Cameron Thompson (Blair, Liberal Party) Share this | Link to this | Hansard source

It is a great privilege to be speaking on the Defence Force (Home Loans Assistance) Amendment Bill 2006. The impact of the armed forces in the area of my electorate is really significant. In the electorate of Blair, one of the major industries is the defence forces, particularly through the RAAF base at Amberley, and that is becoming more and more a significant part of our community. The bill we are debating today helps to transfer the benefit of armed forces deployment to RAAF Base Amberley right down to the grassroots level. It results in greater local investment in housing and construction. It helps to drive the local economy and it demonstrates to local people what a magnificent investment it is, on behalf of the Commonwealth, to continue to raise, train and sustain our armed forces in the defence of our country.

The link between the electorate of Blair and the RAAF goes back a long way. In fact, it goes way back before the electorate of Blair was named the electorate of Blair. It goes back to December 1938 when an area of 882 acres in the parish of Jeebropilly, as it was then, was identified for RAAF Base Amberley. That has become a driving force for industry in the area. This Defence Force (Home Loans Assistance) Amendment Bill 2006 means that what was a bare paddock in 1938—882 acres with a few cows on it—has become a powerhouse of our local economy, with 3,500 service personnel involved in a range of pursuits. Might I say, under this government, it is a base that is growing dramatically.

We have seen, from the Commonwealth in recent times, the investment of $2 billion in the purchase of C17 aircraft and that investment is flowing directly through RAAF Base Amberley because that is where the C17s are to be located. At that base, we have the Wedgetail surveillance aircraft under construction. Those aircraft are going to be based at Williamtown but they are currently located at Amberley under construction, and the RAAF and the defence contractors are doing a brilliant job there in creating this wonderful new capability for our defence forces. But those are just a couple of the facets of the work that is being undertaken by Defence personnel on RAAF Base Amberley. We have a massive redevelopment going on at Amberley. In the 2006 budget, $285.6 million was allocated to the redevelopment of Amberley for accommodation, workshops and other upgrades. We have seen the relocation of the 9th Force Support Battalion and with that allocation has come other personnel.

In recent budgets we have seen allocations to the construction of new homes. At Grammar Park Estate eight new four-bedroom homes were reconstructed as a result of the 2004 budget at a cost of $2.3 million. We have had $5.6 million allocated to 22 new ADF homes around Forest Lake and Springfield Lake, 10 new homes at Winston Glades and another 20 at Kensington Lakes. These projects together have generated 195 new jobs locally—and that is just in housing construction. As I said, there are 3,500 service and civilian personnel at Amberley. Those people generate tremendous impact on our local economy. We have got a big project underway in the provision of 295 new singles accommodation at Amberley—this is part of the Single LEAP project which is going on across Australia—and recently announced, in March 2006, was $50.7 million for 162 new homes at Fairview Rise in Amberley.

That investment in homes and construction and support of the defence capability at Amberley is just one facet of the investment coming from our government. That is a part of the direct investment. What we are talking about today is the indirect investment, the opportunity for people located at Amberley because of their service employment to be able to access home loan assistance from the Commonwealth. The Defence Force (Home Loans Assistance) Amendment Bill 2006 is designed to extend the operation of the Defence HomeOwner Scheme for 12 months beyond its current finishing date of 31 December 2006. Under this bill Defence Force personnel who have been in their work for five years or who have been posted overseas on warlike service have the capacity to access a subsidy from the Commonwealth on loans of up to $80,000 for the purchase of a home. We all know the tremendous difficulty faced by service personnel who are moved backwards and forwards across Australia in the pursuit of the defence of this country. It can be very hard for them to invest in homeownership because six months down the track they might be off somewhere else. This is a real incentive. I say to young people considering a career in the defence force: do not just look at the salary; look at issues such as this. Where else in society can you look to get access to a subsidy of 40 per cent of the interest costs on an $80,000 loan? It really is a fantastic allocation and program and an excellent incentive for people to consider the Defence Force as a career. Later in my speech I will look to the fact that currently we are reviewing that scheme, but the purpose of this particular bill is to extend the current scheme for a year to give certainty to people who are in the Defence Force who want to access that subsidy and to reassure them that the government remains committed to their entitlement and to their opportunity to participate in homeownership.

