Alan Griffin (Bruce, Australian Labor Party, Shadow Minister for Veterans' Affairs) Share this | Link to this | Hansard source

The Labor Party supports the Defence Force (Home Loans Assistance) Amendment Bill 2007, which will continue to provide ADF personnel with loans assistance until the new scheme is established. The bill seeks to amend the Defence Force (Homes Loans Assistance) Act 1990 to extend the operation of the Defence HomeOwner Scheme by half a year, from 31 December 2007 to 30 June 2008. This would allow sufficient time for the new scheme, announced in the 2007-08 budget, to be finalised and introduced. The intention of the new scheme is also supported, although the specific detail will be carefully considered once it is available. The Labor Party welcomed its announcement in the 2007-08 budget as a step in the right direction. So far, we know that the new scheme will increase the subsidy limit in tiers according to length of service and will also allow the ADF member to choose their mortgage provider instead of the single provider, National Australia Bank. We will be seeking further information from the government on the particulars of its new scheme and eligibility requirements at estimates in the coming weeks. I note that the current scheme is 16 years old and was established under the previous Labor government. This is the first real attempt by this government at improving it. It is about time, and Labor encourages the government to implement the new arrangements without delay.

This government must do more to ensure that strong support and first-class services are provided to ADF members and their families. The Labor Party believes that more can always be done to provide Defence personnel and their families with greater choice, better housing and more incentives to stay on. The basis for this matter, and one of the reasons why housing is a significant issue in relation to the defence forces, relates to the whole issue of recruitment and retention, key issues with respect to personnel requirements of the ADF. It is an area where there are real difficulties with the record of this government.

February 2007 Senate estimates data revealed the situation with ADF recruitment by looking at the question of target achievement and the disparity thereof across the services and across the ADF as a whole over the period of this government. There are some key points with respect to that. ADF recruitment levels have been short of recruitment targets for 10 years in a row. There was a massive jump in the disparity between target and actual levels of recruitment between 1997-98 and 1998-99, with a peak in poor performance in 1999-2000. There is still an overall shortfall in 2006-07 of 839 personnel across the ADF. Some of these figures are quite mind-boggling.

The variation in respect of targets back in 1999-2000 was some 4,593 less than the target. For the year before it was 3,027 less than the target. For the year after, in 2000-01, it was 4,077 less. In the years following the figures were 1,983 less, 1,382 less, 1,421 less, 1,924 less and 1,630 less. As we can see, right across this whole period the circumstances show that the government has failed to deal with this issue. It has set targets but has not been able to meet them. Action on this matter is long overdue.

In the broader sense of this particular issue, a report today on ABC Online headed ‘Backlog leaves Army recruits waiting for training’ talked about a side issue. The report read:

The latest recruitment drive for the Australian Defence Force ... appears to have hit a snag, with a major backlog in training for soldiers.

The ADF has estimated that about 300 Army Reserve recruits have not yet been trained, while four out of five of those who have enlisted will face waits of between one and six months for training.

Nearly 400 former Defence employees are also still waiting to hear if their applications to rejoin have been approved.

The ADF has blamed the situation on the training cycle for specific jobs and a lack of vacancies in trade schools.

But a News Limited report suggests the reason is that the Army training centre near Wagga Wagga, in southern New South Wales, is overstretched.

As the opposition defence spokesperson was quoted as saying in that report:

“The Government’s throwing lots of taxpayers’ money into glossy advertising but can’t put the people through the system ...

This is a major concern as to the operation of ADF recruitment. It is one of the reasons why this government has got itself into trouble in ensuring that the Defence Force has the capability to do what is required.

The question of what has occurred with defence home loans assistance is an example of that. The government has waited 10 years before doing anything about the scheme. The comparison of activities table in the 2005-06 Department of Defence annual report shows a steady, consistent decline since 2001-02 in the take-up rates for the program. As we look at that particular table we see some of the differences. In ‘Applications for entitlement certificates received’ the situation is that the figure has gone from 2,451 in 2001-02 down to 1,724 in 2005-06. When we go to the question of entitlement certificates issued, we see the figure has gone down from 2,342 to 1,674. For ‘Applications for payments of subsidy received’ it was 1,648 back in 2001-02 and has been dropping on a yearly basis to 1,544, 1,428, 1,301 and 1,184 in 2005-06. As for the number of subsidy payees as a whole, the figure has increased but, again, we have to take into account the building factor over time. But the circumstances on an annual basis in terms of new applications across that period have seen it go down. That raises some questions about this scheme, given the fact that it is not new, that its take-up is going down and that this has been happening for some time. It has taken this government quite some time to actually start looking at the issue of what to do to try to address that.

