Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Foreign Affairs, Defence and Trade Legislation Committee
23/10/2019
Estimates
DEFENCE PORTFOLIO
Defence Housing Australia

Defence Housing Australia

[18:23]

ACTING CHAIR ( Senator Fierravanti-Wells ): It looks like Senator Kitching doesn't have a lot of questions, so I propose that we conclude Defence Housing, hopefully, by about 6.30.

Senator KITCHING: That's my hope, too, Chair!

ACTING CHAIR: Good.

Senator Reynolds: We are all in thunderous agreement, Senator Fierravanti-Wells!

ACTING CHAIR: I welcome Mr Paul Groenewegen, Acting Managing Director, and officers of Defence Housing Australia. Do you wish to make an opening statement, sir?

Mr Groenewegen : Thank you, Senator. I do wish to make an opening statement, on behalf of Mr Barry Jackson.

ACTING CHAIR: Okay.

Mr Groenewegen : I would like firstly to correct the title: I am Paul Groenewegen, the Chief Financial Officer of Defence Housing Australia.

ACTING CHAIR: Apologies. My script said something different.

Mr Groenewegen : I would like to make an opening statement on behalf of Mr Barry Jackson. Mr Jackson is unable to be at these proceedings this evening. I understand that that circumstance is covered by previous correspondence to the committee. Mr Jackson's opening statement is as follows.

'Unfortunately, I am unable to appear before today's committee hearing due to a scheduled medical procedure in Melbourne. DHA's Chief Financial Officer, Mr Paul Groenewegen, will lead DHA's senior executive group in my absence. I'm confident that they will be able to respond to any of the committee's questions regarding DHA's operations and assure the committee of our ongoing cooperation.

I'm very proud to have been appointed to the role of managing director of DHA, an organisation with a long history of providing excellent housing solutions to our Defence Force members. I look forward to working with our shareholders and the ministers for Defence, Defence personnel and finance to ensure that tradition continues well into the future.

I also wanted to note a particular highlight of 2019, in very difficult circumstances for DHA. In February the city of Townsville endured catastrophic floods. Not since Cyclone Tracy in 1974 has a natural disaster impacted so many Australian Defence Force personnel and their families. DHA was part of the broader Defence and Australian government response, building on the knowledge and capability from DHA's responses to Cyclone Yasi in North Queensland and the Brisbane floods, both in 2011. DHA staff helped secure safe conditions, established functional communications and found emergency shelter for ADF members and their families. Our Townsville regional office and national contact centres worked round the clock, and we flew in staff from around the country to assist our Townsville team. Some of whom were also coping with their own personal impacts from the floods. Up to 318 properties were affected and 245 ADF members, most with families, sought housing assistance immediately following the floods. Ultimately, 101 families needed to be housed, 62 families were rehoused into alternative DHA service residences and the remaining families rehoused in non-DHA accommodation using rental assistance. To date, seven Defence members, three with families, have returned to residences that have been remediated following flood damage. The returning of the properties in to DHA's Townsville portfolio is an ongoing process, with a further 33 flood-affected properties to be returned soon. This process will continue throughout 2020.

I am immensely proud of the tireless efforts of our staff in assisting and continuing to assist our Australian Defence Force personnel and their families. DHA would like to acknowledge the assistance provided by Minister Reynolds who was, at the time of the floods, Assistant Minister for Home Affairs and then subsequently the Minister for Emergency Management and North Queensland Recovery. Thank you.' I understand that a copy of Mr Jackson's opening statement has been provided to you.

CHAIR: Thank you very much.

Senator Reynolds: On indulgence for half a minute, can I also, as the minister at the time, just again extend my thanks and warmest regards to your staff, because I saw firsthand on the ground that you did a wonderful job. It meant a lot to the Defence personnel and their families who were impacted. Thank you for a job really well done.

Senator KITCHING: I'll second the minister's statement. Are you under any pressure to deliver commercial returns for the government?

Mr Groenewegen : DHA is a government business enterprise. As such, we balance our objectives in meeting our purpose under the act with the GBE obligations.

Senator KITCHING: Is that a yes?

Mr Groenewegen : That's a, 'there is a balance'. The balance is, I think, between providing support for the operational recruitment and retention goals of the Australian Defence Force and also being a self-sustaining organisation as a government business enterprise.

Senator KITCHING: So it's a balance rather than a conflict between your not-for-profit function and the primary purpose of providing suitable and adequate housing for ADF members and their families.

Mr Groenewegen : That's how I see it, yes.

Senator KITCHING: Is there anything in terms of governance or legislative arrangements that DHA would like that would make it easier to achieve its primary purpose of providing housing for ADF members?

Mr Groenewegen : I'm not aware that there are any proposals for legislative change coming from the organisation.

