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Thursday, 14 May 2009
Page: 4002


Mr BALDWIN (10:54 AM) —I rise today to speak on the Defence Legislation Amendment Bill (No. 1) 2009. This bill is in two parts. The first part concentrates on the establishment of a discretionary tactical payment scheme, and it is critically important, as our troops operate in the Middle East environment and indeed in other areas, that we move away from an act of grace payment to empowering people actually at the battle face to be able to make compensatory payments to people where damage has occurred. One of the simple lessons in life, which goes back to time immemorial in engaging with the enemy, is that there will often be collateral damage to assets, to individuals and to livestock. If we are to win this offensive against terrorism in Afghanistan, or indeed in other areas that may or may not eventuate out of our engagement when addressing terrorism, we need to empower people on the ground to take immediate action to address losses.

This bill is long overdue. In America they operate under two systems of payments. Firstly, they have a condolence payment, which is an expression of sympathy for death, injury or property damage caused by coalition or US forces generally during combat. In addition, at the commander’s discretion, payments may be made to civilians who are harmed by enemy action when working with the US forces. But, importantly, payment is not an admission of legal liability or fault. Secondly, a solatia payment, which is a token or nominal payment for death, injury or property damage caused by coalition or US forces during combat, is made in accordance with local custom as an expression of remorse or sympathy towards a victim or his or her family. Again, payment is not an admission of legal liability or fault.

Perhaps the key and critical argument in establishing this tactical payment system is that we address the issue in rapid time. This means that payment can be authorised by the minister through delegated approval to the Secretary of the Department of Defence, the Chief of Defence Force, a military officer in command of an activity of the Defence Force outside Australia, and that officer in command of a deployed force will vary depending on the size of the operation—that officer may be a lieutenant colonel or equivalent or higher—or an APS employee who holds or performs the duties of an APS6 or higher, and is intended for those who have been deployed on an overseas operation as the policy officer to the officer in command of an activity outside Australia.

The reality is that in Afghanistan at the moment, and in some of the offensives we are taking against terrorism in protecting freedoms and democracies and getting rid of this scourge on the earth, collateral damage is occurring. Sometimes that collateral damage is to a building or it could be to animals and livestock. Sadly, and unfortunately, it could also relate to an individual’s life. The ability to immediately make a compensation payment to that person can address a lot of the grieving, particularly when a household farm, equipment or livestock have been damaged. We are not talking about massive amounts of money. This legislation will set in place a payment with a set limit of $250,000. Normally, in areas of operation through the Middle East, I am informed these payments would max out generally around $1,500. We are not talking about large sums of money being carried around by soldiers buying their way out of trouble; we are talking about a genuine attempt to mitigate the damage at a local level, to try to keep a semblance of peace, so we are engaged against the terrorist enemy and not against the people who have suffered collateral damage. I think that is critically important.

I know the US military have a very different system from that which we have in Australia, but we can take from their experiences. Their US forces manual, through the United States Government Accountability Office, is quoted in the Bills Digest as follows:

The new U.S. Army Field Manual on Counterinsurgency greatly stresses the importance of winning civilians’ hearts and minds.   To win hearts and minds, militaries must take a holistic approach to rebuilding a nation after war by providing infrastructure, governance, safety and well-being.  Failure in these components may prevent lasting victory.

It goes on to say:

… positive treatment of civilians becomes imperative to strategic military interests. While building a school or hospital may help the military “win over” a community, providing individual monetary assistance to a family who lost a breadwinner during a firefight can “win over” a family and a neighborhood.

What I am saying is that the opposition will support this initiative by the government because we see it as a way of winning the war, particularly in Afghanistan. There have been many, from the Russians through to Alexander the Great, who have tried to establish authority in Afghanistan. Each has had varying degrees of success and some have had massive failure. But it is true that the only way to win this war on terrorism is to win the hearts and minds of the people of Afghanistan. You cannot do that if you take away their breadwinner accidentally; you cannot do that if you destroy their livestock without some form of compensation. This goes a way towards addressing that.