The Defence HomeOwner Scheme assists ADF members to purchase a home, and that is an important ADF personnel retention measure. Under the Defence Force (Home Loans Assistance) Act 1990, the scheme will finish on 31 December 2007; hence the need to make this change on this occasion until the new scheme is in place. The maximum entitlement of the current scheme for married or de facto couples who are both in the ADF is up to $160,000 on one property. I am advised that the amount of subsidy was increased in 1996 but then remained the same until this year’s budget.

Home ownership assistance first began in 1919 as a repatriation measure for servicemen returning from overseas war service after World War I. The reasons for the establishment in 1990-91 of the Defence HomeOwner Scheme under the Defence Force (Home Loans Assistance) Act 1990 were outlined in a paper from the Parliamentary Library. The war service homes scheme was established in 1919, as I mentioned earlier. From 1972 the scheme began to be seen as part of the Defence Force’s conditions of service rather than as a repatriation measure. The erosion of the value of the loan, which had been capped at a maximum of $25,000 since 1980, led the government, in its May 1985 economic statement, to seek the involvement of the private sector in the funding and operation of the scheme.

The big issue for some time was the failure to increase the maximum amount available from $25,000, the amount set in 1980. I mentioned earlier that the new scheme commenced on 15 May 1991, and this area was not updated for quite some time. In November 1996 the ADF Home Loan Assistance Scheme had its maximum subsidised loan increased from $40,000 to $80,000.

In May 2006, Defence announced that it was exploring some options to replace the Defence HomeOwner Scheme and that it would conduct a review. The review is now complete, but it appears that its findings have not been publicly released. I have to question why that is the case. However, the Labor Party welcomes the new scheme and encourages the government to implement it without delay. There is still more work to be done, but this government has shown that it will not act decisively and determinedly to do so. If Defence personnel have had to wait 11 years for movement on Defence home loans support, we do not want to wait to see action from the Howard government on other areas of personnel retention, housing and entitlements. I commend the bill to the House.

David Fawcett (Wakefield, Liberal Party) Share this | Link to this | Hansard source

I rise to address the Defence Force (Home Loans Assistance) Amendment Bill 2007. While I welcome the ALP’s support for this bill, I would like to comment on a couple of things that have just been mentioned. While Labor have talked about the Howard government and decisiveness and they have talked about the Howard government and our need to recruit more people, what they have not talked about is the fact that our need to recruit more people is driven largely by the decisiveness of previous Labor governments which, for example, decided in 1991 to cut two battalions from the Australian Army. Over the last 11 budgets of Labor governments, defence outlays decreased by two per cent in real terms. Compare that to this government’s decisive commitment to defence in the last 11 budgets, increasing defence outlays by 48 per cent in real terms. Compare that two per cent decrease in real terms with the 48 per cent increase in real terms. This government has been so decisive that this is the seventh consecutive budget in which it has met or exceeded the defence white paper funding commitment.

That is significant because for many years Australia has talked about the level of funding that it should be putting into defence in real terms, and then it has consistently failed to meet its targets, particularly under the previous Labor government when we saw cuts to the point where the chiefs of the Army and of the Defence Force were making comments about it. The Armed Forces Federation said that the cuts were devastating. General Peter Gration and the then head of the Department of Defence, Tony Ayers, wrote to the Minister for Defence warning that Defence could not sustain further cuts. They said that there were finite limits to how much more could be drawn from so much less. Is it any wonder that we have had to recruit a number of people when the Defence Force was left in such a parlous state by the previous Labor government?

I welcome the extension of this scheme, but I particularly welcome the announcements in this year’s budget of what the new scheme will look like. The new scheme gives choice to the service men and women. They can choose a mortgage provider that best suits their needs and the product that best suits their needs. Because of the phased nature of the new product that will be offered, there is an incentive for service men and women to continue their service in the Defence Force. Around the 12-year mark, they can draw up to $312,000 with a 37½ per cent subsidy. That is a significant investment by this government into the men and women of our Defence Force.

