Giving evidence in Townsville at the Royal Commission into Defence and Veterans Suicide on Monday, Mr Gee said it was immediately obvious to him when he took on the veteran's affairs portfolio the system was "crying out" for major reform.
Asked to clarify if he believed the "errors and delays in the processing of veterans" claims had been a factor in creating a range of health issues, including "potentially suicidality", Mr Gee replied: "Quite clearly there is a connection there … There is no doubt about it."
"You only have to talk to family members who have lost loved ones to suicide, you only have to speak to advocates who are trying to help veterans and you only have to speak to veterans themselves," he said.
Mr Gee told the inquiry when he was appointed to the portfolio in July 2021 he quickly realised he had inherited an "enormous" shortfall in funding for the Department of Veteran's Affairs.
The inquiry heard additional funding for more DVA staff to help clear the growing backlog of compensation claims by veterans and defence members had been trumpeted as a "positive" in the March federal budget.
But in reality, Mr Gee said, those gains had been completely lost by the imposition of a $430.6 million offset to the department's budget.
"I was quite surprised at the magnitude of that … The department (DVA) doesn't mandate this, this is government," Mr Gee said.
"That's the equivalent to the annual cost of running the DVA. Not the benefits that are paid out to veterans, but the overheads and the departmental operational costs."
Pressed by counsel assisting Peter Gray QC whether any of the shortfall required to pay for staffing could have been taken from funding earmarked to pay for veterans' pensions and benefits, Mr Gee conceded it was a grey area and he wasn't sure of the "precise policy".
"From what I can gather from having experienced this, there is a fair bit of discretion," Mr Gee said.
"They just basically want to find the money from somewhere so there seems to be a fairly broad discretion about where it comes from."
Mr Gee famously threatened to quit cabinet on the eve of the March 2022 election if an additional $96 million wasn't found to clear the massive backlog of 60,000 unprocessed DVA, labelling it a "national disgrace".
He told the inquiry on Monday he backed the DVA secretary Elizabeth Clossom's earlier testimony that inadequate funding for department claims processing between 2017 and 2021 and a heavy reliance on inexperienced labour hire staff had compounded the delays in processing claims.
He said placing arbitrary caps on claims processing staffing levels had also indisputably failed.
"It should never be given priority over the needs of ADF members and veterans to get the claims processed," Mr Gee said.
"You should have as many staff as you need to get the job done… that is the bottom line."
The hearing continues.
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