This was a scheme originally implemented by the former Labor government with a cap of $40,000. In November 1996 the Australian government passed legislation to amend the act to reduce the basic service qualifying period from six to five years full-time service, to increase the maximum amount of the loan to $80,000 and to extend eligibility to active and emergency reserve personnel. That change by the government has served us well.

I will go through initially what people receive as a result of this. If you look at the entitlement of 40 per cent of the interest expense on a loan amount of $80,000 you are talking about a subsidy which is currently worth about $120 a month over a 25-year loan. And it is not just once you can access this as a member of the defence forces; you can access it repeatedly on subsequent homes that you may purchase. What a great incentive this is. One of the important things that you should consider is that, if you are married to someone who is also in the defence forces, you can access that amount of $80,000 twice—you can have a subsidy applying to a loan of $160,000.

As things stand the act specifies a finishing date of 31 December 2006 to this loan, which is linked to the National Australia Bank. As I said, there is currently a review going on and honestly it just would not be possible to complete the review and get it signed off on prior to 31 December 2006, which is why we are looking at the bill today—to extend it by another year and to give the certainty that members crave.

I did speak about the fact that there are particular advantages. Not only is there a five-year qualifying period for people who are in the services, who can access a loan of up to 20 years, but also for people who have operational or warlike service that five-year qualifying period is waived and the maximum period of the subsidy is up to 25 years.

This program has a particular objective, which I have already touched on—to attract and retain ADF personnel, to encourage home ownership during service and to assist members who are in the ADF to reintegrate into the community on their return to service life. This program has been open to permanent Defence Force members who enlisted on or after 15 May 1985. To give members of parliament an idea about how well it is being taken up, the statistics show that the value of Commonwealth subsidy paid through this program in 2003-04 added up to $8.269 million; in 2005-06, $9.289 million was paid through this subsidy, up from a figure of $4.4 million back in 1999-2000. The number of payees has almost doubled in that time, from 3,970 back in 1999-2000 to 6,683 in 2005-06.

Statistics for 2003-04 show that at that time 845 people were seeking to buy homes—that shows that it is an effective program—365 were refinancing, five were enlarging their homes, 160 were building their homes and 53 were renovating their homes as a result of this program. It really is a very strong incentive for Defence Force membership and something that I strongly endorse.

However, as I said at the outset, there has been a request for quotation put out to the market by the Commonwealth to ask interested organisations—obviously banks and other lenders—to prepare a report on the Australian home loan market, to look at the current scheme and at issues such as calculating the net present value of the subsidy available under the defence home ownership scheme and to look at other facets such as a description of the types of home loan products and services out there. At the time that the former Labor government first initiated the home ownership scheme there was not the range of banking options people have today. There was not the range of home ownership and loan providers that are currently out there because of the immense growth that this government has generated in the economy, the immense positive development that we have seen and, of course, the new opportunities.

So we want the scheme to be competitive. We want it to be out there in the marketplace doing what it can for these defence personnel so that we are getting the maximum benefit in terms of all those objectives I spoke about earlier. Four options are currently being considered for a scheme to replace the defence homeownership scheme. We are looking at issues such as providing a scheme under which subsidy assistance would not be tied to a particular home loan provider, assistance tied to a single home loan provider or a panel of home loan providers, deposit assistance linked to career retention or mobility points within the defence forces, and an allowance for owner-occupiers. These are the types of options that are out there.

There is a website for defence personnel to give feedback on the defence homeownership scheme and this current review. I urge members who have not given their feedback to that—I am talking about Defence Force members—to do so, because we do want it to be competitive. I would like to compliment the Defence Families of Australia organisation, because if you go to the website you will find that this organisation has already had quite a bit to say about the shape of the scheme it sees as being worthy going forward. I have the submission of the Defence Families of Australia organisation with me. In their submission to General Evans they say that, of the range of options, they believe that more than one should be available to families because, of course, at different times in people’s lives there are different facets of those options that would be desirable.

