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Wednesday, 18 March 1987
Page: 1052


Mr BEAZLEY (Minister for Defence)(4.14) —I move:

That the Bill be now read a second time.

The purpose of the Bill is to establish the Defence Housing Authority. Creation of the Authority is a crucial part of the Government's strategies to overcome the long-standing deficiencies in the quality and standards of Defence housing. This Government has been the first to adopt a set of principles to govern housing assistance to its own employees including particularly members of the Defence Force. These principles acknowledge the obligation of the Government to provide adequate accommodation for its employees who, by reason of duty requirements, are located where there is inadequate housing, or who are required to live at the work location. The principles also acknowledge the duty on the Government as the employer to minimise the detriment to morale of both its employees and their families who suffer housing upheavals by reason of being required to relocate frequently. As the major strategy for giving practical effect to these principles, the Defence Housing Authority is to be responsible for provision of housing for families of the Defence Force and, where essential, Defence civilian personnel.

The problems of Defence housing have been the subject of several inquiries, the most recent being the Task Force on Australian Public Service and Defence Force Housing Programs. The Task Force reported that there are divided responsibilities and complexity in inter-agency arrangements governing the overall management of the Government's staff housing. The arrangements militate against effective decision-making and prompt action. The Task Force was also critical of inadequate repairs and maintenance of housing and the generally run-down state of much of the stock. In essence the Task Force confirmed many of the complaints on housing expressed by Service personnel and their families.

The Government believes there are three essential elements necessary to remedy the problems. There must be a guaranteed level of funds committed to Defence housing. There must be business enterprise and expertise brought to the management task. There must be a single organisation established which is dedicated to management of Defence housing and free from bureaucratic controls. The Authority will charge the Defence Department the full commercial rent for each house it controls. This will provide a guaranteed level of income, not subject to Budget vagaries. The Authority is to have experts from the private housing field appointed to its board of management. The Authority will be master of its own destiny in making arrangements for the construction, upgrading and maintenance of Defence housing. It will be able to dispose of stock no longer needed, and retain the proceeds of sale.

In developing the legislation, the Government has balanced the requirement that housing management is sensitive to the needs of the Defence Force while allowing for flexibility and commercial freedom in the operation of the Authority. The Authority is to be independent of the Department of Defence. It must, however, ensure that its activities are fully supportive of Defence Force operational needs. Its planning must be consistent with Defence planning. For example, the Authority must ensure that its housing stock is expanded to permit the timely accommodation of the large number of families who will be relocated as a result of the Government's recent announcement of a two-ocean Navy, and its decision to relocate the Second Cavalry Regiment in Darwin.

The membership of the board of management has been structured to ensure the application of the necessary skills for housing management and proper co-ordination with defence policy and planning. It will comprise four part time members, including the chairperson, selected on the basis of business expertise and wide knowledge of housing operations and social planning, and four members to represent each of the Services and the Defence Department. A full time managing director of senior status who will undertake day-to-day direction of the Authority's operations will also be a member of the board.

The Government is committed to an expanded Defence housing program that over the next decade will lead to a housing stock of greatly improved quality and meeting current community standards. Within overall Budget priorities, the Government will aim to provide the Defence Housing Authority with funding, additional to its guaranteed income, needed to meet this objective. Of the 22,000 houses, the worst 6,000 will be progressively replaced and other houses of inadequate standard will be refurbished. An investment program totalling $750m over the next decade is proposed. In view of the urgency in addressing the housing problems, I established an interim Defence Housing Board late last year, on an administrative basis pending passage of legislation.

I am delighted that Mr John Graham, a former national president of the Housing Industry Association and director of the Sydney building firm of Civic Constructions Pty Ltd, has accepted the position of chairman of the interim board. Other external appointments include Dr Roy Gilbert, a former head of the Victorian Ministry of Housing; Ms Valerie Pratt, a former personnel manager with CSR Ltd and now head of the Government's affirmative action agency; and Mr Sam Salpietro, a Western Australian property developer and real estate agent. I propose to invite these members to be considered for appointment to the Authority when it is established. Besides taking over ongoing housing programs in the Defence Department, the interim board is doing much of the preliminary work towards setting in place operating procedures and financial arrangements appropriate for the Authority. It recently completed a tour around Australia to gain a first-hand knowledge of the housing stock. At each location it met service tenants to discuss present dissatisfactions.