It is not only in this area that we have been investing; we have also been investing in Defence Force recruiting. I note that the member opposite talked about recruiting targets and retention. It was interesting to compare this legislation with a similar bill that I spoke on in 2006, when I delved into some of the history of these kinds of recruitment and retention initiatives. Even in times of high unemployment under the previous Labor government, it struggled to attract and retain people in the Defence Force. This government, with its 32-year-record low unemployment—a record number of people engaged in the workforce—is seeing significant achievements through its investment in the current recruiting rounds. As of 30 April this year, 1,000 more people had enlisted in the ADF than at the same time last year. That is because of the investment that this government has made in Defence for their recruiting approaches.

Defence have moved on from the days of the traditional advertisements, and they are looking at things like shared content shows. These shows are becoming popular, and now there is an investment in a Navy patrol boat series. More importantly, they are recognising that the words of Brigadier Jim Wallace (Rtd) hold true for the broader community. Brigadier Wallace often made the point that you lead people and you manage resources. You do not manage people. Much of what was being offered to the young people in our society was the concept of a career that you dabble in, get a bit of training in and then move on to something else. I often said to people under my command when I was in the ADF that no ISO 9000 certified HR management system would have encouraged people at Gallipoli to go over the top of the trenches. It would not encourage somebody to fly a C130 into a missile engagement zone into Baghdad. People do those things because they believe in something that is more significant than themselves and their own circumstances at that point in time.

The Defence Force is now reaching out and touching that part of people. It says: ‘Here is a career path. Here is a worthwhile use of your time that will not only benefit you through a range of things but, more importantly, is an investment in your nation. This is a worthwhile way to spend your life.’ During the first 19-day period the campaign was aired, there was a 33 per cent increase in inquiries being made to the Army. Defence is also looking at other ways of engaging with younger people, such as online gaming and even moving to things like a specific game that could be launched by one of the premier game stations. There is the use of websites and also text messaging. There are a whole range of approaches designed to encourage young people to look at the Defence Force.

One of the most significant things, which I welcome, is the concept of a military gap-year scheme. This will cost some $306 million over the next 10 years. This is not national service. It provides young people in Australia who are considering what they want to do with their future an opportunity to say, ‘Yes, I’m going to give the Defence Force a go.’ Up to 1,000 people can sign up and spend that time experiencing military training and a military lifestyle for 12 months. At the end of that period, there is a very good chance that a high percentage of those people will stay on. But if they do not then all the benefits that many people in our community are calling for from national service will have accrued to these young people in terms of their confidence, the discipline instilled in them, their life experience and the sorts of leadership qualities that the rest of Australian society values so much.

Lastly, I wish to talk briefly about why it is possible for us to extend this scheme and, in practice, to extend the benefits it provides to the defence service men and women in Australia. It is because of the economic management of this government. Rather than having a $96 billion debt and paying $8½ billion in interest every year, this government is able to make those significant investments in the Defence Force, in the security of our nation and in the families of our defence service men and women. As I said before, this is the seventh consecutive budget in which the government has met or exceeded the defence white paper funding commitment. Some $14 billion over the next 10 financial years was announced in this budget to look at a whole range of measures, including things like defence housing. Some $2.1 billion is going into recruitment and retention to make sure that we provide the kind of environment that will encourage the men and women of Australia to choose to serve their country through the services rather than any of the many other jobs that are available in Australia’s expanding economy because of this government’s policies. We have invested in a whole range of capabilities, including systems, platforms and people. There is additional logistics sustainment funding and security measures to protect our people. There are a whole range of things that this government has been able to invest in because of its economic management.

As people move through this year and consider their choices, it is important that they look at the actions of both parties. It is all very well for the Leader of the Opposition to claim to be a financial conservative and claim to have defence as a priority, but look at the opposition’s actions. Look at the debt that was accrued under the former government. Look at the decrease in defence spending and the cuts to defence personnel. Look at the opposition’s attempts to regain credibility—an advertising campaign where the Leader of the Opposition is sitting in front of a building saying, ‘I’m an economic conservative.’ It looks very much like the actions of the former Leader of the Opposition, who signed a big cardboard cheque that said, ‘I guarantee to keep interest rates low.’ If the people of Australia are concerned about the prosperity that underpins the wellbeing of their families and the ability of this country to defend itself, then only one side of this House can deliver that—that is, the coalition.