Let’s go through the options and talk about the kinds of things that Defence Families of Australia have had to say. The first option is an open market subsidy. Defence Families of Australia say that the idea of a wider panel gives greater choice in fees, interest rates and accessibility to the provider of choice. They make a very valid point about the great diversity of property values. They cite, for example, the case of considering the cost of housing in Sydney or in Rockingham. They want to see options that take that into account. One option, they say in their submission, may be to link the length of service to the subsidy amount. For example, if you had served in the defence forces for more than five years you might receive a subsidy on $200,000, but if you had served for 10 or more years you might receive a subsidy on $350,000. That sort of incentive, they say—and I think this is a very important point—would be a weighty consideration for someone at the seven- to eight-year mark in their stay with the defence forces. It would provide a real incentive for them to stay on, perhaps, for 10 years and thereby overcome what is currently a departure point for Defence Force personnel.

The second option is a tied homeowner subsidy. The Defence Families of Australia organisation says that for a lender to qualify to be on a panel under such a program—although, as I said before, you could have just one provider or a panel of providers—that lender should bid for its position on the panel and be reviewed on a regular basis. I think that is a pretty good and perceptive suggestion by Defence Families of Australia. The way the market changes, you do want to have regular updates of their position to be assured that they remain competitive. Under the graduated deposit scheme the Defence Families association says that we could look at a tiered system. For example, if you have served five years you might get five points along the graduated deposit scheme program, but if in that time you have moved three times you might be given an extra three points, giving you a total of eight points towards your entitlement. I think that is a very incisive measure, too.

They do speak under option 4, which is about owner-occupier allowances, about the issue of a redraw facility. On that, the Defence Families association makes what I think is a very interesting alternative submission. They say a concept which has not been covered in the papers but which has previously been floated with Defence is a part ownership and lease arrangement with the Defence Housing Authority. There could be a 49 per cent to 51 per cent ownership arrangement, with the member holding 49 per cent and the DHA owning 51 per cent. Mr Deputy Speaker Scott, I think you will recall only about a year ago this was an idea that was floated more generally by one of the think tanks—I cannot remember which one—suggesting ways by which we could encourage homeownership in Australia more generally. I think the defence homeownership scheme taking up such a suggestion would be a great way to advance the concept out there in the Australian community and perhaps pilot it. I urge the government to consider that opportunity, because of course you are completely reducing the threshold of what it means to get into homeownership in the first place. You are halving it. Why should it be that you have to have 100 per cent in effect to have title over your home? Why shouldn’t it be that you should be able to operate at a 51 per cent level? I think that is a very good submission that comes from Defence Families of Australia and I commend that to the House and to the defence department in considering the various options.

David Fawcett (Wakefield, Liberal Party) Share this | Link to this | Hansard source

I would like to rise to support the Defence Force (Home Loans Assistance) Amendment Bill 2006 today. In so doing, I would like to talk about the content of the bill but, importantly also, the context of the bill because very little operates in isolation. This bill has appropriate measures that have been taken by the government in respect of the context, the environment, that we are working in at the moment. I would then like to look, in contrast, at some of the alternative approaches.

Firstly, the content of the bill, as previous members have described, is fairly simple in its outcome, which is to extend the operation of the Defence Home Owner Scheme from 31 December for 12 months. The immediate purpose of this is to permit certificates to be issued so that ADF members can access that assistance up until December 2007. It preserves the entitlement of those people who have not yet accessed it and it gives effect to an agreement between the Commonwealth and National Australia Bank to extend the franchise through until December 2007. This existing scheme provides members of the ADF with a subsidy on the interest and expenses incurred on a home loan to the maximum value of $80,000 and is currently tied to the National Australia Bank. The issue is that it is still tied back to a time when pretty much all home loan lenders were the banks. These days there are a range of institutions which are providing finance and, more importantly, there are a range of ways that finance is presented. I think one of the encouraging things about this review is that it is looking to try to find some of those more innovative ways that will encourage people to retain or remain in the service.

