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Defence Housing Australia—Report for 2019-20


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Annual Report 2019-20

Defence Housing Australia Annual Report 2019-20

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E. annualreport@dha.gov.au

P: 139 342

i

30 September 2020

Senator the Hon Linda Reynolds CSC

Minister for Defence

Parliament House

Canberra ACT 2600

Senator the Hon Mathias Cormann

Minister for Finance

Parliament House

Canberra ACT 2600

The Hon Darren Chester MP

Minister for Defence Personnel

Parliament House

Canberra ACT 2600

Dear Ministers

On behalf of the Board of Directors, I am pleased to present Defence Housing Australia’s (DHA)

Annual Report 2019-20 for the year ended 30 June 2020 (the report).

The report has been prepared in accordance with the Public Governance, Performance and

Accountability Act 2013 (PGPA Act), related instruments and guidance material, including the Public

Governance, Performance Accountability Rule 2014 and Commonwealth Government Business

Enterprise Governance and Oversight Guidelines.

In the Board’s opinion, the report is based on properly maintained records and accurately reflects

DHA’s performance against the purposes and performance measures set out in our Corporate Plan

2019-20 to 2022-23 and Statement of Corporate Intent 2019-20.

I trust that while this report is primarily a mechanism of accountability to the Australian Government,

it will also be a valuable resource for DHA’s customers, landlords, government organisations at all

levels, industry and the general community.

I commend this report to you as a record of DHA’s achievements and compliance, and request that you

present it to the Parliament in accordance with section 46(1) of the PGPA Act.

Yours sincerely

Hon J.A.L. (Sandy) Macdonald

Chairman

ii DHA Annual Report 2019-20

iii About this report

About this report This report is the Board of Directors’ primary mechanism of accountability to the

Parliament of Australia and has been prepared in accordance with legislative and

parliamentary reporting requirements.

This report outlines Defence Housing Australia’s performance against

stated objectives and performance measures for the period 1 July 2019 to

30 June 2020 as set out in our Corporate Plan 2019-20 to 2022-23

(Corporate Plan 2019-20) and publicly available Statement of Corporate Intent

2019-20 (www.dha.gov.au/sci).

Guide to this report Part 1 Provides a review of the year from our Chairman and Managing

Director and details of our significant highlights and achievements

over the reporting period.

Part 2 Provides an overview of our role, responsibilities, organisational

structure, financial structure, services to Defence, services to

landlords and our property portfolio as at 30 June 2020.

Part 3 Contains our annual performance statement and detailed assessment

of our performance in 2019-20.

Part 4 Details our management and accountability processes, including

corporate governance, external scrutiny and workforce management.

Part 5 Contains our consolidated financial statements for 2019-20.

Part 6 Contains appendices and reference information.

The appendices provide supplementary information on specific areas of the

business, including some required under legislation.

The reference information includes a list of acronyms and abbreviations,

a compliance index, a directory of our services and offices, and an

alphabetical index.

iv DHA Annual Report 2019-20

Contents Part 1 Year in review 1

Chairman's review 2

Managing Director’s review 4

2019-20 in summary 6

Awards and achievements 8

Part 2 Agency overview 11

About us 12

Organisational structure 14

Financial structure 18

Services to Defence 19

Services to landlords 23

Housing portfolio 24

Part 3 Performance reporting 31

Planning and reporting framework 32

Annual Performance Statement 35

Regional report on operational performance 58

Part 4 Management and accountability 67

Legislative framework 68

Corporate governance structure 72

Risk management, internal audit and compliance 85

Procurement and consultancies 87

External scrutiny 88

Workforce management 90

Information management and systems 102

v Contents

Part 5 Financial statements 105

Financial statements 106

Part 6 Appendices and reference information 175

Appendix A: Accountable Authority 176

Appendix B: Workforce statistics 181

Appendix C:Work, health and safety 193

Appendix D: Five year financial summary 196

Appendix E: Advertising and market research 197

Appendix F: Environmental performance 198

Office directory 201

Acronyms and abbreviations 202

Index of annual report requirements 205

Alphabetical index 210

Figures

Figure 2.1 Organisational structure showing direct reports to the Managing Director 30 June 2020 15

Figure 2.2 Office network 30 June 2020 16

Figure 2.3 Staff by gender 30 June 2020 17

Figure 2.4 Staff by employment type 30 June 2020 17

Figure 2.5 Staff by broadband classification 30 June 2020 17

Figure 2.6 Staff by office type 30 June 2020 17

Figure 2.7 Annual provisioning planning cycle 20

Figure 2.8 National housing portfolio 30 June 2020 24

Figure 2.9 MWD portfolio by type 30 June 2020 25

Figure 2.10 MWD portfolio by age (years) 30 June 2020 25

Figure 2.11 MWD portfolio by number of bedrooms 30 June 2020 25

Figure 2.12 MCA portfolio type 30 June 2020 26

Figure 2.13 MCA portfolio by age (years) 30 June 2020 26

Figure 2.14 MCA portfolio by number of bedrooms 30 June 2020 26

Figure 2.15 MWD portfolio by ownership type 30 June 2020 27

Figure 2.16 MCA portfolio by ownership type 30 June 2020 27

Figure 3.1 DHA’s purposes 2019-20 32

Figure 3.2 DHA’s approach to planning and reporting 2019-20 33

Figure 3.3 DHA’s Strategic Canvas 2019-20 34

Figure 3.4 Relationship between the Corporate Plan and Annual Performance Statement 35

Figure 3.5 ADF member online service usage per month 2017-18, 2018-19 and 2019-20 42

Figure 3.6 Landlord online service usage per month 2017-18, 2018-19 and 2019-20 42

Figure 3.7 Net profit after tax (NPAT) and annual dividend payments 2015-16 to 2019-20 52

Figure 6.1 WHS incidents by person involved 2017-18, 2018-19 and 2019-20 194

vi DHA Annual Report 2019-20

Tables

Table 3.1: Results against KPIs 2019-20 36

Table 3.2: Results against KPIs 2019-20 36

Table 3.3: Results against KPIs 2019-20 37

Table 3.4: Results against KPIs 2019-20 37

Table 3.5: Strategic Priority 1—Customers 40

Table 3.6: National property and tenancy services performance 30 June 2020 43

Table 3.7: Strategic Priority 2—Portfolio 46

Table 3.8: National MWD portfolio performance 30 June 2020 47

Table 3.9: National MCA portfolio performance 30 June 2020 47

Table 3.10: Strategic Priority 3—Financial 50

Table 3.11: Strategic Priority 4—Capability 54

Table 3.12: NT region property provisioning and related services 2019-20 58

Table 3.13: NQLD region property provisioning and related services 2019-20 59

Table 3.14: SQLD region property provisioning and related services 2019-20 60

Table 3.15: NSW region property provisioning and related services 2019-20 61

Table 3.16: ACT region property provisioning and related services 2019-20 62

Table 3.17: VIC and TAS region property provisioning and related services 2019-20 63

Table 3.18: SA region property provisioning and related services 2019-20 64

Table 3.19: WA region property provisioning and related services 2019-20 65

Table 4.1: Significant non-compliance with the finance law 69

Table 4.2: Board committees 2019-20 77

Table 4.3: Board meetings and member attendance 2019-20 78

Table 4.4: Board Audit and Risk Committee 2019-20 79

Table 4.5: Executive and national committees 2019-20 83

Table 4.6: Workforce summary 2018-19 and 2019-20 94

Table 4.7: Learning and development 2018-19 and 2019-20 96

Table 4.8: WHS performance 2018-19 and 2019-20 97

vii Contents

Table 6.1: Accountable Authority 2019-20 176

Table 6.2: All ongoing employees current reporting period 2019-20 181

Table 6.3: All non-ongoing employees current reporting period 2019-20 182

Table 6.4: All ongoing employees previous report period 2018-19 182

Table 6.5: All non-ongoing employees previous report period 2018-19 183

Table 6.6: Staff by classification and gender 2018-19 and 2019-20 183

Table 6.7: Staff by classification and employment type 2018-19 and 2019-20 184

Table 6.8: Ongoing staff by length of service and classification 2018-19 and 2019-20 184

Table 6.9: Staff by office type 2018-19 and 2019-20 184

Table 6.10: Staff by location 2018-19 and 2019-20 185

Table 6.11: Staff by employment instrument 2018-19 and 2019-20 186

Table 6.12: Staff gross salary ranges by classification 2018-19 and 2019-20 186

Table 6.13: Maximum potential performance bonus by classification 2018-19 and 2019-20 187

Table 6.14: Performance pay by classification for 2018-19 paid in 2019-20 187

Table 6.15: Details of executive remuneration for KMP 30 June 2020 190

Table 6.16: Details of remuneration for nine senior executive members 30 June 2020 191

Table 6.17: Details of remuneration for eleven other highly paid staff 30 June 2020 192

Table 6.18: WHS performance 2018-19 and 2019-20 193

Table 6.19: Financial performance 2015-16 to 2019-20 196

Table 6.20: Advertising expenditure 2019-20 197

Table 6.21: Direct mail expenditure 2019-20 197

Table 6.22: Media advertising expenditure 2019-20 197

Table 6.23: Market research expenditure 2018-19 197

Table 6.24: Maintenance work expenditure 2019-20 199

PART 1

Year in review Chairman’s review

Managing Director’s review

2019-20 in summary

Awards and achievements

Operating environment The context within which DHA

operates is complex and constantly

evolving. In 2019-20, we sought and

received support from Shareholder

Ministers to implement a revised

business model which refocuses on

our core purpose—providing Australian

Defence Force (ADF) members and

their families with housing services.

We are working closely with the

Departments of Defence and Finance,

and are taking a phased approach to

implementation to ensure alignment

with government needs and minimise

any potential impact on service delivery.

Audit of DHA operations In April 2020, the Australian National

Audit Office’s (ANAO) performance

audit into the Management of Defence

Housing Australia was tabled in the

Senate and published on the ANAO

website. The ANAO made four

recommendations in its report (refer to

the External Scrutiny section for more

detail). DHA agreed to all

recommendations and is implementing

them in consultation with the

Department of Defence.

Natural disasters and COVID-19 pandemic Natural disasters, such as the

bushfires which engulfed much of

south east Australia and the COVID-19

pandemic, challenged our traditional

ways of doing business in 2019-20.

In response, we developed innovative

ways of delivering services and ensuring

a safe workplace. On behalf of the

Board I extend special thanks to our

staff across the country who united to

ensure we continued to meet the needs

of our customers. Their tireless efforts,

flexibility and dedication was, and

continues to be, extraordinary.

Support of the Australian Government In 2019-20, DHA worked very closely

with Shareholder Ministers and their

departmental representatives to

ensure we continue to meet the

current and future needs of the

Australian Government.

DHA will return a dividend of

$25.6 million for 2019-20,

a substantial effort given the

challenges I outlined above.

I would like to thank the Minister for

Defence, Senator the Hon Linda

Reynolds CSC, the Minister for

Finance, Senator the Hon Mathias

Cormann, and the Minister for Defence

Personnel, the Hon Darren Chester MP,

for their continued support of DHA.

Support of the Defence community DHA acknowledges that our primary

purpose is to provide adequate and

suitable housing and related services

for ADF members and their families. We

are also proud members of the broader

Defence community and play an

important role in supporting Defence

capability to defend our country.

Chairman's review

It gives me great pleasure to introduce Defence Housing Australia’s (DHA’s) Annual Report 2019-20.

DHA achieved a great deal in the past

year, despite a number of challenges.

The Managing Director will comment

more specifically on DHA’s operational

achievements, however I wanted to

highlight some key areas.

Hon J.A.L. (Sandy) Macdonald

2 DHA Annual Report 2019-20

In 2019-20, DHA was a proud partner

of Integra Service Dogs Australia and

their project which selects, trains and

places assistance dogs with ADF

veterans or members. We also

supported various ADF sporting

organisations, the Australian Military

Wives Choir and the Prince’s Trust.

As well as our major and sporting

partnerships, we have a long history

of supporting small community

organisations that play a key role in the

Defence community. In 2019-20, we

supported the Randwick Family Centre

in Sydney, Pearce Community Group

in Perth, Duntroon Community Centre

in Canberra and Karrakatta Community

House in Perth.

Our presence at these events provides

a positive interaction between DHA,

ADF members and their families, and

also highlights our brand and services

to other Defence support groups and

key stakeholders.

Support of the broader community One of the most pleasing aspects of

DHA’s national operations is that we

can contribute to local and regional

economies. In 2019-20, we continued

to employ local businesses and

tradespeople wherever possible in

maintaining our property portfolio,

constructing new properties and

creating new residential communities.

Appointments and acknowledgements Board

The Australian Government appoints

and reappoints DHA Board members

to serve at their pleasure. The current

composition of members brings together

a diverse range of skills and experience,

and I thank them for their service.

In 2019 -20, I welcomed the

reappointment of Ms Andrea Galloway

and Mr Ewen Jones as commercial

directors. I also welcomed the

appointment of Brigadier Leigh Wilton

AM as the nominee of the Chief of the

Defence Force and Ms Kate Louis as

the nominee of the Secretary of the

Department of Defence. The Board

and I value their knowledge and

experience, especially in relation to

residential property, the ADF and

Defence industry.

I also acknowledge and thank former

Board members, Commodore Vicki

McConachie CSC RAN and Mr Martin

Brady AO. Both brought considerable

experience and pragmatism to the

Board, especially in their respective

roles as Chair of the DHA Advisory

Committee and Chair of the Board

Audit Committee. The Board and I will

miss their wise counsel and wish them

well in their future endeavours.

I wish to congratulate the Hon Alan

Ferguson who was made a Member

of the Order of Australia in the 2020

Queen’s Birthday Honours for

significant service to the Australian

Parliament and the South Australian

community.

Managing Director

I wish to acknowledge Mr Barry

Jackson and his exemplary leadership

of DHA over the past 12 months. The

Board and I thank him for his efforts,

particularly in relation to development

and implementation of the revised

business model, and oversight of

DHA’s response to the ANAO audit

and operations throughout the

COVID-19 pandemic.

Staff

I would like to acknowledge and

thank the senior leadership team and

all staff for their ongoing efforts and

achievements in 2019-20.

The Board and I are consistently

impressed and thankful for the

professionalism and commitment to

service that is displayed. DHA has

highly motivated people at every level

of the organisation and I thank them

for their teamwork and commitment to

our purpose.

There are always challenges in a

business as large and complex as

DHA, but I am confident we will

continue to navigate them and deliver

quality outcomes for ADF families,

landlords and shareholders in 2020-21.

Hon J.A.L. (Sandy) Macdonald

Chairman

3 Chairman's review

4 DHA Annual Report 2019-20

Managing Director’s review

Mr Barry Jackson

Over the year we focused on reviewing

our operations and implementing a

revised business model to ensure DHA

supports Defence capability, is

sustainable and delivers value to the

Australian Government. External

factors continued to challenge our

traditional ways of doing business.

Unstable property markets in some

regions, evolving housing preferences

and rapid changes in the societal,

technological, environmental and

economic context compelled us to

undertake a number of activities to

address these challenges and better

position DHA to continue to meet the

housing needs of ADF members in a

financially sustainable way.

We also experienced significant

challenges due to bushfires, hailstorms

and the COVID-19 pandemic, resulting

in us developing innovative ways of

delivering services to ensure we

continued to meet the needs of our

customers during these crises.

Performance highlights Some of the highlights and

achievements in 2019-20 include:

A DHA met the targets for housing to be provided for Members with

Dependents and continued to put

customers at the centre of

everything we do, exceeding

all customer satisfaction

performance measures.

A Our financial results exceeded expectations, in part due to

refocusing provisioning strategies on

lower risk and less capital intensive

methods, such as leasing. This was

further supported by bringing forward

the delivery of properties for sale in

markets where demand was strong,

for example the Akuna Vista

development in Schofields (NSW).

A Working with Defence to provide greater choice in housing options

in response to ADF member

preferences.

A DHA supported the Defence Joint Taskforce response to the bushfires

in 2019-20. Between October

2019 and February 2020, DHA

provided assistance to 24 Defence

bases and allocated 5,500 Living in

Accommodation beds to civilian and

Defence evacuees.

A DHA staff quickly transitioned to home based work, where possible,

in response to COVID-19. This was

supported by cybersecurity

awareness resources, video

conferencing solutions, additional

network capacity, a suite of system

changes to enable increased digital

customer engagement and property

inspections conducted by phone.

All face to face interactions and

non-urgent maintenance were

cancelled, with inspections carried

out virtually.

A Adopting a new technology strategy and initiating projects that will

deliver scalable, sustainable and fit

for purpose technology to support

the revised business model.

In 2019-20, DHA continued to deliver strongly against our core purpose of providing housing and related services to ADF members and their families, while adapting to the dynamic environment we operate in.

5 Managing Director’s review

Priorities for the year ahead Our primary purpose remains. We will

continue to put ADF members and

their families at the heart of our

operations. However, like other

organisations, we face challenges and

opportunities: property markets are

more volatile, the expectations of ADF

members and their families, as well as

our staff, have changed, and we are in

the midst of a global health crisis

which will have unknown economic

consequences. With the world in

which we operate continuing to evolve

and facing new disruptions, we must

continue to evolve and ensure we

remain relevant by implementing more

efficient and sustainable ways to

deliver our services.

In the coming year, DHA will focus on:

A continuing to support Defence capability by meeting the evolving

needs of the ADF including through

the ADF Employment Offer

Modernisation program

A refreshing our information technology systems and making it

easier for ADF members and their

families to do business with us

when it suits them

A implementing regional provisioning strategies that focus on flexibility

and reduce exposure to volatile

property markets

A strengthening coordination and decision making processes to

maintain a financially sustainable

business

A aligning our revenues to services delivered focuses on ensuring a

clear link between DHA activities,

their costs and the revenues earned

from performing them

A implementing a sustainable organisational structure and building

the workforce capabilities required

to deliver under the revised

business model.

We will continue to adapt our

approach to the dynamic environment

in which we operate. As a national

organisation, with our property

portfolio spanning every Australian

state and territory, we need to

continue to be flexible in order to

respond to environmental factors

which impact our operations on local,

regional and national levels.

The Leadership Team and I are

committed to ensuring DHA builds and

maintains a high performing culture

that encourages inspiring leadership

and supports our strategic direction.

We expect our leaders to model

Australian Public Service (APS) values,

be accountable, visible, effective,

trusted and make informed evidence

based decisions.

DHA is committed to maintaining a

safe workplace where any individual

or group feels welcomed, respected,

valued and able to fully participate and

contribute. This includes a commitment

to recognise, appreciate and celebrate

our country’s rich and unique Aboriginal

and Torres Strait Islander cultures and

cultural heritages across every facet of

the organisation. We will do this

through meaningful opportunities for

Aboriginal and Torres Strait Islander

peoples, for example by participating

in the Indigenous Apprenticeships

Program and increasing opportunities

for Aboriginal and Torres Strait Islander

suppliers in order to support improved

economic and social outcomes.

Over 2019-20 there have already

been significant changes to our

business and there are more to come

as we continue to improve and refine

the housing services we provide.

During the year I have been impressed

by the commitment of DHA staff as

they embraced the challenges and

opportunities to innovate. Over the

coming year we will continue to

innovate to improve our processes,

systems and ways of working.

I would also like to thank the Board

and our Shareholder Ministers for their

support while leading DHA through

this period of significant reform.

Mr Barry Jackson

Managing Director

6 DHA Annual Report 2019-20

2019-20 in summary Quality services for Defence Housing Australia customers

17,925Properties under management

17,313ADF members in receipt of rent allowance

$11.0 b Market value of property portfolio managed 58,446 Property inspections undertaken

112,845 Maintenance Contact Centre calls received

1,804Property additions to the portfolio 7,240 Housing allocations 13,185 Leases managed

8,954Rent allowance applications

6 DHA Annual Report 2019-20

7 2019-20 in summary

208,631Maintenance work orders raised

330Properties sold through Property Investment Program

42,520Living in Accommodation calls received 449,443 Living in Accommodation bookings

$25.6 mDividend payments to Australian Government

60,358Survey invitations released with a 42% response rate $4.9 mRevenue for Defence from property sales $10.8 mRevenue raised from other property sales

$167.2 mRevenue raised through Property Investment Program

7 2019-20 in summary

8 DHA Annual Report 2019-20

Awards and achievements

Australian Institute of

Landscape Architects

Winner—2020 NSW Landscape

Architect Awards for Gardens

Arkadia Apartments, entered by the

project’s landscape architect, Oculus

Australian Institute of Architects

NSW Chapter

Winner—2020 Sustainable

Architecture Award

Winner—2020 People’s Choice Award

for Life, Isolation Oasis category

Arkadia Apartments

Stormwater Queensland Awards

for Excellence

Winner—2019 Excellence in

Infrastructure category

Torhaven Ephemeral Wetlands project

Sustainability Award

Finalist—2019 Landscape and

Biophilia category

Torhaven Ephemeral Wetlands project

Australian Water Awards

Finalist—2019 Innovation category

Torhaven Ephemeral Wetlands project

Australian Marketing Institute

ACT finalist—2019 Marketing

Excellence

Invictus Games sponsorship

marketing program

Australasian Reporting Awards

Gold Award for Distinguished

Annual Reporting

9 Awards and achievements

Case study

Our response to COVID-19 In March 2020 Australia found itself in the grips of a novel coronavirus named ‘COVID-19’ as it spread across the world.

DHA worked quickly to ensure it could

continue to support Defence capability

through its operations, but in a very

different way.

As soon as it became clear that the

situation was rapidly evolving across

Australia, DHA enacted a Command

Activation Team (CAT). Under DHA’s

Business Continuity Framework the

CAT is alerted and briefed if an event,

threat or physical activity is expected

to cause harm, or is likely to occur to

DHA or its facilities. The CAT’s key role

for COVID-19 was to make decisions

regarding DHA’s operational activities,

ensure the health and safety of staff

and customers, and to ensure that all

stakeholders were communicated with

in a timely and responsible manner.

Along with the Leadership Team, the

CAT invited key business subject

matter experts to attend including

representatives from the Work Health

and Safety, Human Resources,

Communication and Media, and

Information Technology teams as well

as Operations.

In its first meeting the CAT established

two keys areas of focus as critical for

business continuity: the ability to

continue to provide housing and

related services to ADF members,

and the ability for the workforce to

operate remotely.

In just a matter of weeks, the world

changed. How we do business

changed. While we already had plans

in place to become better connected

in the delivery of our services, the

health emergency afforded us an

opportunity to make some significant

progress and accelerate these plans.

To keep pace with the ever changing

environment we switched to video

conferencing to support the staff to

work remotely, enhanced self-service

options for ADF members, and started

conducting property inspections

online. Many of these changes

simplified our operations and

interactions with ADF members and

will become business as usual

processes into the future.

While the external environment is

continuously changing at an

increasingly rapid pace, internally we

needed to ensure that our people were

keeping up with the pace of change.

A COVID-19 hub was established to

provide staff with real-time information

about the developing situation.

Within days of the Australian Public

Service Commission directing public

servants to work from home where

possible, DHA had developed an

interim COVID-19 home based work

policy and had more than 90 per cent

of its workforce working remotely.

Various other corporate policies and

procedures were developed to support

staff, including material on remote

based work, working from home safely

and managing dispersed teams.

While business has continued, and the

changes have been welcomed by both

staff and customers, we have

successfully established a new way of

doing business for our future, in the

face of a worldwide crisis.

9

PART 2

Agency overview About us

Organisational structure

Financial structure

Services to Defence

Services to landlords

Housing portfolio

About us Defence Housing Australia (DHA) was established in 1988 under the Defence Housing Australia Act 1987 (DHA Act) and is a Corporate Commonwealth entity and Government Business Enterprise (GBE) in accordance with the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and PGPA Rule. DHA is a statutory agency under the Public Service Act 1999 (Public Service Act) and is the only GBE to employ staff in accordance with the Public Service Act.

Refer to Part 4 of this report for more information about our legislative framework.

12 DHA Annual Report 2019-20

13 13 About us

Our purpose The 2019-20 Portfolio Budget

Statement outlines DHA’s primary

purpose is to contribute to Defence

outcomes by providing total housing

services that meet Defence

operational and client needs through a

strong customer and business focus.

This outcome is broken down into two

key purposes:

1. Provide quality housing and

related services

We administer Defence housing policy

and provide housing and related

services to Australian Defence Force

(ADF) members and their families in

accordance with our Services

Agreement with the Department of

Defence. Our services under this

purpose include:

A provision of a property portfolio and manage and maintain housing

A assist in finding a housing solution through our Housing Consultants

located around Australia and Online

Services system

A provide a booking and allocation service

A administer the payment of allowances for ADF members

occupying rental accommodation

A construct and acquire properties to meet Defence housing demands

A redevelop properties to meet Defence standards.

2. Provide value to shareholders

We provide value for money services

to Defence and seek to generate

sufficient revenue to enable us to

perform our role on a commercially

sustainable basis. We do this while

continuing to maintain an operational

service delivery model, sound

governance practices, a capable and

productive workforce and integrated

and responsive systems that deliver

high quality and professional

outcomes.

Refer to Part 3 of this report for our

Annual Performance Statement and

detailed assessment of our

performance in 2019-20.

14 DHA Annual Report 2019-20

Organisational structure Shareholder Ministers

DHA sits within the Defence portfolio

of the Australian Government, and the

responsible Minister is the Minister

for Defence, who has delegated DHA

operational matters to the Minister

for Defence Personnel.

As DHA is a Government Business

Enterprise, two Shareholder Ministers

oversee the Australian Government’s

interests in DHA: the Minister for

Defence Personnel and the Minister

for Finance.

Refer to page 72 of this report for

more information on our Shareholder

Ministers.

Board A Board of Directors (the Board) is

established in accordance with Part

III of the DHA Act and is the

accountable authority of DHA under

the PGPA Act. The Board is

responsible for the proper and efficient

performance of our functions. All

non-executive Board members are

appointed by our Shareholder

Ministers following approval from the

Australian Government. Members

have a combination of Australian

Public Service (APS), Australian

Defence Force (ADF) and

commercial experience.

Refer to Appendix A: Accountable

Authority for further detail.

Managing Director The Managing Director is appointed by

the Board and is the only executive

director of the Board. The Managing

Director is responsible for conducting

the affairs of DHA in accordance with

the DHA Act and any policies

determined by, and directions given

by, the Board. The Managing Director

oversees DHA’s strategic direction,

organisational structure, staff,

performance and relationships with key

stakeholders.

Leadership Team The Leadership Team supports the

Managing Director in fulfilling DHA’s

purpose in accordance with the

DHA Act. The Team’s broad role is

to provide leadership, guide

performance, implement and deliver

against the Corporate Plan and

ensure accountability of our activities.

As at 30 June 2020, the group

comprised seven direct reports to

the Managing Director.

The Service Delivery Group is

responsible for all additions and

subtractions to the DHA housing

portfolio, management of housing

allocation, tenancy management,

property sales and DHA’s leasing

activities. The Group is made up of

two main functions comprising property

activities and service operations.

The service operations team is

responsible for delivering cost effective

and timely property management,

maintenance, housing allocation and

leasing services. The property area is

responsible for acquisition of

residential property, heritage and

upgrade projects, construction and

development activity, disposals and

the DHA Property Investment

Program (PIP).

The Service Delivery Support Group

is responsible for supporting the

operations of the Service Delivery

Group, effective decision making,

resource allocation and accountability.

This includes strategic planning,

financial management, governance

frameworks, legal advice,

communication, human resources,

information technology management

and services, and implementation of

the revised business model.

15 Organisational structure

Figure 2.1 Organisational structure showing direct reports to the Managing Director 30 June 2020

Shareholder Ministers

DHA

Board of Directors

DHA

Managing Director

Chief General Counsel Legal Services

General Manager Business Intelligence

Chief Information Officer

Service delivery Service delivery support

General Manager Service Delivery

Chief Financial Officer

General Manager Governance

National Manager People and Capability

16 DHA Annual Report 2017-18

Our office network DHA maintains offices in capital cities,

major regional centres and on some

ADF bases and establishments around

Australia. ADF members utilise Online

Services to access a range of housing

services including allocations, rent

allowance and home maintenance.

Our contact centres provide more

in-depth assistance for ADF members

with complex queries. Regional offices

provide property management services

and manage relationships with local

bases and ADF staff. Our head office

is located in Canberra and provides

operational, financial, information

technology, human resources,

communications and corporate

support to the organisation.

Figure 2.2 Office network 30 June 2020

Regional offices Contact centres Head office and Sydney CBD Outposts On-base

16 DHA Annual Report 2019-20

17 17 Organisational structure

Our staff Staff are critical to the organisation’s

success. As at 30 June 2020, we

employed 541 staff across Australia.

Figures 2.3 to 2.6 show staff by

gender, employment type, broadband

classification and office type.

Refer to Workforce management

(page 90) and Appendix B: Workforce

statistics for more information about

our workforce.

Figure 2.3 Staff by gender 30 June 2020

Figure 2.4 Staff by employment type 30 June 2020

Figure 2.5 Staff by broadband classification 30 June 2020

Figure 2.6 Staff by office type 30 June 2020

35% 65%

Full-time—85% Part-time—15%

EL1

SES and MD

EL2

EL1

DHA6

DHA4

DHA5

DHA3

81

160

59

100

10

54

77

Contact centre—84

Regional office—234

Sydney CBD office—24

Head office—199

18 DHA Annual Report 2019-20

Financial structure As a GBE, we are required to maintain a strong financial position and meet commercial return objectives, including the payment of dividends to the Australian Government. Our dividend for 2019-20 is 60 per cent of net profit after tax.

Our funding model We do not receive funding directly

from the Federal Budget. We fund our

operations through the receipt of

commercial rent, fees and charges

from Defence for our services and

generate revenue from:

A selling and leasing back properties through our Property

Investment Program

A the disposal of excess land and completed properties from our

developments

A the disposal of properties that no longer meet minimum Defence

standards or provisioning

requirements.

We have a loan agreement with the

Commonwealth. As at 30 June 2020,

we had 19 loans totalling $509.6 million.

We are a full tax paying entity in

relation to Australian Government taxes

(e.g. corporate income tax, goods and

services tax (GST) and fringe benefit

tax (FBT)). We also pay state and

territory based tax (e.g. stamp duty,

land tax and payroll tax) equivalents in

accordance with competitive neutrality

requirements.

Refer to Part 3 for more information

about our financial performance in

2019-20.

Our credit rating Standard & Poor’s Rating Services

conducts an annual credit rating

assessment of DHA.

The report issued on 28 May 2020

confirmed a corporate credit issuer

rating of AA+/Negative/A-1+. This

rating is reflective of their assessment

of the effect of government ownership

and the level of support implied by

that ownership.

Standard & Poor’s also provided a

standalone credit profile rating for

DHA of BBB+. This credit profile is

one rating above the target for GBEs

specified in the GBE Guidelines.

19 Services to Defence

Services to Defence Defence is responsible for determining pay conditions for ADF members, including their entitlement to subsidised housing. We administer Defence housing policy and provide housing solutions and related services to ADF members in accordance with our Services Agreement with Defence. In doing so, we contribute to ADF capability and operational goals.

Housing solutions ADF members who do not own a

suitable home in their posting location

may be eligible for housing assistance.

The type of accommodation a member

is eligible for depends on their policy

categorisation, rank, number of

dependants, age and gender of

dependants and their posting location.

Member with Dependants housing

Each year the Department of Defence

provides us with a housing forecast

known as the Defence Housing

Forecast (DHF), which details the

number of Members with Dependants

(MWD) requiring housing for the next

five years by location. The DHF

includes MWD housed in service

residences and those occupying

private rental accommodation. Service

residences provided by DHA are

classified by market rent.

Based on the DHF, DHA prepares a

three year provisioning plan. We plan

to meet approximately 90 per cent of

the total DHF. The remainder of ADF

members rent accommodation

privately and receive rent allowance

administered by DHA on behalf of

Defence or reside in their own home.

Once negotiations are complete and

Defence accepts the provisioning plan

it is incorporated into our Corporate

Plan. Under contractual arrangements

with Defence, our target is to meet

99 per cent of the agreed MWD

provisioning plan.

Member Choice

Accommodation housing

Member Choice Accommodation

(MCA) is designed for Members

without Dependants (MWOD) as an

alternative to finding housing through

the private rental market. Unlike MWD

housing, Defence does not provide us

with a forecast of the number of MCA

properties it requires. Defence

nominates priority locations for MCA

housing and a minimum number of

properties in the priority locations for

us to provision.

We use this information to develop a

provisioning plan which sets out the

proportion of MCA housing we can

supply. It takes into account properties

we own, lease and intend to add to

our portfolio. Defence reviews the

plan annually.

20 DHA Annual Report 2019-20

Figure 2.7 Annual provisioning planning cycle

Rent allowance

When an eligible ADF member

cannot be provided with service

accommodation, they and their family

(if applicable) may be entitled to rent

through the private rental market and

receive rent allowance.

ADF members are responsible for

finding the accommodation but

must engage with DHA (on behalf

of Defence) to seek rent allowance

approval. DHA administers the

rent allowance process on behalf

of Defence.

Living in Accommodation

We manage the online booking system

for approximately 34,500 Defence

owned and maintained beds across

53 Defence bases and establishments.

Living in Accommodation (LIA) caters

for ADF members, reservists and

Defence employees who require

permanent, transit, temporary and

course accommodation to fulfil

Defence’s operational needs.

Refer to Housing portfolio (page 24)

for more information about our housing

portfolio, housing solutions, MWD and

MCA provisioning in 2019-20.

August—Defence provides forecast of housing needs for MWD over next 5 years

Sept/Oct—DHA reviews DHF by region, assessing housing needs against local market conditions

Nov/Dec—DHA reviews and updates Capital Plan with provisioning tactics to meet housing needs

January—Capital Plan for Corporate Plan approved by DHA Board

Feb/March—DHA negotiates with Defence provisioning schedule for next 3 years

April—Defence agrees provisioning schedule

30 June—Corporate Plan (4 years)

DHA Corporate Plan (4 years)

Defence Housing Forecast (5 years)

Approved Provisioning Schedule (3 years)

DHA Capital Plan (10 years)

Snapshot—review of provisioning for previous year (30 June 2019)

1 July 2020—provisioning cycle commences

21 Services to Defence

Related services

Property and tenancy management

We ensure there is a range of suitable

properties in key locations to meet the

housing needs of ADF members and

their families. From the moment an

ADF member receives their posting

order, we provide information and

support to assist them to find a home

that best suits their needs in their

posting location. We welcome

members into their new home and

conduct inspections to ensure the

properties are well managed.

We manage external contractors

who undertake all property

maintenance. By using appropriate

contractors, we offer prompt, quality

service while supporting local and

regional economies.

Property upgrades

On behalf of Defence, we coordinate

upgrades of Defence owned

properties on base and in regional and

remote areas of Australia. Modernising

the properties provides an appropriate

standard of living to ADF members

and their families who occupy the

properties, and extends the life span

of the properties by 10-15 years.

Commonwealth Heritage Listed

properties

On behalf of Defence, we manage and

conserve 61 Commonwealth Heritage

Listed (CHL) properties at ADF bases

and establishments across Australia in

accordance with the Environment

Protection and Biodiversity

Conservation Act 1999 (EPBC Act).

We also own 16 CHL properties and

two CHL development sites. There are

a further three development sites on

the DHA Heritage Register. These

properties are an important piece of

Australia’s history, as well as the

history of the ADF defending our

nation. We plan and undertake

conservation activities in accordance

with the EPBC Act, a heritage

management framework and DHA

Heritage Strategy.

22 DHA Annual Report 2019-20

Case study

Supporting Defence capability in times of crisis In early 2020 Australia experienced unprecedented extreme weather events ranging from widespread catastrophic bushfires in New South Wales and Victoria to significant hail storms affecting Canberra in the Australian Capital Territory. The timing of these events at the heart of the posting period presented many challenges for DHA and ADF families.

Over the years DHA has supported

ADF members and their families

through natural disasters, including

cyclones, floods and bushfires. DHA’s

incident management and business

continuity plans provide clear direction

regarding emergency management and

communication throughout an

unfolding disaster and into the

recovery stages.

DHA uses the Gold Silver Bronze

command structure, which provides a

clear and direct command and control

response and allowing critical business

tasks to be prioritised. The Gold

command team takes overarching

control of the incident, with the Silver

command team coordinating

operational strategies developed by

the Bronze command team. The teams

consist of specialists from across all

areas of DHA and combine to deliver

a unified response.

This approach requires all business

units in DHA to provide support and

take direction from the Gold command

team, safeguarding staff, ADF

members and their families while

ensuring continuity of service.

As a devastating bushfire gripped the

coast of Victoria leaving thousands of

residents and holiday makers seeking

shelter on the beach, DHA joined

forces with the ADF to support the

rescue of men, women, children and

pets from the approaching fires. DHA

answered the call to help source

accommodation on Defence bases

across the country. DHA’s Living in

Accommodation Contact Centre began

the mammoth task of ensuring

maximum availability by ascertaining all

vacant rooms, relocating incoming ADF

members to other accommodation,

and liaising with service providers on

the bases. These rooms were used to

house displaced Australians at very

short notice, including civilian

firefighting crews and Defence

Reservists responding to the

emergency.

Administratively this was a significant

operation requiring an agile response

to safely house civilians at sensitive

Defence bases. Despite these

challenges, DHA was able to assist in

providing safe haven accommodation

for those affected by the bushfires.

Photo: Department of Defence

22 DHA Annual Report 2019-20

23

Services to landlords Landlords are important to us as they help us sustain a high quality, well located property portfolio and a healthy long term financial structure. We sell and lease back properties through our Property Investment Program, direct lease properties from private owners and negotiate with existing landlords to retain properties through a new lease or extension on a current lease.

Our lease agreement Distinguishing features of our lease

agreement include:

A a long lease term (typically six to 12 years; greater when lease

options are exercised)

A a reliable rental income payable from the date of settlement and no

loss of rental income if the property

is not occupied1

A an extensive range of property care services provided during the lease

term in return for a service fee.

Refer to Portfolio ownership type for

(page 27) more information about the

proportion of our housing portfolio that

is leased.

Refer to Part 3 for more information

about our services to landlords and

investor (landlord) satisfaction.

1 Rent may be subject to abatement in limited circumstances.

Services to landlords

Housing portfolio As at 30 June 2020, we managed

18,024 properties in all capital cities,

major regional centres and remote

locations of Australia where the ADF

has a presence (refer to Figure 2.8).2

The majority of properties are

integrated throughout the

community, close to ADF bases

and establishments, and close to

a range of amenities and services

such as transport, shopping facilities

and schools.

Refer to Regional report on operational

performance (page 58) for details on

our housing portfolio by region.

Figure 2.8 National housing portfolio 30 June 20203

Northern Territory 1,785 properties

Queensland 5,248 properties

Western Australia 1,140 properties

New South Wales 5,476 properties

Tasmania 29 properties

South Australia 1,112 properties

Victoria 1,425 properties

Australian Capital Territory 1,809 properties

National portfolio

SR/RBCH 16,386

MCA 1,426

Other 212

Total 18,024

2 Total portfolio managed by DHA includes properties owned and leased by DHA, owned by Defence and annuity properties.

3 Property state information reported in this Figure is by physical location rather than Defence Housing Forecast (DHF).

24 DHA Annual Report 2019-20

25 Housing portfolio

Property type, amenity and location

Apartment

625

Townhouse

2,262

House

13,499

Our Member with

Dependants portfolio

Member with Dependants (MWD)

service residences must comply with

minimum Defence standards in terms

of location and amenity. Depending on the Defence Housing Forecast (DHF) area, service residences are either classified by market rent (known as rent bands) or by property amenity. In general, service residences should not be more than the greater of 30 kilometres one way by road (or 150 minutes for a round trip using public transport) from the base or establishment where the ADF member works.

At a minimum, service residences generally comprise three to four bedrooms, separate lounge and dining areas, kitchen, laundry, bathroom, ensuite, single garage (or carport in the Northern Territory) and a 35 square metre backyard (or 25 square metre backyard in Sydney). Where newly constructed, service residences must achieve a minimum six star energy efficiency rating (EER).4

As indicated in Figures 2.9 to 2.11, the majority of our MWD portfolio features modern, free-standing houses that are up to 10 years old and have four bedrooms.

