A major report into support for Australian veterans says the $13.2 billion system is too complex, poorly run and fails to meet the needs to those it is intended to help.
The Productivity Commission report released on Thursday dropped an earlier proposal to scrap the Department of Veterans' Affairs altogether, but was still scathing of the "ineffective" system - calling for a new statutory agency, the Veterans Services Commission.
About 166,000 veterans and 117,000 dependants are supported by the system, some parts of which date back to the 1920s.
"The system fails to focus on the lifetime wellbeing of veterans," the report said.
"It is overly complex, difficult to navigate, inequitable, and it is poorly administered (which places unwarranted stress on claimants)."
Ideally, the report said, the system should be managed by the Defence Department, but "given a lack of trust and confidence by veterans in Defence to exercise this policy role, and strong opposition to the change, this is not realistic or feasible at this stage".
The commission said the system should be simplified by moving to two compensation and rehabilitation schemes by July 2025.
The first scheme would cover an older cohort of veterans with operational service, based on a modified Veterans' Entitlements Act 1986.
The second would cover all other veterans, based on a modified Military Rehabilitation and Compensation Act 2004, and over time will become the dominant scheme.
Meanwhile, draft laws introduced to parliament on Thursday will make it easier for veterans to receive medical care, the government says.
The proposal will mean about 4000 ex-servicemen and women will no longer pay up-front treatment costs, provided they have Department of Veterans' Affairs health cards.
"These amendments will mean better outcomes for veterans as they will have easier access to treatment as and when they need it," Veterans' Affairs Minister Darren Chester told parliament.
