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Defence Housing Australia

—I welcome officers from Defence Housing Australia

Senator JOHNSTON —Welcome to the table. I want to talk to you about Darwin. I think you were involved in some other matters in Darwin with the Public Works Committee back in April of this year.

Mr Howman —That is correct.

Senator JOHNSTON —I happened to be up in Darwin the other day and a number of people said to me that they had a problem with the number of defence houses in a particular suburb—the name escapes me; it started with W and is adjacent to the air base—which are vacant. I have an aerial photograph that has the vacancies marked. I will show you. They number some 115. I am told that the price of property and rental accommodation in Darwin is absolutely as tight as it has ever been. Please explain to me what the problems are with us opening up these houses on commercial term leases.

Mr Howman —I would just like to confirm the area that you are talking about.

Senator JOHNSTON —It is the one with the golf course up one end.

Mr Howman —Or are you talking about on-base houses?

Senator JOHNSTON —I think it is a bit of both. I think it used to have a line across it and they opened it up. There is a golf course up one end.

Mr Howman —Quickly looking at this map, I believe it is the on-base housing at the RAAF base in Darwin.

Senator JOHNSTON —Okay.

Mr Howman —These houses are owned by Defence, not by DHA. We manage those houses on behalf of Defence. We are in the process of replacing many of those houses, as you are aware, in Lyons and there is also another program coming along in the future called Muirhead. I think you are aware of that particular program. The Public Works Committee is in the process of adjudicating on the first phase of that particular program.

Senator JOHNSTON —What is the duration of the first phase at Muirhead?

Mr Howman —The first phase is for 166 lots, and of that DHA will take about 50 houses. Provided we get the Public Works Committee approval in June of this year, civil works should commence early next year.

Senator JOHNSTON —Let us go back to this on-base housing. You manage it.

Mr Howman —We manage the maintenance of these particular houses, that is correct.

Senator JOHNSTON —The on-base and off-base qualification was recently changed such that I think a very large proportion of what was previously on-base is now off-base.

Mr Howman —That is correct. That is the process that is occurring in Darwin.

Senator JOHNSTON —You are saying that that photo deals with on-base.

Mr Howman —I cannot see the street names but I believe it is the on-base housing. It is the RAAF base in Darwin.

Senator JOHNSTON —I drove around an area that, if not on that map, is adjacent to it and the vacancies are of a similar proportion. You know the numbers.

Mr Howman —All I know is that at the moment Defence has a policy to move all houses off-base in Darwin. We are in the process of moving people off the on-based housing.

Senator JOHNSTON —Is that why they are vacant?

Mr Howman —That is correct.

Senator JOHNSTON —Okay. What about the houses you manage up there? What is the vacancy rate?

Mr Howman —I do not have the exact figure of the vacancy rate in Darwin—it may come to me shortly.

Senator JOHNSTON —Can you take it on notice?

Mr Howman —Yes.

Senator JOHNSTON —Thank you. What are the problems with opening that up so that we can take a bit of pressure off for the people in Darwin?

Mr Howman —I cannot comment on that. They are not our houses; they are Defence houses. They are on a defence facility. Defence owns the houses. They do have a policy to move all houses off the RAAF base in Darwin due to operational requirements.

Senator JOHNSTON —So there are no other houses apart from on-base houses?

Mr Howman —I understand that the houses in the photograph you have given me are all on-base houses at RAAF base Darwin.

Senator JOHNSTON —If they were under your jurisdiction—let us be hypothetical to help me—would there be problems with that? Have you done it before? What is the history of opening up vacant defence housing to the public?

Mr Howman —Occasionally we do just that. For example, we have built houses ahead of units being posted into a particular area. We did that in Canberra before HQJOC staff moved in. We let those houses out to the local public.

Senator JOHNSTON —On commercial leases?

Mr Howman —Absolutely.

Senator JOHNSTON —And who administered those leases?

Mr Howman —We normally use real estate agents to administer those on our behalf.

Senator JOHNSTON —Bonds are taken, leases are signed, everything is commercial.

Mr Howman —That is correct. We will set the leases for the period that is available, noting that when the defence people arrive we need the houses to be available on arrival. Then we are in a position to move the civilians out of the houses and put the defence personnel into those houses.

Senator JOHNSTON —Do you know your stock numbers in Darwin—the ones that you as DHA have?

Mr Howman —It is in the order of 1,800 houses.

Senator JOHNSTON —And on notice you are going to have a look at the vacancy rate.

Mr Howman —Yes. I can also give you the exact numbers that we have up there. In totality I think we are managing about 1,800 houses.