Bruce Billson (Dunkley, Liberal Party, Minister Assisting the Minister for Defence) Share this | Link to this | Hansard source

in reply—I thank members and acknowledge their contributions to the debate on the Defence Force (Home Loans Assistance) Amendment Bill 2007. I thank the member for Bruce for his comments, and I assure him there will be abundant opportunity for discussion about the machinery relating to the enhanced scheme that the government has announced in the budget. I would particularly like to thank the member for Wakefield for his comments. His extended period of service as a former Army officer gives him a very clear understanding. He has articulated and demonstrated his insights into these measures so well: retention in the ADF is not just about the member; it is also about the family. I would like to acknowledge again his extensive experience. It is valued by the community he represents, which has an extensive ADF membership. So thank you to members for that.

The Defence Force (Home Loans Assistance) Amendment Bill 2007 seeks to further extend the operation of the current Defence HomeOwner Scheme from 31 December 2007 to 30 June 2008. Defence has completed a review of the ADF homeownership assistance program, and the results were announced on 9 May by the government as part of the 2007 budget. The new Defence Home Ownership Assistance Scheme is one of a number of initiatives in the budget aimed at improving ADF recruitment and retention. The government has approved $864 million over the next 10 years in the form of a home loan interest subsidy that involves progressively higher subsidy assistance to ADF members who serve beyond critical retention points. This is important because it will provide ADF members with assistance to achieve homeownership. It recognises the difficulty members have in purchasing a new home due to the nature of their career and the relocation and posting cycle that is a part of that career.

As a result of this measure, there will be a significant benefit to retention within the ADF. It is a targeted measure that involves progressively higher loan subsidies for those who serve beyond those critical separation points. This proposal will do a number of things. It will replace the old home loan assistance scheme, which we are presently seeking to extend to facilitate that transition. It will provide contemporary and relevant home loan assistance that is pitched at a level that reflects current prices. Many in the Defence Force community and beyond recognise that the equivalent value of the current subsidy has been outpaced by improvements in home values. So that is also being adjusted in the new program.

The bill provides for increasing entitlements where members serve beyond key exit points and is based on a 37.5 per cent interest subsidy of a three-tiered loan subsidy limit. For four years, it is $160,000 and the subsidy equates to around $241 a month. For eight years, it is $234,000 or a subsidy on interest equating to around $353 a month. For 12 years, it is $312,000 or an interest rate subsidy equating to around $470 a month. It is a structure that is more responsive to changes in the housing market. It is also aimed at providing flexibility and choice. It gives the ADF member a choice of their mortgage provider rather than having to choose from the preferred provider under the current arrangements. Also, on discharge, the entitlement to this subsidy continues at the four-year entitlement level, which is around $241 a month. If the member has served 20 years or more before discharge, it continues at the 12-year subsidy mark. All ADF members will benefit, including reservists and their families.

There are two major factors underlying the extension to the implementation of the new Defence Home Ownership Assistance Scheme to 1 July 2008. They include the need to put in place the legislative amendments. There is a requirement to amend the act that we are debating now to ensure that members and ex-members who are accruing an entitlement under the provisions of this act continue to have access to homeownership assistance in the period between the announcement of the changes and their becoming operational. The current act specifies a finishing date of 31 December 2007. After this date, no entitlement certificates can be issued, and that is why we are seeking the parliament’s agreement to extend that period of certificate eligibility. The act does, however, provide continuing support for members who have taken out loans prior to the finishing date. The progression of the amending legislation is required to ensure that no entitlements are lost.

There is also a need to put in place procurement arrangements. We need to establish a panel of home loan providers and a scheme administrator. Defence needs to go through its comprehensive procurement procedures to put that machinery in place. Procurement management arrangements are being worked through to ensure that home loan providers and the scheme administrator can support the operation of the scheme from a changeover date of 1 July 2008. That brings us to the substance of this bill—to ensure that the current arrangements extend through to 30 June 2008. This amending bill extends the time during which the National Australia Bank will continue its existing rights as a sole loan provider under the act. More importantly, this amendment ensures that ADF members eligible for homeownership assistance continue to have that eligibility in anticipation of the implementation of the new scheme and throughout the interim period. The extension also provides sufficient time for the Department of Defence to put the administrative processes that I have already touched upon in place. This bill provides the facility to transition to the far more contemporary and generous scheme that was outlined in the budget. However, we do need to ensure continuity of a scheme until such time as the new program is put in place with proper legislative and administrative support. I commend the bill to the House.

Question agreed to.

Bill read a second time

Message from the Governor-General recommending appropriation announced.