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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