I now turn to the more significant details of the legislation. The stated objective of the Authority is to provide housing to meet the operational needs of the Defence Force and requirements of the Department as determined by the Minister for Defence. It will have all the powers necessary to perform its functions. As I have already indicated, arrangements for the appointment of the chairperson and members to the Authority will ensure that business acumen will be brought to the management task. The usual provision for such matters as remuneration, leave of absence, termination of appointment and disclosure of interests will apply. Planning and oversight arrangements will ensure a proper degree of responsibility and accountability to the Minister. They will also ensure that the Authority will remain responsible through the Minister to the Government.

The Authority's activities will be guided by a corporate plan which will include forecasts of receipts and expenditure and financial targets for profit, rate of return and dividend approved by the Minister for Defence. It will be required to earn a reasonable rate of return on its assets and maintain the Commonwealth's level of equity. The Minister will monitor the performance of the Authority at the planning level, and this will be a major factor in enabling the Authority to be freed from ministerial involvement in day- to-day management issues. Provision is made for a specific power of direction which in some circumstances would incur reimbursement to the Authority where such a direction resulted in financial detriment.

The Authority will require the approval of the Minister for Defence before entering into joint ventures, forming subsidiary companies or establishing partnerships. Such arrangements will be subject to Commonwealth, State or Territory taxes. The Government has decided that the Authority should not be subject to Commonwealth and State government taxes, but shall continue the existing Commonwealth policy of making grants to local government in lieu of rates. There is provision for the Minister to transfer to the Authority Defence housing stock and land. The value of these assets along with money appropriated by the Parliament and any accumulated reserves will represent the capital of the Authority. The managing director will be appointed by the Authority and will hold office at the Authority's pleasure. The normal conditions associated with a statutory office will apply. The Authority will be staffed under the Public Service Act, and will be empowered to engage consultants.

I turn now to the financial impact of the Bill. At the outset I want to emphasise that provision of housing will continue to be regarded as a condition of service. Rent levels to be charged individual service tenants will be a matter for separate decision by the Government. I wish to assure the House that the announcements that I am making today are not intended to have any significant effect on rents paid by ADF personnel. Rentals will continue to be developed according to a rental scheme designed to meet the specific needs of the Defence Force.

The commercial rent to be charged to the Commonwealth by the Housing Authority for each house available to Defence tenants will represent a new charge to Budget outlays. In 1987-88 this is estimated at $120m. The saving by removal from Budget outlays of payments now to be the responsibility of the Authority is estimated to total $84m. These include payments to the States and Territories for housing provided under the Commonwealth-State housing agreements and related agreements, repairs and maintenance to Defence owned houses, and payments in lieu of rates to local government. The estimated net effect on recurrent Budget outlays is an additional $36m. In addition, revenue from the disposal of surplus housing will be retained by the Housing Authority and will no longer be a credit to Consolidated Revenue. In 1986-87 this is estimated at $5m.

The Housing Authority will be required to use profits from operations towards capital acquisitions and improvements. Consequently the demands for capital from the Budget for investment-$65.8m in 1986-87-will be reduced. It is expected that some supplementation from annual Budgets will be required in order to meet the government commitment of $750m over the next decade to upgrade the Defence housing stock. The requirement for supplementation will be determined in the context of the Authority's corporate and financial plans. The Authority will be required to meet its operating expenses from revenue. Some immediate offsetting reductions in staffing levels will occur in the Department of Defence. I expect the Authority to have a fairly small permanent staff as it will probably engage the private sector to undertake aspects of its operations.

A high degree of expectation exists in the Defence community that the Authority will come to grips with housing problems which have been endured by service families over a long period. The Government's initiatives have been well received by senior management of the Defence Force, service personnel and their families. I am hopeful that there will be support by honourable members on both sides of the House for such an important initiative. I commend the Bill to the House. I present the explanatory memorandum to this Bill.

Debate (on motion by Mr Porter) adjourned.