In context, this is not a new issue. In fact we can go right back to the establishment of Australia and the First World War and we can see that there are a number of ways that we tried to tie homeownership or landownership with service as an incentive or a recognition of service by Australians. The soldier settler scheme is one. There were war service loans and some old schemes that were in place when I was still serving, such as the $25,000 that was available. In the context of the day, that was a sizeable deposit and contribution on the way to actually owning a home. Obviously in the context of today, $25,000 does not go very far at all, which is why this review is important because it is looking at the context of the cost of living, the style of living, the style of finance. Some of the ideas that are coming forward from the defence community itself are very innovative and I encourage the defence department to accept their comments and consider them seriously and be prepared to move beyond the paradigms that have perhaps governed how we have approached these things in the past. The world out there is moving pretty quickly, and if we want to attract people to remain in defence we need to be giving them the same kinds of innovative and flexible opportunities that many other employers and financial institutions are giving. One good example of that is the concept of a graduated scheme where we recognise what service life has imposed on people in terms of the number of moves or the number of years of service and graduating that towards the level of support that they are given.

In context, these measures are important because the issues of recruitment, retention and resettlement are fundamental to the conditions of service for people who volunteer to sign up and serve Australia. These are not new issues. In the days when Britain ruled the waves, they got around their recruitment issues with things like press gangs, which went ashore with a squad of marines and rounded up whomever they could find, took them back to the ship, sailed off and that was it. You were then in the Navy and subject to all those forms of discipline.

Even in Australia we have looked at conscription at various times—in World War I, although conscription was rejected; through to Korea and Vietnam, where conscription was adopted for a period to overcome recruitment issues. In respect of the contemporary Defence Force, in the late 1980s the Joint Standing Committee on Foreign Affairs, Defence and Trade held an inquiry into the number of people leaving the Defence Force. In a transcript of proceedings in November 1988, Senator Maguire said:

... the wastage rates in Australian Defence Force have for several years now significantly exceeded historical levels ...

Even in our contemporary environment we can see that it is not a new problem to be looking for ways to encourage people to remain in the Defence Force. An issue that comes out later in that transcript is an important one for us to understand in the broader context of retaining people and maintaining a capability in the Defence Force. Senator Maguire said later:

A central issue there is the pattern of wastage, that is, who is leaving and when. It is also important to remember that the lead time to replace a highly skilled and trained individual can be at least as long as that required to introduce into service an item of capital equipment.

Further in the document, he said:

The extent and magnitude of wastage in some areas is such that it will adversely affect the ADF for at least the next decade. In sum, the effects of wastage identified by the Joint Committee amount to a loss of operational capability. It is manifestly obvious that the prevailing excessive level of personnel wastage is damaging the organisational health of the ADF. Wastage is undermining the experience and competence levels of personnel.

That finding was made back in the late 1980s and I guess that was the genesis for the development of some of these incentives, including the 40 per cent discount on home loans—the amount after May 1985 that went up to $40,000. It is interesting to note, though, that the press article in the Sydney Morning Herald that announced the 40 per cent discount also noted that a member of the public would pay 16 per cent whereas a member of the Defence Force would pay only 9.6 per cent. I am glad to say, in the context of today, that on the open market you can get interest rates of well under eight per cent without any subsidy.

It is important to also consider, having recognised this problem with wastage—the loss of skills and competence in the ADF was affecting capability—what the Labor government did. A corporate support program was initiated in the early nineties, and the downsizing of the ADF from 1989 to 1995 by some 6,500 had a big impact on the capability, experience levels and moral of the ADF. Some of those impacts, particularly with CSP, continue today. They also have an impact on the recruitment and retention of people within the ADF.