Senator JOHNSTON —Is it conceivable that there would be some capacity to provide commercial tenancies to some of the DHA houses?

Mr Howman —The majority of DHA houses are, I understand, populated. One of the reasons for that is that they are very new houses. Many of those are in the suburb of Lyons. We find that when members are posted into Darwin they look on our system and see the housing in Lyons is available and they will tend to select those as they are so new.

Senator JOHNSTON —We talked about Muirhead. What else is happening?

Mr Howman —Around Australia?

Senator JOHNSTON —First of all, let us deal with Darwin. Then we will talk around Australia.

Mr Howman —Sure. At the moment we have the first stage of Muirhead in front of the Public Works Committee. That focuses on the first 166 lots. The second phase onwards will focus on the remainder of Muirhead. We are currently in the process of determining whether we will require an equity joint venture partner for those or not. Once the DHA board has reviewed that and we move forward we will move to the Public Works Committee with that particular program as well. All up, Muirhead will have around 1,100 houses.

Senator JOHNSTON —For DHA?

Mr Howman —No. That is in total. We will take about one-third of those, and 15 per cent will be made available for social and welfare housing. The remainder will be sold on the open market. Another project we have ongoing in Darwin at the moment is on the Navy base at Larrakeyah. We are replacing 61 houses at Larrakeyah with 97 new houses. The houses on Larrakeyah at the moment are very old, built just post Tracy, I think, in the early seventies. They are very old houses, very small, with very poor cross-flow ventilation. Consequently we are taking the opportunity to increase the density from 61 to 97. I think that is a much better use of the land there, when you consider that land supply in Darwin is very short.

Senator JOHNSTON —Yes, that is why I am raising these issues. It is absolutely terminal.

Mr Howman —Absolutely, so we are looking at how we can increase the density there. Consequently, when we go to Muirhead, of course we are looking at maximising the use of the land as well. We are putting on there the maximum number of lots that we believe you can put there, being mindful that in the tropics you need to make sure you have a good flow of ventilation, a good flow of air, because of the tropical climate, so you really cannot effectively build a house lot much smaller, to the same sorts of small standards that you have in the southern states. We need to make sure that they are a little bit larger. In Darwin we are also building houses in some of the other developments which are being constructed by commercial developers, such as down towards Palmerston, where there are some developments coming along, but we are only taking out small numbers of lots there, maybe half-a-dozen or a dozen at a time. We do that to disperse the defence members throughout the community, and there is a real desire to do that. That is why on Muirhead we are only maximising our take-out to 30 per cent—and, once again, it will not be 30 per cent in one particular area; over the six, seven or eight years of that development we will disperse the members throughout that whole community.

Senator JOHNSTON —Do you have a full-time officer or office in Darwin?

Mr Howman —Sure. We have a number of staff up there doing a range of tasks. One particular task is the capital program, which is looking at buying the land, the leasing activity, the construction activity and so forth, so we have an officer up there for that. And our staff have been very heavily involved in the joint venture that we had for the Lyons development. You may remember that. It has been going on for some years now.

Senator JOHNSTON —Yes.

Mr Howman —So we have had staff up there predominantly for that. In fact, I visit there myself frequently. I was up there only two weeks ago when we opened the Tommy Lyons Neighbourhood Park, in Lyons. We have a lot of experts going to and from, and we have our local people because in the tropics you need local advice and people who have lived and worked in the tropics to understand the conditions up there.

Senator JOHNSTON —Where have you travelled from to be here tonight?

Mr Howman —From Canberra.

Senator JOHNSTON —Good. Hallelujah! I thought you were going to tell me Sydney or Melbourne. Tell me about Townsville. What is happening there?

Mr Howman —In Townsville we are building quite a lot of houses per year. It is in the order of 100 or so a year for the next few years in Townsville. The reason is twofold. No. 1 is that 3RAR are moving to Townsville at the end of next calendar year, so we are in the process of ramping up for that move. We are a fair way ahead of the game for that. As you are aware and would appreciate, you cannot just develop around 300 houses overnight, so we need to lead into that. One of the issues with Townsville for us, I guess, is that DHA have a shortage of broadacre land to develop ourselves, so our strategy for Townsville in the short to medium term is to buy retail land from the developers. There are quite a few developers up there. There is quite a lot of land opening up, especially to the north and to the north-west.

Senator JOHNSTON —That is a preferable way of going forward, isn’t it?

