Last week the public was justifiably outraged as the culture of unlawfulness at the highest levels of government and the public service was laid bare in the Robodebt Royal Commission. With no basis in law, the robodebt scheme purposefully robbed half a million vulnerable Australians to the tune of $1.2 billion over four years, with a human toll including multiple suicides.
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Not yet well known to the public is that the Morrison and Albanese governments have presided over an equally vile, morally bankrupt and unlawful taxation scheme which puts even robodebt to shame - a scheme which has literally stolen somewhere in the order of $10 billion from tens of thousands of people who were seriously injured or permanently disabled while serving this country in uniform.
Like many civilian superannuation or life insurance schemes, the various military superannuation funds provide invalidity lump sum benefits for members so badly injured that they are then discharged from the defence force on medical grounds. Typically these lump sums are received as fortnightly payments, after the member forfeits the entire accumulated amount of their employer's contribution to the scheme. Given these payments can be reviewed or revoked at any time based on the individual's degree of invalidity, at law they do not equate to a pension or a superannuation income stream.
Yet for decades the Australian Taxation Office, Commonwealth Superannuation Corporation and Treasury have unlawfully treated these payments as taxable income. Worse, means testing against these unlawful determinations of annual taxable income have denied affected veterans and their families access to family tax benefits and other desperately needed support. Some have lost hundreds of thousands of dollars, the difference between owning a home or living on the poverty line while relying on charity.
As with robodebt, the human toll has been devastating, including financial distress, family breakdowns and suicides.
In 2020 a full bench of the Federal Court ruled that the government's taxation of these benefits had in fact been unlawful. The Court's ruling and directions have thus far been largely ignored by government.
Had a white collar criminal network scammed billions of dollars from disabled veterans, government officials would have held press conferences while the perpetrators were thrown in jail. But since this 2020 Federal Court ruling the responsible public servants and their gormless ministers have sought to "redress" this travesty by retrospectively legalising their unlawful conduct. Efforts by the Morrison and Albanese governments to develop the necessary bills and pass them through parliament have been grossly misrepresented as "closing loopholes" or "meeting the policy intent" rather than in fact deliberately contravening decades of actual law as it was upheld by the Federal Court.
Perversely, the draft Treasury Laws Amendment (2022 Measures No. 4) Bill 2022 now under review in parliament proposes to enshrine the unlawful tax scheme for veterans and Commonwealth officers who were medically discharged prior to 2007 or those who have joined the newest military superannuation scheme since 2016. This only weeks after Veterans Affairs Minister Matt Keogh announced the development of a single veterans entitlements act to replace three existing dysfunctional acts in response to the first "urgent" recommendation of the Royal Commission into Defence and Veteran Suicides.
The absurdity of this situation is already beyond parody, but it gets even worse.
Two weeks ago, Defence Force Welfare Association witnesses - representing the position of the RSL, the Alliance of Defence Service Organisations and hundreds of thousands of veterans across the country - put to the Senate Economics Legislation Committee a cogent set of recommendations to properly amend the bill and finally resolve this long running fiasco. Witnesses representing peak accountancy bodies recommended similar measures. Yet the Committee's written report published last Friday mocked this testimony, ignored or misrepresented the most crucial evidence, and recommended not one single amendment to the relevant section of the bill.
The anger in the veterans' community over this issue is now visceral.
Prime Minister Albanese has been rightly scathing in his criticisms of the previous government's robodebt injustice, but his name is now written all over the even more reprehensible veteran invalidity benefits taxation travesty. He must now do the right thing by veterans and their families by implementing DFWA's proposed amendments to the Bill and passing these into law without further obfuscation or delay.
- Stuart McCarthy is a medically retired Australian Army officer whose 28-year military career included deployments to Afghanistan, Iraq. Ethiopia and Eritrea, Bougainville and Indonesia.