To contrast that, there has been a good investment by this government in obvious areas of the ADF. The 2006-07 budget committed some $194 million over four years to boost recruitment and retention, with bonus payments for key personnel in 31 selected trades; rehabilitation programs for injured personnel; the raising of the awareness of high school students and cadets in the large range of careers available within the ADF; and revisiting and reinvesting in options—whether through the regular forces or the reserve forces—for people to get a technical trades qualification with the ADF. So this boost in funding aimed specifically at recruitment and retention is important. The investment in raising two new battalions is important in reducing some of the pressures that are on people’s operational tempo, which has a direct impact on their families and on their willingness to remain in the ADF.

Those are important measures. It is also important to see, though, that in the capital acquisition program for Defence, in the defence capability plan for 2006 to 2016, there is some $2.4 billion, which continues the additional three per cent funding over 10 years that was announced in the 2000 white paper.

The important thing to notice here, though, is that we are not just talking about equipment. It is vital that in each of our equipment decisions we also consider the impact on personnel and the requirement of personnel to make that a capability. The Army for a long time has used the posted construct where it looks at a capability as consisting of the people as well as the organisation, the support, the training, the equipment and the doctrine that goes with that.

So, as we look at things like the $3.7 billion that has been put aside to reduce the number of helicopters in ADF use, that is not just about modernising the fleet. It is important to see that one of the underpinning elements of that decision is to make sure that in terms of our training system and our support system—even through to operational levels—we are reducing the number of personnel and the number of trade sets that are required to support a capability. Where you can have common training systems and common logistic systems you are reducing the requirement for the total number of people, which frees us up to move those people into other areas of Defence that desperately need people to commit to the Defence Force.

In a similar manner, the ADF’s maritime patrol aircraft, the replacement for the Orion, will be looking not only at a manned platform but at UAVs—unmanned aerial vehicles. I was recently down at Edingburgh at one of the trials that was launched out of Edinburgh to operate off the North West Shelf. That is going to see us obtain a reconnaissance and particularly a surveillance capability that will be operating for extended periods over remote areas with a requirement for far fewer people—both on the platform and maintaining it. So there are a number of ways we can be smarter about the way we purchase equipment such that we are smarter about our requirement for personnel within the ADF.

Moving on from the purchase of equipment, the next area that is important to look at is the investment in defence industry, because defence industry forms an important part of our capability. Part of the skilling and training of our people is to give defence industry the capability to respond quickly to government requirements. And that quick response and appropriate equipment protects our people in the field and gives them the confidence that this government is looking after their interests and giving them the equipment they need to carry out the tasks that we assign to them.

So, although it seems a bit far removed from recruitment and retention issues, even the investment that this government is making through the Skilling Australia’s Defence Industry program, SADI, is an important step to making sure that we are providing the right people with the right skills to support our men and women in uniform so that they have confidence, and so that their families have confidence that this is a place where their husbands and wives, and sons and daughters, should enlist and work to serve this country.

So there are a number of ways that this government has taken significant decisions to support defence industry and the whole defence industry roundtable—which has been kicked off again—to look at the best way we can engage with industry. It is just one more plank. Again, from a systems engineering perspective it is one more interface that the government needs to be working with to make sure that recruitment and retention issues for our people are addressed.

So, whilst I welcome this bill—and particularly the intent behind it to have a review to give our servicemen and servicewomen more options in terms of how defence can reward their service to the country, with options to support their housing—there is more to be done, particularly in the area of overcoming some of the unintended consequences of decisions from the late 1980s with the CSP program and the way that that has broken the chain of command in some areas. It has turned a lot of our leaders into managers and taken away their focus from command to managing stakeholder relationships.

Both the department and the government need to be prepared to challenge some of the mores and the fads, if you like, in the business community of the late 1980s and bring back the balance, not only in the policies such as the housing assistance but also in the force structures and the personnel, to make our Defence Force a place of first choice to work for the young men and women of Australia.