What is key but is also missing in this is that, previously, acts of grace payments have been reported as part of the Defence annual report in a quantum. I am foreshadowing that the coalition will be moving an amendment in the Senate that will see a reporting structure to the Joint Standing Committee on Intelligence and Security and will require a full list of tactical payments made in the preceding year. We see that as one way of achieving transparency in order to understand the quantum of the payments.

The other thing that I note in the explanatory memorandum is that it says there will be no financial impact from this bill. There is not much point in having a tactical payment system whereby you are going to make remediation for damage that has occurred or loss of life if you are not going to pay out money—introducing this scheme and establishing such a structure that is not going to be used. The whole idea of establishing this tactical payment scheme is to take away from the onerous reporting and paperwork in relation to the acts of grace payment scheme and expedite it. So what we see is that there will be a financial impact. If it brings about a closer resolution to the war on terrorism by taking the people of Afghanistan on the journey with us—which is an often used term—then there will be an impact. But that is not the issue. It is just that in the explanatory memorandum there is the claim that there will be no financial impact from this bill, and that is quite misleading. We will be moving that amendment in the Senate. The government now has the opportunity to think through how it will report back and perhaps cooperate with the opposition. The government, as proven by having to have amendment bills, particularly for the home ownership scheme, has shown they are not the oracle of knowledge when it comes to all things good and great. Some of these things are reached by consensus and exploring each other’s ideas on the way to address situations.

As I said, we support this tactical payment system because we have our men and women on the ground defending freedoms and democracies. In fact, tomorrow in Townsville, at 3rd Brigade, Lavarack Barracks, the Mentoring and Reconstruction Task Force will be deploying to Middle East areas of operations. Our prayers and wishes go with them—first and foremost, to look after their safety, but also to wish them well on their missions in re-establishing the community, working with the community and working with the Afghan nationals in developing their strength so that they can address the issues in relation to terrorism and start to take control of their own destiny. People need to live freely. Freedom and democracy is perhaps one of the most valuable and most cherished things that we have in this world that we live in.

I would also say to the House that we need to make sure that in allowing the tactical payment system to go ahead we have checks and balances in place—that it is not carte blanche. I respect our officers on the ground that will actually be making these decisions and I hope that they do not get too caught up in paperwork that it delays the process.

As I said right at the very beginning, the key effectiveness of this measure is the immediacy of resolution—that a person in a patrol has the financial ability and the delegated authority to address this issue, make the compensatory repayment and thus take most of the heat out of the problem. Of course, in the case of the loss of a loved one, as we know in our own lives, healing takes a long time. But when it is something like a barn, a tractor, some pigs, sheep, cattle, goats or other livestock, whatever it may be, they can be bought down at the market with the financial compensation package.

The second part of this bill addresses issues in relation to the Defence Home Ownership Assistance Scheme. It was last year that this bill was brought to the parliament, and it arose from coalition policy as a means of increasing retention in defence. It came into effect on 1 July 2008, so it has been in operation for not quite a year, and we do not yet know the full effectiveness of the measure as a retention scheme. We do know that listed in the budget papers this week are some facts and figures, and I note that in the net costs of providing the subsidy, after expenses and revenues, the amount apportioned for 2009-10 is $28,929,000 and that in the forward estimates for 2010-11 it is expected to be $45,336,000; for 2011-12 it is expected to be $43,972,000; and for 2012-13 it is expected to be $63,123,000. I do foreshadow for the minister that we will be putting questions on notice to determine how many loans have been provided; to look at its effects, whether there is a correlation with the retention benefit; but also, importantly, to find out what the level of interest rate subsidy on an individual basis has been for that year.

