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ADF to be consulted on remuneration review.

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Friday 5 October 2001 MIN 404/2001


The Federal Government has directed the Chief of the Defence Force and the Service Chiefs to consult widely with both serving and past serving Australian Defence Force members before putting forward a response to Government on the recommendations arising from a review into remuneration for ADF personnel, the Minister Assisting the Minister for Defence, Bruce Scott, announced today.

Mr Scott said the Review of Australian Defence Force Remuneration 2001, compiled by Major General Barry Nunn AO RFD ED (Retd), former Assistant Chief of the Defence Force (Reserves); Mr Les Cupper, General Manager, Group Human Resources, Commonwealth Bank of Australia; and Mr Peter Kennedy, former Deputy Public Service Commissioner, was a wide ranging, independent study, conducted at arm’s length from the ADF.

“The review was undertaken to ensure future ADF remuneration arrangements provide an effective, efficient and flexible framework, consistent with reforms in the wider public and private sectors,” he said.

“The focus of the review was to provide options that improve the attractiveness, flexibility, simplicity, efficiency and transparency of employment conditions offered to ADF personnel.

“The CDF and the three Service Chiefs have been directed to undertake a consultative process with serving and former Defence personnel and interest groups to learn their views of the Nunn Review recommendations. The Defence response to the Nunn Review will be presented to Government for consideration by the end of March 2002.”

“The Liberal-National Government’s Defence White Paper, Defence 2000 Our Future Defence Force, indicated a requirement to focus on the needs of Defence personnel, particularly in regards to recruitment and retention. The Liberal-National Government has committed $100 million to support people related initiatives.

“In parallel with the release of this review, I will be making a separate announcement in relation to housing and accommodation for single members of the ADF.

“The Liberal-National Government is confident that the initiatives to be announced on singles accommodation later today will go a long way to addressing the underlying issues on housing raised in this report.

“The Government recognises that existing housing arrangements for married personnel, administered by the Defence Housing Authority, continue to work well and do not need to be changed. Accordingly the Government, following extensive consultation with the National Consultative Group of Service Families and the Armed Forces Federation of Australia, has decided to set aside the recommendations concerning accommodation in Chapter 8 of the review.

Mr Scott extended his thanks to Major General Nunn and his Review team for conducting such a thorough review of the ADF remuneration policies, practices and arrangements.

A copy of the Review of Australian Defence Force Remuneration 2001 can be found at:

Media Contact: Mark Croxford 02 6277 7820 or 0408 645 787

For Chiefs of Staff and News Editors: Review recommendations are attached.

1 Attachment to Bruce Scott Media Release Min 404/2001 dated 5 Oct 2001

Attachment to

Bruce Scott Media Release Min 404/2001 dated 5 October 2001



Serial Recommendation

3.1 The Panel’s proposals for changes to ADF remuneration arrangements are seen as an integrated package and implemented on that basis. 4.1 The CDF and the Service Chiefs be made fully accountable for strategic people capability issues in the ADF and the three Services respectively

(following implementation of Recommendation 13.1). 4.2 The DPE people management functions be restructured into a small central policy unit to provide strategic people capability policy advice to the CDF

and Secretary.

4.3 The necessary organisational changes be put in place that would allow the Service Chiefs to take on their delegated people leadership roles, including the creation of small sections to provide strategic people capability advice within the three Services.

4.4 The three Services and the DPE ensure they have or acquire the required calibre of strategic people capability advice. 5.1 There is clear and sustained recognition of the following three principles underpinning ADF remuneration policies:

Principle 1: Engaging in unique activities - Combat operations are unique to the ADF and should be recognised with specific remuneration policies.

Principle 2: Nature of military service - Remuneration policies should reflect the liability ADF members have to serve, and the special characteristics of military service.

Principle 3: Adherence to community standards - ADF remuneration policies should be consistent, to the extent practical, with those operating in the wider civilian community. 5.2 The principles and broad strategies outlined in Chapter 5 should be

adopted for the purpose of guiding the determination of ADF remuneration policies. 5.3 The above principles and broad strategies be applied in a consistent and disciplined manner, subject only to amendment when it is clear the military

and industrial environment in which they are required to operate justifies change. 6.1 A new flexible salary structure for officers be adopted which encompasses rolling in the continuous qualifications and skills element of the major

environmental allowances to create continuous salary bands, thereby providing the opportunity for the Service Chiefs to move away from the officers common scale, should they elect to do so.

