|
|||
|
|||
|
|
Subsidy Tier Level |
Minimum Permanent Service |
Minimum Reserve Service |
Subsidised Loan Limit |
Maximum Monthly Subsidy |
1 |
4 years |
8 years |
$187,159 |
Up to $200 |
2 |
8 years |
12 years |
$280,738 |
Up to $301 |
3 |
12 years |
16 years |
$374,318 |
Up to $401 |
The Defence Home Owner Scheme (DHOS) was introduced in 1991 to assist eligible members, and ex-members, of the 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. After a review of the DHOS, the Howard government announced changes to the provision of home loan assistance in the 2007-08 Budget.[7] This Budget initiative eventually saw the Defence Home Ownership Assistance Scheme Act 2008.[8]
Part 2 of this Bill is basically extending access to the DSHIS to persons eligible for assistance under the new DHOAS.
The Government announced the initiative to close up the dependants’ pension from the end of September 2009.[9] The proposal is to cease the payment as at 22 September 2009 and to provide a lump-sum advance payment of three years payment, as a pay-out amount.
The estimated cost of this initiative is $5.3 million in 2009-10 followed by savings of $2.2 million in 2010-11, $2.0 million in 2001-12 and $1.9 million in 2012-13.[10]
Dependants (children and spouses) of veterans were eligible under the Repatriation Act for a dependants’ pension. The rate of payment depended on the rate of pension paid to the veteran or member, that is, 10 per cent of the amount of pension paid to the veteran/member. The current maximum rate of dependants’ pension paid is $8.42 a fortnight, but some dependants are paid as little as 29 cents a fortnight. These payments have remained unchanged for many years. There have been no new grants of dependants’ pension since 1985 and except for a small increase in the rate as a part of the compensation arrangements provided for the introduction of Goods and Services Tax (GST) in 2000, the rates have been frozen since 1964.[11]
It is interesting to note that since 1985 there have been no new grants of dependants’ pension. The main reason for this is the need to provide these payments over the past 20 years has been taken over by other assistance payments to the parents/carers of a child. These payments were originally the Chile Endowment and then became the Family Allowance and now the Family Tax Benefit Part A (FTB-A) and the Family Tax Benefit Part B (FTB-B) payments.
Under the proposal, current recipients of the dependants’ pension will receive a lump-sum equivalent to three years’ payments. Approximately 26 000 people will receive a one-off lump-sum payment of up to $656.76. Lump-sums will be paid at the end of September 2009 at which time the pension will cease.
The fact that there are still dependants’ pensions being paid to the dependants of persons entitled to a payment under the VEA is somewhat anachronistic. Dependants’ assistance is now and has been for many years been provided with the main family assistance payments like FTB-A, FTB-B and also the Child Care Benefit. The only other payments provided to a person, as they are the dependant of a veteran or a person qualified to a payment under the VEA, is the Partner Service Pension and the Orphan’s Pension. However, even the Partner Service Pension has recently had access to qualification narrowed; recognising that generally an adult of working age should qualify for an income support payment in their own right.[12]
Item 1 changes the reference to ‘an account with a bank’ in existing subsection 430(1) of the Military Rehabilitation and Compensation Act 2004 (MRCA) to an account with a bank account or, where a person is physically outside Australia, a foreign corporation that takes money on deposit.
Item 4 changes the reference to ‘an account with a bank’ in subsection 58F(1) of the VEA to an account with a bank or, where a person is physically outside Australia, a foreign corporation that takes money on deposit. Item 7 does likewise to existing subsection 122A(1).
Item 11 inserts a proposed section 38CAA into the Defence Service Homes Act 1918 (DSHA) which empowers the Commonwealth to undertake insurance in respect of:
for which a person is eligible under the DHOAS.
Item 12 inserts a proposed section 38EAA which provides for the cancellation of insurance undertaken under the proposed section 38CAA when the person ceases to be eligible to the DHOAS.
Item 14 inserts a proposed subsection 52–65(1E) into the Income Tax Assessment Act 1997 (ITAA) to ensure that any lump-sum payment under section 198N of the VEA is not taxable income.
Item 15 inserts a proposed section 198N into the VEA. Proposed section 198N details the dependants’ pension payable under subsection 4(6) or (8B)[13] of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 will not be payable after 22 September 2009. Proposed section 198N provides that those persons currently in receipt of dependants’ pension will be entitled to a lump-sum payment equal to three years entitlement at the rate the pension was last paid to them.
The move to allow payments under the VEA into an account in an overseas financial institution is long overdue.
The extension of access to the DSHIS to persons eligible for assistance under the new DHOAS is essentially an update to ensure this incentive aimed at retaining members in the ADF is continued.
The dependants’ pension has seen no new grants since 1985 and the rates frozen since 1964, indicating how outmoded this payment is. The payout of three years lump-sum advance is quite generous, given the payments could, and probably should, have just been stopped as of a date in the future.
Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2413.
[1]. Australian
Government, Budget measures: budget paper no. 2: 2009-10, Commonwealth of
Australia, p. 365, viewed 5 June 2009,
http://www.aph.gov.au/budget/2009-10/content/bp2/html/index.htm
[2]. Australian Government, Budget measures: budget paper no. 2: 2009-10.
[3]. Australian
Government, Budget measures: budget paper no. 2: 2009-10, Commonwealth of
Australia, p. 394, viewed 5 June 2009,
http://www.aph.gov.au/budget/2009-10/content/bp2/html/index.htm
[4]. Explanatory memorandum, p. ii.
[5]. Australian Government, Budget measures: budget paper no. 2: 2009-10, Commonwealth of Australia, p. 394.
[6]. These subsidised loan limits are valid as at 2008-09. Loan limits for 2009-10 are being reviewed. This may result in a change to the loan limit amounts and maximum monthly subsidy values, potentially a decrease, effective as at 1 July 2009.
[7]. Australian Government, Australian Government, Budget measures: budget paper no. 2: 2007-08, Commonwealth of Australia, p. 105, viewed on 9 June 2009, http://www.budget.gov.au/2007-08/bp2/html/index.htm
[8]. P Pyburne, Defence Home Ownership Assistance Scheme Bill 2008, Bills digest no. 141, 2007-08, Parliamentary Library, Canberra, 18 June 2008, viewed 9 June 2009, http://www.aph.gov.au/library/pubs/bd/2007-08/08bd141.htm
[9]. Australian
Government, Budget measures: budget paper no. 2: 2009-10, Commonwealth
of Australia, pp. 394–395, viewed on 9 June 2009,
http://www.aph.gov.au/budget/2009-10/content/bp2/html/index.htm
[10]. Australian Government, Budget measures: budget paper no. 2: 2009-10, Commonwealth of Australia, pp. 394–395.
[11]. Australian Government, Budget measures: budget paper no. 2: 2009-10, Commonwealth of Australia, pp. 394–395.
[12]. D Daniels, P Yeend, Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Further 2008 Budget and Other Measures) Bill 2008, Bills digest no. 52, 2008-09, Parliamentary Library, Canberra, 31 October 2008, http://www.aph.gov.au/library/pubs/bd/2008-09/09bd052.htm
[13]. The Bill itself makes reference to a subsection 4(8b), however no such subsection exists. This appears to be no more than a typographical error and subsection 4(8) of the Veterans’ Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 clearly relates to the relevant subject matter.
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