Choice housing

Our MWD portfolio also includes a

portion of properties categorised as

Rent Band Choice housing. These

properties are generally inner city

apartments and townhouses that do

not meet Defence compliance

standards. ADF members typically

choose to live in Rent Band Choice

housing because the location suits

their lifestyle.

Figure 2.9 MWD portfolio by type 30 June 2020

Figure 2.10 MWD portfolio by age (years) 30 June 2020

Figure 2.11 MWD portfolio by number of bedrooms 30 June 2020

Number of bedrooms Number of properties

1 5

2 431

3 6,009

4 9,490

5 427

6 11

7 2

4 EER must be certified by an independent accredited assessor, using AccuRate (NatHERS replacement), other equivalent methods (e.g. state systems such as BERS Pro and BASIX) or, where permitted, Building Code of Australia Deemed-to-Satisfy provisions.

1,329 0-2

2,354 3-5

3,872 11-15 4,347 6-10

1,972 16-20 2,143 21-30

279 31-40

90 41+

Age

26 DHA Annual Report 2019-20

Our Member Choice

Accommodation portfolio

Our Member Choice Accommodation

(MCA) properties offer Members

without Dependants (MWOD) and

Members with Dependants

Unaccompanied (MWD(U)) an

attractive alternative to renting

privately, including a simple move in

move out process with no bond or

rent required in advance. Eligible ADF

members may also share properties

with other eligible ADF members.

There are no minimum standards in

Defence policy for MCA properties.

As indicated in Figures 2.12 to 2.14,

the majority of our MCA properties are

two bedroom apartments that are up

to five years old.

Refer to Part 3 (page 47) for more

information about our MWD and MCA

portfolio provisioning performance in

2019-20.

237 0-2

736 3-5

86 11-15

285 6-10

26 16-20 26 21-30

5 31-40

25 41+

Age

Townhouse

177

Apartment

1,232

House

17

Figure 2.12 MCA portfolio type 30 June 2020

Figure 2.13 MCA portfolio by age (years) 30 June 2020

Figure 2.14 MCA portfolio by number of bedrooms 30 June 2020

Number of bedrooms Number of properties

1 182

2 1,183

3 61

27 Housing portfolio

Portfolio ownership type Ownership of our portfolio can be

segmented into four categories:

Leased

The majority of our MWD and MCA

portfolio is owned by private landlords

and leased to us.

DHA owned

We retain a portion of our portfolio for

strategic reasons. This includes well

located properties that would be

difficult to replace if sold, properties to

hold for future redevelopment and

properties that we choose to hold for

financial reasons.

Defence owned

A portion of our MWD portfolio is

owned by Defence. These properties

are generally located on or near to

ADF bases or establishments.

Annuity

A portion of our portfolio is classified

as annuity properties. These are

properties that we construct on base

or acquire and/or construct off base in

selected locations as directed by

Defence. We pass the economic risk

of holding capital in these markets

onto Defence.

Figures 2.15 and 2.16 provide a

breakdown of our MWD and MCA

portfolios by ownership type.

Figure 2.15 MWD portfolio by ownership type 30 June 2020

Figure 2.16 MCA portfolio by ownership type 30 June 2020

Defence owned—7%

Leased—71%

Annuity—3%

DHA owned—19%

MWD

16,386 properties

Leased—83%

DHA owned—17%

1,426 properties

MCA

Case study

The best of community, location and good design—Arkadia Apartments The Minister for Defence Personnel the Hon Darren Chester MP joined our Chairman, the Hon J.A.L. (Sandy) Macdonald, on 20 February 2020 to officiate the much anticipated grand opening of Arkadia Apartments—DHA’s residential project located in the inner Sydney suburb of Alexandria.

Comprising 152 apartments offering

a mix of studio, one, two and three

bedroom apartments and terraces,

Arkadia Apartments brings spacious

living to life. Open plan layouts create

an airy flow from the kitchen to the

balcony, while signature brick patterns

and individual floorplans make every

home a unique part of the

neighbourhood.

The ethos of tight knit communities

is supported by the development’s

cleverly composed buildings which

house seven to eight apartments on

each level. Each building has a

communal vegetable garden and a

separate rooftop recreational area

complete with barbeque facilities.

Arkadia Apartments encourages a

connection to the local community

through gathering spaces and small

scale entrances. Landscaping and an

integrated public pocket park seeks

to give something back to the wider

community.

The site, which is bordered by Huntley

Street to the north and Sydney Park

Road to the south, is situated directly

opposite one of Sydney’s most vibrant

parks and close to Alexandria’s thriving

café scene with great access to the

CBD, eastern beaches, the airport,

night life and schools. Key drivers of

demand for the properties include

proximity to public transport, Sydney

CBD, hospitals and universities.

28 DHA Annual Report 2019-20

Extensive research into the site’s

history, the community and the

environment was undertaken to inform

the design that sets a new benchmark

for sustainable multi residential

development in Australia. Built on the

original footprint of a 1870s brickyard,

the façade is almost entirely

constructed from recycled brick

and has been heralded as the largest

recycled brick building in Australia.

From world class weather sensitive

design and air reticulation, to the

thermal efficiency of the solid brick

envelope—as well as a chicken run,

plentiful bike spaces and drought

tolerant planting—the sustainability

features ensure a minimal

environmental footprint.

A key initiative of the 2019-20

corporate strategy was to negotiate

housing flexibility for major metropolitan

areas. The ADF has a strong presence

in Sydney’s inner city with three Defence

bases located only 10kms from this

complex. Arkadia Apartment is a shining

example of how DHA continues to

deliver inspired, sustainable projects

while also providing modern choices for

ADF members and their families in

central locations. As such, 55 per cent

of Arkadia Apartments has been retained

by DHA for Defence housing,

comprising all two bedroom homes in

the complex, along with a select number

of one and three bedroom options.

Award winning design principles

In June 2020, the Australia Institute

of Landscape Architects awarded

Arkadia Apartments the NSW

Landscape Achitecture Award for

Gardens from among a pool of

63 entries—a record number in the

history of the state’s program.

In July 2020, the NSW Chapter of the

Australian Institute of Architects

celebrated the state’s best

architecture, with a total of 41 awards

presented across 13 categories.

Arkadia Apartments was honoured

with the Architecture Award in the

category of Sustainable Architecture,

celebrating the outstanding

architectural collaboration of DKO

Architecture with Breathe Architecture

and Oculus.

A new category in this year’s program

was the People’s Choice Awards for

Life in 2020, which was created by

the NSW Chapter in response to the

ways COVID-19 has altered our

relationship to housing, workplaces

and the public domain. This marked

the first time the public was able to

have its say. Arkadia Apartments was

voted the winner in the category of

Isolation Oasis.

29

PART 3

Performance reporting Planning and reporting framework

Annual Performance Statement

Regional report on operational performance

32 DHA Annual Report 2019-20

Planning and reporting framework As a corporate Commonwealth entity

and Government Business Enterprise

(GBE), DHA plans and reports in

accordance with the:

A Public Governance, Performance and Accountability Act 2013

(PGPA Act)

A Public Governance, Performance and Accountability Rule 2014

(PGPA Rule)

A Commonwealth Government Business Enterprise Governance

and Oversight Guidelines (GBE

Guidelines).

The Australian Government does not

appropriate funds directly to DHA in

the Federal Budget, however,

information about DHA is included in

the Department of Defence’s Portfolio

Budget Statements as we are part of

the Defence portfolio. The Defence

Portfolio Budget Statements outlines

the outcome and the two purposes

that DHA works to achieve (see

Figure 3.1).

Figure 3.1 DHA’s purposes 2019-20

Purpose 1 Provide quality

housing and

related services

Purpose 2 Provide value to

shareholders

DHA’s approach to planning and

reporting (refer Figure 3.2) is

consistent with the requirements of

the Defence Housing Australia Act

1987 (DHA Act), PGPA Act and

associated instruments and policies

and the GBE Guidelines. DHA aims to

provide high quality information to our

Shareholder Ministers, the Parliament,

our customers and the public through

clearly linked and integrated planning

and reporting.

Corporate Plan In accordance with section 16E(4) of

the PGPA Rule, the Board has chosen

not to make our Corporate Plan

publicly available to protect DHA’s

commercial interests. Rather, we

prepare and publish a Statement of

Corporate Intent annually, based on

our Corporate Plan. The Statement of

Corporate Intent 2019-20 provides a

high level, plain English overview of

DHA’s key objectives and priorities for

the financial year and was published in

August 2019.

As set out in our Corporate Plan

2019-20, DHA developed a strategic

canvas with four strategic priorities,

goals, objectives and associated Key

Performance Indicators (KPIs). The

strategic canvas provides a framework

for articulating the work we do to

achieve the outcome mandated by

Government through the fulfilment of

our purposes (refer Figure 3.3).

33 Planning and reporting framework

Figure 3.2 DHA’s approach to planning and reporting 2019-20

Planning Reporting Inputs

Shareholder Ministers, the Parliament and the public

External

Internal

Business unit plans

Project plans

Individual performance agreements

Portfolio Budget Statement

Statement of Corporate Intent

Corporate Plan (Shareholder Ministers only)

Annual Report (Annual Performance Statement)

Performance information to Board

Quarterly performance reports (Shareholder Ministers only)

Performance reviews

Senate Estimates hearings

Performance management

Ministerial and Government priorities

Defence policy and agreements

Defence Housing Forecast

Enabling legislation

Legislation requirements including GBE guidelines

DHA budget

Provisioning and capital plan

Regional portfolio plans

Workforce plan

Risk management framework

34 DHA Annual Report 2019-20

Customers

Put our customers at the centre of everything we do

Portfolio

Deliver flexible housing solutions

Capability

Operate within clear frameworks with a responsive & capable workforce

Financial

Manage assets & services to deliver shareholder value

Our customers are satisfied with the choice & quality of our housing, products & services

ADF members seek our housing over other options

Our customers & stakeholders value & trust us

We are well known for being easy to deal with

Hassle-free Certainty Human

Our high quality portfolio is balanced & diversified. It supports Defence capability & appeals to investors

Increase our investment portfolio in key locations by 10%

We have a sustainable business model which is responsive to market changes

We maximise capital efficiency

Pursue new revenue opportunities

We are customer-centric, future focused & agile

Our people are engaged, capable & fully aligned to One DHA

Our fully integrated systems are responsive & support our customer service

We operate as a compliant & better practice Commonwealth entity

Review & embed governance arrangements & frameworks into our decision making Implement a workforce strategy to retain, develop & attract a skilled & capable workforce Deliver efficiency savings through improved business processes Ensure regulatory & legislative compliance Embed One DHA in all our initiatives & behaviours

Support sound decision making to enable DHA to be responsive to changes within our operating environment

Build inventory health through a sustainable Property Investment Program

Develop an appropriate dividend policy and mechanism for returning shareholder value

Develop a new debt facility & debt management strategy

Negotiate housing flexibility for major metropolitan areas (focus on Sydney East in 2020)

Implement flexible provisioning in response to customer needs & market conditions (by region)

Balance the investment portfolio in key locations

Increase choice & diversity of our housing

Deliver consistent service to all our customers

Increase collaboration & understanding with our Shareholder Units

Housing services

that meet Defence operational needs through a strong customer & business focus

Members satisfied with their service residence (>80%) Houses supplied against provisioning schedule (>99%) Return on equity (4.4%)

Customer services Portfolio management Asset management

Corporate capabilities Governance Finance

Provide quality housing & related services Provide value to shareholders

Operating environment

Purpose

Brand pillars (One DHA)

Strategic priorities

10 year goals (future state)

2019-20 objectives

Outcome

Changing ADF demographics

Growing population

Increasing housing density

Housing

preferences changing

Property market downturn

Financial market regulation Extreme weather events

Strain on the environment

Customers demand ‘more’ & ‘now’

Complex global security environment

New technologies, AI, automation

Core functions

KPIs (2019-20 PBS)

Enabling functions

Figure 3.3 DHA’s Strategic Canvas 2019-20

35 35 Annual Performance Statement

Annual Performance Statement

Statement of preparation On behalf of the Board, the accountable authority of DHA, we present the agency’s

2019-20 Annual Performance Statement, as required under paragraph 39(1)(a) of

the Public Governance, Performance and Accountability Act 2013 (PGPA Act). In the

Board’s opinion, based on advice from DHA’s management and the Board Audit and

Risk Committee, this Annual Performance Statement accurately reflects the

performance of the agency and complies with subsection 39(2) of the PGPA Act.

Hon J.A.L. (Sandy) Macdonald Mr Barry Jackson

Chairman Managing Director

30 September 2020 30 September 2020

Our Annual Performance Statement

has been prepared in accordance with

guidelines provided by the Department

of Finance and shows how we

performed against the two purposes,

and the goals and objectives of our

four strategic priorities with associated

KPIs as set out in our 2019-20

Corporate Plan. These KPIs are

derived from the 2019-20 Defence

Portfolio Budget Statements and the

Department of Finance Guidelines for

Government Business Enterprises

(RMG 126).

Following the performance results and

analysis for the four strategic priorities,

additional information is provided on

the operational performance of our

regional housing and related services.

Relationship between our Corporate Plan and Annual Performance Statement Figure 3.4 sets out the relationship between reporting measures outlined in our

Corporate Plan and the Annual Performance Statement for 2019-20.

Figure 3.4 Relationship between the Corporate Plan and Annual Performance Statement

Annual Performance Statement

Corporate Plan purposes

Portfolio Budget Statement

Outcome: to contribute to Defence outcomes by providing total housing services that meet Defence operational and client needs through a strong customer and business focus

Strategic Priority 1—

Customers

Strategic Priority 2—

Portfolio

Provide quality housing and related services

Strategic Priority 3—

Financial

Strategic Priority 4—

Capability

Provide value to Shareholders

36 DHA Annual Report 2019-20

Our approach This statement has been organised according to the two purposes in our Corporate Plan 2019-20 and shows our

performance in the reporting period.

The following symbols are used to show our performance against the KPIs:

Met target

Did not meet target

Results snapshot Purpose 1: Provide quality housing and related services

Table 3.1: Results against KPIs 2019-20

Strategic Priority 1—Customers

Customer satisfaction Table 3.5

Members satisfaction with service residence Table 3.5

Investors satisfaction with customer service Table 3.5

Table 3.2: Results against KPIs 2019-20

Strategic Priority 2—Portfolio

Houses supplied against provisioning schedule Table 3.7

37 Annual Performance Statement

Purpose 2: Provide value to Shareholders

Table 3.3: Results against KPIs 2019-20

Strategic Priority 3—Financial

Financial performance

Total shareholder return Table 3.10

Return on equity Table 3.10

Net profit after tax Table 3.10

Leverage/solvency

Gearing ratio Table 3.10

Interest cover Table 3.10

Table 3.4: Results against KPIs 2019-20

Strategic Priority 4—Capability

Staffing

Staff retention and turnover rate Table 3.11

Staff engagement n/a Table 3.11

Total recordable injury frequency rate (TRIFR) and OHS incident rate Table 3.11

Wages and expense ratio Table 3.11

38 DHA Annual Report 2019-20

Overarching analysis of performance against our purposes

Our ability to achieve our KPIs is

affected by our Services Agreement

with Defence, their accuracy of

housing requirements forecasting,

their policy framework and decisions

as well as regional property markets

and economic factors. In particular,

over 2019-20 bushfires, hailstorms

and COVID-19 challenged our

performance and drove innovation.

In 2019-20, with the support of

Shareholder Ministers, DHA revised

its business operating model to make

it an efficient, contemporary service

delivery organisation. The revised

operating model was launched in

February 2020. The central feature of

the revised model is the creation of

a centrally coordinated portfolio

management function, underpinned

by simplified business processes and

refreshed information technology.

To ensure the revised operating model

is sustained and to position the

organisation for long term success,

DHA is implementing a series of refresh

initiatives to streamline its operations

aligning its customer service practices

to service level requirements. For

example, we will improve efficiency in

repairs and maintenance through the

use of new technological and

procurement solutions. Since the

launch of the revised operating model

in February 2020, DHA has made

significant progress in implementing

the initiatives:

A Centrally coordinate our portfolio management to create one portfolio

management function responsible

for coordinating leasing, building

and buying what we need and

selling what we don’t.

A Simplify our procurement model to develop a consistent model to

procure services and reduce

administrative and contract

management burden and deliver

better value outcomes.

A Remove duplicate functions to simplify how we operate, reduce

effort and provide accountability

for outcomes.

A Align our KPIs across all business areas, so we’re working towards

the same outcomes.

A Simplify critical business processes to define our core processes and

simplifying these for streamlined

operations.

A Align service delivery with service level requirements to refocus our

services and processes to meet

service level requirements in a

financially sustainable way. We will

do this without compromising the

quality and contracted level of

service for ADF members.

A Build our workforce capability through a future workforce plan

that defines the profile and skills

required, ensuring we have the right

skills and people to achieve our

Corporate Strategy.

A Rebuild our ICT to provide technology that is fit for purpose

and operationally efficient.

This change enables a digital

multi-channel strategy across

DHA to make it easier for staff

and customers to use the

systems and deliver a better

service to our customers across

all points of contact.

39 Annual Performance Statement

Purpose 1: Provide quality housing and related services

We administer Defence housing policy

and provide housing and related

services to ADF members and their

families in accordance with Services

Agreement with Defence. A key

planning document under the Services

Agreement is the Provisioning

Schedule. The schedule sets out the

housing provisioning obligations

including regional housing

requirements. In 2019-20 DHA

focused on providing adequate

volumes of housing to support

Defence with the majority of properties

sourced through leasing activities.

DHA met the housing provisioning

target, and achieved this using lower

levels of capital than forecast in the

Corporate Plan.

During the 2019-20 financial year,

DHA housed over 16,500 ADF

members and families enabling

members to live within reasonable

proximity of their base. We also

provided assistance to over 9,500

members in the administration of

housing solutions across Australia,

reducing the stress of moving.

We actioned 208,631 maintenance

requests to maintain housing quality

to the standard required by the

Services Agreement.

Strategic Priority 1—Customers

During 2019-20 DHA exceeded our

customer service targets, and

maintained service levels and a strong

customer focus with the support of our

dedicated staff. A number of

improvement initiatives were

implemented throughout the year to

strengthen the focus on our

customers. This included the

development of a customer service

strategy as well as organisational

structural changes to align the

business functions with customer

service objectives. In addition, DHA

continued strong collaboration with our

shareholder units, and increased the

diversity of housing for ADF members.

40 DHA Annual Report 2019-20

Performance results

Table 3.5: Strategic Priority 1—Customers

Performance indicator 2019-20 Target Result Achievement

Customer satisfaction >75% 94%

Annually, we survey ADF members and investors (landlords) who have had contact with DHA in the previous 12 months

to measure their satisfaction with DHA. In 2019-20, 94% of 6,296 survey participants rated their experience with DHA

as ‘good’ or ‘very good’.

Member satisfaction with their service residence >80% 89%

Annually, we survey ADF members (or their partner) who are residing in a service residence to measure their satisfaction

with housing. In 2019-20, 89% of 2,622 survey participants were satisfied with their current service residence. This

result is consistent with the result achieved last year (89%) and the results for the past five years have been consistently

above the target rate of 80%.

Investor satisfaction with their customer service >90% 97%

Annually, we survey investors (landlords) at all stages of their lease with DHA to measure satisfaction with customer service

and aspects of property management. In 2019-20, 97% of 2,323 survey participants indicated that they were satisfied with

their overall customer service experience. This result is significantly higher than the result from 2018-19 (94%).

41 Annual Performance Statement

Performance analysis

Delivering consistent service to all our customers

During 2019-20 DHA made a number

of changes to align business functions

with customer service objectives:

A restructured the organisation to simplify our operations into Service

Delivery and Service Delivery

Support groups

A aligned leasing activities, including the amalgamation of a number of

separate leasing functions

A commenced work to implement a centrally coordinated portfolio

management function so we lease,

build or buy what we need and sell

what we do not

A consolidated housing allocations functions into our contact centres

to maximise utilisation of resources

and provide a consistent member

experience.

DHA also redeployed staff from across

the business to assist with DHA

refresh initiatives. Project outcomes

across the year included:

A reviewed contact centre operations including strategies to optimise

customer experience

A reviewed KPIs across the business to clearly align staff performance to

our strategic objectives

A removed duplicate functions across the business to offer a more

consistent customer experience

A process mapped critical business functions to simplify and improve

processes and controls

A reviewed DHA service levels against contractual obligations.

Customer satisfaction and surveys

We are committed to providing all

stakeholders with quality customer

service. Our commitment to customer

service is set out in our service

charter. The charter is available on our

website (www.dha.gov.au/service-charter) and hard copies are available

at our regional offices.

As set out in Table 3.5, we exceeded

both ADF member and investor

(landlord) customer service

satisfaction targets, with results

consistent with previous years.

In addition to seeking feedback via

surveys, we invite general feedback

from our customers, stakeholders and

the public. We manage all complaints

in accordance with the resolution

process set out in our service charter

and complaints management

framework, which has been developed

in accordance with international

standard ISO 9001:2018. Wherever

possible, complaints are resolved at a

local level. We use the information

gained from member feedback to

inform business change and develop

future initiatives to improve customer

satisfaction. For a summary of DHA’s

complaints activity for 2019-20 refer

to the section on the Commonwealth

Ombudsman in Part 4 (page 89).

Online Services and information technology

Our web based system, Online

Services, complements our traditional

service delivery processes and

provides ADF members, investors

(landlords) and contractors with the

ability to view various property related

information and access our services.

In 2019-20 DHA conducted a review

of contact centre operations including

strategies to optimise customer

experience.

Key improvements implemented during

2019-20 to support customer service

include:

A ADF members can do more online (self service) such as downloading

and uploading tenancy agreements

and property condition reports.

A Improved online ADF member enquiry forms, making it easier to

navigate information and engage

with DHA.

A number of reviews also commenced,

to improve ADF member access to

information, reducing unnecessary

email notifications and refining

communication channels with DHA.

These improvements to our Online

Services system offer improved

usability for Defence members. We

also improved our website information

on rent allowance processes.

42 DHA Annual Report 2019-20

Figure 3.5 ADF member online service usage per month 2017-18, 2018-19 and 2019-20

Figure 3.6 Landlord online service usage per month 2017-18, 2018-19 and 2019-20

Aug Jul Sept Oct Nov Dec Jan Feb Mar Apr May Jun

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2017-18 2018-19 2019-20

0

2,000

1,000

3,000

4,000

5,000

6,000

7,000

10,000

8,000

9,000

Aug Jul Sept Oct Nov Dec Jan Feb Mar Apr May Jun

2017-18 2018-19 2019-20

43 Annual Performance Statement

Housing services

DHA provides a suite of housing

related services in accordance with

Defence policy and the Services

Agreement with Defence. Additionally,

we provide a number of property care

services to landlords in accordance

with lease agreements.

Housing allocations

Our Online Services support the

allocation of housing for ADF members

relocated into a new location. Our

system allows members to view

properties that will become available as

other Defence members vacate our

houses. One measure of our success

is the percentage of ADF members

who, before they arrive in a new

posting location, reserve a service

residence. In the reporting period,

7,420 housing allocations were

actioned with 94.58 per cent of ADF

members allocated a home, prior to

arriving in their new location. The

pre-allocation process addresses

some of the stress associated with

finding accommodation in a new

posting location.

Table 3.6: National property and tenancy services performance 30 June 2020

Property and tenancy management service Number

Housing allocations 7,420

Property inspections 58,446

ADF members receiving rent allowance 17,313

Leases managed 13,185

Maintenance work orders raised 208,631

Property inspections

In 2019-20, we completed over

58,000 property inspections. More

than 15,800 were annual inspections

where we reviewed the condition of

the property and, where applicable,

provided an inspection report to

our landlords.

The number of inspections conducted

was lower than previous years due to

restrictions resulting from the

COVID-19 pandemic. We were able to

support a safer environment for

members, staff and contractors by

using remote inspection processes.

This resulted in 715 inspections

occurring via telephone, with the ADF

member (or their appointed agent) in

attendance at the service residence.

Leased property management

In 2019-20, we managed 13,185

properties on behalf of landlords.

Leasing plays an important role in

ensuring DHA meets its housing

portfolio requirements. We manage

additions to the portfolio by negotiating

new leases, renewing existing leases

and exercising lease variations that

exist within our agreements.

44 DHA Annual Report 2019-20

Repairs and maintenance

Under the Services Agreement with

Defence, we maintain our properties

to an agreed standard. For this

reason, our current lease agreement

with landlords includes a property care

requirement, which provides a range

of property related services we

undertake on behalf of the landlord in

return for a fixed service fee. In

2019-20 we revised our property care

documentation to provide greater

clarity on maintenance responsibilities.

In response to COVID-19, we adjusted

our maintenance processes to ensure

members and their families, DHA staff

and our contractors were safe.

Additionally, DHA also employed new

ways of undertaking property

inspections and processing

maintenance requests.

Living in Accommodation (LIA)

In 2019-20, the LIA Contact Centre

provided critical accommodation

booking support to the ADF during the

bushfire and COVID-19 events. Key

improvements in the reporting of

Defence’s asset utilisation this year

assisted Defence by providing greater

visibility of room occupancy rates and

availability.

Rent allowance

When a Member with Dependants

(MWD) or Member with Dependants

(Unaccompanied) (MWD(U)) cannot be

provided with service accommodation

(either a service residence or MCA

property) at the member’s entitlement,

or if the property provided is not

suitable for pets, an ADF member (and

their family if applicable) may choose to

rent through the private rental market.

ADF members are responsible for

finding the accommodation but must

engage with DHA (on behalf of

Defence) to seek rent allowance

approval. DHA administers the rent

allowance process on behalf of

Defence. DHA is then responsible for

administering the rent allowance (RA)

process.

In 2019-20, we administered 8,954

RA applications for ADF members

nationally. The three locations with the

highest number of RA housing

solutions were: Sydney (4,470),

Hunter (3,623) and Canberra (1,818).

The majority of RA applications in

these locations relate to Members

without Dependants (MWOD) or

MWD(U).

Providing choice and diversity in housing

Our MWD portfolio also includes a

portion of properties categorised as

Rent Band Choice housing (RBCH).

These properties are generally inner

city apartments and townhouses that

do not meet the strict Defence

compliance standards of service

residences. ADF members typically

choose to live in RBCH because

the location suits their lifestyle. In

2019-20 we continued to support

Defence and ADF members by

extending the choice and diversity of

housing available through well located

RBCH properties.

Increase collaboration and understanding with our shareholder units

In 2019-20, we have continued to

work closely with shareholder units to

implement our revised business

operating model, negotiate our loan

agreement and address the Australian

National Audit Office’s (ANAO)

recommendations. Our commitment to

collaboration with shareholder units

was further demonstrated by the

creation of a tri-party governance

arrangement between the Managing

Director and his counterparts in the

Department of Defence and the

Department of Finance to guide the

review of the Defence Services

Agreement and policy improvements.

DHA also welcomed both the

Secretary of the Department of

Defence, Mr Greg Moriarty and the

Secretary of the Department of

Finance, Ms Rosemary Huxtable PSM

at our Annual Strategic Meeting on

18 June 2020.

45

Case study

A moving tale When Taylah Pringle and her Army husband Josh moved to Brisbane last year they had more pressing needs than just finding a comfortable family home.

Of course, one priority was finding a

good school for their four year old son

Hunter. But more importantly, they

needed to be close to the best

available healthcare for Taylah, who

has Cystic Fibrosis.

Taylah, a nursing student, and Josh

are originally from Wollongong, NSW.

Josh joined the Australian Army in

2016 and they moved to Albury, NSW,

where he undertook his initial training

as a Fitter Armament, before being

posted to Brisbane, QLD, in

September 2019.

Taylah was first diagnosed with Cystic

Fibrosis when she was just two

minutes old. Cystic Fibrosis is a

recessive genetic condition affecting

one baby born every four days. It

primarily affects the lungs and

digestive system. While there is no

cure, treatments have improved

significantly in recent years. They

include regular physiotherapy, which is

vital in maintaining optimal airway

clearance, and medication.

‘When we were looking for a house,

we primarily looked at things like the

accessibility of healthcare and

schools,’ said Taylah.

‘I require regular medical care.

A benefit of my husband being in the

ADF is that we can access the best

healthcare in Australia. DHA helped us

to find a home in our preferred area to

accommodate this.’

Hunter is set to start at his local school

next year and Taylah is just minutes

from the healthcare that she needs.

The family has benefited enormously

by being part of the ADF community.

‘We’ve been able to see more of

Australia and lead an adventurous life,’

said Taylah.

‘We really love our life and lifestyle.

Although it’s not always easy, we’re

happy and wouldn’t change anything.’

While Taylah finds it challenging when

Josh is away and misses out on

special events, the family has a strong

network around them.

‘Defence Community Organisation and

Defence Special Needs Support

Group have been really good in

regards to giving us help, guidance

and information,’ said Taylah.

‘We know Hunter will have even more

support when he starts primary school

next year with the in school support

that Defence provides.’

45

46 DHA Annual Report 2019-20

Strategic Priority 2— Portfolio

DHA met its provisioning requirements

for 2019-20 through strong

management of DHA’s leased housing

stock and leasing activities,

construction projects and acquisitions

of new properties from the Australian

residential market. DHA’s focus on the

management of existing leased

properties and leveraging the market

for new leases has reduced our

reliance on acquisitions and

construction activities. A review of the

investment portfolio and property

holdings further supported the

judicious use of capital funds. In

addition, DHA improved the diversity

of housing provided for ADF members

with a focus on well-located higher

density housing.

Performance analysis

Flexible property provisioning

During 2019-20, substantial work was

undertaken to support the

development of an end to end asset

strategy. DHA has developed a

decision matrix for all asset decisions

and established the framework for

centrally coordinated portfolio

management. The framework includes

the requirement for asset management

policy and asset management plans.

This work will continue as a part of the

DHA refresh initiatives. This new

framework, supported by a stronger

focus on strategic planning, will

improve DHA’s flexibility to meet

housing provisioning requirements.

Performance results

Table 3.7: Strategic Priority 2—Portfolio

Performance indicator 2019-20 Target Result Achievement

Houses supplied against provisioning schedule >99% 99.26%

DHA managed a diverse portfolio of properties in support of Defence operations. Strong provisioning results were

delivered with the overall provisioning level meeting the target in the Services Agreement with Defence.

DHA is continuing to maintain a strong

focus on delivering high performing

leasing stock through both direct

leasing activity and the retention of

leases. In 2019-20 DHA increased

focus on retaining leased and owned

properties that met provisioning

needs. This was achieved by

reviewing the performance of

properties to ensure DHA retained

the right properties in the right

location.

47 Annual Performance Statement

Table 3.8: National MWD portfolio performance 30 June 2020

Actual

2019-20

Corporate Plan

2019-20

Variance Approved

Provisioning

Schedule (APS)

Opening balance (1 July 2019) 16,358 16,486 -128 16,543

Total additions 1,615 1,629 -14 1,631

Total subtractions 1,667 1,691 -24 1,747

Closing balance (30 June 2020) 16,306 16,424 -118 16,427

Table 3.9: National MCA portfolio performance 30 June 2020

Actual

2019-20

Corporate Plan

2019-20

Variance Revised APS

Opening balance (1 July 2019) 1,373 1,379 -6 1,405

Total additions 189 257 -68 247

Total subtractions 147 157 -10 157

Closing balance (30 June 2020) 1,415 1,479 -64 1,495

Negotiating flexibility in housing for major metropolitan areas

In 2019-20, DHA worked with Defence

to increase housing flexibility and

choice for ADF members. This has

resulted in a stronger focus on

providing alternative housing types

such as townhouses. Townhouses can

generally be provided in higher amenity

areas that reflect the preferences of

some ADF members and their families.

We have also commenced discussions

with Defence on a review of the existing

contractual arrangements including the

Services Agreement and the Member

Choice Agreement.

Member with Dependants (MWD) provisioning summary

While DHA met the Provisioning

Schedule target, the portfolio closing

balance was marginally lower than the

Corporate Plan. This was due to a

lower opening portfolio balance from

the previous year. DHA was able to

maintain provisioning levels by

closely managing the property

additions and subtractions across the

reporting period.

Member Choice Accommodation (MCA) provisioning summary

DHA has focused on attaining the

minimum requirements for provisioning

the MCA portfolio. This has seen a

major focus on directly leasing

products from the market, displacing

anticipated capital expenditure on

acquisitions.

48 DHA Annual Report 2019-20

Balancing the investment portfolio

In September 2019, a review of all

DHA owned properties was

undertaken. The role of each property

in the portfolio was assessed to

ensure that high performing and

strategically valuable stock was

identified and held for the mid to

long term.

As a result of the review:

A 149 properties (valued at approximately $99.65 million at the

time) were reclassified as holding

strategic value to be held on an

ongoing basis.

A 274 properties were made available for sale through the Property

Investment Program (valued at

approximately $191.16 million).

45 of these properties have

subsequently been sold generating

$23.73 million in sales proceeds.

A 50 properties were identified for immediate disposal, with these

properties moving out of the

provisioned portfolio through private

treaty sale as they became vacant.

A A number of locations were identified as strategic targets for a

buyback program to allow for future

redevelopment in anticipation of

mid to long term Defence housing

needs.

Property upgrades

Sometimes older properties within our

portfolio require a refurbishment or

upgrade to ensure the property meets

current standards.

In 2019-20, we completed upgrade

work to 104 properties including:

A 51 properties at Swanbourne in Western Australia

A 20 properties in Sydney, New South Wales

A 11 dwellings in Yallambie, Victoria A 11 properties in Exmouth, Western Australia.

Commonwealth heritage listed properties

As at 30 June 2020, on behalf of

Defence, DHA managed 61

Commonwealth Heritage Listed (CHL)

properties across Australia, including

on ADF bases and establishments, in

accordance with the Environment

Protection and Biodiversity

Conservation Act 1999 (EPBC Act).

DHA owns 16 houses and three

development sites which are also

Commonwealth Heritage Listed.

DHA undertook conservation activities

in accordance with the EPBC Act

and the DHA Heritage Strategy.

Implementation of the DHA Heritage

Strategy is monitored through annual

evaluation and requires:

A the maintenance and conservation of any identified heritage property

A heritage studies, conservation management planning and other

activities relating to the

identification, protection,

conservation, presentation and

transmission of any Commonwealth

Heritage Values of a place

A identification of Commonwealth Heritage Values on all DHA owned

sites/properties.

In 2019-20, DHA continued a major

program of works to conserve and

upgrade Defence owned properties,

including:

A heating and air conditioning installation to properties

A remediation of lead dust and lead paint issues

A upgrade and refurbishment of properties at RMC Duntroon,

Canberra, ACT.

49 Annual Performance Statement

Purpose 2: Provide value to shareholders Our business is centred on providing

value to shareholders by providing

housing and associated services,

aligning the needs and preferences

of Defence and ADF members with

property market opportunities for the

provision of housing. Our business is

self funded—we do not receive

funding from the Federal Budget.

We seek to generate revenues that

are sufficient to sustain, on an ongoing

basis, the delivery of housing and

related services, our property

operations and to provide a return

to shareholders. For 2019-20,

DHA provided a dividend of 60% of

net profit after tax to shareholders

($25.6 millon), with dividend yield and

total shareholder return exceeding

Corporate Plan targets.

DHA also aims to operate as a

compliant, better practice

Commonwealth entity, with sound

governance practices, a capable and

productive workforce and integrated

and responsive systems to deliver

high quality professional outcomes.

Strategic Priority 3—Financial

The 2019-20 year held significant

challenges for DHA’s business. The

year began with poor property market

and credit conditions and evolved to

add further challenges, constraint and

some opportunity through bushfires

and COVID-19.

Notwithstanding these challenges to

our business through 2019-20,

DHA earned a profit before tax of

$59.7 million, exceeding expectations

set ahead of the year. We will pay

dividends of $25.6 million to

shareholders in accordance with our

Dividend Policy established in line with

GBE guidelines.

Our revenues of $917 million comprise

the rents and service fees associated

with housing ADF members, the net

result from management of DHA’s

property portfolio and associated

property market activities.

We assess rents annually to ensure

that we keep pace with market

conditions. As anticipated, there was

little change to rents through the

2019-20 review and rents totalled

$487.8 million for this financial year,

closely matching expected results.

50 DHA Annual Report 2019-20

Performance results

Table 3.10: Strategic Priority 3—Financial

Performance indicator 2019-20 Target Result Achievement

Financial performance

Total shareholder return 4.9% 11.1%

Shareholder return exceeded the target due to an outperformance of annual profit targets through increased revenue

received from sales in the Property Investment Program and from development land.

Return on equity 1.1% 2.8%

The return on equity exceeded the target due to higher than targeted net profit as a result of increased revenue from sales.

Net profit after tax (NPAT) $16.0m $42.7m

NPAT exceeded the target due to higher than targeted net profit as a result of increased revenue from sales.

Leverage/solvency

Gearing ratio 26.0% 25.7%

The gearing ratio was slightly lower than target as a result of the adjustment to equity required to adopt the AASB 16

Lease Accounting Standard in 2019-20.

Interest cover 7.3 8.5

Interest cover exceeded the target due to the favourable earnings before interest and tax outcome compared with

annual interest expense, in line with budget expectations.

51 Annual Performance Statement

Performance analysis

Financial results

Property market constraints were

exacerbated by further disruption

through bushfires in regions in which

we operate and subsequently the

impact of the COVID-19 pandemic

contributed to a significant thinning of

property markets. Through the course

of the year, we undertook a major

review of our housing portfolio,

property sourcing approaches and

portfolio management activities to

place additional weight on the

retention of high performing and

strategically important stock. The

outcome of the review saw an

increase in accessing existing housing

available in the property market, a

reduced reliance on revenues from our

Property Investment Program (PIP) and

a reduction in the number of

underperforming properties or those

not operationally viable.

While meeting our targets for the

provision of housing, we exceeded our

expectation of directly sourcing leased

property from the market. This direct

market access reduced capital

investment requirements for more than

180 properties and reduced the need

for PIP revenues throughout the thin

market conditions of the financial year.

Our PIP product has retained value

with profits from the program totalling

$10.6 million—exceeding both

revenue and profit targets.

The overall condition of property

markets was not uniform through

2019-20, with some segments

performing strongly, despite broader

constraints. Strong demand in the

Sydney and Newcastle regions

underpinned our revenue performance

and contributed $117.9 million to our

full year result. Whereas lower levels

of demand were experienced in the

Darwin, Ipswich and Townsville.

52 DHA Annual Report 2019-20

Returns to the Australian Government

We monitor total shareholder return

which measures the total return to our

shareholders arising from dividends,

together with the growth in the value

of the business. The 2019-20 year

saw the initial application of AASB 16

Leases accounting standards which,

due to the large number of leases

(approximately 13,000) had significant

impact on DHA’s reported financial

outcomes. To meet the compliance

challenge of applying the new

standard, we consolidated various

aspects of the accounting standards

implementation and business

improvement activities into a single

project to upgrade our financial

systems. Application of AASB 16

Leases has resulted in adjustments to

opening asset, liability and equity

balances. After allowing for these

adjustments, we achieved a return of

11.1 per cent in 2019-20.

Dividend NPAT

20

40

60

80

100

120

2015-16 2019-20 2018-19 2017-18 2016-17

$62.7m

$39.6m

$26.6m $24.5m $25.6m

$104.6m

$65.7m

$44.3m

$40.9m $42.7m

Figure 3.7 Net profit after tax (NPAT) and annual dividend payments 2015-16 to 2019-20

53 Annual Performance Statement

Taxation

DHA fully complies with the Australian

Government’s income tax, fringe

benefit tax and goods and services tax

legislation. We comply with the

government’s competitive neutrality

policy ensuring that we do not gain a

commercial advantage resulting from

tax exemptions flowing from our status

as a GBE. In accordance with this

policy, we make tax equivalent

payments in respect of state and

territory taxes that would apply if the

exemption from state and territory

taxation was not in the DHA Act.

Our current tax expense represents

amounts paid and payable to the

Australian Taxation Office in the order

of $17.0 million for 2019-20. We also

paid a state tax equivalent amount to

the Commonwealth of $35.5 million

for 2019-20.

Capital efficiency and debt management

DHA has collaborated extensively

with its shareholder units to establish a

revised debt facility. The facility will

enable more flexible repay-redraw

arrangements for DHA and is expected

to be established by 1 October 2020.

In addition to allowing better

management of our ongoing debt

requirements and funding costs,

establishment of the facility will also

enable us to better manage our capital

structure and returns to government.

