Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 23 May 2007
Page: 114

Mr BILLSON (Minister for Veterans’ Affairs and Minister Assisting the Minister for Defence) (5:23 PM) —in reply—I thank members and acknowledge their contributions to the debate on the Defence Force (Home Loans Assistance) Amendment Bill 2007. I thank the member for Bruce for his comments, and I assure him there will be abundant opportunity for discussion about the machinery relating to the enhanced scheme that the government has announced in the budget. I would particularly like to thank the member for Wakefield for his comments. His extended period of service as a former Army officer gives him a very clear understanding. He has articulated and demonstrated his insights into these measures so well: retention in the ADF is not just about the member; it is also about the family. I would like to acknowledge again his extensive experience. It is valued by the community he represents, which has an extensive ADF membership. So thank you to members for that.

The Defence Force (Home Loans Assistance) Amendment Bill 2007 seeks to further extend the operation of the current Defence HomeOwner Scheme from 31 December 2007 to 30 June 2008. Defence has completed a review of the ADF homeownership assistance program, and the results were announced on 9 May by the government as part of the 2007 budget. The new Defence Home Ownership Assistance Scheme is one of a number of initiatives in the budget aimed at improving ADF recruitment and retention. The government has approved $864 million over the next 10 years in the form of a home loan interest subsidy that involves progressively higher subsidy assistance to ADF members who serve beyond critical retention points. This is important because it will provide ADF members with assistance to achieve homeownership. It recognises the difficulty members have in purchasing a new home due to the nature of their career and the relocation and posting cycle that is a part of that career.

As a result of this measure, there will be a significant benefit to retention within the ADF. It is a targeted measure that involves progressively higher loan subsidies for those who serve beyond those critical separation points. This proposal will do a number of things. It will replace the old home loan assistance scheme, which we are presently seeking to extend to facilitate that transition. It will provide contemporary and relevant home loan assistance that is pitched at a level that reflects current prices. Many in the Defence Force community and beyond recognise that the equivalent value of the current subsidy has been outpaced by improvements in home values. So that is also being adjusted in the new program.

The bill provides for increasing entitlements where members serve beyond key exit points and is based on a 37.5 per cent interest subsidy of a three-tiered loan subsidy limit. For four years, it is $160,000 and the subsidy equates to around $241 a month. For eight years, it is $234,000 or a subsidy on interest equating to around $353 a month. For 12 years, it is $312,000 or an interest rate subsidy equating to around $470 a month. It is a structure that is more responsive to changes in the housing market. It is also aimed at providing flexibility and choice. It gives the ADF member a choice of their mortgage provider rather than having to choose from the preferred provider under the current arrangements. Also, on discharge, the entitlement to this subsidy continues at the four-year entitlement level, which is around $241 a month. If the member has served 20 years or more before discharge, it continues at the 12-year subsidy mark. All ADF members will benefit, including reservists and their families.

There are two major factors underlying the extension to the implementation of the new Defence Home Ownership Assistance Scheme to 1 July 2008. They include the need to put in place the legislative amendments. There is a requirement to amend the act that we are debating now to ensure that members and ex-members who are accruing an entitlement under the provisions of this act continue to have access to homeownership assistance in the period between the announcement of the changes and their becoming operational. The current act specifies a finishing date of 31 December 2007. After this date, no entitlement certificates can be issued, and that is why we are seeking the parliament’s agreement to extend that period of certificate eligibility. The act does, however, provide continuing support for members who have taken out loans prior to the finishing date. The progression of the amending legislation is required to ensure that no entitlements are lost.

There is also a need to put in place procurement arrangements. We need to establish a panel of home loan providers and a scheme administrator. Defence needs to go through its comprehensive procurement procedures to put that machinery in place. Procurement management arrangements are being worked through to ensure that home loan providers and the scheme administrator can support the operation of the scheme from a changeover date of 1 July 2008. That brings us to the substance of this bill—to ensure that the current arrangements extend through to 30 June 2008. This amending bill extends the time during which the National Australia Bank will continue its existing rights as a sole loan provider under the act. More importantly, this amendment ensures that ADF members eligible for homeownership assistance continue to have that eligibility in anticipation of the implementation of the new scheme and throughout the interim period. The extension also provides sufficient time for the Department of Defence to put the administrative processes that I have already touched upon in place. This bill provides the facility to transition to the far more contemporary and generous scheme that was outlined in the budget. However, we do need to ensure continuity of a scheme until such time as the new program is put in place with proper legislative and administrative support. I commend the bill to the House.

Question agreed to.

Bill read a second time

Message from the Governor-General recommending appropriation announced.