Senator KITCHING: No, I'm asking you. I'm interested in whether there are any, but I'm really asking you: is there anything, in terms of either governance or legislative arrangements, that would make it easier for DHA to achieve its primary purpose of providing housing for ADF members and their families.

Mr Groenewegen : I think within that question is perhaps a question as to whether or not we suffer impediment under the current arrangements, and I'm not aware that there are circumstances in which we do.

Senator KITCHING: I'm not really implying that. Obviously, most of us have wish lists or we can see that there's potential for improvement somewhere. I'm really asking you that, not whether you operate impediment free or with impediment.

Mr Groenewegen : Our focus has been on operating within the current framework and doing so as best we can, meeting our core purpose and our GBE obligations as well. Is there a wish list? I don't think so.

Senator KITCHING: I've made an assumption that you do believe your primary purpose is to provide suitable and adequate housing for ADF members and their families.

Mr Groenewegen : It is specified so. The purpose is specified in the act.

Senator KITCHING: In your own words, how do you prepare the financial accounts of DHA? On what basis do you prepare those accounts?

Mr Groenewegen : In 2006, DHA elected to prepare accounts on a for-profit basis.

Senator KITCHING: Would it not be easier to prepare those accounts on a not-for-profit basis?

Mr Groenewegen : We do that too.

Senator KITCHING: You do both.

Mr Groenewegen : Yes.

Senator KITCHING: You do it on a for-profit basis and a not-for-profit basis.

Mr Groenewegen : That's correct.

Senator KITCHING: So you've got different financial accounting methodologies?

Mr Groenewegen : Correct.

Senator KITCHING: Within that for-profit basis, are you subject to an efficiency dividend as well?

Mr Groenewegen : No.

Senator KITCHING: On the for-profit basis, where do those financial accounts go? Do they go to the minister? Or do both sets go to the minister?

Mr Groenewegen : Our for-profit accounts are published in our annual report each year and our not-for-profit outcomes are consolidated into the Department of Defence accounts.

Senator KITCHING: Is there a bottom line difference?

Mr Groenewegen : There are different accounting treatments for some items. In particular, differences of the past have been in relation to how we value the assets of the organisation. Under for-profit accounting, we carry the value of the assets at cost. Under not-for-profit accounts, we carry the value of the assets at fair value.

Senator KITCHING: I might come back with some QONs on that. The Australia Defence Association and the RSL have proposed legislative changes to improve DHA's position—namely, the Defence Housing Australia Act having primacy over the Public Governance, Performance and Accountability Act—in the same way as other institutions such as the Australian War Memorial have their own standalone acts. Would this help?

Mr Groenewegen : I don't think we've done any analysis of the proposal. I haven't heard of the proposal.

Senator KITCHING: So you haven't done any analysis. If it was put to you by the people whom you're providing housing, would you countenance it?

Mr Groenewegen : We would—

Senator Reynolds: I suspect this might be a hypothetical.

Senator KITCHING: No. I understand the Australian Defence Association and the RSL have both written to DHA, so I'm a little surprised that—sorry I don't have my—

Mr Jordan : I might be able to help you there, Senator.

Senator KITCHING: My understanding was you had been written to about this. I'm sorry that Mr Groenewegen doesn't know, but over to you, Mr Jordan.

Mr Jordan : I'm broadly aware, from my memory, of those issues raised by those two organisations. I cannot recall the specifics of whether we received the letters or whether they came through another party, but I'm broadly aware of the concepts.

Senator KITCHING: Okay. First, maybe you could take on notice for how long DHA has been aware of this proposal—that is, when did you receive a letter or letters or communication or correspondence?—and whether there was any action taken on the receipt of such correspondence from those organisations or any other organisations. I don't want you to think that it's just limited to those two. If you have received correspondence on that matter, perhaps you can come back to us and let us know whether any action was taken within DHA.

Mr Jordan : I'm happy to do that.

Senator KITCHING: Thank you. Minister, does the government have any plans to privatise DHA?

Senator Reynolds: Not to the best of my knowledge, but, if that's incorrect, I'll let you know.

Senator KITCHING: Lovely. If you're taking that on notice, could you also take on notice any preparations that have been made for the possible sale of the organisation?

Senator Reynolds: As I said, my understanding is not, but, so I don't want to misinform you, if there's anything further to add to that or to clarify, I'll come back.

Senator KITCHING: Going back to the RSL and the Australian Defence Association, I think you'll find that it wasn't just correspondence; there were proposals in a 2016 Senate inquiry into the operations of DHA as well. That may facilitate.

Mr Jordan : That assists, yes.

Senator KITCHING: Those are all the questions I have.

CHAIR: That concludes the committee's examination of Defence Housing Australia. I thank the officers for their attendance. The committee will now suspend for the dinner break.

Proceedings suspended from 18:38 to 19:35