Supporting sound decision making

We continued to review, reform and

improve our business operations

across 2019-20, improving business

analytics and identifying opportunities

for operational efficiencies. We

achieved cost savings of $6.2 million,

contributing to the higher than

expected financial performance

outcomes.

54 DHA Annual Report 2019-20

Performance results

Table 3.11: Strategic Priority 4—Capability

Performance indicator 2019-20 Target Result Achievement

Staff retention and turnover rate 15% 16.7%

The 2019-20 actual staff retention and turnover rate exceeded the target by 1.7%. The major drivers for employee

separation were resignation, ongoing transfer to other agencies and redundancies. The staff retention and turnover rate

over the next three financial years is likely to increase as DHA implements the revised business model. The reform

program will involve rightsizing the organisation and addressing capability gaps in the workforce that will result in increased

staff movements and changes as the structure and capability profile adjusts to meet emerging operational needs.

Staff engagement 70% N/A N/A

Staff engagement was not measured during the reporting period as the Australian Public Service Commission (APSC)

did not conduct the Australian Public Service (APS) Employee Census in May 2020, due to COVID-19. The census will

be conducted in October 2020.

Total recordable injury frequency rate (TRIFR) and OHS incident rate <7 8.54

TRIFR combines all recorded fatalities (of which there were none), lost time injuries, cases or alternate work and other

injuries requiring treatment by a medical professional. In DHA’s case, TRIFR includes all employee, contractor/visitor and

ADF member or dependant injuries where the incident occurred in a DHA office or DHA property (i.e. DHA-managed

accommodation or a DHA construction site). In 2019-20, DHA exceeded the TRIFR target of fewer than 7. The majority

of incidents were minor slips, trips and falls and required minimal time off work (DHA’s Lost Time Injury Frequency Rate

was 3.11 in 2019-20 compared with 5.49 in 2018-19). The result highlights DHA’s positive safety culture in that the

incidents were reported as well as the impact of COVID-19, where employees and ADF members were working from

home more than usual. Proactive safety campaigns, including a ‘slips, trips and falls’ safety alert, were undertaken to

mitigate further incidents and staff were reminded of applicable safe work processes.

Wages and expense ratio 9.3% 9.3%

Total wages and expense, as a proportion of total revenue, is in line with Corporate Plan targets.

Strategic Priority 4—Capability

During 2019-20 DHA continued its

revised business model, resulting in a

higher retention and turnover rate, a

trend which is likely to continue over

coming financial years as DHA aligns

workforce capability with its operational

needs. We were unable to measure

staff engagement in 2019-20, due to

COVID-19, the APSC Census survey

will be conducted in the second half of

2020. The total recordable injury

frequency rate is just above the target,

however, the majority of incidences

were minor resulting in a reduction in

the lost time injury frequency rate in

2019-20. The wages and expense

ratio was met in 2019-20. COVID-19

necessitated DHA to quickly transition

its workforce to home based work,

with planned technology initiatives

brought forward and new technology

capability deployed to enable the

change. DHA continues to refresh its

technology to support strategic

priorities and key initiatives.

55 Annual Performance Statement

Delivering efficiency savings through improved business processes

As part of the implementation of DHA’s

new business model, we developed a

technology strategy to inform DHA’s

future information technology (IT)

direction and support digital

transformation. The strategy and

supporting roadmap will guide our

decisions around technology design,

delivery and sustainability to make sure

DHA’s technology is fit for purpose and

adaptable.

The strategy will make it easier to:

A invest in digital technology and automation to drive efficiencies

A leverage data as a strategic asset to inform evidence based decision

making

A deliver fast, clear and simple services to ADF members and their

families through multiple digital

channels.

Since committing to developing a

cloud ready deployment platform by

April 2020, DHA embarked on its

business model refresh and developed

a technology strategy. We are

refreshing our enterprise hardware,

which will allow DHA to position itself

to leverage cloud technology and

deliver scalable solutions into the

future. This will be complemented by

a cloud strategy to provide a strategic

approach for the adoption of the

cloud, which we will develop in

2020-21. In developing our strategy,

we identified initiatives relating to

technology, data and information

security governance to be delivered

to support our transition to the cloud.

Reviewing and embedding governance arrangements and frameworks into our decision making

In implementing our technology strategy,

we are producing a business led

strategic vision for the use of data in

alignment with DHA’s strategy. Improving

the quality of our data and providing

consistent access to data across the

organisation will enhance our capability

to report quality information to the Board,

enabling strategic discussion and

decision making.

As we launch into a period of

significant investment in our

technology program we have refreshed

the IT governance framework. This will

enable us to exercise greater control

over and management of information

security risk.

Additionally, we have established a

management level IT Risk Committee

to evaluate IT risks, determine

appropriate risk mitigation strategies

and monitor the implementation and

effectiveness of controls. This

committee reports to the Board Audit

and Risk Committee to ensure that the

Board has the information it needs to

appropriately manage IT and

associated security risk.

56 DHA Annual Report 2019-20

Ensuring regulatory and legislative compliance

In response to the introduction of

Accounting Standards AASB 16

Leases, a joint team of accounting and

IT technical experts designed a system

to automate the complex accounting

transactions relating to the inception,

variation and expiry of DHA’s

approximately 13,000 leases and

ensure legislative compliance with the

accounting standard. In 2019-20, the

system accurately calculated

approximately 2 million complex lease

accounting transactions and created

and interfaced journals to the finance

system, which otherwise would have

been calculated and manually entered

by DHA finance staff. The system’s

second phase has also been

successfully implemented in preparation

for the 2020-21 financial year, improving

functionality and augmenting the strong

internal controls built in the first phase.

During 2019-20 we also delivered the

first phase of a program to increase

DHA’s maturity level in the Australian

Cyber Security Centre’s Essential Eight

strategies to mitigate cybersecurity

incidents. This program has

implemented 17 remediation activities

across five mitigation strategies to

progress toward or achieve our target

maturity levels. The program’s second

phase commences in 2020-21.

As part of our broader cyber security

program, we delivered a full suite of

policies across IT security and

infrastructure operations management

as part of a Board approved

information security policy governance

framework. This will ensure that we

maintain our target maturity levels and

continue to appropriately manage

cybersecurity risks.

Operational workforce planning

The DHA Operational Workforce Plan

2020-21 (the workforce plan) was

delivered in April 2020. The workforce

plan outlines the strategies required to

build a highly capable, flexible and

efficient workforce that will enable DHA

to successfully deliver our strategic

objectives and support our long term

success. The workforce plan:

A identified the critical roles needed to support DHA, including data and

analytical professionals, capital

planning professionals, property

portfolio professionals and

procurement professionals

A identified the six critical capabilities required across our workforce,

including change management,

business acumen, strategic thinking,

influencing and negotiating and

digital ability and literacy

A conducted a gap analysis to identify emerging workforce capability needs

A considered emerging workforce risks and identified mitigation

strategies to address these risks.

We are taking action to address the

risks and emerging needs from the

workforce plan. To date we have:

A implemented a build, borrow or buy approach to addressing workforce

capability gaps

A commenced rightsizing functions to ensure resources match our

operational needs

A focused our learning and development activities on the critical

capabilities needed

A developed a recruitment strategy to ensure we are able to attract the

talent needed.

57

Case study

2019 interns continue to build a legacy at DHA Just over a year ago, Ronan Gotch and Julian Turner commenced work at our head office in Canberra, ACT, as a part of DHA’s 2019 Legacy Internship Program.

With their 12 month placements

completed in January 2020, both

Ronan and Julian have now moved

into roles across the business.

‘I initially viewed the internship as a

stepping stone in my career, however

after experiencing various types of work

between business areas and meeting

lots of wonderful people, it was an easy

decision to stay,’ Julian said.

‘I enjoy being part of a team and seeing

the effort I put in having a positive effect

on the team’s objectives.’

One of Julian’s most enjoyable

experiences in the past year was

working with Corporate Strategy and

Enabling Services on DHA’s 2018-19

Annual Report.

‘Holding a physical copy of something

I contributed to which reflects the

business is something I am proud of,’

Julian said.

Julian has taken up the position of an

Administrative Support Officer, while

Ronan is working as a Leasing Support

Officer. Ronan returned to the Leasing

team after an introduction to this part

of our business during his internship

rotations in 2019—an experience

which taught him new skills in time

management, professional writing and

business etiquette, as well as

establishing a healthy work life

balance.

‘Overall, the experience has been

educational as well as rewarding,’

Ronan said.

‘This internship provided me

with a variety of new skills and a

lifestyle shift.’

‘If you want to try something different

and develop a range of administrative

skills in an office environment in an

entry level role, this would be a good

place to start.’

DHA’s Legacy Internship Program

offers 12 months of employment which

provides for the completion of a

Certificate III in Business. The

internship program is available to

dependents of current or past ADF

members who are beneficiaries of

Legacy Australia.

The program offers valuable on the job

training and work experience. It is

designed to provide our interns with a

foot in the door to start their working life.

The Legacy Internship Program

demonstrates DHA’s responsibility in

supporting ADF members and their

families, and provides an opportunity

for us to give back to the community.

57

58 DHA Annual Report 2019-20

Regional report on operational performance This section provides a detailed report on our operational performance by region in 2019-20.

Northern Territory region As at 30 June 2020, DHA managed 1,773 properties in the Northern Territory (NT) region. The majority were located in

Darwin and Tindal and were freestanding three and four bedroom houses. We managed a number of townhouses and

high rise apartments located within close proximity to the Darwin CBD. Properties in the region accommodated ADF

members working at a number of ADF bases and establishments, including RAAF Base Darwin, RAAF Base Tindal and

Larrakeyah Barracks.

Table 3.12: NT region property provisioning and related services 2019-20

Darwin Tindal Alice Springs Total

Property provisioning

MWD constructions/acquisitions 0 1 1

MCA constructions/acquisitions 0 0 0

Closing balance (30 June 2020)

MWD properties 1,223 353 1,576

MCA properties 197 0 197

Property and tenancy services

Housing allocations 561 129 690

Property inspections 4,180 1,238 5,418

ADF members receiving RA 1,419 69 1,488

Leases managed 870 0 870

Maintenance work orders raised 19,529 6,153 25,682

59 Regional report on operational performance

North Queensland region As at 30 June 2020, DHA managed 1,741 properties in the North Queensland (NQLD) region. The majority were located in

Townsville and Cairns and were freestanding three and four bedroom houses. We managed a number of townhouses and

high rise apartments located within close proximity to the city centre. Properties in the region accommodated ADF

members working at a number of ADF bases and establishments, including Lavarack Barracks and HMAS Cairns.

Table 3.13: NQLD region property provisioning and related services 2019-20

Townsville Cairns Total

Property provisioning

MWD constructions/acquisitions 9 0 9

MCA constructions/acquisitions 0 0 0

Closing balance (30 June 2020)

MWD properties 1,427 194 1,621

MCA properties 98 22 120

Property and tenancy services

Housing allocations 697 91 788

Property inspections 4,970 722 5,692

ADF members receiving RA 1,399 304 1,703

Leases managed 1,411 177 1,588

Maintenance work orders raised 23,404 3,375 26,779

60 DHA Annual Report 2019-20

South Queensland region As at 30 June 2020, DHA managed 3,403 properties in the South Queensland (SQLD) region. The majority were located in

Brisbane and Ipswich and a smaller number were located in Toowoomba and the Gold Coast. The majority of properties

were freestanding three and four bedroom houses. We also managed a number of townhouses and high rise apartments.

Properties in the region accommodated ADF members working at a number of ADF bases and establishments, including

Gallipoli Barracks, Kokoda Barracks and RAAF Base Amberley.

Table 3.14: SQLD region property provisioning and related services 2019-20

Brisbane Ipswich Toowoomba Total

Property provisioning

MWD constructions/acquisitions 3 43 5 51

MCA constructions/acquisitions 0 0 0 0

Closing balance (30 June 2020)

MWD properties 1,865 1,070 184 3,119

MCA properties 251 33 0 284

Property and tenancy services

Housing allocations 824 462 86 1372

Property inspections 6,632 3,343 601 10,576

ADF members receiving RA 1,792 1,108 194 3,094

Leases managed 1,775 915 177 2,867

Maintenance work orders raised 26,252 11,991 2,065 40,208

61 Regional report on operational performance

New South Wales region As at 30 June 2020, DHA managed 4,617 properties in the New South Wales (NSW) region. The majority were located in

Sydney and a smaller number were located in the Hunter Valley (Newcastle and Singleton) and Nowra. The majority of

properties were freestanding three and four bedroom houses. Our Sydney property portfolio comprises a mix of freestanding

houses, townhouses and high rise apartments, reflective of the region’s higher population and housing density. Our properties

accommodated ADF members working at a number of ADF bases and establishments, including Holsworthy Barracks, School

of Infantry Singleton, RAAF Base Williamtown, HMAS Creswell and the broader Fleet Base East.

Table 3.15: NSW region property provisioning and related services 2019-20

Sydney Hunter Valley Nowra Total

Property provisioning

MWD constructions/acquisitions 100 50 12 162

MCA constructions/acquisitions 60 1 0 61

Closing balance (30 June 2020)

MWD properties 3,044 964 370 4,378

MCA properties 203 36 0 239

Property and tenancy services

Housing allocations 1,142 391 151 1,684

Property inspections 10,595 3,676 1,671 15,942

ADF members receiving RA 4,470 3,623 747 5,697

Leases managed 2,034 841 289 3,164

Maintenance work orders raised 29,519 13,185 4,682 47,386

62 DHA Annual Report 2019-20

Australian Capital Territory As at 30 June 2020, DHA managed 2,867 properties in the Australian Capital Territory (ACT) and Riverina region. The

majority were located in the Canberra region, which includes properties in adjacent NSW cities. A smaller number were

located in Wagga Wagga (NSW), Albury (NSW) and Wodonga (VIC). The majority of properties were freestanding three and

four bedroom houses, however we managed a number of townhouses and high rise apartments located close to the

Canberra CBD. Properties in the region accommodated ADF members working at a number of ADF bases and

establishments, including HMAS Harman, Headquarters Joint Operation Command, Kapooka, Latchford Barracks, Royal

Military College, Duntroon and the administrative headquarters of the ADF at Russell.

Table 3.16: ACT region property provisioning and related services 2019-20

Canberra Wagga Wagga Albury/Wodonga Total

Property provisioning

MWD constructions/acquisitions 57 5 3 65

MCA constructions/acquisitions 0 0 0 0

Closing balance (30 June 2020)

MWD properties 2,008 289 298 2,595

MCA properties 272 0 0 272

Property and tenancy services

Housing allocations 1,022 169 178 1,369

Property inspections 6,515 1,314 1,343 9,172

ADF members receiving RA 1,818 213 207 2,238

Leases managed 1,885 179 257 2,321

Maintenance work orders raised 23,143 3,475 4,037 30,655

63 Regional report on operational performance

Victoria and Tasmania region As at 30 June 2020, DHA managed 1,187 properties in the Victoria (VIC) and Tasmania (TAS) region. The majority were

located in Victoria including greater Melbourne, Puckapunyal, Frankston and Sale. We managed 28 properties in Hobart.

The majority of properties were freestanding three and four bedroom houses, however, we managed a number of

townhouses and high rise apartments located close to the Melbourne CBD. Properties in the region accommodated ADF

members working at a number of ADF bases and establishments, including Simpson Barracks, Victoria Barracks,

Puckapunyal Military Area, RAAF Williams, HMAS Cerberus, and RAAF Base East Sale.

Table 3.17: VIC and TAS region property provisioning and related services 2019-20

Victoria Tasmania Total

Property provisioning

MWD constructions/acquisitions 11 0 11

MCA constructions/acquisitions 0 0 0

Closing balance (30 June 2020)

MWD properties 1,137 28 1,165

MCA properties 22 0 22

Property and tenancy services

Housing allocations 541 0 541

Property inspections 3,749 55 3,804

ADF members receiving RA 1,058 0 1,058

Leases managed 440 6 446

Maintenance work orders raised 13,057 276 13,333

64 DHA Annual Report 2019-20

South Australia region As at 30 June 2020, DHA managed 1,105 properties in the South Australia (SA) region. The majority were located in and

around Adelaide and were freestanding three and four bedroom houses. We managed a number of townhouses and high

rise apartments located close to the Adelaide CBD. Properties in the region accommodated ADF members working at a

number of ADF bases and establishments including RAAF Base Edinburgh, Keswick Barracks and Woodside Barracks.

Table 3.18: SA region property provisioning and related services 2019-20

Total

Property provisioning

MWD constructions/acquisitions 28

MCA constructions/acquisitions 0

Closing balance (30 June 2020)

MWD properties 939

MCA properties 166

Property and tenancy services

Housing allocations 544

Property inspections 4,118

ADF members receiving RA 998

Leases managed 898

Maintenance work orders raised 12,771

65 65 Regional report on operational performance

Western Australia region As at 30 June 2020, DHA managed 1,028 properties in the Western Australia (WA) region. The majority were located in

Perth and Rockingham, and a small number of properties were located in Broome, Exmouth, Geraldton, Karratha and

Pearce. The majority of properties were freestanding three and four bedroom houses, however we managed a number of

townhouses and high rise apartments. Properties in the region accommodated ADF members working at a number of ADF

bases and establishments including Fleet Base West, RAAF Base Pearce, Irwin Barracks and Campbell Barracks.

Table 3.19: WA region property provisioning and related services 2019-20

Total

Property provisioning

MWD constructions/acquisitions 0

MCA constructions/acquisitions 0

Closing balance (30 June 2020)

MWD properties 913

MCA properties 115

Property and tenancy services

Housing allocations 432

Property inspections 3,724

ADF members receiving RA 1,037

Leases managed 623

Maintenance work orders raised 11,817

PART 4

Management and accountability Legislative framework

Corporate governance structure

Risk management,

internal audit and compliance

Procurement and consultancies

External scrutiny

Workforce management

Information management and systems

68 DHA Annual Report 2019-20

Legislative framework

The legislative framework in which DHA operates influences our corporate governance.

The most important pieces of

legislation by which DHA is governed

are as follows:

Defence Housing Australia Act 1987

Defence Housing Australia (DHA),

formerly known as the Defence

Housing Authority, was established as

a statutory authority5 on 1 January

1988 under the Defence Housing

Authority Act 1987 (Cth).

On 23 November 2006, in accordance

with the Defence Housing Authority

Amendment Act 2006 (Cth), the

Authority was renamed Defence

Housing Australia and our principal Act

was renamed Defence Housing

Australia Act 1987 (DHA Act).

The DHA Act sets out our functions,

powers, corporate structure and

delegations. In accordance with

section 5 of the DHA Act, the main

function of DHA is to provide adequate

and suitable housing for, and housing

related services to:

A members of the Defence Force and their families

A officers and employees of the Department of Defence and

their families

A persons contracted to provide goods or services to the Defence

Force and their families

in order to meet the operational needs

of the ADF and the requirements of

the Department.

In accordance with section 6 of the

DHA Act, DHA may provide housing

and housing related services to

non-corporate Commonwealth entities

other than Defence in order to meet

the requirements of that entity. DHA

did not provide any such services in

2019-20.

5 A statutory authority is a generic term for an Australian Government body established through legislation for a public purpose.

69 Legislative framework

Public Governance, Performance

and Accountability Act 2013

The Public Governance, Performance

and Accountability Act 2013 (PGPA

Act) and its associated instruments,

policies and guidance set the

standards of governance, performance

and accountability for Commonwealth

entities and companies. The PGPA Act

also imposes specific duties on our

Board members and officials relating

to the use and management of

resources.

In accordance with the PGPA Act,

DHA is a corporate Commonwealth

entity.6 As a corporate Commonwealth

entity, DHA must comply with the

following PGPA Act associated

instruments and policies:

A Public Governance, Performance and Accountability Rule 2014

(PGPA Rule)

A Public Governance, Performance and Accountability (Financial

Reporting) Rule 2015

A any government policy orders.

Significant issues relating to

non-compliance with finance law

In accordance with section 19 of

the PGPA Act, the Board (as the

accountable authority of DHA) must

notify our responsible Minister as soon

as practicable after a significant

non-compliance with finance law7

issue is identified. We must also

include a statement of any significant

issues reported to the responsible

Minister in our Annual Report for that

reporting period.

To assist the Board in fulfilling this

requirement, DHA conducts a

bi-annual finance law compliance

reporting process. Informed by this

completed reporting process, the

Board did not determine any instances

of significant non-compliance with the

finance law for the 2019-20

reporting period.

DHA as a Government

Business Enterprise

In accordance with section 5 of

the PGPA Rule, DHA is one of nine

Government Business Enterprises

(GBEs).8 As a GBE, DHA is expected

to comply with Resource Management

Guide No. 126 Government Business

Enterprises (GBEs) (RMG 126).

RMG 126 provides guidance in

relation to board and corporate

governance, planning and reporting,

financial governance and other

governance matters. A principal

objective for each GBE is that it adds

to shareholder value.

6 A corporate Commonwealth entity is a body corporate, established by a law of the Commonwealth but legally separated from it. Corporate Commonwealth entities can act in their own right and exercise certain legal rights such as entering into contracts and owning property.

7 Finance law incorporates the PGPA Act, any rules covered by the PGPA Act, any instrument under the PGPA Act and an Appropriation Act.

8 A Government Business Enterprise (GBE) is a commercially-focused government owned business that is established to fulfil a Commonwealth Government purpose.

Table 4.1: Significant non-compliance with the finance law

Description of non-compliance Remedial Action

N/A N/A

70 DHA Annual Report 2019-20

Other applicable legislation

and processes

DHA is the only GBE that employs

staff under the Public Service Act

1999. As an Australian Government

employer, we must adhere to the

provisions and statutes of various

Commonwealth employment related

legislation including, but not limited to,

the Fair Work Act 2009 and the Work,

Health and Safety Act 2011.

As a statutory agency, we must also

operate in accordance with

Commonwealth legislation including,

but not limited to, the following Acts:

Freedom of Information Act 1982

Individuals can submit a request to

DHA under the Freedom of Information

Act 1982 (FOI Act) to access

documents we hold and seek to

obtain copies of those documents.

Our responsibilities and functions

under the FOI Act are delegated to a

core group of staff. All new staff are

required to complete FOI Act training

as part of our induction process. In

addition, ongoing staff complete

mandatory refresher training annually.

In 2019-20, DHA received six

requests for access to documents

under the FOI Act. Of these, access

was granted in full for one request and

in part for four requests. One request

was withdrawn by the applicant. There

were no requests outstanding as at

30 June 2020.

Consistent with the Information

Publication Scheme, an agency plan

and FOI disclosure log is published on

our website (www.dha.gov.au/foi).

Privacy Act 1988

Personal information related to the

administration of DHA’s programs and

services is protected by the Privacy

Act 1988 (Privacy Act). To this end,

we have comprehensive policies and

processes in place to protect the

personal information of our customers

and staff.

Our responsibilities and functions

under the Privacy Act are delegated to

a core group of staff. All new staff are

required to complete Privacy Act

training as part of our induction

process. In addition, ongoing staff

complete mandatory refresher training

annually.

Our privacy policy is published on our

website (www.dha.gov.au/policies/

privacy) and sets out:

A how we collect, hold, use and disclose personal information

A how individuals may seek to access or correct personal information

A how individuals can make a complaint if they believe we have

breached our obligations under the

Privacy Act.

71 Legislative framework

As we develop new projects and

programs, we undertake privacy

impact assessments to:

A minimise privacy risks and impacts A ensure compliance with statutory obligations.

In 2019-20, we managed 441 privacy

queries and 63 minor privacy

breaches or investigations that largely

resulted from human error. DHA was

not the subject of any Office of the

Australian Information Commissioner

(OAIC) reviews and there were no

eligible data breaches reported to the

OAIC under the Notifiable Data

Breaches scheme.

Public Interest Disclosure Act 2013

DHA is committed to the highest

standards of ethical and accountable

conduct. The Public Interest

Disclosure Act 2013 (PID Act) allows

for investigations of alleged

wrongdoing by public officials9 and

provides protections for individuals

who disclose or report suspected

wrongdoing.

Our responsibilities and functions

under the PID Act are delegated to a

core group of staff. All new staff are

required to complete PID Act training

as part of our induction process. In

addition, ongoing staff complete

mandatory refresher training annually.

In 2019-20, we managed six

disclosures.

Modern Slavery Act 2018

In 2018-19, the Government

introduced the Modern Slavery Act

2018. The Act requires entities based

or operating in Australia, with an

annual consolidated revenue of more

than $100 million, to report annually

on the risks of modern slavery in their

operations and supply chains, as well

as actions taken to address those

risks. As the Act is likely to apply to

DHA, we are undertaking the steps

necessary to ensure reporting

compliance. The first statements

required under the Modern Slavery Act

2018 are due by 31 December 2020.

9 A public official includes current and former staff and DHA contracted service providers.

Corporate governance structure

DHA’s corporate governance structure ensures we deliver outcomes in a controlled, transparent and accountable manner.

Our governance framework comprises

the principles, practices and tools

needed to ensure our approach to

governance is consistent and

coordinated.

Our performance framework provides

strategic direction and alignment

across the business through a clear

line of sight through all planning and

reporting activities, including:

A coordinated business planning as reflected in our Corporate Plan

strategic priorities, goals and

objectives

A performance monitoring and reporting through regular reviews of

strategic and organisational

performance measures—refer to

our Annual Performance Statement

(page 35).

Shareholder Ministers The Australian Government’s interests

in DHA are overseen by two

Shareholder Ministers: the Minister for

Defence Personnel and the Minister

for Finance. As DHA sits within the

Defence portfolio of the Australian

Government, the Minister for Defence

is our responsible minister. The

Minister for Defence delegated

responsibility for DHA operational

matters to the Minister for Defence

Personnel.

In accordance with the DHA Act and a

ministerial determination, DHA must

seek approval of the Minister for

Defence (or their delegate) for any

contracts we wish to execute which

are greater than or equal to $15 million

in value.

72 DHA Annual Report 2019-20

73 Corporate governance structure

Shareholder Ministers in 2019-20

DHA’s Shareholder Ministers for the

reporting period were as follows:

A Minister for Defence Personnel: the Hon Darren Chester MP

A Minister for Finance: Senator the Hon Mathias Cormann.

Ministerial directions and policy

orders in 2019-20

DHA did not receive any new

ministerial directions or policy orders

in 2019-20.

DHA continues work to meet the April

2018 ministerial direction to relocate

all of our Australian Capital Territory

offices (head office and ACT regional

office) to the Gungahlin Town Centre

by no later than 18 March 2022.

Following a competitive tender

process, G1 DHA Pty Ltd was

selected as the successful tenderer to

construct and fit out DHA’s new office

accommodation. The office will be

located on the site bound by

Hibberson, Hinder, Kate Crace and

Efkarpidis Streets and will hold a

five-star NABERS rating. Construction

works are scheduled to commence in

August 2020.

Board of Directors The Board is established in

accordance with Part III of the DHA Act

and is the accountable authority for

DHA under the PGPA Act. The Board

is responsible for the proper and

efficient performance of DHA’s

functions. The Board makes decisions

on organisational direction and

strategy, which are articulated through

our Corporate Plan.

Board members

In accordance with section 12 of the

DHA Act, our Board consists of:

A eight non-executive members with a mix of APS, Defence and

commercial members

A one executive member who is also the DHA Managing Director.

Refer to Appendix A: Accountable

Authority for further details as required

by the PGPA Rule.

74 DHA Annual Report 2019-20

Board members as at 30 June 2020

Hon J.A.L. (Sandy) Macdonald

Chairman

Mr Macdonald was appointed as a

member of the Board in July 2008 and

was appointed Chairman in February

2015. He has considerable public and

private company experience. He was

elected to the Australian Senate in

1993 and served multiple terms before

retiring in 2008. His Parliamentary

service includes eight years as Chair

of the Senate Foreign Affairs, Defence

and Trade Committee, and periods as

Deputy Leader of the National Party in

the Senate, Parliamentary Secretary for

Defence and Parliamentary Secretary

for Trade. He is a wool and beef

producer near Quirindi (NSW).

Mr Barry Jackson

Managing Director

Mr Jackson was appointed as

Managing Director in May 2019. Prior

to DHA he was Deputy Secretary,

Service Delivery Operations at the

Department of Human Services (DHS).

His Australian Public Service career

includes senior executive roles within

the DHS, the Department of Finance

and the Department of Foreign Affairs

and Trade. He also has over 25 years’

experience in the private sector,

primarily in the areas of construction,

property, strategic and business

process management. Prior to re-joining the public service he was Chief

Executive Officer of UGL Services

Australia and New Zealand, which was

Australia’s largest provider of property

management services. He is the Vice

Chair of Goodwin Aged Care Services,

the ACT’s largest not for profit aged

care provider. He is also on the Board

of Koomarri, an ACT/NSW based not

for profit organisation specialising in

supporting people with an intellectual

disability or acquired brain injury to

achieve their life goals.

Brigadier Leigh Wilton AM

Director

Brigadier Wilton was appointed to the

Board as the nominee of the Chief of

the Defence Force in December 2019.

She graduated from the Royal Military

College to the Royal Australian Army

Ordnance Corps in 1991. Her early

appointments included regimental and

staff positions as a supply officer and

as a project manager. Her command

experience includes a posting as the

Officer Commanding Supply Company,

7th Combat Service Support Battalion

and the inaugural Commanding

Officer/Chief Instructor of the Army

School of Ordnance. She has held a

range of staff appointments at both

Lieutenant Colonel and Colonel. She

has held positions as the Senior

Officer Manager within the Career

Management Agency, directing staff at

both the Australian Command and

Staff College and the Centre for

Defence and Strategic Studies, and as

the Chief of Staff for Headquarters

633—Afghanistan and Chief of Staff

for Army Headquarters. Brigadier

Wilton was appointed as the Director

General Career Management—Army in

2019. She was made a Member of the

Order of Australia (AM) in 2018 for

exceptional service and contributions

to Army’s personnel capability.

75 Corporate governance structure

Mr Simon Lewis AO PSM CSC

Director

Mr Lewis was appointed to the Board

as the nominee of the Department of

Finance Secretary in April 2019. He

had a distinguished career in the

Australian Public Service spanning

more than four decades, including a

five year term as the Secretary of the

Department of Veterans’ Affairs and

senior roles at the Department of

Defence and the Department of

Finance. He was made an Officer of

the Order of Australia (AO) in 2019 for

distinguished service to public

administration, transformational change

and organisational design. He was

awarded a Public Service Medal (PSM)

in 2007 for outstanding public service

and the Centenary Medal in 2001 for

his contribution to Australian society

and government. His former board

appointments include President of the

Repatriation Commission, Chairman of

the Military Rehabilitation and

Compensation Commission and a

member of the ANZAC Centenary

Advisory Board.

Ms Kate Louis

Director

Ms Louis was appointed to the Board

as the nominee of the Department of

Defence Secretary in June 2020. She

has 20 years’ experience in the

Department of Defence including

appointments as Director, Chief of

Staff and Assistant Secretary within the

Capability Development Group. In

2014, she was appointed as the

Assistant Secretary White Paper

Enterprise Management to develop

industry related Defence policy

including shipbuilding and the Defence

industry policy statement. From

November 2015, she was the First

Assistant Secretary Defence Industry

Policy Division. In this role she was

responsible for the effective

implementation of the Government’s

approach to Defence industry policy.

In August 2017, she joined the

Australian Industry Group (AI Group)

as the Executive Director of their

Defence Council and is now also

Head of Industry Development. She is

a member of the Centre for Defence

Industry Capability Advisory Board.

Hon Alan Ferguson

Director

Mr Ferguson was appointed to the

Board as a commercial director in

February 2015. He was elected to the

Australian Senate in 1992 and served

three full terms before retiring in 2011.

He served on a number of Senate and

Joint Committees, including more than

eight years as Chair of the Joint

Committee on Foreign Affairs, Defence

and Trade. He also served as

President of the Senate in 2007 and

2008, and represented the Parliament

on many delegations. He was made a

Member of the Order of Australia (AM)

in 2020 for significant service to the

Parliament of Australia and to the

community of South Australia. Before

entering politics, he was a farmer and

self-employed insurance consultant.

He is currently chair of the Australian

Political Exchange Council.

76 DHA Annual Report 2019-20

Mr Robert Fisher AM

Director

Mr Fisher was appointed to the Board

as a commercial director in February

2016. He had a distinguished career in

the public service spanning more than

four decades, including being a

member of the Australian Trade

Commissioner Service and Chief

Executive Officer or Director General

of various Western Australian (WA)

government departments. He was

Agent General for WA, based in

London, from 2001 to 2006. He was

one of five commissioners on the

Australian Government’s National

Commission of Audit in 2013-14. He

was made a Member of the Order of

Australia (AM) in 2003 for service to

the public sector in WA.

Ms Andrea Galloway

Director

Ms Galloway was appointed to the

Board as a commercial director in

November 2016. She has over 30

years of executive management

experience for national and

multinational commercial organisations,

including leading Spherion, Lucent

Technologies and AT&T in the Asia

Pacific and South Pacific. She was

most recently Managing Director of

Evolve Housing, one of Australia’s

largest community housing providers,

from 2011 to 2019. She is on the

board of Coleman Greig Lawyers,

Tennis Australia (NSW) and is a

member of the Advisory Board for The

Salvation Army Australia—NSW/ACT.

In 2014, she was awarded the

Australian Telstra Business Woman of

the Year and the NSW Telstra Business

Woman of the Year for Innovation.

Mr Ewen Jones

Director

Mr Jones was appointed to the Board

as a commercial director in December

2016. He was elected as the Federal

Member for Herbert, an electorate in

Townsville (QLD), in 2010 and served

until 2016. He was a member of

several House of Representatives

Standing Committees and the Joint

Standing Committee on Foreign Affairs,

Defence and Trade. He was

Government Whip from October 2015

to May 2016. He is an auctioneer by

trade, with a strong real estate and

corporate finance background. He is

currently Manager of Business

Development at Pickerings Auto

Group, a Townsville multi-franchise

motor dealership, and a member of

the National Film and Sound Archive

Australia Board.

77 Corporate governance structure

Board and legislated committees

In accordance with section 26(1) of

the DHA Act, the Board may establish

committees to assist in the discharge

of its duties. The Board and each of

its committees has a charter that sets

out its purpose, composition and

meeting and administrative

arrangements.

The Board considers the charters

and the composition of committees

periodically.

Amendments to the DHA Act in 2006

established the DHA Advisory

Committee to advise on the

performance of DHA’s functions

(refer to Part IIIA of the DHA Act).

Table 4.2: Board committees 2019-20

Committee Role Members

Board Audit and Risk

Committee (BARC)

Assist the Board discharge its responsibilities by

providing oversight, ensuring appropriateness and

review of financial reporting, performance reporting,

system of risk oversight and management, and system

of internal control

S Lewis (Chair)

A Galloway

P Logan1

Board Investment

Committee (BIC)

Provide advice and assurance and, where appropriate,

make recommendations to the Board on investment

related proposals, transactions, projects and related

issues to ensure decisions take account of our

legislative obligations, contractual obligations with

Defence and our commercial interests

R Fisher (Chair)

A Ferguson

A Galloway

E Jones

Nomination and

Remuneration

Committee (NRC)

Assist the Board to review the Managing Director's

remuneration and performance, consider key

appointments, and inform Shareholder Ministers of

impending reappointments or vacancies on the Board,

including recommending possible candidates, where

appropriate

J Macdonald (Chair)

R Fisher

S Lewis2

Future Business

Committee (FBC)

Assist the Board and Managing Director provide

strategic input and guidance into DHA’s submission to

Shareholder Ministers on a future business model

B Jackson (Chair)

S Lewis

A Galloway

DHA Advisory

Committee (DHA AC)

Provide general advice and information on the

performance of DHA’s role

L Wilton (Chair)

DHA representative (currently

the Managing Director)

National Convenor of Defence

Families of Australia (DFA)

Up to three persons appointed by

the Chief of the Defence Force

Notes 1. P Logan is an independent member of the BARC appointed by the Board. 2. S Lewis was appointed to the NRC on 22 June 2020.

78 DHA Annual Report 2019-20

Board and legislated committee meetings 2019-20

Table 4.3: Board meetings and member attendance 2019-20

Scheduled meetings held and number of meetings attended

Board member Board BARC BIC FBC NRC DHA AC

9 6 7 2 2 3

J Macdonald1 9 n/a 1 n/a 2 n/a

B Jackson 9 n/a n/a 2 n/a 3

M Brady2 9 6 n/a 1 2 n/a

S Lewis3 9 6 n/a 2 - n/a

V McConachie4 3 3 n/a 2 n/a 0

L Wilton5 3 n/a n/a n/a n/a 2

K Louis6 - n/a n/a n/a n/a n/a

A Ferguson 8 n/a 6 n/a n/a n/a

R Fisher 9 - 7 n/a 2 n/a

A Galloway 9 5 7 2 n/a n/a

E Jones 8 - 6 n/a n/a n/a

P Logan7 n/a 6 n/a n/a n/a n/a

Notes 1. J Macdonald left the BIC in July 2019.

2. M Brady’s term on the Board expired on 21 June 2020.

3. S Lewis was appointed to the NRC on 22 June 2020.

4. V McConachie’s term on the Board expired on 4 December 2019.

5. L Wilton was appointed as the Chief of the Defence Force nominee to the Board on 5 December 2019.

6. K Louis was appointed to the Board on 21 June 2020 after the final Board meeting of the 2019-20 financial year.

7. P Logan is an independent member of the BARC appointed by the Board.

Board member related party transactions 2019-20

A related party transaction is where a

Board member approved payment for

a good or service from another entity

or provisioning of a grant to another

entity where the member is a director

of DHA’s Board and a director of the

other entity, and the value of the

transaction (or if more than one

transaction, the aggregate value of

those transactions) exceeds $10,000

(GST inclusive). In 2019-20, DHA

Board members did not disclose any

related party transactions.

79 Corporate governance structure

Board Audit and Risk Committee

Information on DHA’s Board Audit and

Risk Committee (BARC) is provided

below in accordance with section

17BE(taa) of the PGPA Rule.

The charter determining the functions

of the BARC is published on our

website (www.dha.gov.au/about-us/

our-organisation/governance).

Table 4.4: Board Audit and Risk Committee 2019-20

Member name Qualifications, knowledge, skills or experience (include formal and informal as relevant) Number of meetings

attended/ total number of meetings

Total annual remuneration

S Lewis Qualifications

A Bachelor of Arts (Economics, Statistics) A Graduate Diploma of Computing Studies A Graduate Diploma in Administrative Studies A Graduate Diploma of Strategic Studies A Completed the Harvard and Wharton Business School’s

Advanced Management Programs

A Graduate of the Australian Institute of Company Directors (AICD) Experience

A Various executive and senior roles in the Australian Public Service A Secretary of the Department of Veterans’ Affairs (2013-2018) A Other board appointments

6/6 $82,861.41

A Galloway Qualifications

A Bachelor of Business Administration A Diploma of Computer Networks A Graduate of the Executive Program (University of Michigan) A Fellow of the AICD A Justice of the Peace A Licensed Real Estate Agent Experience

A 30+ years in executive management for national and multinational commercial organisations

A Former Managing Director and CEO of Evolve Housing A Winner of the Australian and NSW Telstra Women’s Award 2014 (Business Innovation category)

A Other board appointments

5/6 $78,668.02

80 DHA Annual Report 2019-20

Member name Qualifications, knowledge, skills or experience (include formal and informal as relevant) Number of meetings

attended/ total number of meetings

Total annual remuneration

P Logan1 Qualifications

A Bachelor of Commerce A Fellow Certified Practising Accountant (CPA) Experience

A 25+ years’ experience in the air traffic management and civil aviation safety industry across finance, senior management and

executive roles

6/6 $0

M Brady Qualifications

A Bachelor of Arts (Honours) A Bachelor of Fine Arts A Member of the AICD Experience

A 28+ years in the departments of Foreign Affairs and Defence A Director of Signals Directorate (1994-1999) A Chairman of the Defence Intelligence Board (1999-2001) A Consultant on intelligence issues, technology requirements and

arms exports

6/6 $78,053.82

V McConachie1 Qualifications

A Bachelor of Arts/Law A Master of Laws A Graduate of the AICD Experience

A Member of the Royal Australian Navy Reserve A Various senior appointments, including Commanding Officer of HMAS Kuttabul, Director General ADF Legal Service

A Operational service as Deputy Staff Judge Advocate Multinational Force—Iraq

A Lead of an Australian Government legal division

3/3 $0

Note 1. The Commonwealth employs V McConachie and P Logan on a full time basis. For this reason, in accordance with sub-section 7(11) of the Remuneration Tribunal Act 1973, they are not entitled to be remunerated for holding a part time office or independent member of the Board Audit and Risk Committee respectively. They can receive travel allowance for official travel associated with fulfilling the requirements of the office.

