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Wednesday, 4 June 2008
Page: 4433


Mr COMBET (Parliamentary Secretary for Defence Procurement) (1:17 PM) —As a parliamentary secretary in the Defence portfolio, I am very pleased to be able to speak today on the Defence Home Ownership Assistance Scheme Bill 2008 and the Defence Home Ownership Assistance Scheme (Consequential Amendments) Bill 2008. This scheme will offer great assistance for ADF members and their families who are purchasing their own home. The bills before us establish the Defence Home Ownership Assistance Scheme. It is important to note at the outset that funding for the scheme totals more than $988 million in the years to 2017-18 and was provided for in the government’s recent budget and the projections within the Defence budget.

The scheme provides eligible ADF members with access to home ownership assistance in the form of a monthly subsidy on the interest expense incurred on a home loan. The scheme will provide tiered home loan subsidies to permanent members of the ADF who serve over four years and to reservists with service of more than eight years. There are three tiers within the scheme. Tier 1 applies to permanent ADF members who have served for at least four years or reserve members who have served at least eight years. This tier allows for a subsidy calculated on the basis of 40 per cent of the average house price. Tier 2 of the scheme applies to permanent ADF members who have served for at least eight years or reserve members who have served at least 12 years. This tier allows for a subsidy calculated on the basis of 60 per cent of the average house price. Tier 3 of the scheme applies to permanent ADF members who have served for at least 12 years or reserve members who have served at least 16 years. This tier allows for a subsidy calculated on the basis of 80 per cent of the average house price. For each of the tiers, the average house price for the purposes of the scheme is determined by the national weighted average house price.

As an indication of the subsidy that will become available, based on 2007-08 figures, the following subsidies would apply under the three tiers: under tier 1, a subsidy of $241 per month on a subsidised loan limit of $160,000; under tier 2, a subsidy of $353 a month on a subsidised loan limit of $234,000; and, under tier 3, a subsidy of $470 per month on a subsidised loan limit of $312,000. As can be seen from these figures, it is a substantial level of assistance and one which is well deserved. The actual subsidy under the scheme will be equal to 37.5 per cent of the average interest incurred over 25 years on the value of a loan equivalent to the subsidised loan limit or the amount borrowed, whichever is less. The member may borrow more than the subsidised loan limit but will not receive subsidy assistance for the excess borrowings. Unlike its predecessor schemes, the subsidy assistance available under this new scheme will not be tied to a specific home loan or loan amount offered by a home loan provider. Instead, ADF members will have far greater flexibility and choice in accessing the scheme. Defence has already completed a competitive tender process to establish a home loan provider panel to support the scheme. On 23 April 2008, my colleague the Minister for Defence Science and Personnel, Mr Snowdon, announced the successful tenderers as the National Australia Bank Ltd, Australian Defence Credit Union Ltd and Defence Force Credit Union Ltd. A panel arrangement will: provide choice for ADF members, provide greater potential for panel members to develop specific loan products and contain scheme administration costs.

It is important to touch on who is eligible for the scheme. Members who are serving on or after 1 July 2008 and who have met the eligibility requirements may access subsidy assistance under the scheme. Members may access the scheme at any stage during their military career subsequent to becoming eligible members. Periods during which an eligible member does not access the scheme will accrue and may be accessed by the member on separation from the ADF. Assistance to members separating from the ADF will be reduced to the tier 1 level, except for those with 20 years of service or more who will continue to receive assistance at tier 3 level.

Special consideration is given for members discharging with a compensable injury, including waiver of the qualifying period and reduction of tier on separation and provision of an eight-year minimum period of subsidy assistance. If a member dies, their entitlement to subsidy assistance—and this is important in the context of the amendment that has been moved by the member for Paterson—will be transferable to their surviving spouse or partner. Former ADF members will continue to have access to benefits available to them under the Defence Service Homes Act 1918 and the Defence Force (Home Loans Assistance) Act 1990.

One of the biggest challenges currently facing the ADF is the shortage of the right people with the right skills. In my responsibilities as Parliamentary Secretary for Defence Procurement, this is an issue that I confront every day when moving about various bases within the ADF. To help overcome this challenge, the Rudd Labor government is committed to improving retention amongst ADF members. That is extremely important to meet the challenges for national security in the future. That is why Labor’s election policies contain support for this new home loans scheme, which will be established by these bills. It is estimated that the scheme will reduce separations from the ADF by up to 500 members per year in the first three years of the scheme’s operation. Features of the scheme have been designed to specifically achieve higher retention rates. This is why under the scheme higher levels of subsidy assistance will be available to members on the completion of specified years of service. Further to the measures outlined in the bill today, the Minister for Defence Science and Personnel is working to develop a strategic retention framework to ensure answers to enduring retention problems.

The government has taken action in this area already. For example, we have introduced a Navy capability allowance, providing a significant amount of support for service sailors and submariners from able seaman to chief petty officer rank, with important incentives to complete a further 18 months of service. On 19 March 2008 the Prime Minister also announced the appointment of the new service chiefs, and it was announced that each service chief will be directly responsible for ensuring that sufficient trained and skilled personnel are available. Progress in this matter will be monitored by cabinet. However, the government also recognises that more needs to be done in this area to meet the needs of the ADF in the future. Greater training incentives, provision of more stability for families through reduced relocations, introduction of national education curricula to reduce the stress of interstate posting on families, a review of the current superannuation arrangements and measures designed to promote meaningful spouse employment during different postings will all be considered in due course.

The government is determined to make sustained improvements in the area of retention in the ADF. Today’s bills go some way towards achieving this aim. I am sure that the minister, in speaking to this bill in due course, will make observations about the amendment moved by the member for Paterson. It is not one that I anticipate the government will be supporting. We understand its sentiment but are concerned about the equity impact of it. I commend these bills to the House.