Program 1.7 provides an updated actuarial assessment of the movement in the liability for income support and compensation under the Safety Rehabilitation and Compensation Act 1988 (SRCA) and the Military Rehabilitation and Compensation Act 2004 (MRCA).
This program represents the movement in the long-term liability based on the advice of the Australian Government Actuary. The movement is recognised as an expense in DVA’s financial statements. Due to the nature of the provision there can be significant adjustments between years. Movement for the liability for the past two years is shown in table 19.
Historically there have been significant changes to the estimate year on year and these are recognised as adjustments in the year the adjustment occurs. It is expected that adjustments will continue to be made on a year to year basis as claims are received and additional information about claims likely to be made improves.
Additionally, the small decrease that was recognised in 2012–13 has occurred due to a number of factors, including a change in the calculation methodology of the provision. In 2011–12, the provision was calculated utilising the Government’s 10-year bond rate (3.1 per cent) but for 2012–13, to more accurately reflect the long-term nature of the provision, the Department used a yield curve derived from the yields of Government bonds of various durations over the expected period of future payments.