81 81 Corporate governance structure

Leadership

Managing Director

The Managing Director is appointed

by the Board in accordance with

Part VI (Division 1) of the DHA Act and

is its only executive member.

The Managing Director is responsible

for conducting the affairs of DHA in

accordance with the DHA Act and any

policies determined and directions

given by the Board. The Managing

Director oversees strategic direction,

organisational structure, staff,

performance and relationships with

key stakeholders.

Leadership Team

The Leadership Team supports the

Managing Director in fulfilling DHA’s

purpose. The teams broad role is to

provide leadership, guide performance,

implement and deliver against the

Corporate Plan and ensure

accountability of DHA’s activities.

82 DHA Annual Report 2019-20

Mr Barry Jackson

Managing Director

New Zealand Certificate in Quantity Surveying | Quantity Surveyors Registration | Member of the AICD

Mr Jackson was appointed as

Managing Director in May 2019.

Prior to DHA he was Deputy Secretary,

Service Delivery Operations at the

Department of Human Services (DHS).

His Australian Public Service career

includes senior executive roles within

the DHS, the Department of Finance

and the Department of Foreign Affairs

and Trade. He also has over 25 years’

experience in the private sector,

primarily in the areas of construction,

property, strategic and business

process management. Prior to

re-joining the public service he was

Chief Executive Officer of UGL

Services Australia and New Zealand,

which was Australia’s largest provider

of property management services. He

is the Vice Chair of Goodwin Aged

Care Services, the ACT’s largest not

for profit aged care provider. He is

also on the Board of Koomarri, an

ACT/NSW based not for profit

organisation specialising in supporting

people with an intellectual disability or

acquired brain injury to achieve their

life goals.

Key responsibilities:

A operational affairs in accordance with the DHA Act and policies or

directions of the Board

A strategic direction and achievement against the Corporate Plan

A compliance oversight with the PGPA Act, Public Service Act and other

relevant legislation

A key stakeholder relationship management with Shareholder

Ministers, departmental Secretaries

and the Chief of the Defence Force

A management of the Leadership Team

A oversight of organisational structure, staff and performance.

Mr Paul Groenewegen

Chief Financial Officer (CFO)

Bachelor of Commerce | Graduate Diploma of Applied Corporate Governance | Certified Practicing Accountant | Graduate Member of the ACID

Mr Groenewegen joined DHA in

August 2018, initially as interim CFO

before being permanently appointed to

the position in September 2019.

He is an experienced executive and

consultant with a background in

governance practice, strategy

development and implementation, fiscal

management, compliance and risk

activities and government operations

involving regulation and policy. His

previous roles include governance and

review work with government and

industry organisations, executive roles

with prudential regulators and several

financial management roles involving a

range of functions from the oversight of

whole of government payments through

to the financial management of

complex multi-program organisations.

Key responsibilities:

A strategic planning, valuations and capital planning

A financial management services and budgets

A investment management and funding strategies

A financial and taxation compliance A performance reporting.

Executive profiles as at 30 June 2020

83 Corporate governance structure

Mr Brett Jorgensen

General Manager, Service Delivery

Master of Business | Bachelor of Engineering (Honours) | Advanced Business Diploma | Real Estate Management Diploma | Diploma of Contract Management

Mr Jorgensen joined DHA as the

National Manager, Governance in

August 2008. He was appointed

General Manager, Property and

Tenancy Services in May 2012 and

General Manager, Property

Provisioning Group in August 2018.

In February 2020, he was designated

General Manager, Service Delivery.

Before joining DHA, he held a number

of appointments at the Department

of Defence as a civilian and was a

member of the Royal Australian

Air Force.

Key responsibilities:

A housing portfolio management, including property development,

construction, acquisitions, heritage,

upgrades, sales and marketing

A service operations, including property management services,

contact centre operations,

maintenance and leasing activity

A strategy and design.

Executive and national

committees or groups

The Managing Director and the

Leadership Team establish executive

and national committees as needed to

assist them in the discharge of their

duties. Each committee has a charter

or terms of reference that sets out its

purpose, composition, and meeting

and administrative arrangements.

Committee Role Members

Command Activation

Team (CAT)

Established to provide a

management mechanism

that ensured reporting

lines and responsibilities

were clear following

activation of DHA’s

Business Continuity Plan

in response to the

COVID-19 pandemic

General Manager, Service

Delivery (Chair)

Leadership Team

and selected staff

Note 1. Table 4.5 does not include committees and groups that have governance oversight of projects or programs.

Table 4.5: Executive and national committees 2019-201

Case study

LIA Contact Centre specialist awarded DHA Employee of the Year Living in Accommodation (LIA) Contact Centre Base Liaison Officer, Thomas Martin, spent the early part of July 2019 bunking down in RAAF quarters in Townsville for Exercise Talisman Sabre. Four months later he was presented with the Outstanding Customer Service Award and named Employee of the Year at DHA’s Annual Awards.

Both honours are tributes to Thomas’

exceptional record of service to key

Defence customers and his

commitment to improving DHA’s

processes and procedures in line with

our customer service charter.

Thomas joined the team at the LIA

Contact Centre in 2015 and his work

has been integral to building and

maintaining strong relationships with

key stakeholders at Defence bases

across the country.

His determination to deliver the best

outcomes for the ADF, DHA’s primary

customer, has never been more

evident than during Exercise Talisman

Sabre—the largest military exercise on

the ADF calendar, involving thousands

of Australian and international

Defence personnel.

RAAF Townsville is command centre

for the exercise and Thomas was

requested specifically to provide

hands on assistance with LIA

requirements for participating forces.

Thomas attended twice daily briefings

for the planned exercise activities to

provide regular reports on

accommodation availability or alternate

LIA solutions. Thomas drew on his

understanding of base policies and

processes to help provide unique

solutions to accommodation issues.

Additionally, Thomas’ work

demonstrated that our LIA booking

system is capable of handling the large

number of special requests required

during the course of a major exercise.

Another of his key achievements has

been the process he developed to

improve efficiencies by creating

automatic LIA allocations for

incoming trainee ranks at Defence

bases nationally.

DHA’s Annual Awards recognise and

celebrate outstanding team and

individual accomplishments in the

service of DHA’s strategic priorities.

Recognition is an important part of the

overall priority we place on people at

DHA, as is championing team work

and collaboration.

84 DHA Annual Report 2019-20

Risk management, internal audit and compliance DHA operates in a complex environment and recognises that risk is inherent in all that we do.

We proactively identify, engage with

and manage risk at all levels and

across all facets of our business to

create or protect value in support of

improving performance, encouraging

innovation and support in achieving

our purposes, objectives and strategic

priorities. The function is supported by

a co-sourced internal audit function

that provides independent assurance

of the systems of control.

We have established formal, fit for

purpose accountability and

responsibility for risk and internal audit

at an organisational level that is

broadly consistent with risk principles.

The Board, as accountable authority

for DHA under the PGPA Act,

maintains oversight of organisational

risk, management systems and

internal controls.

The Managing Director and Leadership

Team are responsible for implementing

appropriate risk systems and ensuring

resources and capability support

effective risk management and its

integration in decision making

processes.

Risk management Sound risk management continues

to be an important and integral

element that supports achievement

of our purpose, objectives and

strategic priorities.

In 2019-20, we delivered a revised

fit for purpose Risk Management

Framework (the Framework) which

was approved by the Board. The

Framework is a set of components

that provide the foundation and

organisational arrangements for

designing, implementing, monitoring,

reviewing and continually improving

risk management throughout the

organisation.

DHA is committed to maintaining an

effective, efficient and tailored

Framework inclusive of supporting

policies such as fraud control,

business continuity management,

workplace health and safety

management and code of conduct.

The Framework assists DHA to meet

the requirements of section 16 of the

PGPA Act and the Commonwealth

Risk Management Policy issued by the

Department of Finance. It follows the

International Standard on Risk

Management (ISO 31000:2018).

DHA has continued to mature our risk

philosophy and approach, embedding

risk principles into our culture. A key

element of this approach is increasing

the risk capability at all levels of the

organisation. To achieve this, we are

educating and empowering our people

to have the knowledge, judgment,

confidence and support to make more

informed risk based decisions. All new

staff are required to complete risk

management training as part of our

induction process. In addition, ongoing

staff complete mandatory refresher

training annually.

We are confident increased risk based

decision making will make our

business better—more efficient, agile

and responsive. However, we

recognise that we need to

continuously improve. To this end, we

are developing measures to build, test

and refine our approach. These

measures will complement our

integrated business planning and will

assist us to better understand how we

prioritise our resources.

85 Risk management, internal audit and compliance

86 DHA Annual Report 2019-20

Fraud control and anti-corruption We are cognisant that fraud and

corruption can damage the

performance and reputation of our

business. As a GBE, we consistently

monitor and update our fraud and

corruption control framework, which

is consistent with the Commonwealth

fraud control framework

(section 10 of the PGPA Rule).

Fraud and corruption control is a

subset of DHA’s risk portfolio and the

disciplines reflect our risk philosophy

and principles. We continue to

prevent, detect, monitor and

encourage our staff to report potential

fraudulent or corrupt conduct.

Increased staff awareness has

resulted in increased reporting of

potential fraudulent or corrupt

conduct, with seven allegations

reported in 2019-20. As at

30 June 2020, there were two

active investigations.

Resilience Resilience consists of business

continuity, disaster recovery, crisis

and emergency management.

Despite being a standalone discipline,

resilience forms part of our

overarching risk management portfolio

and we are improving it as a subset

of our maturing risk philosophy and

principles.

In accordance with improvements we

are making to our risk management

framework, we undertook significant

steps to revise our approach to all

resilience disciplines in the reporting

period. We are undertaking further

work to continue to progress maturity

of DHA’s approach and to ensure it

continues to remain consistent with

the Government’s Protective Security

Policy Framework and Australian

National Audit Office guidance.

Internal audit Internal audit is a central component

of our governance framework. Audit

strengthens accountability and

promotes good governance and

transparency through independent

and objective assurance.

Each year, we develop a risk based

rolling work program of internal audit

priorities for the coming 12 months.

The program is developed in

consultation with the Managing

Director, Leadership Team and the

BARC, and is designed to ensure

broad coverage of business areas and

activities. The program of work is

revised biannually to ensure alignment

with current and emerging risks. The

program assists the BARC to review

organisational systems and

procedures for managing

performance, and to meet its

performance reporting obligations in

accordance with the PGPA Act.

In 2019-20, EY continued to

provide internal audit services under

a co-sourced arrangement. They

completed reviews on our

development and retail acquisition

process, delegations, complaints

management, repairs and

maintenance contractors, fraud risk

management, recruitment processes,

business continuity management,

financial processes and information

management systems.

87 Procurement and consultancies

Procurement and consultancies Our approach to procuring goods and services, including consultancies, reflects the core policies and principles of the Commonwealth Procurement Rules.

We advertise open tender opportunities

via AusTender (tenders.gov.au) to

procure a range of goods and services.

We use AusTender to manage our

tenders, including releasing tender

opportunities, issuing addenda and

receipt of tender submissions.

Interested parties can register their

details with AusTender to receive

notifications about our tenders.

Senate Order on Entity Contracts As a Corporate Commonwealth entity,

from 1 July 2017 DHA complies with

the Senate Order on Entity Contracts

and publishes a list of contracts over

$100,000 (GST inclusive) on our

website for the relevant reporting

period. Refer to our website

(www.dha.gov.au/entitycontracts)

to read the report.

Consultancies We engage consultants as required

when specialist expertise is not

available in house and the services

are required for a defined period of

time. In 2019-20, we entered into

41 new consultancy contracts worth

$4.67 million (GST inclusive).

The majority of these contracts related

to property provisioning and

construction activities, including

architectural design, town planning,

quantity surveying, impact assessment

(heritage, flora and fauna, etc.), social

and cultural planning, legal services

and graphic design services.

Remaining contracts were for

corporate related items including

strategic planning and executive

recruitment strategy services.

88 DHA Annual Report 2019-20

External scrutiny DHA’s operations are subject to scrutiny from a number of Parliamentary committees and external entities.

This section outlines the external

scrutiny mechanisms under which we

operate on which we report in

accordance with the PGPA Rule.

Parliamentary committees Senate Standing Committee on

Foreign Affairs, Defence and Trade

In 2019-20, DHA was not the subject

of any inquiries or reports by the

Senate Standing Committee on

Foreign Affairs, Defence and Trade

(the Committee). DHA officers and the

Minister for Defence appeared before

the Committee on 23 October 2019

and 4 March 2020. DHA responded to

Questions on Notice.

Parliamentary Standing Committee

on Public Works

In March 2014, in accordance with

subsection 6A(3) of the Public Works

Committee Act 1969, DHA received

exemption from scrutiny by the Public

Works Committee (PWC) for works we

undertake in providing housing and

related services for ADF members and

their families.

We notify or refer any projects we

undertake on behalf of Defence on

Commonwealth land to the PWC

as follows:

A medium works with a proposed cost of over $15 million but fewer

than $75 million

A major works with a proposed cost of more than $75 million.

In 2019-20, we did not make any

new submissions to the PWC. We

progressed work on the following

PWC endorsed projects:

A Seaward Village, Swanbourne (WA) A Randwick Barracks (NSW).

Government agencies Australian National Audit Office

(ANAO)

DHA was the subject of an ANAO

Performance Audit (Management of

Defence Housing Australia) which

commenced in April 2019. On

9 April 2020, the report was tabled

in the Senate and published on the

ANAO website. In its report, the

ANAO identified four recommendations

and some further findings. DHA’s

Accountable Authority agreed with

all recommendations.

We will continue to work closely

with the Department of Defence,

particularly to meet the

recommendations regarding

housing philanthropic organisations,

addressing key performance

indicators, and the study of

comparative costs of a service

residence and rent allowance.

DHA has convened a working group

with representatives from both DHA

and Defence; to prosecute the

acquittal of the recommendations and

findings. The BARC is providing

regular oversight and reports through

to the DHA Board.

89 External scrutiny

In accordance with the ANAO’s better

practice guidelines, in 2019-20 DHA

representatives and BARC members

considered a number of published

reports on other agency operations

that were relevant to DHA, including:

A Cyber resilience of government business enterprises and corporate

Commonwealth entities (Report

No. 1 of 2019-20)

A Defence’s administration of travel allowances and entitlements paid to

APS employees (Report No. 2

of 2019-20)

A Defence’s Quarterly Performance Report on Acquisition and

Sustainment (Report No. 3 of

2019-20)

A OneSKY: Contractual Arrangements (Report No. 4 of 2019-20)

A Implementation of ANAO and Parliamentary committee

recommendations (Report No. 6

of 2019-20).

Commonwealth Ombudsman

DHA maintains a collaborative and

productive working relationship with

the Office of the Commonwealth

Ombudsman. We review any reports

published and monitor any

recommendations implemented.

In 2019-20, the Commonwealth

Ombudsman received 19 complaints

related to DHA. As at 30 June 2020,

the Ombudsman’s office had

investigated one complaint. The

remaining 18 complaints were

managed using early resolution tools,

including referring complainants to

DHA (as they had not previously

sought assistance from DHA) or

referring complainants to another

oversight agency for consideration.

The Commonwealth Ombudsman did

not publish any reports relating to DHA

under section 15 of the Ombudsman

Act 1976 in the reporting period.

Information Publication Scheme

DHA is subject to the Freedom of

Information Act 1982 (FOI Act) and

publishes information in relation to the

Information Publication Scheme on our

website (www.dha.gov.au/foi). The

published information includes a

disclosure log and information about

the FOI Act and DHA’s Information

Publication Scheme Agency Plan.

Office of the Australian Information

Commissioner

DHA maintains a collaborative and

productive working relationship with

the Office of the Australian Information

Commissioner (OAIC). We review any

reports published and monitor any

recommendations implemented.

In 2019-20, DHA was not subject to

any OAIC reviews and there were no

eligible data breaches reported to the

OAIC under the Notifiable Data

Breaches Scheme.

90 DHA Annual Report 2019-20

Workforce management At an operational level, the Managing Director and Leadership Team are accountable for our workforce. They are committed to maintaining a skilled and productive workforce and a safe workplace contributing to high quality and professional outcomes.

During 2019-20 we focused on

building organisational culture and

capability to effectively lead and grow

our people and to support the reform

program. The initiatives implemented

in 2019-20 included:

A Introducing a capability framework to define the core capabilities

required across the organisation

and ensure employees understand

the capabilities required for their

role. The core capability framework

is utilised to inform investment in

our learning and development

activities, recruitment activities,

succession management and

performance management.

A Improving employee accountability through effective performance

management. In September 2019

DHA launched the Performance and

Learning Portal. This system

supports the development of clear

performance objectives and enables

better alignment of employee effort

to corporate priorities.

A Introducing an online learning portal that provides modules supporting

core capabilities and technical skills

required across the organisation.

A Enhancing management capability in performance management.

We delivered approximately

20 structured performance

management training sessions,

supported 78 processes to address

performance and behavioural

issues, implemented two targeted

coaching and conflict resolution

programs in response to census

results and developed a number of

toolkits to raise performance

management capability.

A Implementing a more rigorous and proactive early intervention process

that resulted in more structured

case management support to

injured and ill employees. Since the

inception of the new process, no

workplace injuries sustained during

2019-20 have yet progressed

into a compensation claim and

31 employees successfully returned

to their pre-injury duties.

A Building a respectful and inclusive workplace through launching a

Workplace Inclusion online training

suite. DHA partnered with Job

Access to conduct a review of our

recruitment practices and process

to ensure our roles are accessible

for people living with disability.

A Engaging two interns under the Indigenous Apprenticeship Program.

This program provides the

opportunity for DHA to provide a

pathway for Aboriginal and Torres

Strait Islander People seeking to

start their careers in the APS.

A Launching an internal employee mobility register, to provide

opportunities for employees to

enhance their capabilities and

experience through moving to a

new role.

A Developing an operational workforce plan to build workforce capabilities

required to deliver the refreshed

business model.

91 Workforce management

Workforce summary

Employment conditions

The DHA Enterprise Agreement

2015 (EA) provides a suite of

employment conditions, including

leave entitlements, flexible working

arrangements, learning and

development opportunities and

employee wellbeing and

assistance programs.

The EA nominally expired on 10

January 2019, but continues to

operate until replaced by a new

agreement, or terminated by the

Fair Work Commission. Rather than

negotiate a new agreement, a decision

was made to provide pay increases of

two per cent per annum, to DHA

employees under a determination

made under section 24(1) of the

Public Service Act 1999, an option

available under the Australian

Government’s Workplace Bargaining

Policy 2018.

DHA will develop a new EA with

employees and their representatives

during the 2020-21 financial year.

Remuneration

DHA’s remuneration arrangements are

unique because we are the only GBE

to employ its employees under the

Public Service Act 1999. As such,

DHA plans and reports in accordance

with the PGPA Act, related instruments

and policies including the PGPA Rule,

and the GBE Guidelines.

Our remuneration strategy supports

the strategic purposes of the

organisation, and enables performance

based reward and recognition of

capable employees. The remuneration

strategy is aligned to market practice

and supports the interests of our

shareholders. Our remuneration is

determined based on level and role.

In summary:

A The EA sets out conditions of service for employees employed

from DHA Level 1 to DHA Executive

Level 2, including salary rates for

new employees.

A The remuneration and conditions of service of Senior Executive Service

(SES) officers is set by the

Managing Director in accordance

with section 24(1) of the Public

Service Act 1999.10

A The remuneration of the Managing Director is set by the DHA Board in

accordance with the parameters of

the Remuneration Tribunal’s

determination for Principal Executive

Office holders (refer to section 50

of the DHA Act).11

A The remuneration of Board members is decided upon by the

Remuneration Tribunal’s

determination for holders of part

time public office (refer to section

17 of the DHA Act).

A Each remuneration package consists of a base salary (or fees

in the case of Board members)

and employer superannuation

contributions in accordance with

applicable legislation and fund

requirements.

A Employees are paid allowances (e.g. travel and motor vehicle) in

accordance with the EA or

Remuneration Tribunal determinations

for the Managing Director and Board

members. Employees and the

Managing Director accrue leave and

may be entitled to a potential

performance bonus.

Refer to Appendix B: Workforce

statistics for more information about

salary rates and full disclosure on

executive remuneration.

10 Senior executive service roles are benchmarked with comparable roles in the market. External benchmarks are determined by researching disclosed data from relevant Australian listed companies, the Australian Public Service Commission (APSC), industry data and other GBEs.

11 The Remuneration Tribunal is an independent statutory body established under the Remuneration Tribunal Act 1973 that oversees the remuneration of key Commonwealth offices.

92 DHA Annual Report 2019-20

Employee performance management framework and payments

During 2019-20 DHA implemented a

new Performance Management

Framework (the Framework) which

captured the shared responsibility of

employees and managers to foster a

high performance culture. The

Framework operates over a 12 month

performance review cycle. To support

the Framework, a new online

performance and learning portal (the

Portal) was implemented which

mapped individual performance

objectives against DHA’s strategy

and organisational objectives.

The Portal strengthened the

governance of organisational

performance by providing a more

effective reporting functionality that

contributed to:

A improved accountability to ensure managers and employees are

meeting their performance

management responsibilities

A increased transparency in monitoring progress and the

application of performance ratings

A snapshot of employee effort against corporate objectives and

organisational outcomes

A growth in the frequency and quality of employee performance

conversations.

All employees employed for three

months or more are required to

prepare a performance development

agreement (PDA). Formal performance

reviews were conducted mid-year and

at the end of the financial year to

assess whether individual targets were

exceeded, met or not met. This

assessment informs performance

bonus payments provided for in the EA.

In 2019-20, DHA adopted a more

rigorous moderation process of

each employee’s end of year

performance rating and performance

bonus. The process ensured there

was consistency in performance

assessments across DHA, and

performance ratings were reflective of

the achievement of individuals against

DHA’s strategic priorities. Performance

rating and bonus moderation were

conducted by group managers and the

Managing Director with consideration to

DHA’s organisational performance and

operating environment.

To further enhance management

capability in performance

management, manager and employee

toolkits were developed which was

supplemented with structured

performance management training

sessions. In 2019-20, we saw

improved management capability and

willingness to address performance

and behavioural issues.

Managing Director

In accordance with the Tribunal’s

Determination for Principal Executives

Offices, the Managing Director is

eligible for performance pay of up to

20 per cent of total remuneration.

Performance requirements and related

performance assessments are

determined annually by the Board’s

Nomination and Remuneration

Committee and referred to the Board

for approval.

Senior Executive staff

Senior Executive Service (SES)

employees have traditionally

had the opportunity to receive

potential performance bonuses of

up to 15 per cent of their annual gross

base salary. The Managing Director

reviews performance measures for

SES employees at least biannually to

ensure alignment with DHA’s

organisational strategies, corporate

goals and workforce resources. DHA

is phasing out bonuses for SES

employees, SES appointments made

during the financial year do not have

eligibility for a performance bonus.

Refer to Appendix B: Workforce

statistics for further detail on

performance payments.

93 Workforce management

Salary packaging

Board members are entitled to salary

packaging, whereby they may elect to

have all or part of their fees paid to a

complying superannuation fund as a

pre-tax salary deduction.

The Managing Director and all other

staff are entitled to salary packaging,

whereby they can elect to receive part

of their salary in forms other than

cash. At DHA, salary packaging

options include cars (novated lease),

additional superannuation and head

office car parking. Salary packaging is

subject to internal approvals.

Travel and related allowances

DHA coordinates Board members’ and

the Managing Director’s official

business travel and pays related

allowances in accordance with the

Tribunal’s principal determination for

official travel by office holders. DHA

uses whole of government

procurement arrangements to access

competitive travel rates for senior

executive members and other staff

ensuring value for money in

accordance with the PGPA Act and

Australian Government travel policies.

Flexibility arrangement

In accordance with Part F (Flexible

Working Arrangements) of the EA staff

members employed under the EA may

agree to enter into an Individual

Flexibility Agreement (IFA) to vary

arrangements about when work is

performed, overtime rates, penalty

rates, allowances, remuneration and

leave. An IFA must meet the genuine

needs of DHA and the employee in

relation to one or more of the

aforementioned items and be agreed

to by DHA and the employee in

writing. IFAs are reviewed at least

every 12 months.

Refer to Appendix B: Workforce

statistics for further details on

employment instruments.

Building a diverse workforce This year DHA continued to drive

awareness of diversity and inclusion to

help ensure we have a workplace free

from discrimination, where employees

feel able to come to work in a safe

and supportive environment where

they can be themselves and contribute

to DHA to their full potential.

Initiatives to build a diverse workforce

are supported by the DHA Diversity

and Inclusion working group (the

working group). The working group

comprises up to 12 self-nominated

employees in different locations,

business areas, roles and

backgrounds. Members are expected

to consult with and represent the

views of employees at meetings and

to support initiatives to improve

inclusiveness in DHA.

The working group also provides

advice to DHA on workplace and

workforce issues impacting on the

diversity of employees and that of the

community in which we operate and

meets quarterly or as required.

94 DHA Annual Report 2019-20

Some key highlights of diversity and

inclusion activities included:

A introducing affinity groups across DHA to help facilitate conversation

about relevant topics and

networking amongst colleagues

A holding a virtual National Reconciliation Week event with

special guests from the Indigenous

Literacy Foundation to understand

and promote the important work

they do for Indigenous communities

around Australia

A partnering with JobAccess to review our current recruitment

practices and ensure people living

with a disability are confident to

apply for jobs within DHA

A implementing a LGBTQI+ Action Plan and appointing a LGBTQI+

Champion to support our LGBTQI+

community

A launching a series of e-learning modules which focus on improving

employees’ understanding of

diversity including Aboriginal and

Torres Strait Islander people,

LGBTQI+, gender, age, disability

and cultural diversity

A engaging with the DHA Reconciliation Action Plan working

group to develop DHA’s Innovate

Reconciliation Action Plan.

DHA’s reconciliation actions are

supported by the Reconciliation Action

Plan (RAP) working group. This group

comprises 12 employees who

self-nominate through an interest in

reconciliation and making

reconciliation a positive force for

cultural, work practice and core

business changes. Members are

expected to play a proactive role in

raising awareness and sharing

information across DHA.

The RAP working group also includes

DHA’s RAP Champion, Paul

Groenewegen, the Chief Financial

Officer and meets at least quarterly to

discuss and evaluate reconciliation

initiatives within DHA.

Table 4.6: Workforce summary 2018-19 and 2019-20

Indicator 2018-19 2019-20

Headcount

Total number of staff employed1 646 541

Wages expense ratio 7.9% 9.3%

Diversity (as a percentage of the workforce)2

Identify as a male 36% 35%

Identify as a female 64% 65%

Identified as Aboriginal or Torres Strait Islander 1.3% 1%

Identified as having a disability 1.45% 2%

Retention

Staff retention and turnover rate 13.6% 16.7%

Engagement

Staff engagement3 74% N/A

Notes 1. Figures include ongoing and non-ongoing staff at their substantive classification as at 30 June 2019 or 30 June 2020. Inoperative staff (those on long term leave), staff engaged through an employment agency and Board members are excluded. 2. Diversity figures as identified by staff. These figures exclude the Managing Director, and Board members. No staff have identified as Indeterminate. 3. As measured by our Engagement Employee Index score in the APSC employee Census. Results for 2019-20 is unavailable as the survey was delayed

due to COVID-19.

95 Workforce management

Case study

On the road to reconciliation Two years into DHA’s inaugural Reconciliation Action Plan (RAP), we have introduced a number of important initiatives to ensure we not only promote awareness, but truly embed reconciliation into our work culture.

DHA welcomed our first Indigenous

apprentices through the Australian

Public Service Indigenous Apprentices

Program (IAP) run by Services

Australia. Two apprentices

commenced in our Darwin regional

office in late January 2020 and are

training to fulfil one of our critical front

line roles as a property manager. In

addition, they are studying to complete

a Diploma in Government which is a

nationally recognised qualification.

The IAP is a 12 month engagement

providing apprentices with on the job

training and formal external studies.

This year marks our inaugural

participation in IAP and we look

forward to welcoming more

apprentices in the future.

In early 2020, DHA partnered with the

Indigenous Literacy Foundation (ILF) by

including this charity in our staff

Workplace Giving Program. The ILF is

now one of nine not for profit

organisations that staff can make

donations too. This is facilitated by our

payroll operations where staff can

make donations directly from their

salary. We strengthened our

partnership with the ILF in May and

June by celebrating National

Reconciliation Week 2020 with a

‘Great Book Swap’ to raise funds for

the ILF’s inspirational work with remote

Indigenous communities to close the

literacy gap.

This year we launched an online

inclusion training program which has

been designed to provide all staff with

core skills and knowledge around the

importance of inclusion and diversity in

our workplace. The modules include

Aboriginal and Torres Strait Islander,

LGBTQI+, gender, age, disability and

cultural diversity. It has been designed

to provide all DHA staff with core skills

and knowledge around the importance

of inclusion and diversity and to create

a more inclusive workplace and work

practices in our organisation.

We have embarked on a rigorous

review of our procurement policy to

ensure it continues to align with the

Australian Government’s Indigenous

Procurement Policy and provides the

best opportunity to utilise our

membership with Supply Nation. In

December 2019, DHA awarded a

contract to Indigenous cleaning

company, Pacific Facility Services

for the provision of cleaning services to

11 of DHA’s offices around the country.

DHA is now also participating in the

Commonwealth Indigenous

Procurement Discussion Group.

Established in 2019, its purpose is to

share best practice, resources and

lessons learnt in relation to each

agency’s procurement with Indigenous

businesses. The group provides an

opportunity to build networks between

Australian Government procurement

practitioners who have oversight for the

implementation of the Indigenous

Procurement Policy or supplier diversity

within their respective agencies.

Our RAP working group and

Leadership Team have worked closely

with Reconciliation Australia over the

previous 12 months to draft our

Innovate Reconciliation Action Plan

which will drive the second phase of

our reconciliation journey.

95

96 DHA Annual Report 2019-20

Developing our workforce and people

We are committed to developing the

skills and knowledge staff need to

undertake their current role and build

capability to meet future challenges.

Formal learning and development

Staff can access a range of formal

learning to develop their leadership

skills, personal effectiveness or

functional capability. In addition, staff

must complete mandatory training on

matters of legislative and policy

compliance. In 2019-20, all staff were

required to complete refresher

modules on governance and

compliance, with a completion rate of

97 per cent across the organisation.

Programs are delivered via e-learning,

face to face or a blend of both. They

are presented by external providers

and internal specialists, ensuring we

have the right balance of expertise

and corporate knowledge to provide

staff the personal development they

need to be successful in their role.

The Performance and Learning Portal

implemented in 2019-20 provides a

wide range of online learning modules

supporting the development of core

capabilities and technical skills across

the business.

In response to the COVID-19

pandemic, a large range of online

courses dealing with remote work and

effectively managing remote teams

were ‘pushed’ to employees and

managers to facilitate a smooth

transition to this new way of working

across the business.

Approximately 20 structured

performance management training

sessions were held to raise the

performance management capability

of DHA managers.

Studies assistance

We encourage ongoing staff to

undertake relevant formal study in

approved fields relevant to our

business operations. Where

approved, staff are supported

through financial assistance, paid

study leave and paid exam leave. In

2019-20, 39 employees undertook

supported studies.

Recruitment and panel training

During 2019-20, DHA delivered a

comprehensive training workshop

targeted to DHA employees involved in

recruitment activities. This included

training to become a panel member of

a selection committee or a hiring

manager. The one day workshop was

delivered in house. It covered

understanding and commencing

recruitment, the selection process and

how to get the best candidate for a

role. The workshop continued to

support DHA’s recruitment platform

and was attended by 20 employees

during the course of the year.

Engaging with our employees

DHA’s commitment to consult with

employees is outlined in the DHA

Enterprise Agreement 2015 and

includes the operation of a Staff

Consultative Group (SCG). The SCG

comprises 20 elected employee

representatives, a Community and

Public Sector Union representative,

and a management representative

Secretariat support to the SCG is

provided by DHA.

The SCG meets quarterly and provides

a forum for discussion between

employees and management on

workplace issues. Through

representatives of the SCG, staff

members are encouraged to raise

workplace concerns and suggestions

and work cooperatively to discuss

issues and recommend solutions.

Table 4.7: Learning and development 2018-19 and 2019-20

Indicator 2018-19 2019-20

Percentage of salaries spent on training staff 1.1% 1.1%

Internal learning events completed by staff 9,710 10,020

Staff undertaking supported studies 59 39

Note 1. Supported study includes study, research, training or other educational activities conducted in Australia by a higher education provider or registered training organisation.

97 Workforce management

Maintaining a safe workplace

We are committed to maintaining the

highest possible standard of health

and safety for everyone who enters

our workplace, whether it is in an

office, a construction site or one of

the properties in our portfolio.

Table 4.8 provides a comparative

overview of our work, health and

safety (WHS) performance in 2018-19

and 2019-20. In 2019-20:

A We exceeded the TRIFR benchmark target of fewer than seven. The

majority of incidents were slips,

trips and falls by staff in the field

and required minimal time off.

Proactive safety campaigns were

undertaken to mitigate further

incidents and staff were reminded

of applicable safe work processes.

A The total number of incidents reported declined. This was largely

due to a change in the process for

recording potential gas leaks to

improve the accuracy of incident

reports. All potential gas leaks

reported are now assessed by the

Safety, Health, Environment and

Quality (SHEQ) team in the first

instance to determine whether they

are WHS related incidents or

standard maintenance requests.

A The total number of WHS incidents increased. The largest variance

related to ADF member and

dependant reporting of incidents.

This is attributed to greater home

based work during the bushfires

and COVID-19 pandemic.

Refer to Appendix C: Work, health and

safety for more detailed information on

DHA’s WHS performance in 2019-20.

Table 4.8: WHS performance 2018-19 and 2019-201

Indicator 2018-19 2019-20

Total recordable injury frequency rate (TRIFR)2 7.84 8.54

Lost time injury frequency rate 5.49 3.11

Total incidents reported 677 473

Work health safety incidents 155 174

Staff 62 57

Contractors 34 23

ADF members or dependants 59 94

Notes 1. Incidents are reported from the date of occurrence. Figures in Table 4.8 can vary from previous DHA Annual Reports as incidents which occurred in one financial year may be reported in another year, incidents may be reclassified following investigation, or figures may be varied following greater

data analysis (i.e. to remove duplicate reports). The variances are not considered material or statistically significant.

2. TRIFR is the number of recordable injuries per million work hours.

Response to bushfires

During the 2019-20 bushfire season,

the south east coast of Australia

experienced extreme weather

conditions resulting in a significant

number of bushfires burning

simultaneously across New South

Wales (NSW), the Australian Capital

Territory (ACT), Queensland, Victoria,

South Australia and Tasmania. We

issued safety alerts to staff, provided

personal protective equipment and

amended our operations by deferring

all non-essential inspections. There

were no reports of injuries to DHA staff

or ADF members.

Response to hailstorms

During January 2020, some ACT

suburbs and parts of the surrounding

NSW area were affected by a

significant hailstorm. We issued safety

instructions to staff immediately

following the storm to prevent injury in

the wake of considerable vehicle and

property damage. A small number of

DHA staff members and a contractor

endured minor injuries as a result of the

storm and received medical attention.

Response to the COVID-19

pandemic

DHA activated our Business Continuity

Plan in early March 2020 to safeguard

staff and the ensure continuity of

service to ADF members and their

families in light of the pandemic. In

accordance with government and

health advice, we implemented various

health, safety and welfare policies and

procedures to support staff, including

an interim COVID-19 home based

work policy which enabled the majority

of staff to transition to home based

work. Staff were permitted to take

some equipment home to facilitate,

so far as reasonably practicable, a

suitable ergonomic set up. In addition,

a rostering system allowed critical staff

working from DHA offices to adhere to

strict Government enforced physical

distancing requirements. We also

ceased non-critical inspections,

repairs and maintenance as needed to

safeguard the health and wellbeing of

staff and ADF members.

98 DHA Annual Report 2019-20

99 Workforce management

Contributing to our community

Individual giving

In July 2016, we launched DHA

CommUNITY, a program of corporate

initiatives designed to help employees

support each other and the

communities we live in. Key initiatives

of the program included:

A Workplace Giving Program whereby all employees have the opportunity

to voluntarily donate to charities

through a once off or fortnightly

donation directly from their pay.

A Shared Benefits Scheme whereby employees can donate an amount

of their accrued personal leave to

a registry for the benefit of other

employees who require an

extended leave of absence, most

often due to serious personal or

family illness. More than 662 hours

of personal leave was donated to

the Shared Benefits Scheme during

the reporting period.

A DHA partnered with the Indigenous Literacy Foundation early in 2020

by including this charity in our

Workplace Giving Program. DHA

recognised National Reconciliation

Week 2020 by supporting the

Indigenous Literacy Foundation’s

‘Great Book Swap’. By participating

in the Great Book Swap DHA

employees donated $560 to help

close the literacy gap in remote

Indigenous communities.

In 2019-20, DHA employees made

donations to the following

organisations:

A Assistance Dogs Australia A Beyond Blue A Fred Hollows Foundation A Cancer Council Australia A Legacy Australia A Make-A-Wish Foundation A RSPCA Australia A Indigenous Literacy Foundation A Salvation Army A Starlight Children Foundation

Australia

A Soldier On.

Volunteering

Employees are encouraged to

undertake volunteer work in the local

community and, subject to operational

requirements, may enter into a flexible

work agreement or take paid or unpaid

leave to do so.

Case study

DHA in the community Over the year, DHA developed a community engagement program to support and enhance the lives and communities of ADF members and their families.

We have supported Defence related

organisations that align with DHA’s

broader sponsorship strategy to

support ADF families, especially

women and children, with a particular

focus on mental health support

initiatives.

One of the most enjoyable and

rewarding aspects of partnering with

community organisations is the

opportunity for DHA staff to take part

in events and interact with local

Defence communities. In 2019-20

DHA staff took part in 51 Defence

events and Defence Community

Organisation welcome days, as well

as hosting our own events at DHA

residential developments to strengthen

community spirit among residents.

These engagements are an active

expression of our corporate

commitment to put our Defence

customers at the centre of

everything we do.

The following is a snapshot of

highlights from our 2019-20

community engagement program.

Partnerships Earlier this year DHA was proud to

announce a partnership with Integra

Service Dogs Australia. DHA’s support

has contributed to a project to select,

train and place a Labrador assistance

dog with an ADF veteran or member.

Integra commenced work on this

project in late March 2020 and has

progressed the selection and

placement of two dogs with a veteran

in Melbourne and Canberra. Integra

is continuing to provide training and

support to these clients.

DHA also supported sporting

organisations that bring the ADF

community together through

sponsorship of the Navy Football

Federation Australia, ADFSA Netball

Association and ADFRL Women’s

Rugby League. Our support has gone

towards the hire of training facilities,

team uniforms and equipment. These

partnerships complement our

commitment to inclusivity and diversity

and championing sport and wellbeing.

We are proud to have supported

organisations such as the Australian

Military Wives Choir to hold their

annual national workshop in Canberra

in October 2019, and the Prince’s

Trust Australia with the launch of their

volunteer and mentoring platform for

veterans and ADF family members

participating in enterprise programs.

Community In 2019-20 DHA provided financial

support to several organisations that

play a key role in the Defence

community. This included arts and

crafts resources, office equipment and

safe furniture for small community

centres such the Karrakatta Community

House and Pearce Community Group,

WA, Larrakeyah Neighbourhood House,

NT, and Duntroon Community Centre,

ACT. We have also been able to assist

in providing toys and games for a

number of school Defence clubs in

regional communities and towards the

building of a memorial garden at

Willows State School, QLD.

100 DHA Annual Report 2019-20

At the end of 2019, DHA supported

regional communities with the

opportunity to host their end of year

celebrations for local ADF members

and their families at the Randwick

Family Centre, NSW, Wagga Defence,

NSW, and Tindal RAAF Base, NT.

DHA has also fostered community

engagement by hosting a series of

events at our development areas.