The key measure in all of this is to provide an effective means of support to the men and women of our defence forces, but there are unintentional anomalies in this scheme, and that is what this amendment seeks to address. I think that ‘unintentional anomalies’ is political code for ‘I didn’t think through the legislation properly in the first place.’ The aim of this amendment is to address the period of break in service and make sure that it is actually utilised as a retention bonus. There is a lock-off period of five years—so, if you leave the Defence Force for more than five years and then come back, your service preceding those five years does not count towards achieving this home loan subsidy. That is important at a time when we need to keep critical skills and trades in the Defence Force. Whilst it is good at times for people to move out into other areas of industry to gain new skills or further enhance their skills and education, people being away for more than five years is actually a massive loss to defence because when they come back they need to get reoriented.

As the explanatory memorandum states, the purposes of this bill are to:

  • remove an unintended windfall gain in the eligibility and entitlement of members who rejoined the ADF after a break in service prior to 1 July 2008;
  • provide greater reliability of the subsidy certificate as evidence to a home loan provider that subsidy is payable to a member by making the issue of a subsidy certificate conditional on a member having a service credit in the scheme;
  • ensure that only serving members who are buying a home for the first time have access to the subsidy lump sum payment option;
  • require that for lump sum subsidy to become payable in respect of an interest in land, the property must have been purchased subsequent to the giving of the subsidy certificate that is the basis for the lump sum requested;
  • clarify that subsidy may be payable either as a monthly payment or as a lump sum payment and monthly payment, and ensure that members who access the subsidy lump sum payment option retain sufficient service credit in the scheme to support on-going monthly subsidy payments;
  • ensure that the entitlement of subsidised borrowers who enter into a joint mortgage with a person who is not defined as a partner in the Act, is proportional to the subsidised borrowers’ liability;
  • clarify the entitlements of subsidised borrowers who are partners and who are both parties in respect of the same loan, in order to provide for a consistent framework for shared liability …

This scheme was well thought out in the essence of its proposal, and there was an extended period for the establishment of the legislation. There was a period for a tender process where financial institutions put forward their best cases. Thinking back to when this bill was first debated last year, I was reading it and going over some points and I went back to the Hansard of my contribution to the original second reading debate on the Defence Home Ownership Assistance Scheme Bill 2008 and its consequential amendments bill. At the time, I highlighted how the government had sat on the bill for some time and then sought to introduce that bill in a great flurry prior to 1 July 2008 so the time for the scrutiny and proper examination of the bill was very much truncated. I had a bit to say on the bill and I would like to go back to what I said in Hansard, which proved that the minister had rushed it. I said:

The government have been tardy in their management of this legislation’s process. I note, for example, a letter addressed to me from the Minister for Defence Science and Personnel seeking the coalition’s consent for the signing of contracts to allow the successful tenderers at least eight weeks to transition prior to the 1 July 2008 implementation date. This letter was dated 21 April. The final paragraph of that correspondence says:

Should you have any comment on the proposal I would be grateful if you could provide it to me by 17th April 2008 as Defence needs to sign the contracts in the week commencing 21st April 2008.

That letter was not even stamped or posted to me until after the contracts had to be signed. So in these great rushes we are seeing unintended consequences, and one of them is being addressed today.

I also note that basically three loan providers were successful in providing these loans: the National Australia Bank, the Australian Defence Credit Union and the Defence Force Credit Union. They are doing a good job. They are supporting our service men and women, and that is critical. But, as I said, we need to ascertain the total effectiveness of this package in relation to retention, which is what it was initially all about, because prior to this there was just the defence home loan. It was not competitive in modern times. It did not provide great incentives, but we believe this does. But it also must remain current and it must look to variations in the cost of mortgages, fluctuations in interest rates and how they affect people—whether people are locked in at an interest rate or whether they have a variable rate. It must address all of those concerns.

I dare say that in the coming 12 months we will probably see more amendments to this act, but I hope they are amendments based on need and not based on unintended consequences and a lack of forensic examination by the government of its own bills that it puts forward. As I said, we will be supporting this bill, with the exception that in the Senate we will be moving an amendment to make sure in particular that part of the tactical payment system is referred to the Parliamentary Joint Committee on Intelligence and Security for forensic examination by that committee. I commend this bill to the House.