2 Attachment to Bruce Scott Media Release Min 404/2001 dated 5 Oct 2001

Serial Recommendation

6.2 Specialist officers be included in the new flexible salary structure, but that this not constrain the Services’ capacity to ensure officers receiving specialist salary rates be restricted to performing specialist work.

6.3 The other ranks salary structure be consolidated by rolling in the existing qualification and skills elements of the salary related allowances and progressively removing divisions between the existing pay groups.

6.4 Determining salary related allowances be the responsibility of the Service Chiefs with a view to: • reducing each allowance to its essential elements with each element being treated separately and differently, subject to the principles and

options articulated in Chapter 6 and the requirements of the Service Chiefs;

• applying targeted and flexible attraction and retention payments, rather than paying allowances which cannot be reduced, ceased or varied as circumstances change;

• limiting disability allowances to circumstances where it is essential to compensate for adverse and unsatisfactory physical working conditions which cannot be ameliorated; and

• limiting the recognition of qualifications and skills that are not ongoing to on-occurrence payments.

6.5 Service Allowance be rolled into base salary at its current level. 6.6 Uniform Maintenance Allowance be rolled into base salary, but be discounted by the actuarial cost of accrual based superannuation. 6.7 A comprehensive communication strategy be developed and implemented

to improve ADF members’ understanding of their remuneration package, the rationale underpinning the elements of the package as well as its comparative value. This strategy should include providing members with fortnightly pay advices and promoting the Comparative Employment Value Adjustable Model throughout the ADF. 6.8 The proposed flexible salary structure be used to address circumstances

where existing performance management systems do not provide effective rewards. 6.9 Performance based pay concepts be considered for future implementation, including the application to star rank officers of performance pay

arrangements applying to civilian senior executives within Defence. 6.10 Consideration be given to adopting the total remuneration package approach, involving cashing out non-cash benefits, wherever practicable and appropriate. 6.11 Consideration be given to adopting individual remuneration arrangements

for senior personnel. 7.1 Recreation Leave Free Travel be discontinued when Accommodation Assistance Allowance is provided.

3 Attachment to Bruce Scott Media Release Min 404/2001 dated 5 Oct 2001

Serial Recommendation

7.2 All other financial conditions of service, save for the conditions relating to overseas deployments and postings, be systematically reappraised by the Service Chiefs Chiefs against the following framework: • by determining whether the provision remains justified or relevant in

view of its purpose;

• by clearly focusing on the outcome the provision seeks to achieve, in particular, whether it contributes to military capability; and

• having regard to the strategies outlined and the comments made in relation to the specific examples provided in Chapter 7.

8.1 An Accommodation Assistance Allowance, based on regional housing costs and family structures, be introduced to replace the existing Group Rent Scheme and LIA charges.

8.2 The meal subsidy in messes be reduced to help offset the cost of the Accommodation Assistance Allowance.

8.3 The Home Purchase Assistance Scheme be abolished to help offset the cost of the Accommodation Assistance Allowance.

8.4 Market prices be charged to occupants of DHA houses and Defence provided LIA, with ADF members using the new Accommodation Assistance Allowance and their own resources to secure their accommodation.

8.5 Defence note the administrative issues discussed at Appendix 9 when implementing the Accommodation Assistance Allowance.

8.6 Defence negotiate a contractual arrangement with DHA to ensure that a ‘landlord of last resort’ is available in remote locations and in limited housing markets.

8.7 Defence negotiate with DHA to protect the Commonwealth’s capital investment in on base and remote area houses. 9.1 Individual Service Chiefs have responsibility for managing leave, within a CDF determined framework.