These events included a night of

movies under the stars at Breezes

Muirhead, QLD, a Halloween party

and outdoor movie night at Wirraway

Community Park, NSW, and a

Spring Fling at Torhaven, Deebing

Heights, QLD.

Rex D. Dog school visits Our Rex D. Dog mascot visited six

schools this year, including the

Southern Cross Catholic School and

the Middle Ridge State School, QLD,

Thornton Public School, NSW, and the

Trinity Christian School, ACT.

Rex loves to entertain Defence

children across Australia, reading his

‘Sticking Together’ storybook, taking

part in activities at school fetes and

posing for every available photo

opportunity.

Welcome and family open days DHA staff participated in 21 Defence

Community Organisation (DCO)

welcome days this year. Staff attended

as stall holders meeting new residents

and answering any questions about

DHA. Rex D. Dog also attended

18 DCO events and hosted six Rex

Activity Workshops.

The DCO welcome days took place

between January and March 2020 and

ranged from 500 to 10,000 attendees

at iconic venues and locations across

Australia, including Adelaide Zoo,

Cairns Wildlife Dome, Sydney’s Luna

Park, Townsville Stadium and SciTech

in Perth.

DHA participated in 24 Defence

events and family days held at regional

Defence bases across the country.

These events reinforce DHA’s role in

supporting ADF members and their

families during posting cycles. Events

this year included RAAF Edinburgh Air

Show and 1ARMD Family Day in SA,

HMAS Cerberus Family Fun Day and

the Simpson Barracks Family Day in

VIC, Gallipoli Barracks Open Day in

QLD, HQJOC Defence Family Day in

ACT, Singleton Military Area Family

Day and RAAF Glenbrook Welcome

Day in NSW.

101

102 DHA Annual Report 2019-20

Information management and systems We are committed to improving our information governance and service delivery through the use of technology and making our information and Online Services accessible to as many people as possible, regardless of ability.

Enterprise systems

We are maximising investor (landlord)

and member engagement by

expanding and enhancing digital

channels. We are supporting Defence

with the implementation of Posting

Connect, which allows members to

access Defence, Toll and DHA in a

single platform for all post-in and

post-out activities. Posting Connect

is expected to become available in

2020-21 and we will continue to work

with Defence to ensure exceptional

member experiences.

We have completed the migration of

key processes and data from a

legacy property management system

into our whole of business enterprise

platform for asset management.

As part of our technology strategy,

we are maximising current investments

by transitioning business

functionalities, such as procurement,

travel, accounts payable and financial

delegations, into our financial

management information system.

Staff remote working capability

In 2019-20, we brought forward

planned upgrades to our remote

working technology capability to

ensure staff have all the tools they

need to work remotely, particularly in

response to COVID-19. We enabled

a seamless transition from office

based to home based work for

90 per cent of staff.

Our remote working technology

capability has been further supported

through a rigorous cyber program,

including staff awareness training and

a range of projects aimed at

strengthening our security posture.

Information security governance

In 2019-20, the Board approved an

Information Security Policy Governance

Framework, which defines a policy

based governance process to ensure

the relevance and currency of our

information security policies and

supporting documentation. We have

developed and begun operationalising

a suite of information security policies

to model our approach to information

security on the Australian Government’s

Information Security Manual.

This framework forms part of DHA’s

Cyber Security Program, which

focuses on building maturity across

the Australian Signals Directorate

Essential Eight controls.

103 Information management and systems

PART 5

Financial statements

Defence Housing Australia ABN 72 968 504 934

Annual Report For the year ended 30 June 2020

Contents

Independent Auditor’s Report

Auditors Independence Declaration

Statement by Directors, Managing Director and Chief Financial Officer

Primary financial statements

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

106 DHA Annual Report 2019-20

GPO Box 707 CANBERRA ACT 2601 38 Sydney Avenue FORREST ACT 2603 Phone (02) 6203 7300 Fax (02) 6203 7777

OFFICIAL

OFFICIAL

INDEPENDENT AUDITOR’S REPORT

To the Minister for Defence and the Minister for Finance

Opinion

In my opinion, the financial statements of the Defence Housing Australia (the Entity) for the year ended 30 June 2020:

(a) comply with Australian Accounting Standards and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015; and

(b) present fairly the financial position of the Entity as at 30 June 2020 and its financial performance and cash flows for the year then ended.

The financial statements of the Entity, which I have audited, comprise the following as at 30 June 2020 and for the year then ended:

• Statement by Directors, Managing Director and Chief Financial Officer; • Statement of Comprehensive Income; • Statement of Financial Position; • Statement of Changes in Equity; • Statement of Cash Flows; and • Notes to the financial statements, comprising a summary of significant accounting policies and other

explanatory information.

Basis for opinion

I conducted my audit in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Entity in accordance with the relevant ethical requirements for financial statement audits conducted by the Auditor-General and his delegates. These include the relevant independence requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) to the extent that they are not in conflict with the Auditor-General Act 1997. I have also fulfilled my other responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Accountable Authority’s responsibility for the financial statements

As the Accountable Authority of the Entity, the Chairman of the Board is responsible under the Public Governance, Performance and Accountability Act 2013 (the Act) for the preparation and fair presentation of annual financial statements that comply with Australian Accounting Standards and the rules made under the Act. The Chairman of the Board is also responsible for such internal control as the Chairman of the Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Chairman of the Board is responsible for assessing the ability of the Entity to continue as a going concern, taking into account whether the Entity’s operations will cease as a result of an administrative restructure or for any other reason. The Chairman of the Board is also responsible for disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the assessment indicates that it is not appropriate.

107 Financial statements

OFFICIAL

OFFICIAL

Auditor’s responsibilities for the audit of the financial statements

My objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance

with the Australian National Audit Office Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with the Australian National Audit Office Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

• identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control; • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Accountable Authority; • conclude on the appropriateness of the Accountable Authority’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the Entity to cease to continue as a going concern; and • evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with the Accountable Authority regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

Australian National Audit Office

Rahul Tejani Executive Director Delegate of the Auditor-General

Canberra

28 August 2020

108 DHA Annual Report 2019-20

109 Financial statements

Defence Housing Australia

Statement of Comprehensive Income

Page 5 For the year ended 30 June 2020

The above statement should be read in conjunction with the accompanying notes.

Statement of Comprehensive Income

Notes

2020 $’000

2019

$’000

Income

Revenue

Revenue from c ontracts with c ustomers 3 426,047 437,057

Housing services lease r entals 4 487,815 484,734

Interest received 5 3,450 5,760

Other income 104 104

Total revenue 917,416 927,655

Gains

Gains from disposal of investment properties 6 5,360 7,676

Impairm ent loss reversal on financial i nstruments - 99

Total gains 5,360 7,775

Total income 922,776 935,430

Expenses

Employee expenses 7 69,880 68,710

Housing s ervices l ease rentals - 307,932

Rates, repairs and m aintenance 8 142,019 140,058

Depreciation and a mortisation 9 299,067 19,884

Cost of inventories sold 224,488 257,730

Finance c osts 10 53,109 24,506

Net write down and i mpairment of a ssets 11 45,359 14,155

Impairm ent loss on financial i nstruments 56 -

Other e xpenses 29,073 46,148

Total expenses 863,051 879,123

Share of j oint v enture profit/(l oss) accounted for using the equity method

(2) 76

Profit before income tax on continuing operations 59,723 56,383

Income tax expense 12a 17,050 15,475

Profit after income tax 42,673 40,908

Other c omprehensive income - -

Total comprehensive income 42,673 40,908

110 DHA Annual Report 2019-20

111 Financial statements

Defence Housing Australia

Statement of Financial Position

Page 6 As at 30 June 2020

The above statement should be read in conjunction with the accompanying notes.

Statement of Financial Position

Notes

2020

$’000

2019

$’000

Assets

Current a ssets

Cash and cash equivalents 13 379,143 212,924

Trade and other receivables 14a 23,557 14,001

Investment properties held for sale 15 13,419 1,918

Inventories 16 428,139 488,824

Other current assets 17 2,206 29,854

Total current assets 846,464 747,521

Non - current assets

Inventories 16 327,113 489,733

Investment properties ¹ 18 2,616,999 1,037,730

Property, plant and equipment 1 19 21,837 6,244

Intangibles 4,530 4,526

Deferred tax assets 12c 81,842 28,314

Investments accounted for using the equity

method

- 7

Other receivables 520 678

Total non - current assets 3,052,841 1,567,232

Total assets 3,899,305 2,314,753

Liabilities

Current liabilities

Trade and other payables 20 39,781 60,712

Dividend payable 21 25,604 24,545

Borrowings 22 135,000 150,000

Lease liabilities 23 258,239 -

Provisions 24 53,019 26,731

Current tax liabilities 11,839 3,251

Other financial liabilities 25 34,530 20,317

Total current liabilities 558,012 285,556

Non - current liabilities

Borrowings 22 374,580 359,580

Lease liabilities 23 1,387,196 -

Provisions 24 107,698 101,697

Other financial liab i lities 25 - 386

Total non - current liabilities 1,869,474 461,663

Total liabilities 2,427,486 747,219

Net Assets 1,471,819 1,567,534

Equity

Contributed equity 403,863 403,863

Retained Earnings 1,067,956 1,163,671

Total equity 1,471,819 1,567,534

1. Right of use assets are included in the Investment properties and Property, plant and equipment balance.

Defence Housing Australia

Statement of Changes in Equity

Page 7 For the year ended 30 June 2020

The above statement should be read in conjunction with the accompanying notes.

Statement of Changes in Equity

Retained

Earnings

$’000

Contributed

Equity

$’000

Total Equity

$’000

Balance as at 1 July 2018 1,147,308 403,863 1,551,171

Profit for the year 40,908 - 40,908

Other comprehensive income - - -

Total comprehensive income 40,908 - 40,908

Transactions with owners

Return of capital

Dividends (24,545) - (24,545)

Balance as at 30 June 2019 1,163,671 403,863 1,567,534

Balance at 1 July 2019 1,163,671 403,863 1,567,534

Adjustment on initial application of AASB 16 1 (112,784) - (112,784)

Adjusted opening balance as at 1 July 2019 1,050,887 403,863 1,447,870

Profit for the year 42,673 - 42,673

Other comprehensive income - - -

Profit for the year 42,673 - 42,673

Total comprehensive income 42,673 - 42,673

Transactions with owners

Return of capital

Dividends (25,604) - (25,604)

Balance as at 30 June 2020 1,067,956 403,863 1,471,819

1. Adjustment required on initial implementation of AASB 16 Leases. Refer Note 2 Changes in

Accounting Policies for details.

112 DHA Annual Report 2019-20

113 Financial statements

Defence Housing Australia

Statement of Cash Flows

Page 8 For the year ended 30 June 2020

The above statement should be read in conjunction with the accompanying notes.

Statement of Cash Flows

Notes

2020

$’000

2019

$’000

Cash flows from operating activities

Cash received

Sales of goods and services 608,579 676,772

Sales of inventory 375,092 331,600

Interest 3,457 5,745

Stamp duty and land tax equivalents received 25,898 34,653

GST received 13,806 19,000

Total cash received 1,026,832 1,067,770

Cash used

Employees 85,872 89,462

Suppliers 163,156 517,143

Borrowing costs 20,808 24,506

Interest on leased assets 31,970 -

Income taxes paid 13,562 17,022

Acquisition and construction of inventories 176,194 276,709

Stamp duty and land tax equivalents paid 35,726 36,950

GST paid 26,583 20,556

Other expenses 8,111 15,049

Total cash used 561,982 997,397

Net cash from operating activities 26 464,850 70,373

Cash flows from investing activities

Cash received

Proceeds from sale of investment properties 33,759 20,442

Investment in associates - 611

Total cash received 33,759 21,053

Cash used

Acquisitions and construction of investment properties 24,511 36,763

Acquisition of property, plant and equipment 3,450 2,998

Total cash used 27,961 39,761

Net cash from/( used by ) investing activities 5,798 (18,708)

Cash flows from financing activities

Cash used

Principal repayment on leased assets 279,884 -

Dividend paid 24,545 26,555

Total cash used 304,429 26,555

Net cash from/ ( used by ) financing activities (304,429) (26,555)

Net increase in cash and cash equivalents 166,219 25,110

Cash held at the beginning of the financial year 212,924 187,814

Cash and cash equivalents at end of financial year 13 379,143 212,924

Defence Housing Australia

Notes to the Financial Statements

Page 9 30 June 2020

Notes to the F inancial Statements

How the numbers are calculated

1. Overview

2. Changes in accounting policies

3. Revenue from contracts with customers

4. Housing service lease rental revenue

5. Interest received

6. Gains from disposal of investment properties

7. Employee benefits

8. Rates, repairs and maintenance

9. Depreciation and amortisation

10. Finance costs

11. Net write down and impairment of assets

12. Taxation

13. Cash and cash equivalents

14. T rade and other receivables

15. I nve stment properties held for sale

16. Inventories

17. Other current assets

18. Investment properties

19. Property, plant and equipment

20. Trade and other p ayables

21. Final dividends

22. Borrowings

23. Lease liabilities

24. Provisions

25. Other financial liabilities

26. Cash flow reconciliation

27. Financial Instruments

28. Aggregate assets and liabilities

29. Auditors remuneration

Unrecognised items

30. Commitments

31. Contingent assets and liabilities

32. Events occurring after the reporting period

Key management personnel and related parties

33. K e y management personnel remuneration

34. Related party disclosures

35. Economic dependency

114 DHA Annual Report 2019-20

115 Financial statements

Defence Housing Australia

Notes to the Financial Statements

Page 10 30 June 2020

1. Overview and significant accounting policies

(a) Objectives of DHA

Defence Housing Australia (DHA) is an Australian Government (Government) controlled for profit

entity. The objective of DHA is to provide housing and related services for members of the Australian

Defence Force (ADF) and their families in line with the Department of Defence (Defence) operational

requirements.

DHA is structured to meet one outcome:

 To contribute to Defence's outcomes by providing total housing services that meet Defence's operational and client needs through a strong customer and business focus.

The continued existence of DHA in its present form and with its present operations is dependent on

Government policy. DHA receives no appropriations or receipts from Government, and is considered

'Departmental' for Government reporti ng purposes.

(b) Basis of preparation of the financial statements

The financial statements are required by section 42 of the PGPA Act and are general purpose

financial statements.

The financial statements and notes have been prepared in accordance with:

 Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and

 Australian Accounting Standards and Interpretations issued by the Australian Accounting

Standards Board (AASB) that apply for the reporting period.

DHA is classified as a Government Business Enterprise (GBE) as stipulated in section 5(1)(c) of the

PGPA Act and is a for - profit entity. It should also be noted that DHA is governed by the Defence

Housing Australia Act 1987 (DHA Act).

The financial statements have been prepare d on an accrual basis and in accordance with the

historical cost convention, except for certain assets and liabilities, which as noted, are at fair value.

Except where stated, no allowance is made for the effect of changing prices on the results or the

fin ancial position.

The financial statements are presented in Australian dollars and values are rounded to the nearest

thousand dollars unless otherwise specified.

Defence Housing Australia

Notes to the Financial Statements

Page 11 30 June 2020

1. O verview and significant accounting policies (continued)

(c) New and amended accounting standards adopted by DHA

No accounting standard has been adopted earlier than the application date as stated in the

standard.

In the current year, DHA adopted all new and revised standards issued by the AASB that are relevant

to its operations and effectiv e for the current annual reporting period. Adoption of AASB 16 Leases

required DHA to change its accounting policies where DHA is the less ee. DHA elected to adopt the

new rules retrospectively but recognised the cumulative effect of initially applying the new standard

on 1 July 2019. This is disclosed in Note 2 Changes in Accounting Policies.

Several other new standards and amendments apply for the first time from 1 July 201 9 , but these do

not have a material impact on the financial statements.

Lease accounting

DHA has changed its accounting policy for leases where DHA is the lessee. The new policy is

described in Note 23 Lease Liabilities and the impact of the change in Note 2 Changes in Accounting

Policies.

Lease income from operating leases where DH A is a lessor is recognised in income on a straight - line

basis over the lease term. The respective leased assets are included in the Statement of Financial

Position based on their nature.

(d) COVID 19 impact risk assessment

DHA has considered the emerging r isk arising from the uncertainty surrounding the COVID - 19 global

risk. In response to the COVID - 19 crisis, DHA management activated the Business Continuity Plan

and established a team to monitor the rapidly changing impacts on DHA business. E arly predictions

of a significant downturn in the Australian property market and contraction of the rental market

have not eventuated . I nternal and external market data indicates low interest rates and government

support for borrowers have helped insulate the m arket from a significant downturn. Market

uncertainty remains in the medium term as the pandemic is not yet under control and restrictions

are currently being re - imposed in some jurisdictions after a period of slight easing. DHA ha s

identified the followin g potential financial implications:

Fair value of inventory and investment assets DHA measures its inventory and investment stock based on market value assessment, a market

downturn could result in an impairment adjustment. To mitigate the risk of estimate uncertainty,

DHA management closely monitor external report ing on property market indicators and the sale

price outcomes of DHA stock compared to the 31 December 2019 independent market valuation.

Property market report ing at the date of publication of these financial statements support a

stabilisation of property values in line with the ten year averages and a recovery from the market

lows reported in April 2020 . In addition, the sales price achieved on DHA properties sold during the

period 1 January 2020 to 30 June 2020 are in line with the 31 December 2019 independent market

valuation. Impairment recognised at 30 June 2020 is appropriately updated to reflect market

conditions.

116 DHA Annual Report 2019-20

117 Financial statements

Defence Housing Australia

Notes to the Financial Statements

Page 12 30 June 2020

1. Overview and significant accounting policie s (continued)

Investment Stock and Leased Investment Properties Recoverable amount calculations for investment properties and right of use leased investment

properties use a discount rate that reflect the market property risks. Changes in the market capit al

values and rental returns could result in a n additional impairment. As noted above, DHA

management closely monitor external property market reports and internal sale s outcomes to

mitigate the risk of estimate uncertainty.

Expected credit losses DHA c alculates expected credit losses using historical rates of default rate to estimate future

probability of default . DHA does not expect a material change as the majority of rental income is

derived from Defence. H owever, DHA has factored the increased credit risk on private rental default

into the expected credit loss calculation.

Going Concern The financial statements have been prepared on a going concern basis. DHA management ha s

reviewed the financial model to ensure DHA remains financially sustainab le through the COVID - 19

crisis by implementing measures to limit expenditure. In addition, the Defence rent bill revenue and

payment to investors are known and not considered to be at risk. The directors of DHA are of the

opinion that DHA has adequate reso urces to continue as a going concern and pay its debt when they

fall due and payable.

Defence Housing Australia

Notes to the Financial Statements

Page 13 30 June 2020

2. Changes in accounting policies

This note explains the impact of the adoption of AASB 16 Leases on DHA’s financial statements.

DHA adopted AASB 16 Leases from 1 July 2019 . The new accounting policies are disclosed

throughout the notes to the financial statements.

On adoption of AASB 16 Leases, DHA recognised lease liabilities in relation to leases which had

previously been classified as ‘operating leases’ under the principles of AASB 117 Leases. These

liabilities were measured at the present value of the remaining lease payments, discounted using the

lessee’s incremental borrowing rate as of 1 July 2019. The weighted average of DHA’s incremental borrowing r ate applied to the lease liabilities on 1 July 2019 was 1.73%.

(a) Practical expedients applied

In applying AASB 16 Leases for the first time, DHA has adopted the modified retrospective

transitional approach, with the cumulative effect of initially applying th e standard recognised at the

date of initial application as an adjustment to the opening balance of retained earnings.

DHA is not required, or permitted, to reassess sale and leaseback transactions entered into before

the date of initial application to det ermine whether the transfer of the underlying asset satisfies the

requirements of AASB 15 Revenue from Contracts with Customers to be accounted for as a sale. DHA

accounts for sale and leaseback transactions as a sale as all the risks and rewards of owners hip

transferred to the new owner at the date of sale. Using the practical expedient , provided in AASB 16

Leases relating to sale and leasebacks, DHA accounts for the leaseback in the same way it accounts

for any other operating lease that exists at the dat e of initial application .

In line with the requirements of applying the modified retrospective approach, DHA has:

 applied the Incremental Borrowing Rate (IBR) to discount the lease payment when calculating

the lease liabilities to recognise on transition; the IBR is the rate DHA would have to pay to

borrow over a similar term, and with a similar security, the funds necessary to obtain an asset

of a similar value to the right of use asset in a similar economic environment;

 elected to use the practical exped ient and is using a single discount rate for leases that have

similar characteristics, such as leases with a similar remaining lease term for a similar class of

underlying asset in a similar economic environment; and

 assessed whether the right of use asset s recognised on transition relating to leases previously

classified as operating leases need to be impaired in accordance with the requirements of AASB

136 Impairment of Assets; DHA has not relied on its assessment of whether leases are onerous when applying AASB 137 Provisions, Contingent Liabilities and Contingent Assets immediately before the date of initial application as an alternative to performing an impairment assessment.

DHA has not elected to use the recognition and measurement exemptions availabl e under the

standard for lease contracts where the lease term ends within 12 months from the date of initial

application or for lease contract s where the underlying asset is of low - value. At 1 July 2019, DHA did

not have any leases over low value assets o r lease terms shorter than 12 months.

118 DHA Annual Report 2019-20

119 Financial statements

Defence Housing Australia Notes to the Financial Statements

Page 14 30 June 2020

2. Changes in accounting policies (continued)

(b) Measurement of right of use assets

Right - of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the Statement of Financial Position as at 1 July 2019.

(c) Adjustment recognised on the Statement of Financial Position as at 1 July 2019

The change in accounting policy affected the following items on the Statement of Financial Position on 1 July 2019. All numbers stated below are in $’000s:

 right of use leased investment properties - increase by $1, 619,657  right- of- use assets property plant and equipment - increase by $17,942  lease incentives - decrease by $ 781  deferred tax assets - increase by $ 48,428

 prepayments - decrease by $ 26,041  lease liabilities - increase by $1, 771,989

The net impact on retained earnings on 1 July 2019 was a decrease of $ 112,784 .

(d) Lessor accounting

DHA did not need to make any adjustments to the accounting for assets held as lessor under operating leases (see Note 18 Investment Properties) as a result of the adoption of AASB 16 Leases.

Defence Housing Australia Notes to the Financial Statements

Page 15 30 June 2020

3 . Revenue from contracts with customers

2020

$’000

2019

$’000

Revenue from Defence

Allocation services provided 13,928 13,149

Defence property management services 59,630 59,029

Construction services 32,725 19,275

Defence other charges 6,989 7,930

Total r evenue from Defence 113,272 99,383

Revenue from other customers

Sale of inventories 1 307,145 334,256

Lessor management fee revenue 5,532 3,312

Non - Defence other charges 98 106

Total r evenue from other customers 312,775 337,674

Total revenue from contracts with customers 426,047 437,057

Timing of revenue recognition

Over time 111,913 94,871

At a point in time 1 314,134 342,186

Total revenue from contracts with customers 426,047 437,057

1.

In the 2018 - 19 Sale of inventory was disclosed separately on the face of the Statement of

Comprehensive Income .

Accounting policy

Revenue recognition accounting policies with respect to DHA’s business activities within the scope of AASB15 Revenue from Contracts with Customers are as follows:

Timing of revenue recognition

Revenue from Defence

Allocation services provided Defence property management services Defence other charges

Construction services revenue Revenue from Non-Defence Customers Constructions services Sales of inventories Lessor management fee revenue

Over time

Over time

Point in time Over time

Over time

Point in time Over time

Allocation services provided

120 DHA Annual Report 2019-20

121 Financial statements

Defence Housing Australia Notes to the Financial Statements

Page 16 30 June 2020

DHA provides the service of allocating ADF members to available and suitable accommodation under : the Allocation and Tenancy Management contract (ATM) or off - base accommodation ; and

the Living In Accommodation contract (LIA) or on - base accommodation based on Defence's requirements and policies. For these services, DHA receives annu al fixed fees from Defence as per the ATM and LIA contracts which form part of the overall Services Agreement. The transaction price relating to the provision of each of these services comprises fixed annual amounts which remain unchanged across the contra ct term and cover a specified number of annual allocations. Additional fees are receivable by DHA should allocations exceed the annual amount. There is also an annual performance payment which DHA may be entitled to receive from Defence should specific KPI s be met. This performance payment relates to all services provided to Defence under the Services Agreement which includes the housing (leasing) services plus the services provided under the ATM and LIA contracts.

The provision of the Allocation Services u nder the ATM and LIA contracts each represent a series of distinct services that are substantially the same and have the same pattern of transfer to Defence and are each treated as one performance obligation satisfied over time. The fixed fees DHA receives for these services are considered to be the stand - alone selling price for the services being provided. All fees receivable under these arrangements will be recognised in full within the financial year.

For allocations above the specified contractual annua l amounts, DHA will receive an additional fee. DHA considers the additional services in relation to the ATM contract to be options to purchase additional goods and services. Therefore, these will only be recognised as revenue as and when the additional allocation services are provided. The additional amounts relating to the LIA contract are considered to represent a material right to receive additional services at a discount and hence a separate performance obligation. However, the underlying services and t he related revenue are not recognised until the option is exercised (so no amount of consideration for these transactions is estimated and included in the transaction price initially allocated). In all situations, revenue recognised in a year will relate t o all allocations performed during that year. DHA invoices Defence on a monthly basis for the services provided and Defence pays within 30 days.

The performance payment is regarded as variable consideration at contract inception and fully constrained at th is date given the nature of the payment. However, by the end of each financial year, the uncertainty of the performance payment is resolved as the performance payment is recognised using the variable consideration allocation exemption. It is allocated betw een the Allocation Services Provided, the other services provided to Defence, and other services which are in scope of AASB 15, i.e., the Defence property management services. DHA invoices Defence for such performance payments and Defence pays within 30 da ys .

Defence Property Management Services

DHA receive a range of fees and charges for managing and maintaining residential properties owned by Defence used to house ADF Members. DHA receives payments:

- weekly , when a property is tenanted by an ADF member

- annually , for propert ies managed by DHA

Defence Housing Australia Notes to the Financial Statements

Page 17 30 June 2020

- ad hoc, on an actual cost incurred basis plus a management fee percentage.

The management services provided under this part of the Services Agreement are considered to be a series of distinct services that form a sing le performance obligation that is recognised over time. The transaction price is variable as it depends on : how many properties are managed by DHA and for how many years ; how often the property is tenanted ; and what costs are incurred by DHA in providing specific services. The variable allocation exemption is used to allocate the variable consideration to the services provided in each month. DHA invoices Defence on a monthly basis for the services provided and Defence is required to pay within 30 days; Stat e Taxes

are invoiced quarterly and paid by Defence within 30 days.

Defence Other Charges

Defence Other Charges include expenses which are recovered from Defence under the Services Agreement. In the prior year, this included amounts such as: Defence funded capital projects; upgrades to the properties; reimbursements of rates, municipal charges, insurance and utilities incurred by DHA on behalf of Defence.

When incurring these costs, DHA assesses whether it is principal or agent in such transactions. DHA is the principal if DHA controls the good or service before the good or service is transferred to Defence. Where DHA is the principal, the consideration received from Defence is recognised as revenue when the service is performed.

Where DHA is the agent, the consideration received and the expense incurred will have no net impact on profit or loss as these amounts are reimbursed by Defence on a cost recovery basis with no margin or commissions retained by DHA.

Revenue received in relation to Defence funded capi tal projects is presented as construction services revenue (refer below).

Revenue received to upgrade properties to the required Defence standard is considered to be a distinct performance obligation satisfied at the point in time when the property is firs t tenanted by an ADF member, as this is when control of the upgrade is transferred to Defence. DHA receives a fixed fee for these services depending on the nature of the property being upgraded. DHA invoice Defence on a monthly basis for the services provi ded and Defence is required to pay within 30 days.

Construction Services

DHA will often manage the construction of property developments on behalf of Defence and at times non - Defence customers. These services involve DHA project managing the construction using sub - contractors for on - base housing constructions and particular off - base properties for Defence and non- Defence customers. The transaction price DHA receives r epresents the costs incurred plus a management fee.

122 DHA Annual Report 2019-20

123 Financial statements

Defence Housing Australia Notes to the Financial Statements

Page 18 30 June 2020

Defence - Construction Services

When DHA provides construction services to Defence it either receives cash in instalments over the construction period, or under annuity arrangements whereby Defence mak es payments over a fixed period (typically 3 - 4 years) commencing after construction is completed.

Non-Defence Customers - Construction Services

The construction services DHA provides to non - Defence customers may involve either cash or non- cash considerati on, usually being land DHA can use for future developments. Where non - cash consideration is provided, it is valued at fair value at the commencement of the contract. If actual construction costs incurred plus the specified margin is less than the fair valu e of the non - cash consideration determined at contract inception, DHA is required to refund the difference to the customer in cash, if the costs plus the margin are more than the fair value of the non - cash consideration, the customer is required to pay DHA the additional amount in cash.

The construction services provided for each project represent a single performance obligation satisfied over time, as DHA is creating or enhancing an asset that is controlled by Defence or other non- Defence customers as the construction occurs. The transaction price is determined based on the estimated construction costs plus a specified margin. It is considered variable as the final transaction price will depend on the actual construction costs incurred. At contract inceptio n, DHA estimates variable consideration using an expected value method and this estimate is updated at each reporting period. Revenue is recognised over time using an input method, being the costs incurred to date on the project compared to total costs exp ected to be incurred, in determining how much of the performance obligation has been satisfied throughout the construction period. Any adjustment to the transaction price is recognised as part of revenue in the period the adjustment occurs.

For constructio n services involving non - cash consideration, DHA determines the fair value at contract inception using an external market valuation of the land being transferred to DHA.

DHA has applied the contract modification practical expedient available under AASB 15 to construction services contracts. The application of this practical expedient means DHA will not retrospectively account for any contract modifications occurring before the date of initial application. The application of this practical expedient will not have a material impact on DHA at transition or an ongoing basis.

Sale of Inventories

DHA develops properties with the primary purpose of using these properties to house ADF members. In the event that DHA has properties which become surplus to its requirem ents for meeting this purpose, properties will be disposed and sold to third parties.

Where DHA sells property that has been developed as inventory, it considers each sale of property to be single performance obligation which is satisfied at a point in tim e i.e. when control of the property transfers to the customer. This is deemed to occur upon final settlement. The transaction price is fixed and is determined at completion of the auction process. There are no significant payments terms as cash is exchange d at settlement .

Defence Housing Australia Notes to the Financial Statements

Page 19 30 June 2020

Lessor Management Fee Revenue

DHA receives a fixed percentage management fee based on the rent paid to lessors in exchange for performing management and maintenance services on the property.

The lessor management fee that compensates DHA f or the provision of separate services is recognised as lessor management fee revenue. DHA considers these services to be a series of distinct services that form a single performance obligation that is recognised over time. The transaction price is calculat ed as a set percentage of the monthly rent paid and will increase when the annual market rents are reset and the variable allocation exemption is used to allocate the variable consideration to the services performed in each month.

These lessor management f ees are deducted from the monthly rental bill paid by DHA to the lessor.

Significant Accounting Judgement and Estimates

Lessor Management Fee Revenue

DHA has analysed the services provided in return for lessor management fees and applied judgement to conclude that some activities do not represent the transfer of goods or services from DHA to the lessor. Specifically, bill paying services and market rent review services were considered a performance obligation and recognised as revenue under AASB 15 Revenue from contracts with customers; while property administration, annual market rent reviews as defined by the lease and maintenance and restoration services are part of the overall lease related to DHA’s use of the property and accounted for as a reducti on to rental expense under AASB 16 Leases.

Judgement was required in determining the split between the portion that represents the transfer of goods or services to the lessor (herein called ‘lessor management fee revenue’) and the portion that relates to t he lease. DHA utilised internal business and product line costing methodologies across historical financial data, to determine the split.

Sale of Inventories

DHA standard Sale and Leaseback (SLB) arrangement s have been assessed to ensure they meet the crit eria of a sale under AASB 15 Revenue from contracts with customers. These arrangements typically grant DHA, as the seller - lessee, a first right to purchase the property in the event the lessor intends to sell. This option is controlled by the investor and not DHA. DHA has made a key judgement that the conditional repurchase option does not represent a substantive repurchase option that would preclude them from being accounted for as a sale under AASB 15 Revenue from contracts with customers.

SLB transaction s executed on terms above or below market have specific accounting treatments under AASB 16 Leases. Prior to the implementation of AASB 16 Leases, DHA offered increased rents on leaseback arrangements to achieve a desired sales price, the sales achieved were usually made with an acceptable range to the independent market value assessment. DHA has applied judgement to conclude these SLB transactions completed prior to the date of initial application,

124 DHA Annual Report 2019-20

125 Financial statements

Defence Housing Australia Notes to the Financial Statements

Page 20 30 June 2020

do not represent above or below market terms. All SLB transactions completed after the date of initial adoption are assessed by property with reference to the independent market assessment of price and rent.

In relation to a SLB transaction, AASB 16 Leases only refers to the concept of recognising a gain or loss rather the revenue or expense ; DHA has recognised revenue and cost of sales for the portion of the asset that relates to the rights transferred to the buyer - lessor. Management estimates are required to determine portion of revenue and cost of sales t o be recognised such th at they only reflect the portion rights transferred to the buyer - lessor (investor).

Defence Housing Australia Notes to the Financial Statements

Page 21 30 June 2020

4 . Housing services lease rentals

2020

$’000

2019

$’000

Housing services lease rentals

Defence rent 476,347 473,796

Other rentals 11,468 10,938

Total h ousing services lease rentals 487,815 484,734

Accounting policy

Defence Rent

This represents lease revenue received from Defence for properties provided under the Services Agreement and Members Choice Accommodation Agreement and is accounted for on a straight line basis .

Other Rentals

Other Rentals comprise rental income received from the private rental market, where there are excess rental properties, not currently occupied by ADF members. Revenue is recognised when a property is tenanted and occupied by a civilian on a monthly basis for the term of the tenancy.

Significant Accounting Judgement

AASB 16 Leases states that a lease is present if a contract “conveys the right to control the use of an identified asset for a period of time in exchange of consideration.” AASB 16 Leases further sets out that to assess whether a contract conveys the right to control th e use of an identified asset for a period of time, an entity shall assess whether, throughout the period of use, the customer has both of the following:

a) the right to obtain substantially all of the economic benefits from use of the identified asset; and b) the right to direct the use of the identified asset.

DHA has analysed the agreements between DHA, Department of Defence and the Australian Defence Force Member in order to determine if there is a lease agreement under AASB 16 Leases. DHA considers it is necessary to read the Defence Services Agreement (DSA), the Defence Housing Australia Act 1987 ( DHA Act) and the Defence Housing Australia Residence Agreement ( DRA ) as a whole to understand the commercial arrangements between the t hree parties. DHA has concluded that the DSA between DHA and Defence satisfies the definition of a lease under AASB 16 Leases, based on the following key judgements :

i) In order to understand the arrangements, the DSA should be considered together with the DRA and the DHA Act. On assessing the substance of these arrangements, DHA

126 DHA Annual Report 2019-20

127 Financial statements

Defence Housing Australia Notes to the Financial Statements

Page 22 30 June 2020

considers that the DSA, through the provisioning process, identifies the portfolio of properties that Defence has the right to control the use of, and benefit from. ii) T he DSA provides De fence the right to control the properties because it directs when the properties are to be used, including the allocations policy and when properties must be

vacated. The ADF members only have a right to occupy a DHA property as a result of their employment with Defence and, if the employment is terminated the entitlement under the DRA ends. The DSA is therefore a lease in an arrangement where the property is ultimately occupied by the ADF member. iii) Defence does not act as an agent for DHA by collecting rental contributions from

members. Defence’s obligation to pay rent under the DSA is independent of the member’s contribution under the DRA. Defence bears the credit risk on contributions by ADF member s, and Defence payments to DHA continue regardless of any default by an ADF member.

Defence Housing Australia Notes to the Financial Statements

Page 23 30 June 2020

5 . Interest received

2020

$’000

2019

$’000

Interest received

Interest on deposits 3,450 3,644

Interest on annuities - 2,116

Total interest received 3,450 5,760

Accounting policy

Interest revenue earned on financial assets is recognised on an accrual basis using the effective interest method taking into account the interest rates applicable to the financial assets.

Interest income is also recognised in relation to construction services DHA provides to Defence under annuity arrangements. The annuity balance was paid out by Defence on 1 May 2019 and therefore there is no interest received on annuities in the 2019 - 20 financial year.

6 . Gains from disposal of investment properties

2020

$’000

2019

$’000

Net gains from disposal

Proceeds from Sale 24,486 20,375

Carrying value of assets sold (18,518) (11,171)

Selling expenses (608) (1,528)

Total g ains from disposal of investment properties 5,360 7,676

Accounting policy

Profits or losses from the disposal of investment properties are recognised when all specified conditions relating to the sale are satisfied and there is an unconditional sale. This is when settlement occurs.

128 DHA Annual Report 2019-20

129 Financial statements

Defence Housing Australia

Notes to the Financial Statements

Page 24 30 June 2020

7 . Employee benefits

2020

$’000

2019

$’000

Employee benefits

Wages and salaries 51,570 50,065

Superannuation

Defined contribution plans 7,529 8,016

Defined benefit plans 2,480 2,681

Leave and other entitlements 6,601 7,478

Separation and redundancies 1,700 470

Total employee benefits 69,880 68,710

Accounting policy

Superannuation

DHA staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector

Superannuation Scheme (PSS), or the PSS accumulation plan (PSSap), or other superannuation

funds held outside the Government.

The CSS and PSS are defined benefit schemes for the Government. The PSSap is a defined

contribution scheme.

The liability for defined benefits is recognised in the financial statements of the Government and

is settled by the Government in due course. This liability is reported in the Department of

Finance's (Finance) administered schedules and notes.

DHA makes employer contributions to CSS and PSS at rates determined by an actuary to be

sufficient to meet the current cost to the Government. DHA accounts for these contributions as if

they were contributions to defined contribution plans in accordance with AASB 119 - Employee

Benefits.

The liability for superannuation recognised as at 30 June represents outstanding contributions.

Leave and other entitlements

T he liability for employee benefits includes provisions for annual leave and long service leave. The

leave liabilities are calculated on the basis of employees' remuneration at the estimated salary

rates that will be applied at the time the leave is taken, including DHA's employer superannuation

contribution rates to the extent that the leave is likely to be taken during service rather than paid

out on termination .

Defence Housing Australia

Notes to the Financial Statements

Page 25 30 June 2020

Separation and redundancy

Provision is made for separation and redundancy benefit payments. The entity recognises a

provision for termination when it has developed a detailed formal plan for the terminations and

has informed those employees affected that it will carry out the terminations.

Payroll tax equivalent is a related party transaction with Defence, and is reported on the

Statement of Comprehensive Income as Other Expenses. All other employee benefits are incurred

with external parties.

130 DHA Annual Report 2019-20

131 Financial statements

Defence Housing Australia

Notes to the Financial Statements

Page 26 30 June 2020

8 . Rates, repairs and maintenance

2020

$’000

2019

$’000

Rates, repairs and maintenance

Rates and municipal charges 11,655 11,347

Stamp duty and land tax equivalents 34,915 34,206

Repairs and maintenance 37,167 45,822

Other property charges 58,282 48,683

Total rates, repairs and maintenance 142,019 140,058

Accounting policy

Rates, Repairs and Maintenance includes expenditure for investment properties of $ 44,941,885

( 2019 : $20,017,983 ). The 2019 - 20 financial year includes l eased properties due to the

implementation of AASB 16 Leases .

Rates and Municipal Charges

Includes council and water rates for DHA's property portfolio, which are not recoverable from

Defence. The expenses are incurred from external parties, and are expensed in the period they

are incurred.

Stamp Duty and Land Tax Equivalents

Stamp Duty and Lan d Tax Equivalents are related party transactions associated with Defence.

DHA provides services on a for - profit basis. Under the Competitive Neutrality arrangements, DHA

is required to make State Tax Equivalent payments, including payroll tax, land tax and stamp duty.

DHA includes State Tax Equivalent payments in the expenditure items to which they relate. Payroll

tax is included in Other Expenses.

Repairs and Maintenance

Includes repairs and maintenance expenses on the DHA property portfolio, which are not

recoverable from Defence.

Expenses are incurred from external contractors and are expensed in the period they are incurred.

