Thursday May 31, 2018

The Standing Senate Committee on National Security and Defence has the honour to table its

SEVENTEENTH REPORT

Your committee, which was authorized to examine the subject matter of those elements contained in Part 4 of Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures, has, in obedience to the order of reference of April 24, 2018, examined the said subject-matter and now reports as follows:

On May 7, 2018, the Standing Senate Committee on National Security and Defence held a meeting to study the provisions of the budget implementation bill concerning veterans and members of the military. The Committee heard evidence from the Department of Veterans Affairs, and from Brian McKenna, Director of the Equitas Society. The Committee also received written submissions from the Office of the Veterans Ombudsman and from the National Council of Veteran Associations in Canada (NCVA).

Part 4 of Bill C-74 proposes changes to the Veterans Well being Act (VWBA), also known as the New Veterans Charter, as well as a minor change to the Pension Act. The main changes are as follows:

• As of April 1, 2019, the new Income Replacement Benefit (IRB) would replace four benefits currently provided for by the VWBA: the Earnings Loss Benefit; the Career Impact Allowance and Supplement; the Supplementary Retirement Benefit; and the Retirement Income Security Benefit.

• As of April 1, 2019, the new Pain and Suffering Compensation would replace the Disability Award and provide for a monthly payment for life. Veterans and military members who prefer to receive a lump sum could still do so.

• As of April 1, 2019, the new Additional Pain and Suffering Compensation, similar to the current Career Impact Allowance (CIA), would pay a monthly benefit to a veteran with one or more disabilities that create a permanent and severe impairment and a barrier to re establishment in civilian life, in an amount that varies with the extent of the impairment. However, the CIA Supplement, paid to the most severely injured veterans who face a diminished earning capacity, would be eliminated entirely.

• Finally, veterans released for medical reasons unrelated to their service and their families would cease to have access to the following:

– Income replacement of 90 per cent of their pre-release salary, under the new Income Replacement Benefit to take effect April 1, 2019, unless they were receiving the Earnings Loss Benefit prior to that date;

– Spouse access to vocational rehabilitation if the veteran is unable to take advantage of it, as of April 1, 2019; and

– All rehabilitation services under Part 2 of the VWBA as of April 1, 2024.

The Department of Veterans Affairs indicated that the new Income Replacement Benefit is an effort to streamline and simplify processes, by consolidating several current benefits into one. They also said that veterans who are entitled to the Earnings Lost Benefit, the Career Impact Allowance supplement and the Retirement Income Security Benefit as of March 31, 2019 would see the amount of their benefits protected so that they would not receive less under the new Income Replacement Benefit.

With regards to the new Pain and Suffering Compensation benefit, the Department explained that the amount of compensation would be tied directly to the extent of disability, as is currently the case with the Disability Award. The maximum monthly payment for life would be $1,150, for a veteran deemed 100 per cent disabled. Furthermore, the Department pointed out that military members and veterans who previously received a Disability Award could benefit from an additional monthly amount for life under the new Pain and Suffering Compensation.

Finally, the Department stated that the changes contained in Part 4 of the bill “deliver on this government’s promise of a Pension for Life.” They said that the combination of benefits that is being proposed would “provide recognition, income support and stability to members and veterans who experience a service-related injury or illness, focusing on financial stability as one of the many domains essential to a veteran’s well-being.”

Witness Observations

The provisions in Part 4 of the bill were generally found to be unsatisfactory by the organizations representing veterans who took part in the Committee’s study.

Two of these organizations, the Equitas Society and the NCVA, highlighted the financial disparity that remains unaddressed by Bill C-74 between veterans entitled to benefits under the Pension Act and those entitled to benefits under the New Veterans Charter. Further, they both indicated that the recommendations made by the Ministerial Policy Advisory Group were not reflected in the bill.

These witnesses requested that the government create a new family benefit to parallel the Pension Act’s spousal and child allowances, in recognition of the impact of the veteran’s disability on their family. They also expressed concerns with the clawbacks in place that reduce the income replacement benefits for disabled veterans, including those related to the pension they receive under the Canadian Forces Superannuation Act.

The Equitas Society pointed out that eliminating the Career Impact Allowance Supplement will result in a significant financial loss for the most severely injured veterans faced with a diminished earning capacity who submit an application after March 31 2019. Its replacement with a 1 per cent yearly increase of the IRB was considered inadequate. Instead, NCVA recommended implementing a progressive income model that would reflect what the veteran would have earned in their military career had they not been injured.

NCVA also recommended easing the eligibility criteria for the new Additional Pain and Suffering Compensation benefit, so that more disabled veterans could qualify. In addition, the organization recommended incorporating the Exceptional Incapacity Allowance and the Attendance Allowance from the Pensions Act into the VWBA “to help address the financial disparity between the two statutory regimes.”

The Veterans Ombudsman criticized the lack of information about the complex changes contained in Bill C-74 being provided by the Department of Veterans Affairs to the veterans’ community. He stressed that more transparency and clear communications are needed as soon as possible to ease the anxiety and concerns of serving members and vveterans.

He also expressed concerns around three specific areas of the bill. First, the loss of access to services and income replacement for veterans released for health reasons not related to service and their families. Second, the fact that the transitional provisions of the bill provide that veterans with pending applications for the Earnings Loss Benefit as of April 1, 2019, would be considered under the current act and their amounts protected if greater than what would be provided under the new act, while serving members in the process of releasing in the same situation would be considered under the new act if they release after March 31, 2019. The Ombudsman believes that this distinction could cause members to decide to take their release sooner in order to potentially access more generous benefits. Finally, the Ombudsman questioned why the bill provides for different income replacement outcomes for survivors of veterans who die as a result of a non-service-related death, depending on if they died before or after 65 years of age.

On a positive note, the Equitas Society recognized the benefit of delivering the new Pain and Suffering Compensation through monthly payments over a lifetime by default, instead of the current default lump sum paid under the Disability Award. The organization indicated that this is better for veterans who might be going through a crisis and may be unable to manage a large sum of money adequately.

NCVA stated that it commends the Department of Veterans Affairs for its efforts to improve wellness, rehabilitation and education programs. However, the organization thinks that these programs must be complemented by adequate financial compensation: “financial security remains a fundamental necessity to the successful implementation of any wellness or rehabilitation strategy.”

Committee Observations

Based on the entirety of the testimony placed before us, your committee encourages the Canadian government to:

• create a new family benefit under the VWBA to parallel the Pension Act’s spousal and child allowances, to recognize the impact of the veteran’s disability on their family;

• assess the impact of eliminating the CIA Supplement paid to the most severely injured veterans faced with a diminished earning capacity, in order to ensure that they have equal or greater financial security under the proposed changes;

• quickly provide more details and guidance around the proposed changes, including eligibility requirements and projected impacts on turnaround times at the Department of Veterans Affairs; and

• ensure that a wide range of experience among veterans be represented on the Department of Veterans Affairs’ advisory groups, including veterans who experienced military sexual trauma, and require that the Department of Veterans Affairs report to Parliament annually on the concerns and advise of its advisory groups and how these issues have been addressed or not, including any reasons for decisions taken.

Respectfully submitted,