Bills Digest no. 142 2007–08
Defence Home Ownership Assistance Scheme (Consequential
Amendments) Bill 2008
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
Contact officer & copyright details
Passage history
Defence Home Ownership Assistance
Scheme (Consequential Amendments) Bill 2008
Date
introduced: 28 May
2008
House: House of Representatives
Portfolio: Defence
Commencement:
Sections 1 - 3 on the day
of the Royal Assent; Schedule 1 at the same time as section 3
of the Defence Home Ownership Assistance Scheme Act 2008
commences.
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The purpose of the Bill is to
make consequential amendments to the Defence Force (Home Loans
Assistance) Act 1990 (the Home Loans Assistance Act) and the
Defence Service Homes Act 1918 (the Defence Service Homes
Act) to provide for the transition into the new Defence Home
Ownership Assistance Scheme and close the existing scheme for
serving members who have not yet exercised their rights under that
scheme.
The Bills
Digest for the Defence Force (Home Loans Assistance) Amendment
Bill 2007 provides the following information about the current
Defence HomeOwner Scheme (DHOS).
The DHOS was introduced in 1991 to assist eligible members and
ex-members of the Australian Defence Force 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. The Defence Housing
Authority 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 compensable
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 eligible ADF
members could get $160,000).
In May 2006 a
review of the scheme, which was due to end on 31 December 2006,
was announced. The Defence Force (Home Loans Assistance)
Amendment Act 2006 extended the life of the scheme for a
further year so that the review could be carried out.
In the 2007/08 Budget, the then Minister for
Defence, the Hon. Dr Brendan Nelson, announced the Government s
response to the Review. The Defence Force (Home Loans
Assistance) Amendment Act 2007 provided for a further
extension to the DHOS to 30 July 2008 to allow time for a new
Scheme, announced in the 2007 Budget, to be fully developed and
implemented.
However, relevant legislation had
not been introduced when Parliament was prorogued on 15 October
2007.
The amendments contained in the Bill have no financial
impact.[1]
Items 1-5 amend the Home Loans Assistance
Act.
According to existing section 3 of the Home Loans Assistance Act
the term finishing day is defined as 30 June 2008. Item
1 repeals the existing definition of finishing
day and inserts a new definition. The effect of the
proposed new definition is that the existing home loans assistance
scheme will be closed off for all eligible persons who are members
of the Defence Force on 30 June 2008. However the proposed new
definition will extend the time for non-serving members until 30
June 2010.
Existing subsection 12(1) sets out the circumstances in which
the Secretary must not issue an entitlement certificate to a
person. Item 2 inserts proposed paragraph
12(1)(g) so that an entitlement certificate cannot be
issued to a person on or after 1 July 2008.
Item 3 inserts proposed section
20A which provides that a subsidy is payable under
either the Home Loans Assistance Act
or the proposed Defence Home Ownership Assistance
Scheme Act 2008 (the proposed 2008 Act), but not both.
Item 4 inserts proposed section
36A in relation to the use and disclosure of personal
information into the existing Home Loans Assistance Act. The
section applies to personal information about an applicant or
recipient of an entitlement certificate, a person who is or has
been a subsidised borrower, and their families: proposed
subsection 36A(1).
Under proposed subsections 36A(2) and (3) the
following people may use or disclose personal information to each
other:
- the Secretary
- a delegate of the Secretary under section 37 of the Home Loans
Assistance Act, the Defence Service Homes Act or the proposed 2008
Act
- the Bank, if the Bank has received an application for a
subsidised loan or has made a subsidised loan to the person
- the loan provider, if the loan provider has received an
application for a subsidised loan or has made a subsidised loan to
the person under the proposed 2008 Act and
- a credit provider, if the credit provider has received an
application for a subsidised advance or has made a subsidised
advance to the person under the Defence Service Homes Act.
According to the Explanatory Memorandum these privacy
arrangements enable the administrators of the new scheme to inform
the administrators and loan providers under the old scheme in the
event that a subsidy recipient chooses to extinguish their rights
under the old scheme in order to take up a new scheme
entitlement.[2]
Under existing section 37 the Secretary may delegate their
powers and functions under the Home Loans Assistance Act to an
officer of the Department, a member of the Defence Force, or member
of staff of Defence Housing Australia. Item 5
inserts proposed paragraph 37(d) to allow the
Secretary to also delegate their powers under subsection 81(2) of
the proposed 2008 Act.[3]
Item 6 inserts proposed section
24A into the existing Defence Service Homes Act. The
section applies so that subsidy is not payable on a loan to a
person under the Defence Service Homes Act if the person has
received a subsidy under the proposed 2008 Act. In that respect it
mirrors the terms of item 3 that a person can
receive a subsidy under one scheme or the other, but not both.
Item 7 inserts proposed section
45C about the use and disclosure of personal information
into the existing Defence Service Homes Act. It is in the same
terms as proposed section 36A in that it contains
expanded privacy arrangements which enable the administrators of
the new scheme to inform the administrators and loan providers
under the old scheme in the event that a subsidy recipient chooses
to extinguish their rights under the old scheme in order to take up
a new scheme entitlement.
Paula Pyburne
18 June 2008
Bills Digest Service
Parliamentary Library
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