Other Property Charges

Includes recoverable repairs and maintenance, and Defence funded capital project expenses.

DHA, in accordance with the Services Agreement, is entitled to recover from Defence these

expenses.

Expenses are incurred from external parties and sub - contractors and are expensed in the period

they are incurred.

Defence Housing Australia

Notes to the Financial Statements

Page 27 30 June 2020

9 . Depreciation and amortisation

2020

$’000

2019

$’000

Depreciation

Investment properties ¹ 288,907 15,031

Plant and equipment 3,246 3,355

292,153 18,386

Amortisation

Software 1,525 1,498

Right of use assets - PPE 5,389 -

6,914 1,498

Total depreciation and amortisation 299,067 19,884

1.

Depreciation in the 2019 - 20 financial year includes $272,021,232 d epreciation o f right of use

assets which meet the definition of investment properties under AASB 140 Investment

Properties.

Accounting policy

Depreciable assets are written down to their estimated residual values over their estimated useful

lives using, in all cases, the straight - line method of depreciation. Office fit outs are depreciated on

a straight - line basis over the lesser of the estimated useful life of the improvements or the

unexpired period of the lease.

Depreciation and amortisation rates applying to each class of depreciable asset are based on the

straight - line metho d o ver the following useful lives:

2020

2019

Investment properties 50 years or the term

of the lease

50 years

Plant and equipment Term of Lease Term of Lease

Software

Right of use assets - PPE

2.5 to 6 years

Term of Lease

2.5 to 6 years

Term of lease

Depreciation and amortisation rates (useful lives), residual values and methods are reviewed at

each reporting date and necessary adjustments are recognised in the current, or current and

future reporting periods, as appropriate.

132 DHA Annual Report 2019-20

133 Financial statements

Defence Housing Australia

Notes to the Financial Statements

Page 28 30 June 2020

10. Finance costs

2020

$’000

2019

$’000

Finance costs

Interest on loans 20,809 24,506

Interest on lease liabilities 32,300 -

Total finance costs 53,109 24,506

Accounting policy

Interest on loans is accrued based on effective interest rates on the outstanding balance of the

loan. Interest paid on loans is a related party transaction with Defence .

Interest on lease liabilities is the amount that produces a constant rate of interest on the

remaining balance of the lease liability.

Defence Housing Australia

Notes to the Financial Statements

Page 29 30 June 2020

1 1 . Write down and impairment of assets

2020

$’000

2019

$’000

Non - financial assets

Write downs and impairments

Investment properties 1 34,447 5,299

Inventories 40,550 11,007

74,997 16,306

Reversal of write downs and impairments

Investment properties 1 (28,138) (1,209)

Inventories (1,500) (942)

(29,638) (2,151)

Net write down and impairment 45,359 14,155

1.

Write down and impairment of investment properties in the 2019 - 20 financial year includes

$2,958,272 impairment on right of use assets which meet the definition of investment

properties under AASB 140 Investment Properties.

Accounting policy

Inventories

T o ensure compliance with AASB 102 Inventories , an independent valuation to assess the net

realisable value of inventory properties held by DHA is undertaken by a registered valuer as at 31

December 201 9 . The carrying value of individual properties, where t he cost of the property

exceeded the net realisable value, are written down accordingly. At the end of the reporting

period DHA reassesses the net realisable value based on internal and external market data , and

recognises a further write down or write bac k where there is a significant change in the property

market . A write back, where applicable, will not exceed cost. Refer to Note 1 6 Inventories for

more information.

Investment Properties

Investment properties include r ight of use assets that meet the definition of investment

properties in accordance with AASB 140 Investment Property .

Investment properties are initially recognised at cost. The carrying amount includes the cost of

replacing parts of existing investment pr operties, at the time those costs are incurred. The

carrying amount excludes costs of day - to - day servicing and maintenance of the investment

property.

Investment properties are subsequently recognised at the lower of carrying value and recoverable

amount. The recoverable amount is the higher of an assets’ fair value less costs to sell and value in use where the property is not identified for future sale or is a leased property .

134 DHA Annual Report 2019-20

135 Financial statements

Defence Housing Australia Notes to the Financial Statements

Page 30 30 June 2020

Investment properties are derecognised wh en they have been disposed of, when the y are withdrawn from use and no future economic value is expected from its disposal , or when the lease has expired .

The fair value of investment properties is assessed annually by an independent valuer and a value in use calculation is prepared internally for assets not identified for future sale and for right of use assets. Where the fair value less costs to sell and the value in use calculation for an individual property is less than its cost, the carrying value of the property is written down to the high er of the two valuation methods, and the loss is recognised as an impairment loss in the statement of comprehensive income. Refer to Note 1 8 Investment Properties .

DHA uses a discounted cash flow model to determine the value in use of investment properties . In determining the value in use, DHA applies the following assumptions:

• Rental and capital growth for the next 20 years or rental growth for the term of the lease by individual post codes from major industry publications. • Consumer Price Index (CPI) rates in line with the mid - point of the Reserve Bank of

Australia's (RBA) target inflation rate, being 2.50%. • A discount rate that is determined in accordance with the requirement of AASB 136 Impairment , calculated internally by management on an individual asse t basis. • Cash inflow estimates including rental income and other Defence fees and charges paid to

DHA in accordance with the Services Agreement. • Cash outflow estimates including annual repairs and maintenance based on historical data and judgements made by management.  Major capital work expenditure estimates including internal and external repainting and

replacement of carpets based on the age of the property.

Significant Accounting Judgement and Estimates

Rental and Capital Growth

The discounted cash flow model used to determine the value in use of investment properties includes an assumption on the forecast rental and capital growth for the next 20 years or rental growth for the term of the lease. DHA management applies judgement to assume a capi tal growth rate in line with the long term historical average, and estimates a rental growth rate by individ ual postcode from major industry publications.

136 DHA Annual Report 2019-20

Defence Housing Australia

Notes to the Financial Statements

Page 31 30 June 2020

1 2 . Taxation

a) Income tax expense

2020

$’000

2019

$’000

Income tax expense

Current tax expense 22,501 17,343

Adjustments for current tax of prior periods (351) 1,716

Deferred tax (5,284) (1,520)

Adjustments for deferred tax of prior periods 184 (2,064)

17,050 15,475

Income tax expense attributable to:

Profit from continuing operations 59,723 56,383

59,723 56,383

b ) Reconciliation of income tax expense to prima facie tax payable

2020

$’000

2019

$’000

Reconciliation of income tax expense:

Profit from continuing operations before income tax 59,723 56,383

Tax expense at the Australian tax rate of 30% 17,917 16,915

Tax effect of amounts not deductible/(assessable):

Tax cost base valuations (512) (886)

Adjustments relating to prior periods (168) (349)

Other (187) (205)

17,050 15,475

137 Financial statements

Defence Housing Australia

Notes to the Financial Statements

Page 32 30 June 2020

c ) Deferred tax assets/(liabilities) recognised in the Statement of Comprehensive Income

2020

$’000

2019

$’000

Net deferred tax assets/(liabilities)

Employee benefits 6,191 8,749

Unearned income (1,279) 234

Inventory properties 2,435 (818)

Investment properties (7,361) (8,933)

Right of use asset - investment properties (455,917) -

Right of use asset - property, plant and equipment (5,201) -

Lease liability 493,663 -

Pr e payments 8,859 (576)

Make good provisions 34,094 29,125

Provisions - other 4,226 604

Property, plant and equipment 1,691 565

Research and development expense - (737)

Other 441 101

Net deferred tax asset 81,842 28,314

Comprising:

Deferred tax assets 551,600 39,494

Deferred tax liabilities (469,758) (11,180)

Net deferred tax asset 81,842 28,314

Movements:

Opening balance at 1 July 28,314 24,738

Adjustment on initial application of AASB 16 Leases 1

Charged to the statement of comprehensive income

48,428

5,100

-

3,576

Net deferred tax asset 81,842 28,314

1.

Adjustment required on initial implementation of AASB 16 Leases . Refer Note 2 Change in Accounting

Policies for details.

Accounting policy

DHA became a Commonwealth income tax payer on 1 July 2007 , following an amendment of the

DHA Act.

As a result of DHA becoming a taxable entity on 1 July 2007, an unrecognised temporary

difference (Deferred Tax Asset) was created between the accounting carrying value and the tax

value for properties held as Investment Propertie s. The unrecognised value of the temporary

difference at 30 June 2020 is $ 442,325,907 ( 2019 : $445,771,382 ). The tax effect of this temporary

difference is $132,697,772 ( 2019 : $133,731,415 ).

Income Tax Expense

The income tax expense or revenue for the period is the tax payable on the current period’s

taxable income based on the applicable income tax rate adjusted by changes in deferred tax

assets and liabilities attributable to temporary differences and to unused tax losses.

138 DHA Annual Report 2019-20

Defence Housing Australia Notes to the Financial Statements

Page 33 30 June 2020

Deferred income tax is provided on tem porary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transac tion other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates and laws that have been enacted or substantially enacted by the reporting d ate and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities, and when the deferred tax bal ances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset, and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST), except:

• Where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO), it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or

• Receivables and payables which are recognised in clusive of GST.

The net amount of GST recoverable from or payable to the ATO, is included as part of receivables or payables.

Cash flows are included in the Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing a nd financing activities, which are recoverable from or payable to the ATO, are classified as operating cash flows.

Non Refundable Research & Development Tax Incentive

DHA makes research and development tax incentive claims through AusIndustry and the ATO i n relation to qualifying expenditure on major property developments.

The permanent benefit arising from the non- refundable research and development tax incentive is accounted for in accordance with AASB 120 Accounting for Government Grants and Disclosure o f Government Grants , and is capitalised to the extent that it relates to assets in accordance with

Part 3 of the FRR. The capitalised amounts are recognised as income based on the underlying assets useful life, or when disposed.

139 Financial statements

Defence Housing Australia

Notes to the Financial Statements

Page 34 30 June 2020

The temporary timing benefi t arising from the non - refundable research and development tax

incentive is accounted for in accordance with AASB 112 Income Taxes.

140 DHA Annual Report 2019-20

Defence Housing Australia

Notes to the Financial Statements

Page 35 30 June 2020

1 3 . C ash and cash equivalents

2020

$’000

2019

$’000

Cash and cash equivalents

Cash at bank 118,143 19,924

Term deposits 261,000 193,000

Total cash and cash equivalents 379,143 212,924

Accounting policy

Cash and cash equivalents means notes and coins held and any deposit held at call or readily

convertible to cash with a bank or financial institution. As part of managing working capital, DHA

invests in term deposits. These term deposits are classified as cash equivalents as they are readily

convertible to a known amount of cash and are not subject to a significant risk of change in value.

Cash is recognised at its nominal amount .

1 4 . Trade and other receivables

a) Trade and other receivables

2020

$’000

2019

$’000

Current receivables for good and services

Receivables 5,492 5,522

Impairment - expected credit loss (111) (55)

5,381 5,467

Accrued income 13,848 5,020

Other receivables 4,328 3,514

23,557 14,001

Current receivables for g oods and services from

Related entities 16,627 6,034

External parties 6,930 7,967

Total trade and other receivables 23,557 14,001

b ) Trade and Other Receivables (Net) expected to be recovered

2020

$’000

2019

$’000

Current receivables (net) expected to be recovered in:

Less than 12 months 23,557 14,001

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c) Receivables are aged as follows:

2020

$’000

2019

$’000

Current receivables (net) expected to be recovered in:

Not overdue 18,063 8,478

0 to 30 days 5,030 4,694

31 to 60 days 380 329

61 to 90 days 44 48

More than 90 days 40 452

Total trade and other receivables 23,557 14,001

d) Reconciliation of the impairment loss allowance :

2020

$’000

2019

$’000

Movement in the impairment loss allowance:

Impairment loss allowance at 1 July 55 154

I mpairment loss increase 56 -

Amounts written off - (7)

Amounts to be recovered and reversed - (92)

Total as at 30 June 111 55

Accounting policy

Credit terms are between 7 and 30 days.

Receivables for goods and services are recognised at the nominal amounts due, less any provision

for impairment allowance. Collectability of debts is reviewed at 30 June each year. Allowances for

expected credit losses (ECL’s) are based on a provision matrix that is in accordance with AASB 9

Financial Instruments.

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Notes to the Financial Statements

Page 37 30 June 2020

1 5 . I nvestment properties held for sale

2020

$’000

2019

$’000

Current assets

Investment properties - at cost 11,332 1,918

Investment properties - at cost (less impairment) 2,087 -

Total investment properties held for sale 13,419 1,918

Accounting policy

DHA applies AASB 5 Non - Current Assets Held for Sale and Discont inu ed Operations to its

investment properties held for sale. These properties are carried at the lower of cost and fair value less costs to sell and are not depreciated.

DHA holds a small proportion of its investment properties for sale. Investment properties are deemed eligible for sale if identified as a sale and lease back property, when they have below average capital growth expectations, carry high repairs and maintenance expenditure, are permanently privately leased out, have no redevelopment opportunities or have lo w rental yield.

DHA will only classify Investment properties as held for sale once the property is available for immediate sale in its present condition, there is an active programme to locate a buyer and management is committed to selling the investment p roperty. It is expected that the sale will be completed within 12 months.

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1 6 . Inventories

2020

$’000

2019

$’000

Total inventories

Current inventories 428,139 488,824

Non - current inventories 327,113 489,733

Total inventories 755,252 978,557

Completed properties

At cost 348,128 383,949

At net realisable value 182,405 193,438

Land held for sale

At cost 30,590 30,878

At net realisable value 631 -

Work in progress

At cost 173,528 358,782

At net realisable value 19,970 11,510

Total inventories 755,252 978,557

Accounting policy

The total fair value of inventory as at 30 June 2020 is $898,685,828 ( 2019 : $1,191,844,103 ).

For the period 1 July 2019 to 30 June 2020 DHA disposed of 409 inventory properties of which 25

at a loss of $622,679 ( 2019 : DHA disposed of 393 inventory properties of which 7 properties at a

loss of $91,696 ) .

DHA accounts for inventory properties under AASB 102 - Inventories . Inventories are properties

which are held to meet Defence provisioning requirements and are available for sale in the short

to medium term in order to free capital for reinvestment.

Inventories are initially recognised at cost and are subsequently recognised at the lower of cost or

net r ealisable value. Net realisable value is estimated based on the finished product's gros s

expected realisation less costs to complete and selling costs.

Inventories are separated into the following categories:

• Completed properties - completed properties h eld for sale on normal trading cycle;

• Land held for sale; or

• Work in progress - incomplete construction projects.

Work in Progress

Development projects are classified as inventory properties whilst in progress where a significant

majority of the property on completion of the development is expected to be sold as inventory

stock.

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Notes to the Financial Statements

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Development project costs include variable and fixed costs as they relate directly to specific

contracts, and those costs relating to general contract activity which can b e allocated to the

project on a reasonable basis.

Significant Accounting Judgement and Estimates

Completed inventory properties

The net realisable value of completed inventory properties is assessed annually by independent

valuers at 31 December . Where the net realisable value for an individual property is less than its

cost, the carrying value of the property is written down to its net realisable value.

Development inventory sites

The net realisable value of an inventory development site is the finished product's gross realisable

value less cost to complete and selling costs. Where the net realisable value is lower than cost to

date for the development site, the cost to date is written down by the value of the estimated loss.

Market Uncertainty

DHA has considered the emerging risk to property values arising from the uncertainty surrounding

the COVID - 19 crisis and potential economic downturn. A significant downturn in the property

market capital values and rental returns could result in a reduction in the net realisable value and

additional impairment. DHA management closely monitor external reports on property market

indicators and the sale price outcomes of DHA stock compared to the 31 December 2019

independent market valuation. Property market reports a t the date of publication of these

financial statements support a stabilisation of property values in line with the ten year averages

and a recovery from the market lows reported in April. In addition, the sales price achieved on

DHA properties sold during the period 1 January 2020 to 30 June 2020 are in line with the 31

December 2019 independent market valuation. Carrying values and impairment recognised at 30

June 2020 is appropriately updated to reflect market conditions.

145 Financial statements

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1 7 . Other current assets

2020

$’000

2019

$’000

Other current assets

Other prepayments 2,206 2,388

Prepaid property rentals - 27,466

Total other current assets 2,206 29,854

Accounting policy

In the 2019 - 20 financial year Other current assets include prepayments of subscriptions, body

corporate fees, rates and insurance premiums. In 2018 - 19 financial year this amount also i ncluded

commercial office rents and rents to lessors paid in advance which are now accounted for under

the new leasing rules due t o the implementation of AASB 16 Leases ( refer Note 2 Changes in

Accounting Policies) .

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Notes to the Financial Statements

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1 8 . I nvestment properties

2020

$’000

2019

$’000

Investment properties

Investment properties at cost 1,400,982 1,013,986

Less: accumulated depreciation (193,816) (122,432)

1,207,166 891,554

Investment properties - impaired

Investment properties at cost 1,805,100 166,011

Less: accumulated depreciation (215,314) (7,731)

Less: accumulated impairment (179,953) (12,104)

1,409,833 146,176

Total investment properties 1 2,616,999 1,037,730

1.

Total investment properties in the 2019 - 20 financial year includes $1,519,723,629 of right of

use assets (measured at cost less accumulated depreciation and impairment) which meet

the definition of investment properties under AASB 140 Investment Properties .

Accounting policy

The total fair value of Investment Properties (including Investment Properties - Hel d for Sale in

Note 1 5 ) as at 30 June 2020 is $3,645,711,176 ( 2019 : $2,068,166,322 ) . The fair value amount

disclosed at 30 June 2020 includes $ 1,519,723,629 of right of use assets measured at cost.

The fair value of DHA’s investment properties as at 31 December 2019 and as at 31 December 2018 was on the basis of a valuat ion carried out on the respective date by external independent

valuers. On 30 June 2020, DHA undertook a review of the fair value determined on 31 December

2019 and determined there is no material change. The external valuers are members of the

Institute o f Valuers of Australia, and they have appropriate qualifications and recent experience

in the valuation of properties in the relevant locations. The fair value was determined based on

the market comparable approach that reflects recent transaction prices f or similar properties. In

estimating the fair value of the properties, the highest and best use of the properties is their

current use. There has been no change to the valuation technique during the year. The fair value

level in accordance with AASB 13 Fai r Value Measurement is level 2.

To calculate impairment, t he fair value of DHA’s right of use assets that meet the definition of

investment properties in accordance with AASB 16 Leases as at 30 June 2020 has been

determined based on a discounted cash flow with an appropriate buyer’s premium applied. In determining the fair value, DHA applies the following assumptions:

• Rental and capital growth for the next 20 years or r ental growth for the term of the lease

by individual post codes from major industry publications.

• Consumer Price Index (CPI) rates in line with the mid - point of the Reserve Bank of

Australia's (RBA) target inflation rate, being 2.50%.

147 Financial statements

Defence Housing Australia Notes to the Financial Statements

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• A discount rate which is calculated internally by management on an individual asset basis, being the nomi nal pre- tax discount rate implied by the capital value of the individual property’s and the expected future rent, determined in accordance with the requirement of AASB 136 I mpairment of Assets .

• Cash inflow estimates including rental income and other Defence fees and charges paid to DHA in accordance with the Services Agreement.

Cash outflow estimates including annual repairs and maintenance based on historical data and judgements made by management. The fair value level in accordance with AASB 13 Fair Value Measurement is level 3.

Significant Accounting Judgement and Estimates

DHA owned investment properties are assessed for indicators of impairment annually. Where there is an indicator of impairment, the recoverable amount of each investment property is estimated. AASB 136 Impairment of Assets requires that the recoverable amount is the higher of

the property’s fair value less costs of disposal (FVLCOD) and its value in use (VIU) .

FVLCOD is assessed annually by an independent valuer. VIU is calculated by management using various assumptions in relation to the cost of debt and equity and future rental income of the property. Where the recoverable amount is less than the carrying amount, the carrying amount of the investment property is impaired to the greater of the fair value less cost to sell and value in use.

DHA has applied judgement to determine the discount rate used in the calculation of the VIU. DHA has used a rate that reflects the nominal pre- tax discount rate implied by the capital value of related properties, the expected future rents from the properties and other cash flows for associated property related services.

DHA’s right of use assets that meet the definition of investments properties may be assessed for impairment by itself, or as pa rt of a Cash Generating Unit (CGU). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. DHA has determined that individual right of use asset for each property represents a CGU , as each property is capable of generating cash inflows which are largely independent of cash inflows of any other asset/CGU.

DHA has applied judgement to conclude that of the two methods available to determine the recoverable amount on right of use assets, the value in use will consistently generate a higher recoverable amount. DHA use a VIU approach to assess and measure impairment o n the right of use assets.

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1 8 . I nvestment properties (continued) 2020

$’000

2019

$’000

As at 1 July

Cost or fair value 1,179,997 1,110,883

Less: accumulated depreciation and impairment (142,267) (124,110)

Total as at 1 July 2019 1,037,730 986,773

Recognition of ROU investment properties 1 1,779,584 -

Less: Opening accumulated impairment on leased properties 1 (159,927) -

Adjusted total as at 1 July 2019 2,657,387 986,773

For the year ended 30 June

Additions 133,492 37,589

Lease Adjustments 62,100 -

Transfer from inventory to investment property 101,037 38,619

Depreciation charge (288,907) (15,031)

Impairment loss (6,459) (4 ,090)

Transfer to assets held for sale (40,380) (7,094)

Other disposals or lease expiries (9,747) -

Depreciation/impairment written back on disposal or transfer 8,476 964

Movement in net book value for the period (40,388) 50,957

As at 30 June

Cost or fair value 3,206,083 1,179,997

Less: accumulated depreciation and impairment (589,084) (142,267)

Total investment properties 2,616,999 1,037,730

1. Recognition of right of use leased investment properties on initial application of AASB 16 Leases .

Refer to Note 2 ( d ) Changes in Accounting Policies - Adjustment recognised on the Statement of

Financial Position as at 1 July 2019.

Accounting policy

DHA accounts for investment properties under AASB 140 Investment Property and applies the

Cost mo del. Investment properties are properties held for strategic long - term provisioning requirements.

Investment properties are separated into the following categories:

• Completed properties;

• Land held for future development; or

• Work in progress - incomplete construction projects.

Transfers from inventory to investment are made when there is a change in use of a property in accordance with AASB 140 Investment Property .

Where there is a change in the term of a lease or the weekly rental paid on a lea sed investment property, this is treated as a Lease Adjustment.

149 Financial statements

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Notes to the Financial Statements

Page 44 30 June 2020

19. Property, plant and equipment

2020

$’000

2019

$’000

Property, plant and equipment

Property, plant and equipment at cost 21,551 20,422

Less: accumulated depreciation (17,052) (14,178)

Net property, plant and equipment 4,499 6,244

Right of use assets

Motor vehicles and office leases 22,727 -

Less: accumulated amortisation (5,389) -

Net motor vehicles and office leases 17,338 -

Total property, plant and equipment 21,837 6,244

150 DHA Annual Report 2019-20

Defence Housing Australia

Notes to the Financial Statements

Page 45 30 June 2020

20. Current liabilities - trade and other payables

2020

$’000

2019

$’000

Trade and other payables

Trade creditors 13,805 15,950

Accrued expenses 20,333 39,676

Stamp duty and land tax payable 5,643 5,086

39,781 60,712

Trade payables expected to be settled no later than 12

months:

Related entities 5,732 8,548

External parties 34,049 52,164

Total trade and other payables 39,781 60,712

2 1 . Final dividend

DHA declared a final dividend for the year ended 30 June 2020 of $25,603,579 ( 2019 : $24,544,517 ) .

The DHA Board resolved on 18 June 2020 to pay a dividend of 60 percent of net profit after tax in

accordance with DHA’s dividend policy.

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2 2 . Borrowings

2020

$’000

2019

$’000

Loans from the Commonwealth

Current borrowings 135,000 150,000

Non - current borrowings 374,580 359,580

509,580 509,580

Maturity schedule for borrowings payable

Within one year 135,000 150,000

Between two and five years 309,100 200,000

More than five years 65,480 159,580

Total borrowings 509,580 509,580

Accounting policy

DHA has an unsecured borrowing facility with the Commonwealth, incorporating all borrowings, underpinned by a Loan Agreement dated 21 February 2017, as amended. Finance representatives delivered a letter to DHA extending DHA’s current facility with the Min ister for Finance until 21 February 2020 . On 20 February a deed of variation was signed to extend the current facility to 30 June 2020 . Due to delays resulting from the coronavirus pandemic, a letter was signed to further extend the term of the current fac ility to 1 October 2020 until the renewed agreement is approved by Parliament .

The facility affords DHA the flexibility to borrow at either fixed or floating interest rates at market rates which includes a competitive neutrality charge. Note that even tho ugh the facility is with the Commonwealth, the facility requires DHA to pay interest on the amounts drawn down to Defence.

All loans and borrowings drawn down under this facility are initially recognised at fair value less directly attributable transaction costs. Subsequent recognition of loans and borrowings is at amortised cost, and interest is charged as an expense as it accrues. During 2019 - 2020 the interest rate range applied to DHA's borrowings was from 0.55 % to 5.89 % ( 2019 : 1.78 % to 5.89 %) .

Borrowings are classified as current liabilities unless DHA has an unconditional right to defer settlement of the liability for at least 12 months after the balance date.

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2 3 . Lease liabilities

2020

$’000

2019

$’000

Lease liabilities ¹

Current lease liabilities 258,239 -

Non - current lease liabilities 1,387,196 -

1,645,435 -

Maturity schedule for lease liabilities

Within one year 11,231 -

Between two and five years 332,785 -

More than five years 1,301,419 -

Total lease liabilities 1,645,435 -

1. For adjustments recognised on adoption of AASB 16 Le a ses on 1 July 2019, please refer to Note 2 Changes in

Accounting Policies.

Accounting policy

(i) DHA’s leasing activities

DHA leases real estate, various offices and vehicles. Rental contracts are typically made for fixed periods of 6 months to 15 years, but may have extension options as described below .

Contracts may contain both lease and non - lease components. DHA allocates the consideration in the contract to the lease and non - lease components based on their relative stand- alone prices.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants o ther than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

Until 30 June 2019 leases of property, plant and equipment were classified as operating leases, see Note 2 Changes in Accounting Policies for details. From 1 J uly 2019, leases are recognised as a

right of use asset and a corresponding liability at the date at which the leased asset is available for use by DHA.

Assets and liabilities arising from a lease are ini tially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

 fixed payments (including in - substance fixed payments), less any lease incentives receivable ;

 variable lease payment that are based o n an index or a rate, initially measured using the index or rate as at the commencement date ;

 amounts expected to be payable by DHA under residual value guarantees ;

 the exercise price of a purchase option if DHA is reasonably certain to exercise that optio n;

and

 payment of penalties for terminating the lease, if the lease term reflects DHA exercising that option.

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Notes to the Financial Statements

Page 48 30 June 2020

Lease payments to be made under reasonably certain extension options are also included in the

measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot

be readily determined, the lessee’s incremental borrowing rate is used, being the rate that DHA would have to pay to borrow the funds necessary to obtain a n asset of similar value to the right of

use asset in a similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, DHA:

 uses a build - up approach that starts with a risk - free interest rate adjusted for credit risk ; and

 makes adjustments specific to the lease, e.g. term and security

DHA is exposed to potential future increases in variable lease payments based on an index or rate,

which are not included in the lease liability until they take effect. W hen adjustments to lease

payments based on an index or rate take effect, the lease liability is reassessed and adjusted

against the right of use asset.

Lease payments are allocated between principal and finance cost. The finance cost is expensed

over the lease period so as to produce a constant periodic rate of interest on the remaining

balance of the liability for each perio d.

Right of use assets commencing after 1 July 2019 are measured at cost comprising the following:

 the amount of the initi al measurement of lease liability ;

 any lease payments made at or before the commencement date less any lease incentives

received;

 any initial direct costs ; and

 restoration costs .

Right of use assets are depreciated over the lease term on a straight - line ba sis .

(ii) Extension and termination options

Extension and termination options are included in a number of property leases. These are used to

maximise operational flexibility in terms of managing the assets used in DHA’s operations. The

majority of extension and termination options held are exercisable only by DHA and not by the

respective lessor.

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Page 49 30 June 2020

Significant Accounting Judgement

(i) Lease term

DHA has used judgement in determining where options for extension or termination contained in lease arrangements would or would not be considered reasonably certain of being exercised. DHA make s this judgement on a lease by lease basis and consider s all relevant facts and circumstances that create an economic incentive for DHA from the commencement date until the exe rcise date of the option.

For most proper ty leases, DHA has concluded it is reasonably certain to exercise options to extend the lease, and accordingly has included the period covered by those lease extensions in the lease term. DHA’s assessment reflects, in part, DHA’s past experience in exercising a high proportion of extension options, expectations of the housing needs of the Department of Defence, and costs to source alternative properties.

Generally extension options for motor vehicle leases have not b een included in the lease liability, because DHA could replace the assets without significant cost or business disruption.

The lease term is reassessed if an option is actually exercised (or not exercised) or DHA becomes obliged to exercise (or not exerc ise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and is within the control of the lessee. During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extension and termination options was an increase in recognised lease liabilities and right of use assets of $150,000.

(ii) Renewal of a lease arrangement

In some instances, DHA may renew a lea se with an investor, often 1 - 2 years before the end of the lease term. DHA will typically incur legal costs to review the lease and DHA will also incur capital works to maintain Defence standards where DHA is able to recover 50% of the capital costs from the investor/lessor . DHA ha s used judgement to conclude that lease renewals are to be accounted for a s lease modifications, rather than as new or separate leases under AASB 16 Leases . In the absence of specific requirements in AASB 16 Leases for costs associated with the modified lease, judgement is required to conclude that modification transaction costs, agreed capital costs and associated recoveries will be capitalised by either including amounts in the lease payments, which forms an input to the cost of the right of use asset, or as an adjustment to the cost of the associated right of use asset .

(iii) Make good costs

A liability is recognised for make good costs to be incurred on the expiry of long term leases. B ased on historical data, management has made assumptions regarding the future economic outflows associated with the make good expenditure. DHA is required under the lease agreement to undertake prescribed maintenance (make good) at the end of the lease period.

At the time of entering into the lease agreement, a provision is raised to recognise the make good obligation. The provision is based on an assessment of the present value of the necessary costs to

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Page 50 30 June 2020

make good properties at the end of their lease terms. The estimate includes a n inflation factor of 2.50% (201 9 : 2.50%) and a discount rate of 0.40% (201 9 : 2.47%, being the five year commercial

bank swap rate as at 30 June 2019 ) . During 2019 - 20 DHA has reassessed the discount rate used for

discounting make good and determined that the risk f ree rate is a more appropriate rate in accordance with AASB 137 - Provision and Contingent L iabilities . Actual make good expenditure is

charged, as incurred against the provision. The estimate of future make good maintenance is reviewed annually to ensure that the make good provision is adequate to meet the liability.

Judgment has been applied to conclude that changes to provisions for make good obligations that exist in respect of leases at transition, which were initially recognised as an expense in prof it or loss under previous standards, will be recognised as an adjustment to the associated right of use asset recognised at transition.

Judgement has been applied to conclude that obligations that arise during the lease term, when a contractual op tion is exercised, will be reco gnised as an adjustment to the related right of use asset. The judgement arises from unclear requirements of AASB 16. T he requireme nts explicitly state that lessees may incur the obligation for such costs either at the commencement da te or as a consequence of having used the underlying asset during a particular period. Those provisions are included in relation to the initial measurement of the right of use asset .

DHA’s obligation to perform restoration activities at the end of the lease term vary depending on the length of time DHA has held the lease, with no obligation where DHA hold the lease for less than 6 years. Judgement has been applied to conclude DHA does not re cognise a make good provision for leases with a current contract le ase term of less than 6 years.

(iv) Incremental borrowing rate (IBR)

Significant estimation is involved in determin ing the discount rate to apply to calculate the lease liability when initially recognising a lease. In line with the requirements of applying the modified retrospective transition method, DHA is required to use the Incremental Borrowing Rate (IBR) to discount the lease payments when calculati ng the lease liabilities to be recognised on transition. The IBR is the rate of interest DHA would have to pay to borrow funds over a similar term, and with a similar security, to obtain an asset of similar value to the right of use asset in a similar economic environment.

The IBR to be adopted by DHA reflects its corporate credit issuer rating of AA+ which considers its ownership by, and relationship with, the Commonwealth Government. DHA has assessed that no other significant adjustments are required for other lessee or lease - specific factors.

(v) Interest rate implicit in the lease (IRIL)

The IRIL is the discount rate that, at the inception of the lease, causes the aggregate present value of the lease payments and the unguaranteed residual value to be equal to the sum of the fair value of the leased asset and the initial direct costs of the lessor. The unguaranteed residual value is defined in AASB 16 Leases as the portion of the residual value of the underlying asset, the realisation of which is not assured. Determining the unguaranteed residual value may be the most significant estimate in the IRIL calculation. DHA uses forecast property capital growths, s ourced

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from Core Logic, for each geographical area to determine the estimated unguaranteed residual value of each property.

(vi) Defence Services Agreement

DHA has analysed the agreements between DHA, Department of Defence and the Australian Defence Force Membe r in order to determine if there is a lease agreement under AASB 16 Leases . AASB 16 defines a lease as an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of tim e. AASB 16 Leases states that a lease is present if a contract “conveys the right to control the use of an identified asset for a period of time in exchange of consideration.” AASB 16 Leases further sets out that to assess whether a contract conveys the ri ght to control the use of an identified asset for a period of time, an entity shall assess whether, throughout the period of use, the customer has both of the following:

(i) the right to obtain substantially all of the economic benefits from use of the identif ied asset; and (ii) the right to direct the use of the identified asset.

DHA has concluded that the Defence Services Agreement between DHA and Defence is a lease in accordance with AASB 16 Leases , as it satisfies the definition of a lease.

(vii) Lessor management fees

DHA has analysed the services provided in return for lessor management fees and concluded that some activities do not represent the transfer of goods or services from DHA to the lessor. Specifically, bill paying services and market rent review service s were considered a performance obligation and recognised as revenue under AASB 15 Revenue from Contracts with Customers ;

while property administration, annual market rent reviews as defined by the lease and maintenance and restoration services are part of the overall lease and accounted for as a reduction to rental expense.

Judgement was required in determining the split between the portion that represents the transfer of goods or services to the lessor (herein called ‘lessor management fee revenue’) and the portion that relates to the lease. DHA utilised internal business and product line costing methodologies across historical financial data, to determine the split .

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2 4 . Provisions

2020 2019

Current

$’000

Non -

current

$’000

Total

$’000

Current $’000

Non -

current $’000

Total

$’000

Employee benefits:

Annual leave 5,253 - 5,253 5,273 - 5,273

Long service leave 7,981 3,156 11,137 7,932 3,349 11,281

Redundancy 75 - 75 75 - 75

13,309 3,156 16,465 13,280 3,349 16,629

Other provisions:

Make good 11,475 102,172 113,647 7,258 97,010 104,268

Lease capital upgrades 11,415 - 11,415 - - -

Other general 16,820 2,370 19,190 6,193 1,338 7,531

39,710 104,542 144,252 13,451 98,348 111,799

Total provisions 53,019 107,698 160,717 26,731 101,697 128,428

Movements in pro v i sions

Movements in each c lass of provision during the financial year, other than employee benefits, is set out below:

Make good

provision

$’000

Lease

capital

upgrades

$’000

Other

general

provision

$’000

Total

$’000

Carrying amount at 1 July 2019 104,268 - 7,531 111,799

Additional provisions recognised 25,773 11,415 20,178 57,366

Amounts used during the year (16,394) - (8,519) (24,913)

Carrying amount at 30 June 2020 113,647 11,415 19,190 144,252

Accounting policy

Employee benefits

Liabilities for services rendered by employees are recognised at the reporting date to the extent that they have not been settled.

Liabilities for ‘short- term employee benefits’ (as defined in AASB 119 - Employee Benefits ) and termination benefits expected to be sett led within twelve months of the end of the reporting period are measured at their nominal amounts.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

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Leave Liability

A liability is recognised for benefits accruing to employees in respect of annual leave and long service leave in the period the related service is rendered.

Liabilities recognised in respect of short - term employee benefits are measured at their nominal values using the remuneration ra te expected to apply at the time of settlement.

Liabilities recognised in respect of long term employee benefits are measured as the present value of the estimated future cash outflows to be made by DHA in respect of services provided by employees up to the reporting date.

Make good provision

DHA is required under the sale and leaseback agreement to undertake prescribed maintenance (make good) at the end of the lease period, where the lease term is more than six years. The make good provision provides for the cost of refurbishing the leased property as set out in the lease agreement.

Lease capital upgrades provision

DHA is required to undertake capital upgrades on leased properties which were agreed to at the time the lease was signed. The capital upgrad e provision provides for the costs of these obligations as set out in the lease .

Other general provisions

Other general provisions include amounts set aside for:

• Fringe Benefits Tax and Goods and Service Tax;

• Employee performance bonuses

Recognition of Pro visions

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured us ing the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the recei vable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably.

159 Financial statements

Defence Housing Australia

Notes to the Financial Statements

Page 54 30 June 2020

2 5 . Other financial liabilities

2020

$’000

2019

$’000

Current other financial liabilities

Revenue in advance 34,530 19,922

Lease incentives - 395

34,530 20,317

Non - current other financial liabilities

Lease incentives - 386

Total other financial liabilities - 386

Accounting policy

Revenue in advance

Rental and property management fee revenues are billed to Defence one month in advance, in

line with the Services Agreement. For the year ended 30 June 2020 , 72.7 3 % of revenue in advance

was in relation to payments received from Defence ( 2019 : 100 .00 % ). The majority of revenue in

advance received from non - Defence sources in the 2019 - 20 year relates to development project

income.

Lease Incentives

From 1 July 2019 Lease Incentives are accounted for in accordance with AASB 16 Leases . Refer

Note 2 Changes in Accounting Policies .

Other financial liabilities

DHA classifies all financial liabilities as Other f inancial l iabilities. Other f inancial l iabilities are

recognised and derecognised upon trade date.

160 DHA Annual Report 2019-20

Defence Housing Australia

Notes to the Financial Statements

Page 55 30 June 2020

2 6 . Cash flow reconciliation

2020

$’000

2019

$’000

Reconciliation of operating results to net cash from

operating activities

Profit for the period after tax 42,673 40,908

Depreciation - plant and equipment 3,246 3,355

Depreciation - investment properties 288,907 15,031

Depreciation - right of use assets 5,389 -

Amortisation - software 1,525 1,498

Impairment expense/(write back) 6,309 4,090

G ain on disposal of investment properties (5,360) (7,676)

Increase/(decrease) in other non - operating cash flow

revenue items

2 (76)

Increase/(decrease) in other non - operating cash flow

expense items

(224) 2,881

Increase/(decrease) in supplier payments (20,931) 3,018

Increase/(decrease) in p rovisions 33,348 (3,457)

Increase/(decrease) in other liabilities 13,827 (5,655)

Increase/(decrease) in tax liabilities 8,588 4,507

(Increase)/decrease in net receivables (9,398) 61,538

(Increase)/decrease in net deferred tax assets (53,528) (3,576)

(Increase)/decrease in inventories 122,829 (49,372)

(Increase)/decrease in prepayments 27,648 3,359

Net cash from operating activities 464,850 70,373

161 Financial statements

Defence Housing Australia

Notes to the Financial Statements

Page 56 30 June 2020

27. Financial instruments

The main risks arising from DHA's financial instruments are interest rate risk, credit risk and liquidity

risk. DHA uses different methods to measure and manage different types of risks to which it is

exposed. These include monitoring the level of exposure to interest rates and assessments of

foreca sts for interest rates. Ageing analysis and monitoring of specific credit tolerances are

undertaken to manage credit risk. Liquidity risk is monitored through the development of rolling

cash flow forecasts.

Financial Assets at Amortised Cost

Financial asse ts included in this category need to meet two criteria:

(i) the financial asset is held in order to collect the contractual cash flows; and

(ii) the cash flows are solely payments of principal and interest (SPPI) on the principal outstanding

amount.

Amortised cost is determined using the effective interest method.

Effective Interest Method

Income is recognised on an effective interest rate basis for financial assets that are recognised at

amortised cost.

Impairment of Financial Assets

Financial assets are assessed for impairment at the end of each reporting period based on Expected

Credit Losses, using the general approach which measures the loss allowance based on an amount

equal to lifetime expected credit losses where risk has significantly increased, or an amoun t equal to

12 month expected credit losses if risk has not increased.

