Thursday, 30 March 2006
Defence Housing Authority Amendment Bill 2006
That this bill be now read a second time.
The Defence Housing Authority Amendment Bill 2006 makes various amendments to the Defence Housing Authority Act 1987, including the creation of a smaller, more commercially focused board and the establishment of an advisory committee. The amendments reinforce the government’s ongoing commitment to the provision of high-quality housing to our Defence Force personnel and their families. The Commonwealth will also benefit from the DHA being given the capacity to provide services to other Commonwealth agencies, and to provide ancillary services to both Defence and other Commonwealth agencies. The Commonwealth will be able to achieve best value for money outcomes by utilising the DHA’s expertise in housing provision. The increase in the DHA’s capacity will also underpin its long-term viability as a government business enterprise.
The amendments in the bill are consistent with the Australian government’s response to the recommendations of an interdepartmental review into the governance arrangements and legislative framework of the DHA. This review took account of the recommendations outlined in the Review of the Corporate Governance of Statutory Authorities and Office Holdersby Mr John Uhrig AC.
Turning now to the specific amendments, I will outline the key changes in the bill.
Firstly, the bill introduces a change of name for the authority to Defence Housing Australia. This change better reflects the DHA’s commerciality, and establishes a brand name that is readily recognised with the activities of the DHA throughout Australia. An appropriate brand name is important to the ongoing commercial success of the DHA.
Secondly, the bill reorientates the structure of the board by reducing its size and creating an advisory committee. These changes reflect a more commercial arrangement which also takes into account the better practice guidance on board size contained in the Uhrig review. The DHA board will now have a more commercial focus and greater freedom to operate commercially. Given the importance of housing to Defence’s operational effectiveness, Defence representation on the board will be retained, although reduced from five to two. The Secretary of Defence and the Chief of the Defence Force will each nominate a representative to serve on the board. These nominees will be approved by the Minister for Defence. A nominee of the Secretary of the Department of Finance and Administration, who is approved by the Minister for Finance and Administration, will be added to the board to enhance its commercial focus.
In line with the recommendations of the Uhrig review, representatives from each of Navy, Army, Air Force and Defence Families Australia will be appointed to the advisory committee. This committee will now be the primary vehicle for the representations of Defence and Defence families to the DHA board. The committee will assist and support the board in its primary role as the provider of housing to meet the operational requirements of Defence.
Thirdly, the bill also makes provision for the DHA, subject to ministerial approval, to expand its operations to provide housing and housing related services to other Commonwealth agencies. This amendment in particular will promote the efficient use of the DHA’s housing stock and maximise the benefit to the Commonwealth from the DHA’s expertise in the provision of housing and housing related services. The DHA will have greater scope in its operations, which will assist the DHA to achieve its outcomes as a government business enterprise.
For these additional services to other agencies, a volume limit has been set which is a percentage of the DHA’s total revenue. Initially, revenue from expanded services cannot equate to more than 25 per cent of the DHA’s total revenue. A review of the revenue limit will occur in three years to evaluate the suitability or otherwise of this limit. The requirement for ministerial approval and the volume limit are designed to safeguard the interests of Defence.
Fourthly, the bill also allows the DHA, subject to ministerial approval, to provide services that are ancillary to the housing and housing related services it provides. Ancillary services could include, but would not be limited to, services associated with the care and control of residential premises and services to facilitate the access to community support or community services. The minister will be required to approve the ancillary services that DHA can provide to ensure they are appropriate and in the best interests of Defence and the Commonwealth.
The fifth key amendment will make the DHA liable for Commonwealth taxation, from which it was previously exempt. The DHA will remain exempt from state and territory taxation but will be required to make tax equivalent payments in respect of state and territory taxation to the Commonwealth.
Finally, there are a number of amendments proposed in this bill that will improve the harmonisation of the DHA Act with the Commonwealth Authorities and Companies Act 1997, under which DHA also operates. These amendments are necessary to remove outdated provisions from the DHA Act. The government’s expectations of the DHA will have greater clarity as a result of these amendments. The commercial focus of the DHA’s legislative framework will be strengthened and the DHA’s governance arrangements will now be more closely aligned with those of other government business enterprises.
All of the amendments proposed in this bill herald the beginning of an exciting new phase for the Defence Housing Authority. I commend the bill to the House and present the explanatory memorandum.
Debate (on motion by Mr Gavan O’Connor) adjourned.