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Thursday, 28 November 1974
Page: 2911

The PRESIDENT - Is leave granted? There being no dissent, leave is granted. (The document read as follows)-

As honourable senators will be aware, one of the first steps taken by the Labor Government when it took office in December 1972 was to carry out a comprehensive review of the then war service homes scheme. The changes which were subsequently made by the Defence Service Homes Act 1973 were the most significant since the enactment of the original War Service Homes Act, which received the royal assent on Christmas day 1918. The Government has carried out a further review of the scheme and this Bill makes provision for a number of additional important changes in the scheme which are designed to improve substantially the borrowing arrangements under the scheme.

Provision is made in the Bill for an increase in the maximum loan to $ 1 5,000. The Government considers that this is necessary in view of the increase in the cost of acquiring a home since the maximum loan was increased to $12,000 in 1973.

The Bill provides also for a liberalisation of the eligibility provisions of the Act which will remove the restrictions which, since the inception of the scheme, have prevented single men and widows with the necessary qualifying service from receiving assistance. A similar restriction relating to the granting of assistance to single and widowed females was removed last year.

This amendment will remove all discrimination in the Defence Service Homes Act against single persons, thus giving full recognition to the principle that defence service homes benefits are granted not only as a measure of repatriation, but also as a reward for service.

The Bill contains limited provisions which will enable the balance of an existing loan to be made available for the acquisition of another property in special circumstances.

Since the inception of the scheme in 1919 it has been the intention that an eligible person shall be granted assistance under the scheme in respect of only one home. In conformity with this intention, the Act provides that the Director of Defence Service Homes shall not grant to any one person a loan in respect of more than one property, except with the approval of the Minister.

Under the existing provisions of the Act, when a purchaser or borrower sells his defence service home and discharges his liability, the amount received must be paid into the Consolidated Revenue Fund and is not available for allocation towards the building or purchase of another home. While the Act empowers the Minister to approve the grant of assistance for another property, the loan must be provided from the annual appropriation of funds for defence service homes. As a consequence, where a second loan is approved, the funds available for applicants who have not previously been assisted under the scheme are correspondingly reduced.

Although the policy is being administered more liberally and sympathetically than prior to December 1 972, it has been necessary to be careful and conservative in approving second loans, in order not to jeopardise the interests of persons seeking initial loans.

The Government feels there is a need for more flexible arrangements which will enable the balance of a loan to be transferred in special circumstances, without adversely affecting the interests of persons seeking assistance for the first time. Accordingly provision has been made in the Bill for a standing appropriation of moneys in the Consolidated Revenue Fund to the extent of the balance of the moneys outstanding under a contract of sale or advance under the Act paid to the Director, where, by virtue of an approval by the Ministers under section 19b and 20a of the Act, the Director has entered or enters into a further contract of sale or advance with that persons in respect of another dwelling-house.

In conformity with the intention of the scheme, the balance of an existing loan will be made available for the acquisition of another home only in special circumstances. In general, approvals will be limited to cases where the applicant is compelled to move from his present defence service home through circumstances beyond his control. An application for approval must be made before the first home is sold and the amount of assistance will ordinarily not exceed the balance of the existing loan.

The Bill provides for an extension of the definition of 'holding' in the Act to include a lease on Norfolk Island from Australia or from the Administration of the Territory granted for a term of not less than 28 years. At present the only leasehold interests on Norfolk Island which can be accepted under the Defence Service Homes Act are leases in perpetuity or leases for a term not less than 99 years. This has caused some difficulty as leases on Norfolk Island are normally limited to 28 years.

The Government has reviewed the interest rate charged on loans made under the Act. The present rate of VA per cent per annum was fixed in 1946. Since then, the long term bond rate has risen from 3% per cent to 9¥i per cent per annum. The Bill provides for an interest rate of 3% per cent per annum to be charged to a purchaser or borrower in respect of a loan not exceeding $12,000. Where the amount of loan exceeds $ 12,000, the Bill provides for interest to be charged at the prescribed rate in respect of that part of the loan which exceeds $12,000. Provision is also made for interest to be charged at the prescribed rate in respect of any additional loan made to a purchaser or borrower.

It is proposed that the prescribed rate shall be 2 per cent below the most favourable rate charged by the Commonwealth Savings Bank on housing loans. The most favourable rate at present is 9 'A per cent and accordingly the Bill provides that the prescribed rate of interest shall be TV* per cent per annum or such other rate as may be prescribed.

In reviewing the interest rate to be charged on defence service homes loans, the Government noted that loans were being made to eligible persons such as widows, totally and permanently incapacitated pensioners, persons living on an age or invalid pension or small superannuation payment who ordinarily could not meet the obligations of home ownership except under the concessional conditions presently provided in the Act. Provision has accordingly been made in the Bill for the granting of a measure of relief in relation to the instalments payable in cases where those instalments include an amount of interest calculated at a rate exceeeding 3.75 per cent per annum and the Minister is satisfied it would cause hardship to the purchaser or borrower if he were required to pay the amount of instalments in full.

The Bill includes a number of other amendments to the Act which are either of an administrative nature or are consequential upon the proposed changes in the interest rate provisions and other measures included in the Bill.

The defence service homes scheme has now been in operation for more than 55 years. During that time nearly 350,000 persons have been assisted under the scheme to become homeowners. Since it took office in December 1972, the Government has liberalised and extended the scope of the scheme and it can look with pride on what it has done to provide homes for service and ex-service personnel under the scheme. The provisions of this Bill will enable the valuable contribution made in past years by the defence service homes scheme to the housing of the Australian people to be maintained and improved upon.

I commend the Bill to the Senate.

Debate (on motion by Senator Cotton) adjourned.

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