The simplified approach for trade, contract and lease receivables is used. This approach always

measures the loss allowance as the amount equal to the lifetime expected credit losses.

A write - off constitutes a de - recognition event where the write - off directly reduces the gross carrying

amount of the financial asset.

162 DHA Annual Report 2019-20

Defence Housing Australia

Notes to the Financial Statements

Page 57 30 June 2020

27. Financial instruments (continued)

Carrying value

The carrying value of DHA’s financial assets and liabilities at the reporting date are as follows:

2020

$’000

2019

$’000

Financial assets

Cash and cash equivalents 379,143 212,924

Trade and other receivables 23,557 14,001

Carrying value of financial assets 402,700 226,925

Financial liabilities

Borrowings - current 135,000 150,000

Borrowings - non - current 374,580 359,580

Trade and other payables 39,781 60,712

Other financial liabilities - current 34,530 20,317

Other financial liabilities - non - current - 386

Final dividend 25,604 24,545

Carrying value of financial liabilities 609,495 615,540

2020

$’000

2019

$’000

Net income from financial assets

Interest 3,450 3,644

Annuity revenue - 2,116

Net gain on loans and receivables 3,450 5,760

Net expenses from financial liabilities

Interest on borrowings 20,809 24,506

Net loss on financial liabilities - amortised cost 20,809 24,506

Accounting policy

Fair Value

The fair value of financial assets and liabilities are derived as follows:

 The fair value of government loans is calculated by the Australian Office of Financial

Management. The loans are valued by calculating the net present value of all future

contracted payments at the relevant interest rate. The fair value of DHA's loans with the

Commonwealth was $554,942,788 for 2020 ( 2019 : $535,650,410 ) .

163 Financial statements

Defence Housing Australia Notes to the Financial Statements

Page 58 30 June 2020

 The Directors consider that the carrying amounts of all other financial assets and liabilities recorded at amortised cost in the financial statements approximates their fair values.

In accordance with AASB 7 - Financial Instruments : Disclosure s, the fair value of Government loans have been determined using level 2 of the fair value hierarchy.

Credit Risk

Credit risk arises from the financial assets of DHA, which comprise cash and cash equivalents and trade and other receivables. Exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note.

DHA does not hold any credit derivatives to offset its credit exposure.

DHA trades only with recogn ised, creditworthy third parties. Department of Defence is the primary counterparty. As such collateral is not requested nor is it policy to securitise its trade and other receivables.

In addition, receivable balances are monitored on an ongoing basis with the result that DHA's potential exposure to bad debts is not significant.

There are no significant concentrations of credit risk within DHA and financial instruments are spread amongst a number of financial institutions to minimise the risk of default of counterparties.

Liquidity Risk

DHA manages liquidity risk by maintaining an appropriate level of marketable securities on hand to meet outgoing commitments in the event of failure to receive any revenue from the normal course of business and ensuring capac ity exists to borrow under the Cash Advance Facility based upon regular cash flow forecasts prepared by DHA.

Other than Commonwealth loans all financial liabilities will mature within one year. Refer to Note 22 Borrowing s for ageing of Commonwealth loans.

Market Risk

Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. DHA has exposure to interest rate risk arising from fluctuations in interest ra tes applicable to cash and borrowings.

DHA manages interest rate risk by ensuring that investments mature commensurate with cash flow requirements to maximise interest income. DHA also seeks to ensure an appropriate mix of maturities across the yield curve to avoid concentration of maturities on any given date and higher volatility inherent in longer dated investments.

164 DHA Annual Report 2019-20

Defence Housing Australia Notes to the Financial Statements

Page 59 30 June 2020

Interest rate risk on borrowings is managed by ensuring maturing loans are rolled over taking into consideration the interest rate outlook a nd the maturity profile of existing borrowings.

Financial Risk Management

DHA's principle financial instruments comprise receivables, payables, government loans, finance leases, cash and short term deposits.

DHA’s Treasury Policy provides a framework to manage core risks, including financial risk management, which pertain to DHA’s financial market investments, borrowings and associated activities.

Primary responsibility for the overall financial risk management rests with the Chief Financial Officer, duly supported by the Chief Risk Officer through the identification, assessment and regular reporting to the DHA Board.

Sensitivity analysis of the risk that DHA is exposed to in 2020 and 2019

The table below details the interest rate sensitivity analyses of the entity at the reporting date, holding all other variables constant.

Effect on

Interest rate risk

Risk Variable

Change in risk

variable %

Average cash

$’000

Profit & loss

and equity

$’000

2020 Interest 0. 09 282,076 254

2019 Interest 0.20 183,366 367

Interest rate sensitivity analysis has been calculated on a "reasonable possible" basis. The rate of 9 basis points (2019: 20 basis points) was determined by using the standard parameters issued by Finance.

165 Financial statements

Defence Housing Australia Notes to the Financial Statements

Page 60 30 June 2020

2 8 . Aggregate assets and liabilities

2020

$’000

2019

$’000

Assets expected to be recovered in:

No more than 12 months 846,464 747,521

Greater than 12 months 3,052,841 1,567,232

Total assets 3,899,305 2,314,753

Liabilities expected to be recovered in:

No more than 12 months 558,012 285,556

Greater than 12 months 1,869,474 461,663

Total liabilities 2,427,486 747,219

2 9 . Auditors remuneration

2020

$

2019

$

Amount received or due and receivable by auditors

Australian National Audit Office (ANAO) for the audit of the financial statements 355,000 376,000

Deloitte Touché Tohmatsu has been contracted by the ANAO to provide audit services on the ANAO's behalf. Fees for these services are included above. No other services were provided by the ANAO or Deloitte during the reporting period .

166 DHA Annual Report 2019-20

Defence Housing Australia

Notes to the Financial Statements

Page 61 30 June 2020

Unrecognised Items

This section of the notes provides information about items that are not recognised in the financial

statements as they do not (yet) satisfy recognition criteria.

30. Commitments

31. Contingent assets and liabilities

32. Events occurring after the reporting period

167 Financial statements

Defence Housing Australia

Notes to the Financial Statements

Page 62 30 June 2020

30. Commitments

2020

$’000

2019

$’000

Commitments receivable

Operating lease income

- Within one year 406,703 397,578

- Later than one year but not later than five years 1,273,515 1,277,271

- Later than five years 1,026,063 1,220,451

2,706,281 2,895,300

Commitments payable - capital expenditure

- Within one year 78,060 147,541

- Later than one year but not later than five years 17,225 20,879

- Later than five years 624 2,495

95,909 170,915

Commitments payable -operating lease 1

- Within one year - 280,673

- Later than one year but not later than five years - 968,597

- Later than five years - 625,058

- 1,874,328

Total commitments payable 95,909 2,045,243

Net Commitments Receivable/(Payable) 2,610,372 850,057

Commitments are GST inclusive where relevant.

1. Measurement of lease liabilities

From 1 July 2019, due to the implementation of AASB 16 Leases , commitments payable on operating

leases are disclosed in the Statement of Financial Position as current and non- current lease

liabilities. The adjustments made upon implementation of AASB 16 Leases are disclosed below:

2020

$’000

Operating lease commitments payable disclosed as at 30 June 2019 1, 874,328

Discounted using the lessee’s incremental borrowing rate at 1 July 2019 (107,887 )

A djustments relating to prepaid rent ( 25,536 )

Adjustment due to changes in accounting treatment

Additions due to option period not included in 2019 office lease commitments

Rental changes not included in 2019 office lease commitments

25,912

6,559

(836)

Motor vehicle operating expenditure excluded from lease liability ( 551 )

Lease liabilities recognised as at 1 July 2019 1, 771,989

Lease liabilities recognised as at 1 July 2019

Current lease liabilities 278,346

Non - current lease liabilities 1,493,643

Total lease liabilities recognised as at 1 July 2019 1,771,989

168 DHA Annual Report 2019-20

Defence Housing Australia Notes to the Financial Statements

Page 63 30 June 2020

Accounting policy

Commitments are GST inclusive where relevant.

Operating Lease Income Receivable

The operating lease income commitments receivable is the expected future lease rent to be received from the Department of Defence, taking into consideration the number of properties available for lease by the Department of Defence adjusted for the estimated vacancy based on historical data. DHA has determined that the Defence S ervices A greement is a lease agreement in accordance with AASB 1 6 L eases.

Capital ex penditure commitments

Capital expenditure commitments refer to construction project commitments and the payable figures above represent outstanding contractual payments for buildings under construction.

Operating lease commitments

Operating lease payments were expensed until 30 June 2019 on a straight line basis which is representative of the pattern of benefits derived from the leased assets. Under AASB 16 Leases , a lease liability is reflected on the Statement of Financial Position, refer N ote 2(b) Chang es in Accounting Policies - Measurement of Lease Liabilities .

DHA has three categories of leases:

a. Residential properties (mostly acquired through the sale and leaseback program), for the housing of ADF members, under the Services Agreement between DHA and Defence; b. Commercial propert ies for the administration of DHA; and c. Motor vehicles used in the operations of DHA.

Significant Accounting Judgement and Estimates

Operating Lease Income Receivable

DHA management applies judgement to estimate renta l growth and property vacancy rates based on historical long term average s. In addition, DHA estimates that ninety percent of all options to extend the lease term will be exercised, in line with the DHA Capital Plan.

169 Financial statements

Defence Housing Australia Notes to the Financial Statements

Page 64 30 June 2020

31. Contingent assets and liabilities

Guarantees Total

2020

$’000

2019

$’000

2020

$’000

2019

$’000

Contingent assets

Balance from previous period 3,000 9,050 3,000 9,050

New - - - -

Expired (3,000) (6,050) (3,000) (6,050)

- 3,000 - 3,000

Contingent liabilities

Balance from previous period 11,448 14,291 11,448 14,291

New 10,309 8,742 10,309 8,742

Expired (7,034) (11,585) (7,034) (11,585)

14,723 11,448 14,723 11,448

Net contingent liability (14,723) (8,448) (14,723) (8,448)

Accounting policy

Quantifiable Contingencies

Contingent assets and liabilities take the form of bank guarantees and financial undertakings which arise as a result of DHA's normal business operations. The amount disclosed represents the aggregate amount of such guarantees and financial undertakings. N o financial assets or liabilities are expected to arise from provisions of the guarantees or financial undertakings.

Unquantifiable Contingencies

As at 30 June 2020 , DHA has no unquantifiable contingencies.

Remote Contingencies

As at 30 June 2020 , DHA has no remote contingencies .

170 DHA Annual Report 2019-20

Defence Housing Australia

Notes to the Financial Statements

Page 65 30 June 2020

3 2 . Events occurring after the reporting period

Australian Property Market

The Covid - 19 global crisis is expected to have a significant impact on the Australian economy and in

turn the potential to significantly impact the Australian Property Market. DHA management closely

monitor a range of property market indicators, to ensure the inventory and investment stock,

including leased residential properties, are measured based on fair value assessment .

The July 2020 property market indicators show that activity is returning to the market, with the

national average clearance rate and n ew listings higher than the lows recorded in April 2020 and

consistent with the 10 year averages. The rental market continues to be subdued, however the

impact on rental prices has been minor with overall vacancy rates tracking lower than previous

years.

The Melbourne market is strongly supplied compared to other cities, thought to be compounded by

current restrictions and the growing concern of community spread of the COVID - 19 virus. T he full

impact on short term valuations and rental is unknown at the da te of publication.

Further recovery is expected in September onwards for most capital cities, consistent with normal

seasonal demand. The government support packages and bank loan deferrals have helped insulate

the housing market from a significant downt urn to date. T he medium to long term impact on the

Australian Property market remains uncertain as the spread of community transmission within

Victoria escalates and small pockets of community transmission continues within NSW. Victoria and

NSW represent t he two biggest markets within Australia, economic recovery will be dependent on

the speed of recovery in both these states. Based on current market indicators, management

consider there is no change required to the fair values recorded at 30 June 2020.

Other

There are no other events post 30 June 2020 which would have a material impact on the financial

statements or operations of the DHA business.

171 Financial statements

Defence Housing Australia

Notes to the Financial Statements

Page 66 30 June 2020

Key management personnel and related parties

This section of the notes prov ides other information that must be disclosed to comply with the

accounting standards and other pronouncements, but that is not immediately related to individual

line items in the financial statements .

2. Key management personnel disclosures

3. Related party tra nsactions

4. Economic dependency

172 DHA Annual Report 2019-20

Defence Housing Australia

Notes to the Financial Statements

Page 67 30 June 2020

3 3 . Key management personnel remuneration

a) Director remuneration

The aggregate remuneration of the Directors of DHA is set out below:

2020

$

2019

$

Director remuneration

Short term employee benefits 534,165 524,998

Post - employment benefits 64,837 61,589

Total director remuneration 599,002 586,587

The Director's remuneration includes fees and benefits, including travel and motor vehicle

allowances, as prescribed by the Remuneration Tribunal’s determination for part- time public office holders and superannuation payable in accordance with applicable legislation and fund

requirements.

b ) Key management personnel remuneration

Key management personnel are those persons having authority and responsibility for planning,

directing and control ling the activities of DHA, directly or indirectly. DHA has determined key

management personnel to include the Managing Director, Group General Managers, Chief Financial

Officer and Senior Legal Counsel, including in an acting capacity.

The aggregate remuneration of key management personnel of DHA during the financial year is set

out below:

2020

$

2019

$

Short - term employee benefits

Base s alary 1,345,243 2,204,465

Performance bonus 86,774 280,263

Other benefits and allowances 6,125 18,295

1,438,142 2,503,023

Post - employment benefits

Superannuation 240,319 333,185

240,319 333,185

Other long - term employee benefits

Long service leave 23,548 48,030

23,548 48,030

Termination benefits

Termination benefits - 20,545

- 20,545

Total employment benefits 1,702,009 2,904,783

173 Financial statements

Defence Housing Australia Notes to the Financial Statements

Page 68 30 June 2020

Accounting policy

The total number of key management personnel that are included in the above table are 5 individuals (2019 : 11 individuals).

The above key management personnel remuneration excludes the remuneration and other benefits of the Cabinet and Portfolio Ministers. The Portfolio Ministers' remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the entity.

34. Related party disclosures

DHA is an Australian Government controlled entity. Related parties to this entity are the Directors, Key Management personnel and Executive, and other Australian Government entities. DHA forms part of the Defence Portfolio. DHA reports to two shareholder ministers : the Minister for Defence and the Minister for Finance.

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. These transactions have not been separately disclosed.

DHA and Defence have entered into a Services Agreement on housing and related matters which details the provision of services to Defence. Transactions between Defence, Finance and DHA are highlighted throughout the financial statement notes.

There have been no financial transactions between the key management personnel and DHA outside the normal employment contracts under the Public Service Act 1999.

3 5 . Economic dependency

DHA depends on Defence in accordance with the Services Agreement. DHA received 70.95 % of its

total revenue from Defence for the year ended 30 June 2020 ( 2019 : 77.30 % ).

PART 6

Appendices and reference information Appendix A: Accountable Authority

Appendix B: Workforce statistics

Appendix C: Work, health and safety

Appendix D: Five year financial summary

Appendix E: Advertising and market research

Appendix F: Environmental performance

Office directory

Acronyms and abbreviations

Index of annual report requirements

Alphabetical index

176 DHA Annual Report 2019-20

Appendix A: Accountable Authority

This appendix provides details of our Accountable Authority for 2019-20 in accordance with the PGPA Rule.

Table 6.1: Accountable Authority 2019-20

Period as the Accountable Authority or member within the reporting period

Name Qualifications of the

Accountable Authority

Experience of the Accountable Authority

Position Title/Position held Executive/Non-Executive Date of Commencement

Date of Cessation Number of meetings of

Accountable Authority attended

Hon J.A.L. (Sandy) Macdonald

A

Bachelor of Laws (Sydney) A

Member of the Australian Institute of Company Directors (AICD)

A

Senator for New South Wales (1993-2008) A Parliamentary Secretary to the Minister for Defence (2006-2007) A

Wool and beef producer A

Former board appointments

A

Chairman A

Chair of the Nomination and Remuneration Committee A

Non-Executive member

February 2018 - 9/9

Mr Barry Jackson

A

New Zealand Certificate in Quantity Surveying A Quantity Surveyors Registration A

Member of the AICD

A

Various executive and senior roles in the Australian Public Service (APS) and Victorian government A

25+ years in private sector (construction, property, strategic and business process management) A

Other board appointments

A

Managing Director A

Executive member

May 2019 - 9/9

177 Appendix A: Accountable Authority

Period as the Accountable Authority or member within the reporting period

Name Qualifications of the

Accountable Authority

Experience of the Accountable Authority

Position Title/Position held Executive/Non-Executive Date of Commencement

Date of Cessation Number of meetings of

Accountable Authority attended

Mr Simon Lewis AO PSM CSC

A

Bachelor of Arts (Economics, Statistics) A Graduate Diploma of Computing StudiesA

Graduate Diploma in Administrative Studies A Graduate Diploma of Strategic StudiesA

Completed the Harvard and Wharton Business School’s Advanced Management Programs A

Graduate of the AICD

A

Various executive and senior roles in the APSA Secretary of the Department of Veterans’ Affairs (2013-2018) A

Other board appointments

A

Nominee of the Secretary of Finance A Chair of the Board Audit and Risk Committee A

Non-Executive member

April 2019 - 9/9

Brigadier Leigh Wilton AM

A

Master of Arts (Strategic Studies) A

Master of Management A

Bachelor of Business A

Graduate Diploma in Information SystemsA Graduate of the Australian Command and Staff College A

Graduate of the Centre for Defence and Strategic Studies A Graduate of the AICD

A

Member of the Australian Army A

Various senior appointments including Commanding Officer and Chief Instructor of the Army School of Ordnance and Director General Career Management—Army

A

Nominee of the Chief of the Defence Force A Chair of the DHA Advisory Committee A

Non-Executive member

December 2019 - 3/4

178 DHA Annual Report 2019-20

Period as the Accountable Authority or member within the reporting period

Name Qualifications of the

Accountable Authority

Experience of the Accountable Authority

Position Title/Position held Executive/Non-Executive Date of Commencement

Date of Cessation Number of meetings of

Accountable Authority attended

Ms Kate Louis

1

A

Bachelor of Laws (1st Class Honours) A Bachelor of Arts

A

20 years’ experience in the Department of Defence including Chief of Staff, Assistant Secretary and First Assistant Secretary roles

A

Executive Director of the Defence Council and Head of Industry Development for the Australian Industry Group

A

Member of the Centre for Defence Industry Capability Advisory Board

A

Nominee of the Secretary of Defence A Non-Executive member

June 2020 - 0/0

Mr Robert Fisher AM

A

Bachelor of Arts A

Bachelor of Education A

Member of the AICD

A

40+ year public service career A

Member of the Australian Trade Commission Service A CEO/Director General of various WA government departments A

One of five commissioners on the Australian Government’s National Commission of Audit A

Former board appointments

A

Commercial member A

Chair of the Board Investment Committee A Non-Executive member

February 2019 - 9/9

Hon Alan Ferguson

A

Senator for South Australia (1992-2011) A

Self-employed insurance consultant A

Farm owner and joint manager of farming property A Other board appointments

A

Commercial member A

Non-Executive member

February 2018 - 8/9

179 Appendix A: Accountable Authority

Period as the Accountable Authority or member within the reporting period

Name Qualifications of the

Accountable Authority

Experience of the Accountable Authority

Position Title/Position held Executive/Non-Executive Date of Commencement

Date of Cessation Number of meetings of

Accountable Authority attended

Ms Andrea Galloway

A

Bachelor of Business Administration A Diploma of Computer Networks A

Graduate of the Executive Program (University of Michigan) A Fellow of the AICD A

Justice of the Peace A

Licensed Real Estate Agent

A

30+ years in executive management for national and multinational commercial organisations A

Former Managing Director and CEO of Evolve Housing A Winner of the Australian and NSW Telstra Women’s Award 2014

(Business Innovation category) A

Other board appointments

A

Commercial member A

Non-Executive member

November 2016 - 9/9

Mr Ewen Jones

A

Member of the AICD

A

Federal member for Herbert (2010-2016) A Government Whip (2015-2016) A

Auctioneer A

Real estate and corporate finance experience A Manager of Business Development at Pickerings Auto Group A

Other board appointments

A

Commercial member A

Non-Executive member

December 2016 - 8/9

Mr Martin Brady AO

A

Bachelor of Arts (Honours) A

Bachelor of Fine Arts A

Member of the AICD

A

28+ years in the departments of Foreign Affairs and Defence A Director of Signals Directorate (1994-1999) A

Chairman of the Defence Intelligence Board (1999-2001) A Consultant on intelligence issues, technology requirements and arms

exports

A

Nominee of the Secretary of Defence A Non-Executive member

June 2017 June 2020 9/9

180 DHA Annual Report 2019-20

Period as the Accountable Authority or member within the reporting period

Name Qualifications of the

Accountable Authority

Experience of the Accountable Authority

Position Title/Position held Executive/Non-Executive Date of Commencement

Date of Cessation Number of meetings of

Accountable Authority attended

Commodore Vicki McConachie CSC RAN

A

Bachelor of Arts/Law A

Master of Laws A

Graduate of the AICD

A

Member of the Royal Australian Navy ReserveA Various senior appointments, including Commanding Officer of

HMAS Kuttabul, Director General ADF Legal Service

A

Operational service as Deputy Staff Judge Advocate Multinational Force—Iraq A

Lead of an Australian Government legal division

A

Nominee of the Chief of the Defence Force A Chair of the DHA Advisory Committee A

Non-Executive member

December 2016 December 2019 3/5

Note 1. K Louis was appointed to the Board on 21 June 2020, after the final Board meeting of the 2019-20 financial year.

181 Appendix B: Workforce statistics

Appendix B: Workforce statistics This appendix provides statistics on our workforce as at 30 June 2020 and 30 June 2019 for comparison

(unless otherwise stated).12

Staffing profile (by headcount) Table 6.2: All ongoing employees current reporting period 2019-20

Male Female Indeterminate Total

Full-time

Part-time

Total Male

Full-time

Part-time

Total

Female

Full-time

Part-time

Total

Indeter-minate

NSW 43 1 44 49 10 59 0 0 0 103

QLD 24 0 24 60 26 86 0 0 0 110

SA 17 1 18 21 5 26 0 0 0 44

TAS 0 0 0 0 0 0 0 0 0 0

VIC 11 0 11 7 1 8 0 0 0 19

WA 5 0 5 8 0 8 0 0 0 13

ACT 68 6 74 99 22 121 0 0 0 195

NT 1 0 1 16 0 16 0 0 0 17

External

Territories

0 0 0 0 0 0 0 0 0 0

Overseas 0 0 0 0 0 0 0 0 0 0

Total 169 8 177 260 64 324 0 0 0 501

12 Workforce statistics include ongoing and non-ongoing staff at their substantive and classification as at 30 June 2019 or 30 June 2020. Inoperative staff (those on long term leave), staff engaged through an employment agency and Board members are excluded. One casual employee who has not worked since March 2020 is not included in these figures.

182 DHA Annual Report 2019-20

Table 6.3: All non-ongoing employees current reporting period 2019-20

Male Female Indeterminate Total

Full-time

Part-time

Total Male

Full-time

Part-time

Total

Female

Full-time

Part-time

Total

Indeter-minate

NSW 2 0 2 2 1 3 0 0 0 5

QLD 0 0 0 2 1 3 0 0 0 3

SA 1 0 1 0 2 2 0 0 0 3

TAS 0 0 0 0 0 0 0 0 0 0

VIC 1 0 1 1 0 1 0 0 0 2

WA 0 0 0 3 0 3 0 0 0 3

ACT 6 2 8 13 2 15 0 0 0 23

NT 0 0 0 1 0 1 0 0 0 1

External

Territories

0 0 0 0 0 0 0 0 0 0

Overseas 0 0 0 0 0 0 0 0 0 0

Total 10 2 12 22 6 28 0 0 0 40

Table 6.4: All ongoing employees previous report period 2018-19

Male Female Indeterminate Total

Full-time

Part-time

Total Male

Full-time

Part-time

Total

Female

Full-time

Part-time

Total

Indeter-minate

NSW 54 2 56 48 16 64 0 0 0 120

QLD 32 0 32 67 21 88 0 0 0 120

SA 19 1 20 26 7 33 0 0 0 53

TAS 0 0 0 0 0 0 0 0 0 0

VIC 13 0 13 14 0 14 0 0 0 27

WA 7 0 7 9 0 9 0 0 0 16

ACT 71 7 78 111 30 141 0 0 0 219

NT 1 0 1 19 2 21 0 0 0 22

External

Territories

0 0 0 0 0 0 0 0 0 0

Overseas 0 0 0 0 0 0 0 0 0 0

Total 197 10 207 294 76 370 0 0 0 577

183 Appendix B: Workforce statistics

Table 6.5: All non-ongoing employees previous report period 2018-19

Male Female Indeterminate Total

Full-time

Part-time

Total Male

Full-time

Part-time

Total

Female

Full-time

Part-time

Total

Indeter-minate

NSW 7 0 7 10 1 11 0 0 0 18

QLD 0 0 0 6 2 8 0 0 0 8

SA 1 0 1 0 1 1 0 0 0 2

TAS 0 0 0 0 0 0 0 0 0 0

VIC 2 0 2 2 0 2 0 0 0 4

WA 0 0 0 2 0 2 0 0 0 2

ACT 13 3 16 15 3 18 0 0 0 34

NT 0 0 0 1 0 1 0 0 0 1

External

Territories

0 0 0 0 0 0 0 0 0 0

Overseas 0 0 0 0 0 0 0 0 0 0

Total 23 3 26 36 7 43 0 0 0 69

Table 6.6: Staff by classification and gender 2018-19 and 2019-20

2018-19 2019-20

Classification Female Male Female Male

DHA1 0 2 0 0

DHA2 0 0 0 0

DHA3 54 12 47 12

DHA4 126 36 126 34

DHA5 81 44 66 34

DHA6 67 30 53 28

EL1 48 52 35 42

EL2 32 49 21 33

SES and MD 6 7 4 6

Total 414 232 352 189

184 DHA Annual Report 2019-20

Table 6.7: Staff by classification and employment type 2018-19 and 2019-20

2018-19 2019-20

Classification Full-time Part-time Full-time Part-time

DHA1 2 0 0 0

DHA2 0 0 0 0

DHA3 54 12 45 14

DHA4 136 26 134 26

DHA5 110 15 89 11

DHA6 79 18 65 16

EL1 86 14 67 10

EL2 71 10 52 2

SES and MD 12 1 9 1

Total 550 96 461 80

Table 6.8: Ongoing staff by length of service and classification 2018-19 and 2019-20

2018-19 2019-20

Length of service DHA1-4 DHA5-6 EL1-MD DHA1-4 DHA5-6 EL1-MD

<2 years 77 32 38 51 33 30

2-5 years 78 73 42 90 48 43

6-10 years 28 46 45 35 42 24

≥11years 47 71 69 43 58 44

Total 230 222 194 219 181 141

Table 6.9: Staff by office type 2018-19 and 2019-20

2018-19 2019-20

Office type Total Total

Head office 233 199

Sydney CBD office 36 24

Regional office 269 234

Contact centre 108 84

Total 646 541

185 Appendix B: Workforce statistics

Table 6.10: Staff by location 2018-19 and 2019-20

State Office Type Comments 2018-19 2019-20

ACT Head Office 235 199

Canberra regional office 24 19

NSW Hunter regional office 46 39

Nowra regional office 7 4

Sydney regional office 43 37

Sydney CBD office 37 24

Wagga Wagga regional office 5 4

NT Darwin regional office 21 17

Tindal regional office 2 1

QLD Brisbane regional office 58 49

Cairns regional office 0 1

Canungra regional office 0 1

Ipswich regional office 14 11

Toowoomba regional office 0 1

Townsville regional office 54 50

SA Adelaide regional office 54 47

VIC Cerberus regional office 1 1

Melbourne regional office 24 17

Puckapunyal regional office Defence personnel only 1 0

Sale regional office 1 1

Wodonga regional office 0 2

WA Perth regional office 19 16

186 DHA Annual Report 2019-20

Table 6.11: Staff by employment instrument 2018-19 and 2019-20

2018-19 2019-20

Employment instrument Number Number

Enterprise Agreement (EA) 511 452

EA with individual flexibility agreement1 121 79

Common law contract 0 0

Public Service Act 1999 Section 24(1)

determination2

13 9

Remuneration Tribunal determination 1 1

Total 646 541

Notes 1. The Fair Work Act 2009 requires that all Enterprise Agreements (EA) contain provision for an individual flexibility arrangement. Where DHA and a staff member agree to vary specific terms and conditions in DHA’s EA, an Individual Flexibility Agreement is entered into. Refer to our website

(www.dha.gov.au/ea) for a full copy of the EA.

2. In accordance with section 24(1) of the Public Service Act 1999, an agency head may determine in writing the terms and conditions of employment applying to an Australian Public Service employee. Remuneration and conditions of service for Senior Executive Service (SES) staff in DHA are determined in this way.

Table 6.12: Staff gross salary ranges by classification 2018-19 and 2019-20

2018-19 2019-20

Classification Salary range1 Salary range1

DHA1 $48,640-$54,393 $49,614-$55,481

DHA2 $52,279-$59,789 $53,325-$60,985

DHA3 $60,059-$66,548 $61,620-$67,879

DHA4 $66,360-$74,154 $67,687-$75,637

DHA5 $74,764-$81,603 $76,259-$83,235

DHA6 $82,532-$94,895 $84,183-$96,793

EL1 $100,201-$122,287 $102,205-$124,73

EL2 $119,076-$152,786 $121,458-$155,842

SES and MD $149,323-$394,200 $210,000-$401,722

Note 1. In a determination under section 24(1) of the Public Service Act 1999, the Managing Director provided employees with a two per cent increase effective on 18 January 2019 and a further two per cent increase effective on 18 January 2020. These increases are reflected in the above figures. The

Board increased the remuneration of the Managing Director in line with recommendations from the Remuneration Tribunal.

187 Appendix B: Workforce statistics

Performance payments Table 6.13: Maximum potential performance bonus by classification 2018-19 and 2019-20

Classification Maximum potential performance payment

DHA1-DHA41 7.5%

DHA5-EL12 12.5%

EL2-SES3 15%

MD4 20%

Notes 1. In accordance with the EA, DHA1-DHA4 staff may be eligible for performance pay of up to 7.5 per cent of their annual gross base salary.

2. In accordance with the EA, DHA5-EL1 staff may be eligible for performance pay of up to 12.5 per cent of their annual gross base salary.

3. In accordance with the EA and section 24(1) of the Public Service Act 1999, EL2-SES staff may be eligible for performance pay of up to 15 per cent of their annual gross base salary.

4. In accordance with the Remuneration Tribunal’s determination for Principal Executive Office holders, the Managing Director may be eligible for performance pay of up to 20 per cent of total gross remuneration.

Table 6.14: Performance pay by classification for 2018-19 paid in 2019-20 1

Classification Number of payments Aggregated amount Average amount Range of payments

DHA1 0 0 0 0

DHA2 0 0 0 0

DHA3 64 $174,404 $2,725 $769-$4,254

DHA4 165 $539,070 $3,267 $73-$5,202

DHA5 117 $733,255 $6,267 $432-$8,912

DHA6 91 $650,221 $7,145 $1,524-$11,936

EL1 87 $816,274 $9,382 $1,971-$14,209

EL2 77 $1,173,836 $15,245 $5,039-$22,254

SES 10 $206,820 $20,682 $5,663-$28,612

MD 0 0 0 0

Note 1. This table sets out performance pay for the 2018-19 performance cycle that was paid to eligible employees in 2019-20.

188 DHA Annual Report 2019-20

Executive remuneration During the reporting ended 30 June 2020, DHA had eight non-executive Board members and five senior executives who

meet the definition of Key Management Personnel (KMP). In the notes to the financial statements for the period ending 30

June 2020, DHA disclosed the following KMP expenses:

Key management personnel remuneration for the reporting period 2020

Key management personnel remuneration for the reporting period $

Short-term benefits

Base Salary $1,824,095.67

Bonus $86,774.10

Other benefits and allowances $61,437.54

Total short-term benefits $1,972,307.31

Superannuation $305,155.70

Total post-employment benefits $305,155.70

Other long term benefits $0.00

Long Service Leave $23,547.63

Total long term benefits $23,547.63

Termination benefits $0.00

Total key management personnel remuneration $2,301,010.64

189 Appendix B: Workforce statistics

In accordance with the PGPA Rule, Tables 6.15 to 6.17 comply with GBE remuneration disclosure requirements

specified in Resource Management Guide No. 138 Commonwealth entities Executive Remuneration Reporting Guide

for Annual Reports.

Details and length of term for key management personnel

Name Position Term as KMP

Barry Jackson Managing Director Full year

Paul Groenewegen Chief Financial Officer Full year

Suzanne Pitson General Manager Portfolio

Management

Part year—ceased 13 March 2020

Lisa Barlin Chief General Counsel Part year—commenced

30 September 2019

Brett Jorgensen General Manager Property

Provisioning Group

Full year

J.A.L. (Sandy) Macdonald Board Chairman Full year

Martin Brady Board Member Part year—appointment

ended 21 June 2020

Alan Ferguson Board Member Full year

Robert Fisher Board Member Full year

Andrea Galloway Board Member Full year

Ewen Jones Board Member Full year

Simon Lewis Board Member Full year

Kate Louis Board Member Part year—appointed 21 June 2020

As per the PGPA Rule, this information is further disaggregated in Table 6.15.

190 DHA Annual Report 2019-20

Information about remuneration for key management personnel

Table 6.15: Details of executive remuneration for KMP 30 June 2020

Short term benefits Post-employment

benefits

Other long term benefits Termination benefits Total remuneration

Name Position title Base salary Bonuses Other

benefits and allowances

Superannuation contributions

Long service leave

Other

long-term benefits

Barry Jackson Managing Director $429,814.65 0 0 $68,970.15 $10,782.38 0 0 $509,567.18

Brett Jorgensen General Manager,

Service Delivery

$281,178.34 $28,612.50 $3,134.19 $51,746.64 0 0 0 $364,671.67

Suzanne Pitson General Manager,

Portfolio Management

$144,769.38 $20,361.60 $2,990.42 $33,464.00 0 0 0 $201,585.40

Paul Groenewegen Chief Financial

Officer

$303,411.56 $37,800.00 0 $52,211.53 $8,131.63 0 0 $401,554.72

Lisa Barlin Chief General

Counsel

$186,069.58 0 0 $33,926.63 $4,633.62 0 0 $224,629.83

J.A.L. (Sandy) Macdonald Board Chairman $119,713.04 0 $3,512.20 $11,284.12 0 0 0 $134,509.36

Martin Brady Board Member $58,257.30 0 $13,107.93 $6,688.59 0 0 0 $78,053.82

Alan Ferguson Board Member $59,856.52 0 $1,305.60 $9,214.29 0 0 0 $70,376.41

Robert Fisher Board Member $59,856.52 0 $8,133.84 $6,414.90 0 0 0 $74,405.26

Andrea Galloway Board Member $59,856.52 0 $8,511.92 $10,299.58 0 0 0 $78,668.02

Ewen Jones Board Member $59,856.52 0 $8,133.84 $10,291.70 0 0 0 $78,282.06

Simon Lewis Board Member $59,856.52 0 $12,607.60 $10,397.29 0 0 0 $82,861.41

Kate Louis Board Member $1,599.22 0 0 $246.28 0 0 0 $1,845.50

Total $1,824,095.67 $86,774.10 $61,437.54 $305,155.70 $23,547.63 $0.00 $0.00 $2,301,010.64

191 Appendix B: Workforce statistics

Information about remuneration for senior executives

Table 6.16: Details of remuneration for nine senior executive members 30 June 2020

Short term benefits Post-employment

benefits

Other long term benefits Termination benefits Total remuneration

Total remuneration bands

Number of senior executives

Average base salary

Average bonuses

Average other

benefits and allowances

Average

superannuation contributions

Average long service leave Average other long term

benefits

Average termination benefits

Average total remuneration

$0-$220,000 3 $76,185.67 $1,887.98 0 $15,053.93 $1,291.47 0 0 $94,419.05

$220,001-$245,000 1 $204,440.94 0 0 $30,750.59 $5,459.32 0 0 $240,650.85

$245,001-$270,000 1 $204,221.89 $25,080.00 0 $39,360.83 0 0 0 $268,662.72

$270,001-$295,000 1 $216,766.82 $24,090.00 $2,610.35 $41,678.17 $1,686.90 0 0 $286,832.24

$295,001-$320,000 2 $237,010.53 $24,101.25 $3,256.92 $38,146.12 $5,944.41 0 0 $308,459.22

$320,001-$345,000 0 0 0 0 0 0 0 0 0

$345,001-$370,000 1 $275,405.89 $25,447.50 0 $40,503.10 $7,004.47 0 0 $348,360.96

$370,001-$395,000 0 0 0 0 0 0 0 0 0

$395,001-$420,000 0 0 0 0 0 0 0 0 0

$420,001-$445,000 0 0 0 0 0 0 0 0 0

$445,001-$470,000 0 0 0 0 0 0 0 0 0

$470,001-$495,000 0 0 0 0 0 0 0 0 0

$495,001-… 0 0 0 0 0 0 0 0 0

192 DHA Annual Report 2019-20

Information about remuneration for other highly paid staff

Table 6.17: Details of remuneration for eleven other highly paid staff 30 June 2020

Short term benefits Post-employment

benefits

Other long term benefits Termination benefits Total remuneration

Total remuneration bands

Number of other highly paid staff

Average base salary

Average bonuses

Average other

benefits and allowances

Average

superannuation contributions

Average long service leave Average other long

term

benefits

Average termination benefits

Average total remuneration

$225,001-$245,000 3 $159,347.46 $17,981.74 $16,911.68 $29,442.51 $4,182.34 0 0 $227,865.73

$245,001-$270,000 2 $145,881.40 $16,305.12 $70,189.61 $32,903.67 $3,862.74 0 0 $269,142.53

$270,001-$295,000 0 0 0 0 0 0 0 0 0

$295,001-$320,000 3 $180,979.85 $28,877.01 $51,243.70 $37,809.25 $4,870.90 0 0 $303,780.71

$320,001-$345,000 1 $154,840.17 $51,842.53 $91,714.13 $37,632.10 $4,182.34 0 0 $340,211.27

$345,001-$370,000 1 $162,009.89 $52,634.32 $93,179.77 $37,828.82 $4,182.34 0 0 $349,835.14

$370,001-$395,000 0 0 0 0 0 0 0 0 0

$395,001-$420,000 0 0 0 0 0 0 0 0 0

$420,001-$445,000 0 0 0 0 0 0 0 0 0

$445,001-$470,000 1 $159,022.49 $96,236.86 $145,325.07 $45,694.13 $4,182.34 0 0 $450,460.89

$470,001-$495,000 0 0 0 0 0 0 0 0 0

$495,001-… 0 0 0 0 0 0 0 0 0

193 Appendix C: Work, health and safety

Appendix C: Work, health and safety

WHS performance 2018-19 and 2019-20 This appendix outlines our Work, Health and Safety (WHS) performance in accordance with the Work Health and

Safety Act 2011 (WHS Act).

Table 6.18: WHS performance 2018-19 and 2019-20

Indicator 2018-19 2019-20

Incident reporting1

Total incidents reported 677 473

WHS incidents 155 174

Staff 62 57

Contractors 34 23

Tenants and others 59 94

Recordable injury rate

Total recordable injury frequency rate 7.84 8.54

Lost time rate

Lost time injury frequency rate 5.49 3.11

Audits and office inspections

Contractor and internal audits conducted 753 192

Desktop 673 156

Onsite 80 36

Safety interaction 670 460

Office inspections conducted 76 62

Workers’ compensation

Workers’ compensation claims (accepted in financial year) 3 1

Note 1. Incidents are reported from the date of occurrence. Figures in Table 6.18 can vary from previous DHA Annual Reports as incidents which occurred in one financial year may be reported in another year, incidents may be reclassified following investigation, or figures may be varied following greater data analysis (i.e. to remove duplicate reports). The variances are not considered material or statistically significant.