4 Attachment to Bruce Scott Media Release Min 404/2001 dated 5 Oct 2001

Serial Recommendation

9.2 The CDF leave framework covers policy for legislated leave, basic recreation leave, war service leave, leave without pay and leave for compassionate and carers purposes, and includes:

• restricting the level of accruable leave for basic recreation leave to 12 weeks;

• allowing basic recreation leave to accrue fortnightly;

• changing war service leave from accruable leave to non-accruable leave;

• the partial or full cash out of long service leave after 10 years; and

• allowing maternity leave to be taken at half pay.

9.3 Additional recreation leave currently granted for flying duties, seagoing service, field service, prolonged duty, service in a relevant remote locality, trainee duty, and all other provisions for leave, be discontinued and replaced by discretionary, non-accruable commander’s and supervisor’s leave.

9.4 All leave be reportable. 10.1 There be more effective communication with ADF members about the existing military superannuation schemes and their benefits. 10.2 The Military Superannuation and Benefits Scheme Act 1991 be amended

to cease access to the MSBS Retention Benefit for future ADF members while ‘grandfathering’ the entitlement for currently serving members. 10.3 Implementation of the improvements to ancillary benefits being undertaken by the MSBS Board and Department of Defence. 10.4 Existing military pensions be indexed twice yearly consistent with changes

in public sector superannuation schemes. 11.1 Reserve members continue to have two alternative modes of active employment with appropriate remuneration, namely:

• part-time members on daily Reserve pay rates, or consolidated rates where appropriate, and

• members on full time duty at Permanent rates.

11.2 The tax-free status of Reserve pay be maintained. 11.3 Having regard to the need to recognise the increased callout liability, and in view of the need to reflect the change we propose to military salary in Chapter 6, we propose that Service Allowance and Uniform Maintenance

Allowance be included in the military salary of Reserve members. 11.4 Service Chiefs should consider Reserve pay rates be set at 100 per cent of that for equivalent Permanent employment categories unless different

competencies are required. Under these circumstances Service Chiefs should authorise placement of Reserve members at different points in pay bands.

5 Attachment to Bruce Scott Media Release Min 404/2001 dated 5 Oct 2001

Serial Recommendation

11.5 An annual payment be provided to those Reserve members on high readiness for callout, to compensate for the increased personal preparation required. The quantum should be at the discretion of the Service Chiefs and should be paid at the conclusion of qualifying periods of effective service.

11.6 Superannuation should not be extended to Reserve members while Reserve pay remains tax free. 11.7 Service Chiefs apply selective retention bonus payments at critical points in the career of Reserve members. These bonus payments should be

deferred and paid on the satisfactory completion of an appropriate period of effective military service. 11.8 Service Chiefs consider deferred bonus payments for Permanent members transferring to active components of the Reserve. 11.9 The CDF resolve the compensation issues for Civilian Specialists. 11.10 Head Reserve Policy review the effectiveness of Employer Support

Payments once experience is gained. 11.11 Service Chiefs consider a deferred bonus payment for members of the inactive Reserve components. 12.1 Strategic people capability planning be fully embedded in the ADF planning


12.2 ADF leadership act to identify and reduce excessive workloads. 12.3 Government be advised of any reduced capability caused by excessive workloads. 12.4 Innovative work practices be actively pursued by the CDF and Service


12.5 Financial incentives be specifically targeted and monitored for effectiveness and not be built in to base salary and allowance rates. 12.6 Particular attention be given to the management of unrealistic career expectations. 13.1 The responsibilities currently held by the Minister for Employment,

Workplace Relations and Small Business under sections 58F to 58Q of the Defence Act 1903 be transferred to the Minister for Defence. 13.2 In recognition of the distinctive features of military service, the Tribunal be maintained as a separate independent arbitral tribunal responsible for

determining specified elements of ADF remuneration. 13.3 Section 58H of the Defence Act 1903 be amended to change the role of the Tribunal to determining, on an annual basis, the appropriate minimum and maximum salary levels for ADF members up to and including colonel

(and equivalent).

13.4 The Tribunal’s proceedings be carried out in an informal and non-adversarial manner. 13.5 The office of the Defence Force Advocate be abolished. 13.6 The remuneration of star rank officers be determined directly by the CDF,

advised by the Service Chiefs. 14.1 The integrated package of reform proposals and the implementation plan outlined in Chapter 14 be adopted.