Mr Howman —It is a good way of going forward for DHA—providing, that is, that we can negotiate a reasonable price when we buy in bulk. That is a good way forward for us. It lowers our risk, it shares the risk and it allows us to make sure that we are distributed amongst the community as well, which of course we like to do. Townsville is quite a large program for us. Up the road is Cairns, of course. We built a few houses this year but next year I believe we do not have a building program for Cairns. The other driver for the house constructions in Townsville is the lease expiries which are occurring. As you would appreciate, our model requires us to build, purchase or direct-lease houses for a period of time. We sell them, release them back and put members in there and then the leases expire. So we have an ongoing program around that as well.

Senator JOHNSTON —What about 5RAR going to Adelaide? They are all young blokes, but is there a Defence Housing issue there?

Mr Howman —It is actually 7RAR, I believe.

Senator JOHNSTON —You are quite right: 7RAR. They have broken off from 5RAR.

Mr Howman —I am sorry to correct you there.

Senator JOHNSTON —No, you are quite right. Thank you.

Mr Howman —7RAR are moving, we understand, from Robertson Barracks in Darwin to Adelaide. The bulk of that move will occur towards the end of this calendar year and we have had quite a large program happening in Adelaide over the last year or so in building up for that. Be mindful that our requirement is to only house the married members with dependents.

Senator JOHNSTON —Of which there are not many.

Mr Howman —That is not quite true. Sorry to correct you again—

Senator JOHNSTON —I was only surrounded by young men when I was up there.

Mr Howman —but we have had to construct around 300-odd houses over the last year or so to be ready for that. It has been an interesting market in Adelaide. You will recall one of the issues that we have in Adelaide is the fact that we have not got available to us a lot of broadacre land so we have been required to buy land off the open market place again. We have had a good arrangement with the Land Management Corporation, LMC, down in Adelaide and we have been able to negotiate good discounts through them and through their developers. We have had no real difficulty in the supply although it has been very tight. Our main competitor in the marketplace has been the first home owners, of course, and my feeling is that there may have been some upward movement in the price of land because land is short and there is a supply and demand issue. I think as we move forward though that that will settle down a little.

Senator JOHNSTON —The pressure might ease a bit?

Mr Howman —Absolutely; I hope so. Most of the houses we are building there are in the northern suburbs. There is a lot of land opening up around the Lake View area up towards Gawler and around that area, but you may be aware that a parcel of land was referred in parliament last Thursday by Minister Kelly which is down near Port Adelaide. It is called Largs North. We are in the process of going forward through the Public Works Committee process in order to gain approval to develop that land on behalf of the LMC, and of that we will take out about a third as well. It is well located for the Submarine Corporation at Osborne. With the coming of the new ships and submarines and so forth it is a great place for the submariners to be, and also DMO staff whilst the programs are going on. It is about a two kilometre drive.

Senator JOHNSTON —What about Western Australia? Is there anything much happening there?

Mr Howman —Your home state.

Senator JOHNSTON —Yes.

Mr Howman —It is a great place. I lived there myself for about four years. We do not have a large program there at the moment.

Senator JOHNSTON —It is Senator Bishop’s home state too.

Mr Howman —Yes, I realise that.

Senator Faulkner —I do think it is quite inappropriate that the witnesses start to schmooze the committee members like that. Nothing has been said that is very positive about the state of New South Wales.

Senator JOHNSTON —It is a welcome change of pace, Minister. I think we are all welcoming the change of pace. Go on, Mr Howman.

Mr Howman —To get back to the question, we have a higher rental assistance number in WA, the reason being that we have a shortage of housing stock there. Once again that has been driven by the cost of houses in WA. You will recall during the last few years that there has been quite an inflation in house prices over there. We need to be commercial in the way we provision houses, so predominantly the way we are provisioning houses at the moment in WA is through the rental assistance program. We are not getting any complaints or issues from the members. However, moving forward we certainly have two programs we need to look at over there. One is the better supply of land, so we are in discussions with Defence in regards to procuring some Defence land which we could develop. That land, if we are successful in moving forward with the process on that, could supply in the order of 200 lots and that would solve the housing shortage that Defence has over there for many, many years into the future.

Senator JOHNSTON —Whereabouts is that land?

Mr Howman —It is in towards Subiaco.

Senator JOHNSTON —Karrakatta?

Mr Howman —That’s correct, yes. Defence are currently understanding the usage of that land and whether there is the opportunity or not to provide some of that land. There is already an area there—

Senator JOHNSTON —A very successful development there.

Mr Howman —Yes, there has been.

Senator JOHNSTON —I like the sound of that.

