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Thursday, 12 October 2006
Page: 129

Mr FAWCETT (11:01 AM) —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.