Bills Digest no. 154 2006–07
Defence Force (Home Loans Assistance) Amendment
Bill 2007
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Financial implications
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Defence Force (Home Loans
Assistance) Amendment Bill 2007
Date introduced:
9 May 2007
House: House of Representatives
Portfolio: Defence
Commencement:
On Royal
Assent
To amend the
Defence Force (Home Loans Assistance) Act 1990 to extend
the operation of the existing Defence HomeOwner Scheme to 30 June
2008. This will allow time for the new Scheme, announced in the
2007 Budget, to be fully developed and implemented.
Background
The Defence HomeOwner
Scheme (DHOS) was introduced in 1991 to assist eligible members and
ex-members of the Australian Defence Force (ADF) to purchase their
own home by providing a subsidy on the interest of a home loan
borrowed from the approved lender, the National Australia Bank.
The scheme is
administered in accordance with the Defence Force (Home Loans
Assistance) Act 1990. Defence Housing Australia administers
the scheme on behalf of the Department of Defence.
Under the current scheme, ADF personnel must
serve a set period ( basic service period ) before qualifying for
the scheme. The basic service period is:
-
Regular Service personnel who are still serving
- five years of continuous effective full-time service ; or
-
Regular Service personnel with less than 15
years of effective full-time service, and have been discharged with
a compensatable disability - basic service period is waived;
or
-
Active and Emergency Reserve personnel still
serving after 8 November 1996 - eight years of continuous efficient
service (where the annual statutory training obligation has been
met each financial year)
However, Regular Service personnel with
warlike (Somalia, Cambodia, East Timor, Afghanistan and Iraq) or
operational service need not serve the basic service period in
order to qualify. Warlike Service is the period of service in an
operational area defined as warlike by the Minister for
Defence.
Normally, eligible ADF members are entitled to
one year of subsidy for each completed year of service after
completing their respective basic service period, up to a
maximum of 20 years of subsidy. Members with warlike service are
eligible for an extended subsidy period.
The subsidy is equal to 40% of the average
monthly interest on the loan, calculated on a 25 year loan
period. The maximum loan amount eligible for the subsidy is $80,000
per ADF member (a married or defacto couple who were both eligble
ADF members could get $160,000).
More information is available from the
relevant part of the Defence Housing Australia
website.
A Review of the DHOS was announced by the
Government on 10 May 2006.
The operation of the current DHOS has already
been extended once (to 31 December 2007) by the Defence Force
(Home Loans Assistance) Amendment Act 2006 to allow for the
completion of the Review.
Whilst the Review has been completed, it
appears its findings have not been made public.
However, in the 2007 Budget, the Minister for
Defence, Brendan Nelson,
released some details of the Government s response to the
Review.(1) The key provision in the new DHOS is that the
maximum loan amount per ADF member that is subject to the subsidy
(now 37.5%) will progressively increase according to years of
service. For example, the maximum loan entitlement of regular
service ADF personal will be:
-
four years of service - $160,000 (attracting a
subsidy of $241 per month on current interest rates)
-
eight years of service - $234,000 (attracting a
subsidy of $353 per month)
-
twelve years of service- $312,000 (attracting a
subsidy of $470 per month)
More information, including entitlements for
discharged former regular ADF members, and reservists, can be
obtained in the Minister s
press release.
According to the Minister s press release, the
new scheme is estimated to cost an additional $863.5
million over the period 2008-09 to 2116-17.(2)
Item
1 amends section 3 of the above Act ( definition of
finishing day ). The item would omit 31 December 2007 , and
substitute 30 June 2008 .
Concluding comments
Whilst some key points of the new DHOS were
announced in the Minister s Budget press release and confirmed in
the Minister s second reading speech for this Bill, the
relevant part of website of Defence Housing Australia, which
administers the current scheme, notes:
While it appears that some information relating
to the operation of the new scheme is now available in the public
forum, the fine details of the Scheme are still being developed by
Personnel Executive. Further advice on the operation of the scheme
will be published on the Pay and Conditions website towards the
middle of next week.(3)
Angus Martyn
18 May 2007
Bills Digest Service
Parliamentary Library
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ISSN 1328-8091
© Commonwealth of Australia 2007
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Published by the Parliamentary Library, 2007.
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