 was around 13,000, so the numbers have reduced.
Senator WRIGHT: Is it possible to give a sense of the percentage reduction over that period of time—the last five years? I am happy for you to take that on notice if necessary.
Mr Farrelly: It is around 25 per cent.
Senator WRIGHT: Has the time and the number of personnel required to process each claim and the number of appeal cases increased over this period?
Mr Farrelly: Dealing with appeal cases first, I have figures for the last three years of appeals to the VRB. The number of claims to the VRB in 2008-09 was 3,930. In 2010-11, the number of claims was 3,275. In the first half year of this financial year, the number of claims was around 1,500, so pro rata that would be 3,000 in a full year.
Senator WRIGHT: You may have left out 2009-10.
Mr Farrelly: I can add that: it was 3,906.
Senator WRIGHT: Thank you for that. That is the number of appeal cases. I am interested in the degree of complexity, as much as it is possible to assess or evaluate that.
Mr Farrelly: Complexity is a difficult thing to describe sometimes. We do not believe, for example, that VEA claims are inherently more complex than claims under the new act. They both involve similar sorts of processes. Complexity does arise, though, where people have claims that overlap acts. There has been some increased complexity with people having one claim being considered under all three acts, the VEA, SERCA and MRCA.
Senator WRIGHT: I guess another indication might be the number of personnel required to complete each claim. I am asking the question because the number of cases if obviously one guide to the need for assistance. But, in fact, even if that is decreasing but the time taken to process the claims and to get assistance to the applicants then that is something that would need to be taken into account. I am interested in whether the department has been tracking that and whether it has any figures in relation to that.
Mr Farrelly: Let me know if this answers your question or not. From the point of view of an ex-service organisation helping a veteran with a claim, in principle it should be as complex under MRCA or SERCA as it was under the VEA, assuming that they know their business. In the end, it is DVA that has to process the claim. o the extent that there is complexity, it is DVA that faces it and not necessarily the ESO representative who is helping the client fill the claim in—assuming that they know their business.
Senator WRIGHT: That is interesting, because anecdotally, through consultation that I have done, I have heard that in fact there has been an increase in the complexity of claims. There is a concern that the reduction in the BEST funding does not acknowledge that as it may be based purely on numerical forecasts at this stage. What you are saying is not necessarily consistent with what I have been hearing, at least in terms of the perception of those people I have been talking to.
Mr Campbell: Perhaps if I could add a point there to try and round this debate out. There is a perception in the ex-service community that the most recent act, which is the Military Rehabilitation and Compensation Act, which came into effect on 1 July 2004, is more complex than the previous two acts. People still have claims under the VEA and SRCA. Mr Farrelly is saying that, in essence, that is not so; although, because it is a new act, people see it as complex. Apart from the interplay between acts that Mr Farrelly talked about, there is another element of MRCA that people do see as complex but, again, it does not impact upon the lodging of the claim.
A major part of the Military Rehabilitation and Compensation Act foundation is that final compensation is not determined and paid until the condition is permanent and stable. That does not exist under the VEA. I think the word that you used in a slightly different context is very apt here and that is the word 'perception'. Because it was a new act and people were used to the VEA, they thought MRCA was more complex, but it uses SoPs. It uses levels of impairment but then there are these added elements of 'permanent', 'stable' and 'stability' before the final assessment is made and the final payment is made. I am not being critical of people in the veteran community, quite the contrary. I can understand why they think it is more complex. But a lot of that complexity flows in from our side of the counter rather than from their side.
Senator WRIGHT: I used the term 'perception' advisedly not necessarily because I was suggesting that was an erroneous perception but because I understand there are two points of view. What I am interested in is the extent to which the department has consulted, with the experience of the ESOs who are actually advising the applicants, because while you are suggesting that the complexity is perhaps more on the part of the work of the DVA, in fact, the information that I am receiving is that there is an increase in complexity that is involved. It is what they are experiencing. Perhaps the question I should go to is: to what degree was there consultation with the ESOs about their workload and about the way they are processing their claims before these cuts were made or the decision was made to reduce the funding?
Mr Farrelly: The cut was a government decision, so the ex-service community were not consulted directly about the magnitude of the reductions essentially because they were based on a 25 per cent reduction over a five-year period in the lead-up. Having said that, though, there was a review of TIP and BEST that was released in December 2010.
Ms Stevenson: The report was publicly released in February 2011. It was finalised late in December the previous year.
Senator WRIGHT: Can I clarify: is that the review of DVA funded ESO advocacy and welfare services final report? Is that the report you are referring to?
Ms Stevenson: Yes.
Senator WRIGHT: That is the basis on which I have been asking these questions, so thank you for that. It would seem you are making an assumption to suggest that there is an erroneous perception on the part of the ESOs when they are actually having the experience of having to help people to process the claims without necessarily having consulted with them to find out if that was the case. I am interested to what degree you are able to measure whether or not that is the case?
