Compensation payments spike by $9b with PTSD affecting more young veterans

Compensation and pension payments to veterans will surge by $9 billion over five years as the federal government moves to clear a massive backlog of claims by former military personnel.

The veterans’ payments represent one of the biggest budget blowouts since December’s mid-year budget update, alongside unexpected increases in disaster relief payments, childcare subsidies and unemployment benefits.

Government sources said growth in the number of young veterans being treated for PTSD helped explain the recent surge in compensation claims.Credit: Getty Images

Finance Minister Katy Gallagher said the budget contained a “very substantial increase” in veterans’ rehabilitation and compensation payments, reflecting a concerted effort to clear a backlog of 41,000 unprocessed claims that Labor faced when it took office in 2022.

“They’ve all been allocated; they’re all being processed,” Gallagher told this masthead when asked about the outstanding claims during Tuesday’s budget lock-up.

Gallagher said veterans were “getting access to the compensation they deserve” after volunteering to serve their country.

Government sources said growth in the number of young veterans being treated for post-traumatic stress disorder helped explain the recent surge in compensation claims.

Department of Veterans’ Affairs projections show payments relating to military rehabilitation and compensation claims are expected to grow by $6.5 billion over the next five years as the government brings in extra staff to clear the backlog.

Permanent impairment compensation claims are projected to spike to $5.1 billion in 2025, up from $2.8 billion this year. Payments are forecast to return to around $2.8 billion a year when the backlog is cleared.

Payments relating to Defence Force superannuation benefits will also increase by $2.1 billion over the next five years, reflecting changes to invalidity payment projections.

Former veterans’ affairs minister Andrew Gee told the Royal Commission into Defence and Veteran Suicide in 2022 that there was a clear link between the huge claims backlog and suicide rates in the defence community.

Gee said at the time he was forced to cut $430 million from the department, stymying efforts to get veterans the support they needed. He said the department was struggling under limited staffing and the system was “crying out for reform”.

The royal commissioners will deliver their final report in September after hearing from more than 340 witnesses and receiving almost 6000 written submissions.

An interim report found that a slow and complex compensation claims process could harm people’s mental health and might contribute to suicidality.

Outgoing Australian Defence Force Chief Angus Campbell used the final day of public hearings in March to unreservedly apologise for failures that had contributed to high rates of suicide among current and former service members.

Disaster relief payments are forecast to grow by $3.9 billion more than expected in December because of higher than anticipated spending related to flooding in NSW in 2021 and 2022, as well as flooding associated with Tropical Cyclone Jasper in north Queensland last December.

The National Disability Insurance Scheme, one of the biggest budget pressures, cost $44.3 billion last year, $2.4 billion more than forecast in last year’s budget.

But the revised outlook of $56.5 billion for 2026-27 – up from $55.9 billion last year – indicates the scheme’s growth will slow as Labor’s reforms come into effect.

Payments related to JobSeeker income support are expected to rise by $2.7 billion over the next five years because of a projected increase in recipients and changes to the composition of payments.

An unexpected increase in research and development tax incentive claims by companies is forecast to lead to a $2.6 billion increase over the next five years.

These blowouts have been offset by a $3.5 billion decline in payments to the states and territories because of a reduction in GST receipts, driven by consumers cutting back on discretionary spending.

Lower than expected spending on medical benefit payments and road transport projects will save the government $1.3 billion and $1.2 billion respectively over the next five years.

The government is also expected to pocket $2.5 billion over the next five years because of lower than expected payments to carers, students and single parents.

If you are a current or former ADF member, or a relative, and need counselling or support, contact the Defence All-Hours Support Line on 1800 628 036 or Open Arms on 1800 011 046.

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.