Mr Howman —Yes, and you will recall that there was some housing on base there. So that is the area we are talking about, around where the old on-base housing was. It is close to Subiaco, so it is well located for members’ spouses—those who wish to work in the city. So I think it is a good thing for them as well. Plus it is close to either the CBD for people working there and also to Swanbourne Barracks, of course.

That brings me to the other program which we have in place, and that is that over the next few years we need to do some work on the houses out at Seaward Village, which is abutting on Swanbourne. The reason for that is that many of the houses now are upwards of 20 years old. Many need some refurbishment to be done. There are in the order of 40 plus that I think do not meet the standards which come into effect in 2017. They are deficient of amenities such as ensuites and so forth.

Senator JOHNSTON —They are bungalow style almost, aren’t they?

Mr Howman —Yes, you could describe them as such.

Senator JOHNSTON —You are quite right—they should be improved. I appreciate your commentary on that.

Mr Howman —The other area of interest in Western Australia is up north of Karratha. We have been provisioning a few houses up there as well, and that is predominantly because of old lease expiries. That has been a challenge for us over the years because of the mining activities which are occurring there and, once again, the cost of land and the cost of house construction in that area. However, we are still able to sell and lease back houses over there, and that is supporting the program quite well.

Senator JOHNSTON —Fabulous. Mr Howman, thank you very much for that. I am very impressed with your very broad knowledge of the subject matter. I am sure the people in Darwin who told me about that are not as happy as they might have been that there is not as much stock available for commercial leases, but that is life. Thank you very much.

Senator KROGER —I want to follow up on questions I raised at the additional estimates in relation to the great state of Victoria. My colleague seemed to miss out not only New South Wales but Victoria. I was asking you about off-base housing stock that was empty and whether there were any plans for that. At that time you indicated that discussions had taken place with the immigration department in relation to scoping out the possible use of those homes. I was wondering whether there was any advancement on those scoping discussions.

Mr Howman —I have not had any discussions at all with any other department in regard to any houses of DHA’s in Victoria, so I am certainly not in a position to answer that.

Senator Faulkner —Perhaps I can help here, Senator Kroger. I think this was done during examination of the estimates of the department, not Defence Housing Australia. That is my recollection. I do recall your questions, but I think they were asked of the department, as opposed to Defence Housing.

Senator KROGER —You are 80 per cent correct, Minister, in that Mr Bowles was here and the CDF was also still here, so we did have that discussion—you are absolutely right.

Senator Faulkner —That is more than 80 per cent, then, Senator, isn’t it?

Senator KROGER —You are probably right.

Senator Faulkner —I suppose eight out of 10 is not bad.

Senator KROGER —I will let you have that one. But Mr Bowles did say that he thought there had been some discussions, so I thought you might have been aware of whether there had been any developments.

Senator Faulkner —Officials can correct me if I am wrong, but they would have been handled on a Department of Defence and Department of Immigration and Multicultural Affairs basis. So it was that sort of agency-to-agency discussion, as I recall the evidence that was provided.

Senator KROGER —Then I presume you would be advised what the intentions were with that particular housing stock.

Senator Faulkner —Quite possibly not, because there may not necessarily be an involvement at all for Defence Housing. This is not a conclusion you could automatically draw. It is possible but, as the officials have said, they are not aware of it. Most of those things would be handled on an agency-to-agency basis.

Mr Merchant —At the time of the additional estimates, Mr Bowles was the Deputy Secretary, Defence Support, in the Department of Defence. He has now moved on and is working on the home insulation issues. His position in Defence has now been taken on by Simon Lewis. I think the recollection of the minister is right, and it certainly accords with my recollection: this was handled by the Department of Defence, and I think it would have continued to be handled by the Department of Defence, particularly the Defence Support group, now headed by Mr Lewis.

Senator KROGER —I would like to put on notice a request for any updates in relation to that housing stock.

Mr Merchant —Certainly.

Senator Faulkner —We are happy to do that. This is the housing stock that you identified in your previous question?

Senator KROGER —I will be more specific. At Point Cook, Victoria, there is off-base housing. There were some 13 houses, and discussions were underway at that time in relation to their possible use. It was specifically the off-base housing that was the issue.

Senator Faulkner —Yes. I am very confident that there have been no further discussions between agencies in relation to that matter. Without the relevant officials at the table, I will certainly undertake to double-check and take the issue on notice. I am, however, very confident that that matter has not progressed beyond where it was at the last estimates. If there is anything further I can add I certainly will, and we will give you a formal response on notice just to tie up the loose end.

Senator KROGER —Thank you, Minister.

