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Thursday, 11 May 2006
Page: 55

Senator MARK BISHOP (12:59 PM) —The Defence Housing Authority Amendment Bill 2006 represents a significant stage in the evolution of the Defence Housing Authority. The only criticism that we have of substance is that it is a decade overdue. The provision of housing to the ADF and their families is a fundamental condition of service. Yet it is not that long ago—relatively—when housing for Defence people was absolutely appalling. It is not all that long since single men and women lived in World War II barracks—and there are still plenty of those to be seen around Australia. It is not all that long since one of the biggest topics of complaint from Defence personnel was their housing—either its lack of quality or the lack of maintenance. From leaking roofs to flyscreen doors, the attitudes of Defence management and the government of the time were locked into that of war time. ADF personnel had to put up with it and shut up.

Most affected were the wives and children, who were shunted from base to base and house to house. Everywhere they went, the problem was the same: poor-quality housing—except for some of the officers, with the best residences in the best positions in our capital cities reserved for a few. It is little wonder that there is so much resistance to moving our military bases out of those places. The reported resistance to the construction of the new joint headquarters at Bungendore in the bush outside Canberra is a case in point. The unfortunate nature of that lies in the idiocy of the decision, which is pure pork-barrelling without any justification whatsoever.

However, under better management—beginning in the early 1980s—more attention was paid to defence housing. The establishment of the DHA as a separate authority, ridding Defence of the cumbersome bureaucracy which preceded it, made the difference. It has taken time, though, for the organisation to mature. Over recent years, with sound management and the discipline which goes with properly managing a very large property portfolio, DHA, it must be said, has become a different organisation. And, as we know, it now also looks after removals—another long-running sore, and one which defence personnel endure far too often.

This is a big business, as anyone who looks at the balance sheet for DHA can see. DHA has moved from an organisation providing and maintaining its own property to a broader property management business. It no longer owns all its property but is active in the rental and leaseback fields. Instead of being an annual drain on the budget, DHA now performs commercially, and reports accordingly. The changes in this bill will assist that further.

A look at last year’s figures is instructive. Last year earnings before interest and tax were $82.3 million, up $8 million on the previous year. Net profit was $ 66.9 million, which was $26.5 million above target, with 451 houses built in the year and a further 520 purchased. The combined cost of this was some $396 million, so we are talking about a massive business. And it is one which has been largely unheralded in a period when it can be fairly said that the rest of Defence purchasing is a very dismal tale indeed. Our congratulations go to the management and staff of the DHA. I am sure, too, that members of the ADF also appreciate the new quality of housing they continue to enjoy. I know that those Australian investors in the property market know what a good deal rental to the DHA is. With guaranteed rental income 12 months of the year and total maintenance, it is a very good deal indeed. The number of houses rented now totals 16,128, and the number of removals each year stands at 30,809. The latter is another story for another time, but it can be said to be one of the greatest drawbacks of Defence service.

Let me return to the bill before us. This bill does a number of things, all of which we support, though not without criticism. Primarily, the bill converts DHA from a statutory authority, with functions serving the ADF exclusively, to a commercial organisation. As such, a number of changes need to be made. First, the name changes to Defence Housing Australia. That of course retains an exclusive Defence flavour which belies its broader responsibility beyond Defence. Perhaps that is the obvious next step. It is not a huge one—except for the Howard government, which has made incrementalism a fine art. By this bill, DHA will have responsibility for providing housing beyond Defence to other Commonwealth agencies. One might ask: why restrict it to Commonwealth agencies? Given the Howard government’s penchant for selling the family silver, the sale of DHA might already be on the agenda.

Along with the broadening of housing services, DHA will also be able to provide ancillary services. These ancillary services are undefined except that they must be related to housing services, the minister having the discretion to broaden this ambit. It is worth speculating on these ancillary services because in some instances it could lead, we presume, to other services such as social support being provided. That could take the shape of education services, including pre-schools. It could, we presume, lead to counselling and assistance during absences on deployment, and so lead to a more integrated form of family support within the Defence community. We would certainly support that development.

We would also support the bringing together of other services and support in the personnel area which are currently divided along bureaucratic lines. The provision of health services during and after service in the ADF is a very topical case in point. If this initiative makes the DHA a hub, then that is good and worth while. To the extent that this might lead to the better management of services in addition to removals in a more holistic way, we support that initiative. Interestingly, though, there is also—as usual—a dead hand in the bill. In case the DHA gets too adventurous and too commercial, the extent of any new business undertaken outside the core function of housing is to be limited. The dead hand dictates that the volume of any new business will be limited to 25 per cent of the total. That is a restriction that we find odd coming from a government that supports free enterprise and benefits for entrepreneurs. Perhaps it is a device to limit demand; maybe it is a device to limit supply.

But that is not the only dead hand. Consistent with this commercialisation process, the board of DHA will also be reduced. DHA, despite its name, will no longer be a purely defence organisation. The board will be reduced from 12 to nine, the loser being Defence. Defence representation will be reduced from five to two—those to be removed being representatives of the defence community, including, oddly enough, a spouse representative. Yet the Department of Finance and Administration gets a guernsey. The reason? The minister says it is ‘to enhance its commercial focus’. He has to be joking!

The simple truth is that the longstanding war between Finance and Defence has resulted in infiltration by the former. That will ensure at least that the maximum revenue will be sucked out to budget, and DHA will wither from a lack of capital funds like nearly all other government run enterprises. Consistent with that, this bill also provides that the new DHA will pay tax, from which it was previously exempt. Given the performance of DHA this is not a problem, but it is still, in essence, a milking of capital which we can be sure will not be provided. So Finance win again—they will strip a hefty dividend before tax and then get the right to impose tax as well. Capital, in that circumstance will, presumably, have to be borrowed—another cost. And just to make the point on how DHA will operate for the benefit of Commonwealth revenue, DHA operations will be exempt from all state taxes.

So this is the new Commonwealth business enterprise model—built, we suggest, for revenue. No doubt, ADF families will pay more rent or be subsidised further by Defence—that is obviously going to have to occur. Either way, Finance win and Defence lose. But, as Finance no doubt say, Defence waste so much it should not be a problem—it is all swings and roundabouts. The defence community also lose by the loss of their representation. In the place of their two lost board members they get an advisory committee. This committee is purely advisory, and in fact section 30 of the bill gives the board power to issue the committee with directions as to how it should operate. That is the bill in a nutshell.

Despite our cynicism about the obvious bureaucratic intrigue that is woven into the story, the amendments are still worthy of support. For Labor, there is only one position and that is that which looks after the welfare of ADF families. Life in the military, as we all know, is pretty tough. Absences and constant moves are enough to strain any relationship. They are certainly enough to make family life difficult. And it is enough, as we also know, to impact on recruitment. The ADF itself admits that, but the government dithers. Some of the announcements on Tuesday night, I suspect, are going to have a marginal impact at best.

We can only imagine how bad it might have been had it not been for the efforts of the board and the management and staff of DHA in recent years. Conditions of service are at the heart of military service, and when the labour market is tight and recruitment is hard the attraction of housing is very important. But, as is generally acknowledged, the housing must be good quality. It must be better than the housing trust fibro which was all that was once on offer. Housing must be of high standard and it must be close to all facilities, as is the case for other Australians. ADF families should not be denied the living standards available to everyone else, recognising the peculiarities of their service. Good housing is part of the deal and that is why the opposition support this bill.