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Thursday, 12 October 2006
Page: 126

Mr CAMERON THOMPSON (10:41 AM) —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.