Senator COLBECK —You might have to take on notice these questions with respect to average construction costs in different locations around the country. I understand that you would have different styles of property. There is detached housing—for example, bungalow style, if you want to call it that. I do not know whether that is the politically correct term—and there are also apartment style properties. Can you give us a sense of the average cost for construction of those different types of properties in your key centres.

Mr Howman —I can give you an answer to that. Construction costs vary from state to state.

Senator COLBECK —I understand that.

Mr Howman —The variation depends on the type of house, particularly whether it is a five-start house or a six-star house. It depends upon the type of land—that is, whether it is on a slope or not on a slope or whether it is north facing or not north facing. We vary in costs from about $220,000-odd and upwards, maybe to $250,000 to $260,000. I can give you a closer per suburb cost at a later date, if you wish.

Senator COLBECK —Yes, would you take that on notice. So that is a rough construction cost per unit?

Senator Faulkner —We are happy to take it on notice, Senator. Where are you looking? Are you looking at a specific location?

Senator COLBECK —I am looking specifically at Darwin and regional Northern Territory—say, out in some of the more remote areas in the Northern Territory and down through Newcastle and Queensland in particular.

Senator Faulkner —Down through Newcastle from the Northern Territory?

Senator COLBECK —Newcastle is where I know DHA has a lot of housing and also the bases in Queensland.

Senator Faulkner —Yes, I know that.

Senator COLBECK —I am trying to get a range of property construction costs per square metre.

Senator Faulkner —I am just trying to nail down what you would like. In the Northern Territory, Darwin and outside Darwin is what you are asking for?

Senator COLBECK —Yes, for Darwin and regional Northern Territory.

Senator Faulkner —Newcastle, New South Wales. Were there any other locations?

Senator COLBECK —Yes. Townsville and anything you have in metropolitan Victoria.

Senator Faulkner —So you are talking about metropolitan Melbourne, effectively?

Senator Colbeck —Yes.

Senator Faulkner —The best thing we can do is that I will ask.

Mr Howman —I have some data here that I can give you, now that I have clarity on that.

Senator Faulkner —The problem is going to be time. Is that document able to be tabled.

Senator COLBECK —If you can table the document, that would be fine.

Mr Howman —I would rather extract the data out of the table, if that is okay.

Senator Faulkner —Why don’t we extend for a couple of minutes and allow the witness to do that, Chair, because it might assist Senator Colbeck.

CHAIR —Proceed, Mr Howman.

Senator Faulkner —If the committee is comfortable, we will do that.

Mr Howman —In the areas you have mentioned, Darwin, the average cost of construction for DHA—and be mindful that our houses are not specified like a normal house; we have got particular—

Senator COLBECK —They would be above spec a little bit.

Mr Howman —Sure. The average is about $358,000 in Darwin. For the Hunter area, we would average around $248,000 for the construction of a house. For Townsville, we are averaging in the order of $257,000 per house. I think you mentioned Melbourne: Melbourne, we average around $228,000 per house; Brisbane, we are currently averaging around $244,000 per house. You need to—

Senator COLBECK —Average size; square metres?

Mr Howman —Average size would be around 160-170-square metres. You need to be a little careful with that, being mindful as I said that our specifications are different to average.

Senator COLBECK —Above spec. I understand that they would be perhaps more towards commercial spec—

Mr Howman —Correct.

Senator COLBECK —so they will survive rental type circumstances. I understand that in a specification sense. I just wanted to get those rough parameters.

—Chair, just before we end, can I come back to Senator Kroger because I have a little more information on this. I think the status of the 13 houses, I understand that you mentioned, Senator, at the previous estimates—I will take your question on notice so you can absolutely be given all the contemporary information. My understanding is that the 13 houses you were speaking of have been demolished, but there are 33 houses which have been fenced off but no decision has been made to use that accommodation. I think that is the status. As I said, I will take that question on notice for you at the end of the hearing and provide you with a status report to assist you. I will also go back to the previous Hansard of the previous estimates just to make sure we cover off the issues for you. In a very broad brush, that is my understanding of the current status.

Senator KROGER —That is one way to resolve what to do with them.

Senator Faulkner —You mean demolish them.

Senator KROGER —Yes, absolutely.

Senator Faulkner —Some would say: we’re all in the demolition business.

Senator KROGER —Touche.

CHAIR —Thank you, Minister. I thank the officers from Defence Housing for attending this evening and providing that information as requested. This now concludes deliberation of Defence and agency estimates. We will resume at 7.35—

Senator Faulkner —Senator Stephens will be with you, and I am looking forward to joining you again tomorrow.

CHAIR —Thank you, Minister. We will resume at 7.35 to discuss estimates for DVA.