Mr Farrelly: It is difficult to measure directly. Even to the extent that there is some perceived increased complexity because people are trying to get used to a new thing, the difference between the reduction in VEA claims and the increase in MRCA claims simply would not offset that. For example, for 2010-11 we are talking about approximately 18,600 primary VEA claims, compared to 3,200 MRCA claims. And the VEA itself is not increasing in complexity.
Senator WRIGHT: Did every ex-service organisations involved in the BEST program submit figures to the department to be considered as part of the 2010 report?
Ms Stevenson: No, they did not.
Senator WRIGHT: Which ESOs did submit figures?
Ms Stevenson: By figures, do you mean their actual workload?
Senator WRIGHT: Yes, in terms of the review.
Ms Stevenson: None were formally invited to do so and none that I can recall provided that information. I can check the information we gathered during the consultations around the country, but they were not part of the report or part of the information provided to the independent review team.
Senator WRIGHT: Please take that on notice and check how you went about that, whether or not they were invited and how you ascertained figures for the ESOs involved in it, whether you had figures for some and not for others.
Ms Stevenson: I can advise tonight that the review team did produce a number of tables and graphs taken from departmental data, not by ex-service organisation or BEST grant recipients by recipient. However, they did provide a range of tables on where the clients were populated across the country, where the concentrations of veterans were, where the concentrations of veterans centres were by local government area. Quite a significant amount of information was made available during the consultations and at the end of each round of consultations, and much of that material was published on the website as part of the report when it was made available in February 2011.
Senator WRIGHT: Am I correct in understanding what you are saying is that it was based on population?
Ms Stevenson: Population and workloads, that information was there. It was made available to ex-service organisations for their review. But it is not down to the level you have asked for.
Senator WRIGHT: How were the new funding arrangements as of 1 July 2011 allocated to individual ex-service organisations? I am interested in how that decision was made.
Ms Stevenson: The starting point was the beneficiary populations per state. We looked at the total amount of funding available and took the client numbers within individual states, and the amount of money was allocated on a pro-rata basis. Then we looked at each application. If one state was not going to utilise all its funding, the funding was redistributed across other states. We then looked at eligibility criteria that the minister had requested. We were still unable to fund new applicants unless there was a critical need for them in an area that was otherwise unserviced. Otherwise it was based on funding from the previous year, consistent workload trends. We had a very good look at capital equipment—items like computers—particularly in light of funding that had been provided in previous rounds.
Senator WRIGHT: Was the number of claims processed by particular organisations part of that assessment process?
Ms Stevenson: Yes.
Senator WRIGHT: Are there any organisations that experienced an increase in claims in the past one to two years?
Mr Farrelly: If we could take that question on notice. I should say that, while workload is a factor and it has been a factor in every round for the last four or five, there is not a funding formula along the lines that one VA claim equals one unit of work or one advocacy claim handled equals two units of work. It is not a fee-for-service arrangement, simply because different ESOs face different funding structures.
I will give you an example of two organisations, each of which handles a thousand primary claims a year. One of them could be asking for $80,000 and the other for $20,000. If there is $50,000 to allocate who gets the money? When we have looked at this issue and when we have discussed it with the ESO roundtable the differences really depend upon whether the organisation is volunteer based or has paid practitioners—that is, salaried positions. So workload is an important factor but it only gets you so far because ESOs have different cost structures.
Senator WRIGHT: That is interesting. How does being volunteer based or having salaried positions affect the assessment? Can you tease that out a little bit more? How would that determine the allocation of funding?
Ms Stevenson: One major determinant between a largely volunteer practitioner organisation and a paid salaried organisation is that a lot of the volunteer practitioners are looking more for consumables, capital equipment items, travel reimbursement and those sorts of things whereas salaried organisation perhaps have a number of advocates who attend the VRB to represent the claimants. What the review said—and it has been the rule ever since—is that at least 20 per cent of the funding has to be quarantined to enable just those basic items to keep an organisation running to still be funded. So no more than 80 per cent is then available for salary and a minimum of 20 per cent is available for those organisations primarily run by volunteers. That is the starting point to protect a level of funding for non-salaried organisations.
Senator WRIGHT: I want to come back to the question on whether you have data which would indicate which organisations have experienced an increase in claims. You said you would take that on notice. Thank you for that. What I would like to follow up on is whether those organisations which have experienced an increase in claims, if there are any, are receiving more funding under the BEST program in order to respond to the increase in claims or their funding has been cut under the funding arrangements that took effect on 1 July 2011. I would like to know for each of those organisations. So there is a bit of cross-analysis there. Finally, what proportion of claims are being handled by volunteers working for ex-service organisations compared with the proportion of claims that are being handled by paid employees?
Ms Stevenson: Those figures are available and I can provide them.
Senator WRIGHT: Thank you. I should indicate that the thrust of my questioning has arisen from concern that has been expressed to me that the sector is becoming increasingly reliant on volunteers in order to try and meet the need and that there are certainly some ESOs that are struggling to do that and be effective.