194 DHA Annual Report 2019-20

Reported incidents The total number of incidents reported

declined in 2019-20. The variance is

largely due to a change in the process

for recording potential gas leaks to

improve the accuracy of incident

reports. All potential gas leaks

reported are now assessed by the

Safety, Health, Environment and

Quality (SHEQ) team in the first

instance to determine whether they

are WHS related incidents or standard

maintenance requests. Previously, all

potential gas leaks were recorded as

WHS incidents, skewing the number

of incidents reported.

The total number of WHS related

incidents increased in 2019-20. The

largest variance related to ADF

members and dependant reporting of

incidents. This is attributed to greater

home based work during the bushfires

and COVID-19 pandemic.

In 2019-20, DHA notified Comcare of

eight incidents in line with the WHS

Act (as they were deemed dangerous

or resulted in serious injury). Of these,

five incidents concerned contractors

and three concerned ADF members or

dependants. DHA conducts an internal

investigation of all incidents. Following

investigation, the three ADF member

or dependant incidents were not

deemed to be WHS related.

.

Figure 6.1 WHS incidents by person involved 2017-18, 2018-19 and 2019-201

2017-18 2018-19 2019-20

0

20

40

60

80

100

Staff Contractor Tenant Visitor/Other

74

62

57

70

34

23

45

54

92

0

5

2

Note 1. Incidents are reported from the date of occurrence. The data in Figure 6.1 can vary from previous DHA Annual Reports as incidents which occurred in one financial year may be reported in another year, incidents may be reclassified following investigation, or figures may be varied following greater data analysis (i.e. to remove duplicate reports). The variances are not considered material or statistically significant.

Safety audits and inspections

In 2019-20, DHA undertook 192

contractor audits and 62 office

inspections as part of our regular

Safety, Health, Environment and

Quality Program. A total of 172

corrective actions were identified

following these audits. The results

have assisted in various initiatives,

including data trend analysis, targeted

audit and safety campaigns and local

area risk mitigation strategies. The

significant variance in auditing

(753 audits in 2018-19 compared to

192 audits in 2019-20) is due to

trade group auditing undertaken in

2018-19. This type of auditing is only

performed every two years.

Certification

DHA holds AS NZS 4801 (Health

and Safety) and ISO 9001 (Quality)

management system certifications.

Ongoing certification is subject to an

annual external audit process. DHA’s

audit process was ongoing as at

30 June 2020.

Worker’s compensation

In 2019-20, four workers’

compensation claims were lodged

with Comcare, the Australian

Government’s insurer, regulator and

scheme manager. Of the four claims,

two related to psychological injuries,

one related to an autoimmune

condition and one was a

musculoskeletal injury. One claim

(musculoskeletal) was accepted as a

compensable injury. The remaining

three claims were rejected by

Comcare.

195 Appendix C: Work, health and safety

196 DHA Annual Report 2019-20

Appendix D: Five year financial summary This appendix provides a comprehensive overview of DHA’s key financial performance results for the last five financial years.

Table 6.19: Financial performance 2015-16 to 2019-20

2015-16 2016-17 2017-18 2018-19 2019-20

Financial performance

Net profit after tax ($m) $104.6 $65.7 $44.3 $40.9 $42.7

Annual dividend ($m) $62.7 $39.6 $26.6 $24.5 $25.6

Return on equity 7.0% 4.3% 2.9% 2.4% 2.7%

Property investment revenue ($m)¹ $428.8 $363.9 $278.5 $156.6 $167.2

Disposal program revenue ($m) $59.0 $64.2 $32.2 $35.4 $10.8

Development land and property sales revenue ($m) $238.5 $116.4 $104.9 $140.1 $204.5

Business efficiency

Return on capital employed 9.2% 5.9% 4.2% 3.8% 6.3%

Leverage/solvency

Gearing ratio 25.8% 24.9% 24.7% 24.5% 25.7%

Interest times cover 7.0 5.2 4.7 4.7 8.5

Current ratio 4.7 6.2 3.4 7.5 2.3

Liquidity ratio2 4.7 6.2 5.8 2.1 1.0

Portfolio management

Value of portfolio under management ($b) $10.6 $11.0 $11.1 $11.2 $11.0

Total properties under management3 18,767 18,841 18,395 18,112 17,925

New constructions and acquisitions 864 940 473 641 450

Notes 1. Property investment revenues reported are the gross sale proceeds, excluding GST. In 2019-20 the accounting treatment under AASB 16 Leases reports the net gain $15.2 million, with a portion of the gain deferred over the term of the lease.

2. Liquidity ratio excludes current borrowings as borrowed items are rolled on maturity and not considered to be a risk.

3. Figures include all properties managed by DHA (leased and owned).

197 Appendix E: Advertising and market research

Appendix E: Advertising and market research In accordance with section 311A of the Commonwealth Electoral Act 1918, this appendix discloses payments of $13,801

or more (including GST) for advertising and market research services provided during the reporting period. There was no

direct mail expenditure to be reported against for 2019-20.

Table 6.20: Advertising expenditure 2019-20

Organisation Purpose of services Expenditure ($ inc GST)

McCann Property investment program campaigns $621,218.00

Campaign Edge Sprout Breezes Muirhead campaigns $119,932.45

Audience Group Torhaven & Miramor campaigns $52,689.35

Heard Agency Akuna Vista campaigns $203,079.05

Creative ADM Liv & Wirraway campaigns $157,341.97

Simple Northwest Quarter campaigns $98,846.00

Table 6.21: Direct mail expenditure 2019-20

Organisation Purpose of direct mail Expenditure ($ inc GST)

n/a n/a $0

Table 6.22: Media advertising expenditure 2019-20

Organisation Purpose of services Expenditure ($ inc GST)

Universal McCann Property investment program media advertising $631,922.44

Campaign Edge Sprout Breezes Muirhead media advertising $251,697.29

Audience Group Torhaven & Miramor media advertising $325,894.87

Heard Agency Akuna Vista media advertising $119,490.80

Creative ADM Liv & Wirraway media advertising $84,607.30

Table 6.23: Market research expenditure 2018-19

Organisation Purpose of market research Expenditure ($ inc GST)

Colmar Brunton DHA brand campaign tracking $52,800.00

MacroPlan Lawson market research $49,009.30

198 DHA Annual Report 2019-20

Appendix F: Environmental performance

We are committed to improving our environmental performance in accordance with government policy. We manage environmental impacts through a number of policies and administrative controls and use a range of communication methods, including all staff messages and intranet content, to support staff to mitigate environmental impacts.

Property portfolio We are committed to creating healthy

and sustainable communities for ADF

members, their families and the

broader community.

Heritage properties

Commonwealth Heritage Listed

properties

On behalf of Defence, DHA manage

and conserve 61 Commonwealth

Heritage Listed (CHL) properties at

ADF bases and establishments across

Australia in accordance with the

Environment Protection and

Biodiversity Conservation Act 1999

(EPBC Act). We also own 16 CHL

properties and two CHL development

sites. There are a further three

development sites on the DHA

Heritage Register (DHAHR). These

properties are an important piece of

Australia’s history, as well as the

history of the ADF. We plan and

undertake conservation activities in

accordance with the EPBC Act, a

heritage management framework and

a heritage strategy.

Maintenance and conservation of

any identified heritage property

DHA has several development sites

that are currently under various stages

of planning. Each project has allowed

for the ongoing maintenance and

protection of the heritage values. We

have an obligation to protect the sites

from vandalism and damage whilst

they are in the planning stages.

Heritage studies, conservation

management planning and other

activities relating to the

identification, protection,

conservation, presentation and

transmission of any Commonwealth

Heritage Values of a place

Each project has allowance for the

necessary Conservation Management

Plans or Heritage Management Plans

that enable the continued management

of the sites during and after delivery.

199 Appendix F: Environmental performance

Identification of heritage values

No new sites were reviewed as part of

this strategy for the year 2019-20.

Last year’s review is below for

information. These reviews are still

relevant as the sites are still in

planning.

Four sites were reviewed as part of

this strategy including:

A Stockton Rifle Range has identified Commonwealth Heritage Values

and has been placed on the

DHAHR. The review and

identification is ongoing at this

stage and is being incorporated into

future planning of the site and

development.

A Aulds Road Ripley at this stage the development does not have

identified Commonwealth Heritage

Values, but has potential for

archaeological discoveries.

Procedures have been initiated

should any archaeological items be

uncovered during future works.

A Mount Lofty has been added to the DHAHR due to the identified

Commonwealth Heritage Values.

A Schofields Aerodrome has several Commonwealth Heritage Values

and is listed on the DHAHR.

Development and maintenance of

the DHAHR

The DHAHR is updated when any

change in heritage values are

identified, or a new site is identified

as having heritage values. The

DHAHR is detailed on our website

(www.dha.gov.au/about-us/heritage-properties).

Preparation and review of

Conservation Management Plans

We undertake a review of

Conservation Management Plans

every five years in accordance with

the EPBC Act or within 2 years of

purchasing a known listed CHL place.

Referrals made under the EPBC Act

DHA lodged a referral for the sale of

the 16 Gunners Cottages located in

Fremantle, WA. The referral advice

was received and the sale is

proceeding under the EPBC Act.

Disposal or acquisition of property

with heritage values

DHA has not acquired or disposed of

any properties with heritage values

over the financial year.

Maintenance and works expenditure on properties with heritage values

in 2019-20

Table 6.24: Maintenance work expenditure 2019-20

Project/Property Maintenance Management

Plans

Conservation /

Refurbishment

Gunners Cottages, WA $18,271 - -

Mount Lofty, QLD - - -

Stockton Rifle Range, NSW $21,741 - -

Fort Wallace, NSW $71,000 - $387,806

Lawson, ACT $116,600 $353,018 $126,000

Schofields, NSW - $66,177 -

Total $227,612 $419,195 $513,806

200 DHA Annual Report 2019-20

Office energy use DHA does not have control over the

energy efficiency of fixtures and

fittings within our offices as they are all

commercially leased. However,

where possible, we reduce energy

consumption through the use of

automated essential lighting and

heating and cooling outside of

business hours. Our ICT equipment,

including printers, monitors and

laptops/tablets are set to go into

standby mode when not in use.

Desk phones and meeting room

screens go into sleep mode outside of

business hours.

Energy efficiency is one of a number

of factors taken into account when

considering new commercial premises

for leasing when a current lease is due

to expire.

Travel and transport DHA has seen significant savings by

encouraging staff to use

videoconferencing and teleconference

technologies as alternatives to travel,

and has identified further efficiencies

by opting into Whole of Government

Travel Services—Phase 1

arrangements. DHA has also

commenced exploring benefits and

efficiencies of opting into Whole of

Government, Travel Services—Phase

3 arrangements which will be fully

realised in the next reporting year.

We have rationalised the fleet of

leased vehicles, reducing the entire

fleet by 5 per cent over the year. As at

30 June 2020, we leased 193

vehicles via sgfleet under the

Department of Finance fleet service

contract.

Resource efficiency and waste DHA introduced a number of regular

practices to reduce our environmental

footprint including:

A reduced the use and disposal of printer toner cartridges and paper

by implementing follow-me printing

solution

A enabled digital signing and lodgement for appropriate

documents to reduce the paper

consumption of home based staff.

201 Office directory

Office directory

ACT Head office

26 Brisbane Avenue

Barton ACT 2600

24 Brisbane Avenue

Barton ACT 2600

Canberra regional office

Tenancy 12, 26 Ipswich Street

Fyshwick ACT 2609

NSW Hunter regional office

Suite 2, 45D Fitzroy Street

Carrington NSW 2294

Nowra regional office

Suite 3, Level 2 Bridgeton House

55-57 Berry Street

Nowra NSW 2541

Sydney regional office

Level 5, 111 Phillip Street

Parramatta NSW 2150

Sydney CBD office

Suite 201, Level 2

287 Elizabeth Street

Sydney NSW 2000

Wagga Wagga regional office

Ground Floor T3

193-195 Morgan Street

Wagga Wagga NSW 2650

NT Darwin regional office

Level 1, Building 4

631 Stuart Highway

Berrimah NT 0828

Tindal regional office

By appointment only

Unit 2, 42 Katherine Terrace

Katherine NT 0828

SA Adelaide regional office

Level 1, 1 Main Street

Mawson Lakes SA 5095

WA Perth regional office

Level 2, 1 Swan Street

North Fremantle WA 6159

QLD Brisbane regional office

Level 4, 76 Skyring Terrace

Newstead QLD 4006

Cairns regional office

26 Florence Street Cairns QLD 4870

Ipswich regional office Level 1, 15 Gordon Street Ipswich QLD 4305

Toowoomba regional office By appointment only Shop 4A Shopping Centre 2 Plaza Circle Highfields QLD 4352

Townsville regional office 63-65 Bamford Lane

Kirwan QLD 4817

Canungra outpost office

Defence personnel only

Building No. 3, Papang Road

Kokoda Barracks

Canungra QLD 4275

VIC Melbourne regional office

Suite 305, Level 3

120 Bay Street

Port Melbourne VIC 3207

Wodonga regional office

83 Hume Street

Wodonga VIC 3690

Cerberus outpost office

Defence personnel only

Building 192, Cook Road

HMAS Cerberus

Cerebus VIC 3920

Puckapunyal outpost office

Defence personnel only

Building A0548, Vivi Street

Puckapunyal VIC 3662

Sale outpost office

Defence personnel only

Building 115, Catalina Street

RAAF Base East Sale VIC 3662

202 DHA Annual Report 2019-20

Acronyms and abbreviations AASB Australian Accounting Standards Board

AccuRate Residential building energy-efficiency rating system (replaced NaTHERS)

ACT Australian Capital Territory

ADF Australian Defence Force

AM Member of the Order of Australia

AICD Australian Institute of Company Directors

ANAO Australian National Audit Office

ANZAC Australian and New Zealand Army Corps

AO Officer of the Order of Australia

APS Australian Public Service

APSC Australian Public Service Commission

BARC Board Audit and Risk Committee

Board Board of Directors

BIC Board Investment Committee

CAT Command Activation Team

CHL Commonwealth Heritage Listed

CSC Conspicuous Service Cross

Cth Commonwealth

DCO Defence Community Organisation

Defence Department of Defence

DFA Defence Families of Australia

DHA Defence Housing Australia

DHA AC DHA Advisory Committee

DHA Act Defence Housing Australia Act 1987

DHAHR DHA Heritage Register

DHF Defence Housing Forecast

DSA Defence Services Agreement —Services Agreement with Defence on housing and related

matters

203 Acronyms and abbreviations

EA Enterprise Agreement

EER Energy Efficiency Rating

EPBC Act Environment Protection and Biodiversity Conservation Act 1999

EY Ernst & Young (professional services company)

FBC Future Business Committee

FBT Fringe Benefits Tax

FOI Freedom of Information Act 1982

GBE Government Business Enterprise

GBE Guidelines Commonwealth Government Business Enterprise Governance and Oversight Guidelines

GST Goods and Services Tax

Hon Honourable

ICT Information Communication and Technology

ISO International Organization for Standardization

Investor Owner of a DHA investment (formerly referred to as a lessor)

KPI key performance indicator

Lessor Owner of a DHA investment property now referred to as an investor

LIA Living in Accommodation

MCA Member Choice Accommodation

MD Managing Director

MP Member of Parliament

MWD member with dependants

MWD(U) member with dependants (unaccompanied)

MWOD member without dependants

NatHERS Nationwide House Energy Rating Scheme (replaced by AccuRate)

NQLD North Queensland

NRC Nomination and Remuneration Committee

NPAT Net Profit After Tax

NSW New South Wales

NT Northern Territory

OAIC Office of the Australian Information Commissioner

204 DHA Annual Report 2019-20

PBS Portfolio Budget Statements

PDA Performance Development Agreement

PGPA Act Public Governance, Performance and Accountability Act 2013

PGPA Rule Public Governance, Performance and Accountability Rule 2014

PIP Property Investment Program

PSM Public Service Medal

PWC Parliamentary Standing Committee on Public Works

QLD Queensland

RA rent allowance

RAAF Royal Australian Air Force

RAN Royal Australian Navy

RAP Reconciliation Action Plan

RBCH Rent Band Choice Housing

Rent Bands Classification of service residences by market rent

RMG Resource Management Guide

Rtd Retired

SA South Australia

Services Agreement Services Agreement with Defence on housing and related matters

SES Senior Executive Service

SHEQ Safety, Health, Environment and Quality

SQLD South Queensland

SR Service residence

TAS Tasmania

TRIFR Total recordable injury frequency rate

VIC Victoria

WA Western Australia

WHS Work, Health and Safety

WHS Act Work Health and Safety Act 2011

205 Index of annual report requirements

Index of annual report requirements This list of requirements has been prepared in accordance with the Public Governance, Performance and Accountability Act

2013 (PGPA Act), the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) and Resource Management

Guide No. 136, Annual report for corporate Commonwealth entitles (as published by the Department of Finance in May 2020).

PGPA

Rule

Reference

Part of Report Pages Description Requirement

17BB Approval of annual report by the accountable authority

Letter of transmittal i Detail of how and when the report was approved

by the accountable authority and confirmation that

the report has been prepared in accordance with

section 46 of the PGPA act

17BD Plain English and clear design

Contents iv Table of contents

Alphabetical index 211 Index [alphabetical]

Acronyms and

abbreviations

203 Glossary [acronyms and abbreviations]

Contact details

Cover

Digital report

ISFC Details of contact officer

Entity’s website address

Electronic address of the annual report

Index of annual report

requirements

205 List of requirements

17BE Contents of annual report

17BE(a) Legislative framework 68 Details of the legislation establishing the body Mandatory

17BE(b)(i) Legislative framework 68 A summary of the objects and functions of the

entity as set out in legislation

Mandatory

17BE(b)(ii) Planning and reporting

framework

32 The purposes of the entity as included in the

entity’s corporate plan for the reporting period

Mandatory

17BE(c) Shareholder Ministers 72 The names of the persons holding the position of

responsible Minister or responsible Ministers

during the reporting period, and the titles of those

responsible Ministers

Mandatory

17BE(d) Shareholder Ministers 72 Directions given to the entity by the Minister under

an Act or instrument during the reporting period

If applicable,

mandatory

206 DHA Annual Report 2019-20

PGPA

Rule

Reference

Part of Report Pages Description Requirement

17BE Contents of annual report

17BE(e) Shareholder Ministers 72 Any government policy order that applied in

relation to the entity during the reporting period

under section 22 of the Act

If applicable,

mandatory

17BE(f) N/A N/A Particulars of non-compliance with:

(a) a direction given to the entity by the Minister

under an Act or instrument during the reporting

period; or

(b) a government policy order that applied in

relation to the entity during the reporting period

under section 22 of the Act

If applicable,

mandatory

17BE(g) Annual Performance

Statement

35 Annual performance statements in accordance

with paragraph 39(1)(b) of the Act and section

16F of the rule

Mandatory

17BE(h),

17BE(i)

Significant issues relating

to non-compliance with

finance law

69 A statement of significant issues reported to the

Minister under paragraph 19(1)(e) of the Act that

relates to non-compliance with finance law and

action taken to remedy non-compliance

If applicable,

mandatory

17BE(j) Board of Directors

Appendix A:

Accountable Authority

73

176

Information on the accountable authority, or each

member of the accountable authority, of the entity

during the reporting period

Mandatory

17BE(k) Organisational structure 14 Outline of the organisational structure of the entity

(including any subsidiaries of the entity)

Mandatory

17BE(ka) Appendix B:

Workforce statistics

181 Statistics on the entity’s employees on an ongoing

and non-ongoing basis, including the following:

(a) statistics on full-time employees;

(b) statistics on part-time employees;

(c) statistics on gender;

(d) statistics on staff location

Mandatory

17BE(l) Our office network

Office directory

16

201

Outline of the location (whether or not in Australia)

of major activities or facilities of the entity

Mandatory

17BE(m) Corporate governance

structure

72 Information relating to the main corporate

governance practices used by the entity during

the reporting period

Mandatory

207 Index of annual report requirements

PGPA

Rule

Reference

Part of Report Pages Description Requirement

17BE Contents of annual report

17BE(n),

17BE(o)

Board of Directors 77-78 For transactions with a related Commonwealth

entity or related company where the value of the

transaction, or if there is more than one

transaction, the aggregate of those transactions,

is more than $10,000 (inclusive of GST):

(a) the decision-making process undertaken by

the accountable authority to approve the entity

paying for a good or service from, or providing a

grant to, the related Commonwealth entity or

related company; and

(b) the value of the transaction, or if there is more

than one transaction, the number of transactions

and the aggregate of value of the transactions

If applicable,

mandatory

17BE(p) Managing Director’s review 4-5 Any significant activities and changes that

affected the operation or structure of the entity

during the reporting period

If applicable,

mandatory Overarching analysis of our performance against

our purposes

38

Purpose 1: Provide

quality housing and

related services

39-44

Purpose 2: Provide

value to shareholders

46-56

External scrutiny 88

17BE(q) N/A N/A Particulars of judicial decisions or decisions of

administrative tribunals that may have a significant

effect on the operations of the entity

If applicable,

mandatory

17BE(r) External scrutiny 88-89 Particulars of any reports on the entity given by:

(a) the Auditor-General (other than a report under

section 43 of the Act); or

(b) a Parliamentary Committee; or

(c) the Commonwealth Ombudsman; or

(d) the Office of the Australian Information

Commissioner

If applicable,

mandatory

17BE(s) N/A N/A An explanation of information not obtained from a

subsidiary of the entity and the effect of not

having the information on the annual report

If applicable,

mandatory

208 DHA Annual Report 2019-20

PGPA

Rule

Reference

Part of Report Pages Description Requirement

17BE Contents of annual report

17BE(t) N/A N/A Details of any indemnity that applied during the

reporting period to the accountable authority,

any member of the accountable authority or

officer of the entity against a liability (including

premiums paid, or agreed to be paid, for

insurance against the authority, member or

officer’s liability for legal costs)

If applicable,

mandatory

17BE(taa) Board Audit and Risk

Committee

79-80 The following information about the audit

committee for the entity:

(a) a direct electronic address of the charter

determining the functions of the audit committee;

(b) the name of each member of the audit

committee;

(c) the qualifications, knowledge, skills or

experience of each member of the audit

committee;

(d) information about each member’s attendance

at meetings of the audit committee;

(e) the remuneration of each member of the audit

committee

Mandatory

17BE(ta) Executive remuneration 188 Information about executive remuneration Mandatory

17BF Disclosure requirements for government business enterprises

17BF

(1)(a)(i)

Managing Director’s review 4-5 An assessment of significant changes in the

entity’s overall financial structure and financial

conditions

If applicable,

mandatory Overarching analysis of performance against our

purposes

38

Performance analysis 51

17BF

(1)(a)(ii)

Overarching analaysis

against our purpose

38 An assessment of any events or risks that could

cause financial information that is reported not to

be indicative of future operations or financial

conditions

If applicable,

mandatory

17BF(1)(b) Purpose 2: Provide value

to shareholders

49 Information on dividends paid or recommended If applicable,

mandatory

Performance analysis 51-52

Appendix D: Five year

financial summary

196

209 Index of annual report requirements

PGPA

Rule

Reference

Part of Report Pages Description Requirement

17BF Disclosure requirements for government business enterprises

17BF(1)(c) N/A N/A Details of any community service obligations the

government business enterprise has including:

(a) an outline of actions taken to fulfil those

obligations; and

(b) an assessment of the cost of fulfilling those

obligations

If applicable,

mandatory

17BF(2) Corporate Plan 32 A statement regarding the exclusion of information

on the grounds that the information is

commercially sensitive and would be likely to

result in unreasonable commercial prejudice to

the government business enterprise

If applicable,

mandatory

Other legislation

Maintaining a safe workplace 97 Work, health and safety (schedule 2, Part 4 of the Work Health

and Safety Act 2011) Appendix C: Work, health and safety 193 Appendix E: Advertising and

market research

197 Advertising and market research (section 311A of the

Commonwealth Electoral Act 1918)

Appendix F: Environmental performance 198 Ecological sustainable development and environmental

performance (section 516A of the Environment Protection and

Biodiversity Act 2010)

210 DHA Annual Report 2019-20

Alphabetical index

A Aboriginal and Torres Strait Islander employees, 90, 94, 95

accommodation bookings see booking system

accountable authority, 14, 35, 69, 73, 85, 176-80

accounting standards, 50, 52, 56

address and contact details, 201

ADF Employment Offer Modernisation program, 5

ADF members, services to, 19-22 see also property

ADF sporting teams sponsorship, 3, 100-101

advertising and market research, 197

annual performance statement see performance

annuity properties, 27

apprenticeships, 90, 95

Arkadia Apartments, 28-9

asset management, 102

audits

financial statements, 107-108

internal, 85, 86

performance audit by ANAO, 2, 44, 88

safety audits, 193, 196

see also Board Audit and Risk Committee

AusTender, 87

Australian Capital Territory and Riverina region, 62

Australian Defence force see ADF members

Australian Institute of Architects awards, 8, 29

Australian Military Wives Choir, 3, 100

Australian National Audit Office

financial statements audit, 107-108

performance audit, 2, 44, 88

reports by, 89

awards

to development projects, 8, 29

staff, 84

B Barlin, Lisa, 189

Board Audit and Risk Committee, 55, 77, 79-80, 88-9

Board Investment Committee, 77

Board of Directors

accountable authority, 14, 35, 69, 73, 85, 176-80

Chairman see Chairman of the Board

committees, 77-8

meetings, 78

members, 3, 73-6, 176-80

related party transactions, 78

remuneration, 91, 188-91

role, 14, 73

bonuses (staff), 91, 92, 187

booking system, 7, 13, 20, 44, 84

Brady, Martin, 3, 78, 80, 179, 189

bushfires, 2, 4, 22, 44, 49, 51, 98

business continuity, 9, 86, 98

business improvements, 41, 53, 55-6

business model, 2, 3, 4, 5, 44, 54 see also Corporate Plan

C capability, 54-6, 90 see also staff

capital management, 27, 39, 51, 53

case studies

Arkadia Apartments, 28-9

DHA Employee of the Year, 84

DHA in the community, 100-101

A moving tale, 45

Our response to COVID-19, 9

On the road to reconciliation, 95

Supporting Defence capability in times of crisis, 22

2019 interns, 57

certification, 195

Chairman of the Board, 74, 176

review by, 2-3

charitable donations, 95, 99

Chester, Darren, 2, 73

Chief Financial Officer, 82 see also Groenewegen, Paul

Command Activation Team, 9, 83

211 Alphabetical index

committees

Board, 77-8

executive or national, 83

common law contracts, 186

Commonwealth Electoral Act 1918, 197

Commonwealth Government Business Enterprise

Governance and Oversight Guidelines, 1, 18, 32, 36,

49, 91

Commonwealth Heritage Listed properties, 21, 48, 198-9

Commonwealth Indigenous Procurement Discussion Group,

95

Commonwealth Ombudsman, 89

Commonwealth Procurement Rules, 87

Commonwealth Risk Management Policy, 85

community, support for, 3, 99-100

complaints handling, 41, 89

consultancies, 87

contact details, 201

contracts, 21, 72, 87, 95

Cormann, Mathias, 2, 73

corporate Commonwealth entity, DHA as, 12, 32, 69, 87

corporate governance, 72-83

Corporate Plan, 32, 35, 73 see also performance

corruption control, 86

COVID-19 pandemic, 2, 4, 5, 9, 44, 49, 51, 98

credit rating, 18

crisis and emergency management, 86

customer satisfaction, 36, 40-5

customer service, 41, 89

cyber security, 56, 102

D data breaches, 71, 89

debt management, 53

Defence see Department of Defence

Defence Community Organisation, 45, 100-101

Defence Housing Australia Act 1987, 12, 14, 32, 68, 72

Defence Housing Australia (DHA)

accountable authority, 14, 35, 69, 73, 176-80

Advisory Committee, 77

Board see Board of Directors

corporate Commonwealth entity, 12, 32, 69, 87

establishment, 12, 68

financial structure, 18

governance structure, 72-83

Government Business Enterprise, 12, 18, 32, 69

legislative framework, 32, 68-71

organisational structure, 14-17

overview, 11-29

performance see performance

priorities, 5

purposes, 2, 13, 32

role and functions, 68

Statement of Corporate Intent, 32

statutory authority, 68, 70

Defence Housing Authority Act 1987, 68

Defence Housing Forecast, 19-20, 25

Defence Joint Taskforce response to 2019-20 bushfires, 4

Defence-owned properties, 27, 48

Defence Services Agreement, 44, 47

Defence Special Needs Support Group, 45

Department of Defence, 2, 44, 88

Portfolio Budget Statement, 32, 35

Department of Finance, 2, 35, 44, 85

development projects, 8, 28-9

DHA CommUNITY, 99

Directors see Board of Directors

disability employment, 90, 94

disaster recovery, 86

dividends to Australian Government, 2, 7, 18, 49, 52

dogs

assistance dogs, 3, 100

Rex D. Dog mascot, 101

donations see charitable donations; sponsorships

E emergency management, 86

Employee of the Year, 84 see also staff

energy use, 200

enterprise agreements, 91, 96, 186

environmental performance, 198-200

Environment Protection and Biodiversity Conservation Act

1999, 21, 48, 198,199

executive and national committees, 83

Exercise Talisman Sabre, 84

external scrutiny, 2, 71, 88-9

F Fair Work Act 2009, 70

Ferguson, Alan, 3, 75, 78, 178, 189

finance law compliance, 69

financial management systems, 102

financial performance, 4, 37, 49-53, 196

212 DHA Annual Report 2019-20

financial statements, 106-113

auditor’s report, 107-108

notes to, 114-73

financial structure, 18

Fisher, Robert, 76, 78, 178, 189

flexibility arrangements (staff), 91, 93, 186

fraud control, 86

Freedom of Information Act 1982, 70, 89

funding model, 18

Future Business Committee, 77

G Galloway, Andrea, 3, 76, 78, 79, 179, 189

gearing ratio, 37, 50

General Manager, Service Delivery, 83

Gotch, Ronan, 57

governance structure see corporate governance

Government Business Enterprise, DHA as, 12, 18, 32, 69

Groenewegen, Paul, 82, 94, 189

H hailstorms, 4, 22, 98

heritage properties, 21, 48, 198-9

highlights of 2019-20, 2-8

home-based work, 4, 9, 98, 102

housing allocations, 43, 58-65

housing portfolio see property portfolio

housing preferences, 4, 5, 47

Huxtable, Rosemary, 44

I incident reports (WHS), 97, 193, 194

Indigenous Apprenticeships Program, 5, 90, 95

Indigenous Literacy Foundation, 94, 95, 99

Indigenous Procurement Policy, 95

individual flexibility agreements, 93, 186

Information Publication Scheme, 70, 89

Information Security Policy Governance Framework, 102

information technology, 4, 5, 55-6, 102 see also Online

Services; website

injury and illness see work health and safety

Integra Service Dogs Australia, 3, 100

interest cover, 37, 50

internal audit, 85, 86

internship program, 57, 90

investment see Property Investment Program

investors see landlords

J Jackson, Barry, 3, 74, 78, 82, 176, 189

review by, 4-5

see also Managing Director

Jones, Ewen, 3, 76, 78, 179, 189

Jorgensen, Brett, 83, 189

K key management personnel remuneration, 91, 172-3,

187-91

key performance indicators, 32, 35-7 see also performance

L landlords

satisfaction, 36, 40-5

services to, 23, 41-2

Leadership Team, 5, 9, 14, 81, 85

learning and development, 71, 92, 94, 95, 96

leasing, 43, 47, 52

impact of application of AASB 16, 52, 56

lease agreement, 23

leases managed, 6, 43, 58-65

services to landlords, 23, 41-2

Legacy Internship Program, 57

legislative and regulatory compliance, 56, 69

legislative framework, 32, 68-71

letter of transmittal, i

leverage/solvency, 37, 50

Lewis, Simon, 75, 78, 79, 177, 189

Living in Accommodation, 7, 22, 44, 84

booking system, 7, 13, 20, 44, 84

bushfire response, 22

loan agreement, 18

Logan, P, 78, 80

Louis, Kate, 3, 75, 78, 178, 189

M Macdonald, J.A.L. (Sandy), 74, 78, 176, 189

review by, 2-3

see also Chairman of the Board

maintenance, 6, 7, 21, 43-4

heritage properties, 21, 48, 198-9

by region, 58-65

213 Alphabetical index

Managing Director, 3, 14, 73, 74, 82, 85, 176

appointment and responsibilities, 81

direct reports to, 14, 15

remuneration, 91, 92, 188-91

review by, 4-5

market research, 197

Martin, Thomas, 84

MCA properties, 19, 24, 26, 27, 47, 58-65

McConachie, Vicki, 3, 78, 80, 180

Member Choice Accommodation see MCA properties

Members with Dependants housing see MWD properties

Members with Dependants Unaccompanied (MWD(U)),

26, 44

Members without Dependants (MWOD), 19, 26, 44

see also MCA properties

military exercises, 84

ministerial directions and policy orders, 72, 73

ministers, 2, 14, 72-3

Modern Slavery Act 2018, 71

Moriarty, Greg, 44

MWD properties, 4, 47

member satisfaction with, 36, 40-5

by ownership type, 27

performance results, 47

provisioning plan, 19-20, 36, 46

by region, 58-65

standards, 25

by type, age and number of bedrooms, 25

N National Reconciliation Week, 94, 95, 99

natural disasters, DHA command structure in, 22 see also

bushfires; weather events

net profit after tax (NPAT), 37, 50, 52

New South Wales region, 61

Nomination and Remuneration Committee, 77, 92

non-salary benefits, 91, 93

Northern Territory region, 58

North Queensland region, 59

Notifiable Data Breaches scheme, 71, 89

notifiable incidents (WHS), 193, 194

O Office of the Australian Information Commissioner, 71, 89

offices of DHA

locations, 16, 73, 185, 201

staff by office type, 184

Ombudsman, 89

Online Services, 16, 41-3 see also information technology;

website

operating environment, 2, 4, 5, 9, 49, 51, 85

operational performance see performance

organisational structure, 14-17

Outstanding Customer Service Award, 84

overview of DHA, 11-29

P parliamentary committees, 88

performance

analysis (overarching), 38

dividends to Australian Government, 2, 7, 18, 49, 52

environmental, 198-200

financial, 4, 37, 49-53, 196

highlights, 2-8

regional operational performance, 24, 58-65

results, against KPIs (snapshot), 36-7

results, Purpose 1: Provide quality housing and related

services, 32, 35, 36, 39-48

results, Purpose 2: Provide value to shareholders, 32,

35, 37, 49-56

statement of preparation, 35

work health and safety, 97, 193-5

year in summary (statistics), 6-7

performance audit by ANAO, 2, 44, 88

performance framework, 72

performance management (staff), 90, 92

performance pay, 91, 92, 187

Pitson, Suzanne, 189

planning and reporting framework, 32-4 see also Corporate

Plan; performance

Portfolio Budget Statement, 32, 35

portfolio membership (government), 72

portfolio (property) see property portfolio

Posting Connect, 102

Prince’s Trust, 3, 100

Pringle, Taylah and Josh, 45

priorities of DHA for 2019-20, 5

214 DHA Annual Report 2019-20

Privacy Act 1988, 70-1

procurement (corporate), 87, 95

projects see development projects

property

allocations, 43

inspections, 6, 43, 58-65

leased see leasing

maintenance see maintenance

ownership categories, 27

property numbers managed, 6-7, 43, 47-8

upgrades, 21, 48

Property Investment Program, 7, 14, 23, 48, 51

property market conditions, 4, 5, 49, 51

property portfolio, 13, 24-7

Defence-owned properties, 27, 48

environmental performance, 198

five-year financial summary, 196

housing solutions and related services, 19-22

management information systems, 102

number and value, 6, 24

ownership types, 27

performance results, 43, 46-8

provisioning plans, 19-20, 36, 46

by region, 24, 58-65

review of, 51

services to landlords, 23

statistics (summary), 6-7

see also MCA properties; MWD properties

provisioning plans, 19-20, 36, 46

Public Governance, Performance and Accountability Act

2013, i, 12, 14, 32, 69, 91

Public Governance, Performance and Accountability rules,

i, 32, 69, 91

Public Interest Disclosure Act 2013, 71

public office holders see Board of Directors

Public Service Act 1999, 12, 70

section 24(1) determination, 91, 186

Public Works Committee Act 1969, 88

purposes of DHA, 2, 13, 32 see also performance

Q quality standards compliance and certification, 195

Queensland regions, 59-60

R Reconciliation Action Plan, 94, 95

recruitment panel training, 96

recruitment practices, 94

regional community support, 101

regional operational performance, 24, 58-65

regulatory compliance, 56, 69 see also legislative

framework

related party transactions, 78

remuneration, 91, 92-3, 186-92

auditors, 165

Board, 91, 188-91

Board Audit Committee, 79-80

key management personnel and senior executives, 91,

92, 172-3, 187-92

non-salary benefits, 91, 93

performance pay, 91, 92, 187

wages expense ratio, 54, 94

Remuneration Tribunal, 91, 186

rent allowance (RA), 6, 20, 43, 44, 58-65

Rent Band Choice Housing (RBCH), 24, 25, 44

rents, 49

repairs and maintenance see maintenance

reporting framework, 32-4 see also Corporate Plan;

performance

residential property market, 4, 5, 49, 51

resilience, 86

responsible ministers, 14, 72-3

return on equity, 37, 50

revenue, 7, 59 see also financial statements

Rex D. Dog mascot, 101

Reynolds, Linda, 2, 73

risk management, 55, 85

Riverina region, 62

role and functions of DHA, 68 see also purposes of DHA

S safety see work health and safety

security, 56, 102

Senate Order on Entity Contracts, 87

Senate Standing Committee on Foreign Affairs, Defence

and Trade, 88

senior executive remuneration, 91, 92, 172-3, 187-92

see also Leadership Team

service charter, 41

215 Alphabetical index

Service Delivery Group, 14, 41

Service Delivery Support Group, 14, 41

service residences see housing portfolio

services

for ADF members, 19-22

customer service, 41, 89

to landlords, 23

satisfaction with, 36, 40-5

see also MCA properties; MWD properties

Services Agreement, 44, 47

Shared Benefits Scheme, 99

Shareholder Ministers, 14, 72-3

shareholder returns, 37, 49, 50, 52 see also dividends to

Australian Government

solvency see leverage/solvency

South Australia region, 64

South Queensland region, 60

sponsorships, 3, 100-101

staff

awards and recognition, 84

charitable donations, 95, 99

consultative arrangements, 96

diversity, 90, 93-4, 181-3

employment arrangements, 70, 91, 93

employment instrument, 186

engagement, 37, 54, 94

health and safety see work health and safety

home-based work, 4, 9, 98, 102

location, 185

performance management, 90, 92

recruitment, 94, 96

remuneration see remuneration

retention and turnover, 37, 54

Shared Benefits Scheme, 99

statistics, 17, 181-6

training and development, 71, 85, 90, 92, 94, 95, 96

wages and expense ratio, 37, 54

workforce planning, 56, 90, 93

Staff Consultative Group, 96

Standard & Poor’s credit rating, 18

standards compliance and certification, 85, 195 see also

accounting standards

Statement of Corporate Intent, 32

statutory authority, 68, 70

strategic canvas, 32, 34

strategic priorities performance results

Strategic Priority 1: Customers, 36, 39-44

Strategic Priority 2: Portfolio, 36, 46-8

Strategic Priority 3: Financial, 37, 49-53

Strategic Priority 4: Capability, 37, 54-6

see also performance

studies assistance, 96

T Tasmania region, 63

taxation, 53

technology strategy see information technology

teleconferencing, 9, 200

tenancy management see property portfolio

training (staff), 71, 85, 90, 92, 94, 95, 96

travel, 200

travel allowances, 91, 93

Turner, Julian, 57

U values (corporate), 5

vehicles, 93, 200

Victoria and Tasmania region, 63

video- and teleconferencing, 9, 200

volunteering, 99

V waste minimisation, 200

weather events, 4, 22, 98

website, 41 see also Online Services

Western Australia region, 65

Wilton, Leigh, 3, 74, 78, 177

workers compensation, 90, 193

workforce

management, 90-101

planning, 56, 90, 93

see also staff

work health and safety, 5, 90, 97, 193-5

injury and incident rates, 37, 54

Work Health and Safety Act 2011, 70

working remotely, 4, 9, 98, 102

Workplace Bargaining Policy 2018, 91

Workplace Giving Program, 95, 99

Y year in summary (statistics), 6-7

Defence Housing Australia Annual Report 2019-20