Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

There are two aspects to the Defence Legislation Amendment Bill (No. 1) 2009 which are worthy of brief mention. The first concerns the payment of compensation to those who suffer unintended collateral damage and loss as a result of action against enemy forces, especially where those affected are local people whose support is so important in areas of engagement by Australian forces. Discussions on the merits of such a policy as provided by the Parliamentary Library are quite useful in this context and it is not worthy at this stage of further comment on my part. Suffice to say that the government’s preference to pay compensation as recognition that the loss caused should not have to fall on innocents is a most serious stricture in modern warfare. But where winning hearts and minds is so important, history tells us that it is vital in stemming the shifting allegiance to the insurgents. If Vietnam taught us anything, it taught us at least that much.

The point here though is not about the policy but about the technicalities of how the compensation is paid. Clearly, the system of act of grace payments is designed for ad hoc losses, losses that are not anticipated, but where it is considered that there is some public responsibility in the absence of any other means of compensation for innocent victims. In situations such as our military engagement in Iraq and where we are currently involved in Afghanistan there is some certainty, indeed it is almost forecast, that these circumstances will arise. We therefore need a more ready response than the cumbersome procedures in the act of grace scheme. This is simply a pragmatic amendment worthy of support.

With respect to the amendments to the home loan subsidy scheme it is of course natural that upon implementation some matters would arise which were not foreseen at the time of drafting and which require attention to make sure that the intention of the act remains consistent. Clearly, with this bill there have been some unintended consequences, especially in relation to eligibility where there has been a break in service and, naturally, ADF members have been quite confused. The act has not been clear enough and some windfalls have occurred which were not foreseen. These amendments close those loopholes and therefore are also quite worthy of support.

However, this particular program retains some problematic characteristics. As we know the scheme had its origins in the previous government as it sought to introduce additional incentives to retain ADF members in service. I should note however that the cost of the original subsidy which stood at a maximum of $705 per month for those with over 12 years of service on the maximum loan is now, as a result of the cut in interest rates, much reduced, indeed dramatically reduced, at that level by in excess of $300 per month. The subsidy remains valuable in relative terms but at a much reduced cost to the taxpayer.

I make one comment on this particular scheme. That is, while the ADF personnel should be assisted in homeownership like any other Australian and we accept initiatives such as this are important in retaining experienced people in the ADF, there is still a sense of a lack of equity in the totality of the design of the scheme. The reason for that is simply that a large portion of ADF personnel are not in a position to take advantage of the scheme as currently designed. This is not just because of the four-year qualifying period but also because the opportunity to purchase a home might not exist particularly of course in the remote areas of our large continent. This then begs the question of the fairness and equity of defence housing support programs and allowances, particularly between those who have a rental subsidy and those who opt to buy their own home.

This is in fact a serious question for ADF personnel who must find themselves faced with exactly this choice. On the one hand, if you buy, there is a subsidy available and if you choose to rent because purchase is not an option, there is no subsidy. I am not sure how they are advised on the financial implications of such a choice nor am I aware of any modelling done on which that advice can be given. Perhaps we might find out in due course along with an analysis which shows the taxpayer in the long term which is the preferred model having due regard to considerations of equity. Moreover, it is important for serving ADF personnel to know as well and hence my particular interest. With those comments, clearly, the bill is worthy of support.

David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

From the outset the opposition does support these two very important measures for ADF personnel in theDefence Legislation Amendment Bill (No. 1) 2009 . Firstly, there is the tactical payments scheme in schedule 1, which I will come back to in a moment, and, secondly, there is the defence homeownership assistance scheme and the amendments to deal with unintended anomalies arising from the scheme. I do to some extent adopt the words and detail of the speech which Senator Bishop just made.

The most important part of the bill is the introduction of the tactical payments scheme. These provisions provide a mechanism for making expeditious no-liability payments to persons adversely affected by Australian Defence Force operations outside of Australia. The scheme acknowledges that in many areas in which the ADF operates financial compensation for collateral damage to property, injury, and loss of life is often a common expectation of local cultures. Indeed our allies in both Iraq and Afghanistan have for some long time been availed of a capability of being able to settle such matters virtually instantaneously. This legislation will be a great boon to our soldiers who will similarly now be able to settle such issues of damage to property, injury, loss of life and other matters related thereto at the time of the incident as opposed to relying upon the act of grace mechanism which is often cumbersome, very lengthy in its time to resolve issues and essentially, at the end of the day, has its effectiveness eroded by the effluxion of time between the payment and the occurrence of the event.

The tactical payment scheme is a Defence-specific discretionary mechanism. It will still be possible for Defence to have recourse to act of grace provisions in the Financial Management and Accountability Act. Guidance for TPS payments for each operation will take into account the cultural and socioeconomic circumstances of the local people and will be benchmarked against similar policies, as I have already mentioned, applied by coalition partners in theatre. In special circumstances where such claims exceed the financial delegation or fall outside the guidelines, such cases may be referred to the secretary, the CDF or the minister for approval.

The opposition did have some concerns as to the reporting of such matters. Can I say that those concerns have been satisfied. Whilst there is no specific mention in the legislation of the accountability and reporting provisions, the Financial Management and Accountability Act 1997 sets out that there is an obligation to report in the Defence annual report. This is similar to other equivalent schemes such as the act of grace payments and special circumstances payments made pursuant to section 73 of the Public Service Act 1999. Specifically, section 48 of the Financial Management and Accountability Act, together with the finance minister’s orders, mandate that such tactical payments must be reported in the Defence annual report. Tactical payments paid pursuant to this scheme will be subject to audit by the Australian National Audit Office.

I am very pleased to say, with the assistance of the former minister, that the opposition’s concerns regarding accountability and reporting of these payment has been met, and I commend the legislation to the Senate.

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

I thank Senator Bishop and Senator Johnston for their contributions, and the Senate for its support for the bill.

Question agreed to.