Bruce Billson (Dunkley, Liberal Party, Minister Assisting the Minister for Defence) Share this | Link to this | Hansard source

in reply—Thank you for your invitation to sum up the debate. I would like to thank all those contributors from both sides of the chamber. Many of the contributions remind us about the etymology of the Defence Force (Home Loans Assistance) Amendment Bill 2006, how things have changed and the influences on what encourages and rewards members of the Australian defence forces to join, perform magnificently and then extend their career within the ADF. Many of the contributions, particularly the very insightful and well-informed contribution from the member for Wakefield, touched on those things. There is an interconnectedness of many themes and challenges and I tried to say that our goal should be to make sure that we have the world’s best ADF, involving world-class people that have fulfilling experiences in their careers with the defence forces. There are a range of influences on that, such as making sure that they are properly supported, properly equipped and properly remunerated in a contemporary and competitive labour market.

We must have due regard, as I said in the House yesterday, for the fact that we might recruit the member but we need not only to retain the member but to retain their family. I know your good self, Mr Deputy Speaker Scott, and Mrs Scott is probably as influential as Mrs Billson is, in that I might have many good ideas, but if she is in my earhole, as I imagine if Mrs Scott is in yours, that is very persuasive. This recognises the crucial role of families and the support of families in making sure that the assistance is there for those who are members of the ADF, recognising the many other aspirations they have for their lives.

This particular bill touches on one of those matters. A number of speakers talked about the history and have shown some understanding of the changes not only in the property market and the finance market but in the nature and tempo of what is being asked of our men and women of the ADF. All of these have an impact on how well a benefit such as is embraced in the Defence HomeOwner Scheme plays out, rewards, recognises and supports those members of the ADF.

That complexity and those interrelated factors are many, and that is why the review that the government has instigated to look at the best future shape of the homeownership assistance scheme is so important. But that complexity also means the work needs to be done well, and this bill seeks to provide that opportunity. Of course, we all would have liked this extensive review to have been concluded so that we could seamlessly transition from the current scheme to the future arrangements. But, given the complexity of the issues that have been touched on in the debate, that has not been possible, and that is why we are seeking this extension.

I welcome the opposition’s contribution, where they largely echoed the government’s statements about what we are seeking to do, the aspirations we have for the homeownership assistance scheme for members of the ADF and the influences and options that need to be considered. My colleague the member for Blair has a very substantial population of serving members and their families in his electorate and his comments were quite insightful and very well placed and well informed as well. I commend him for that contribution. The member for Fisher I think addressed some of the incorrect assertions of the member for Barton, talking about military bases being placed willy-nilly around the country in marginal seats, and I am grateful for the member for Fisher’s considered response, because we all know that kind of loose talk is completely unhelpful and undermines the great deal of analysis that goes into placing military installations and equipping them to meet the national security and defence challenges of our nation.

Let me remind us all of why we are here discussing this legislation. The Defence HomeOwner Scheme is being reviewed with the aim of updating the scheme to make it more supportive of personnel recruitment, retention and resettlement. Defence is seeking to identify ways of improving the current homeowner scheme, which has been in place since 1991. Our aim is to develop a contemporary homeownership scheme that will support Defence Force recruitment, retention and resettlement, recognising the changes in the property market, the finance market and other influences on the scheme itself.

The existing loan franchise arrangement with the National Australia Bank was due to expire on 31 December this year. Agreement has been reached to extend the contract by 12 months while Defence finalises proposals for a new scheme. Of course, the Australian Defence Force members may still access subsidised housing loans while replacement arrangements are being contemplated and developed. Accordingly, enabling legislation for that purpose was introduced to extend the legal authority to issue certificates of entitlement until 31 December 2007.

I look forward to being able to bring a revised arrangement for consideration into this place in the new year. All of us in this place would agree our combined intent is to recognise and support our outstanding men and women of the Australian defence forces. On that, we are one. We admire their work, we respect their competence, we commit ourselves to support them in their important work in our national interest and I commend the bill to the Committee.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

Ordered that the bill be reported to the House without amendment.