Posted 13/05/2020 by David Watt
Purpose of the Bill
The Defence Legislation Amendment (Miscellaneous Measures) Bill 2020 seeks to do two things.
Firstly it amends the Defence Home Ownership Assistance Scheme Act 2008 to extend the period from two to five years in which a member who has left the Australian Defence Force (ADF) can access the Defence Home Ownership Assistance Scheme.
In addition, it amends the Australian Defence Force Superannuation Act 2015 (ADF Superannuation Act) so that former ADF members can continue to make contributions to their ADF superannuation accounts once the ADF Super Trust Deed has been amended to so allow. The Bill contains consequential amendments to the Superannuation Industry (Supervision) Act 1993 (SIS Act) to support that change.
The Bill was introduced into the House of Representatives on 13 February 2020 by the Minister for Defence Personnel.
Background and history
Defence Home Ownership assistance scheme
During the 2019 federal election campaign the Prime Minister and the Minister for Veterans’ Affairs announced that the Government would extend the time in which eligible veterans could access the Home Ownership Assistance Scheme from two to five years after they complete their ADF service. The Prime Minister said this would:
… allow veterans and their families more time to settle their affairs and find a home once their service has been completed.
The Defence Home Ownership Assistance Scheme was established in 2008 by the Defence Home Ownership Assistance Scheme Act 2008 (DHO Act). The DHO Act was enacted in response to concerns about the ADF’s ability to recruit and retain people. The Australian National Audit Office conducted audits into this issue during 2000 and again in 2003. Both audits noted the importance of ‘quality of life’ issues to the retention of ADF members and the second asserted:
Expenditure on retention has the potential to be much more cost effective than expenditure on recruitment and training.
Problems with recruitment and retention continued through 2005 and in 2006 the Government initiated a review of the existing 1991 Defence Home Ownership scheme. In response to this review and as a part of the 2007 Budget, the Minister for Defence announced that the 1991 scheme would be replaced with a new scheme. This was intended to enhance assistance by providing higher benefits as members served for longer periods, and allowing members to choose a mortgage provider (the old scheme had one specified provider).
The resulting Defence Force (Home Loans Assistance Amendment Bill 2007 lapsed when the Parliament was prorogued that year. The Rudd Government supported the policy and a new Bill in similar terms was enacted in 2008. It is this Act that the current Bill seeks to amend.
Superannuation
The ADF Superannuation Act established a new superannuation scheme for members of the ADF—the Australian Defence Force Superannuation Scheme (ADF Super). It is an accumulation scheme to which present members can no longer contribute when they leave the ADF. In order to remove this stricture changes must be made to the ADF Super Trust Deed. The purpose of the current Bill in relation to the ADF Superannuation Act is to clarify that the proposed change to the Deed is consistent with the relevant legislation.
The current Bill
In order to achieve the Government’s aims the Bill contains two Schedules. Schedule 1 amends the DHO Act by:
- making amendments such that when an eligible ADF member leaves the service they can apply for a subsidy certificate for a period of up to five years
- changing all references to two years (the current length of time in which the subsidy lasts) to five years
- changing the rules governing members who have left and rejoined the ADF to bring these into line with the change from two to five years and
- ensuring that a member who has previously applied and been refused under the two-year rule can apply again.
Schedule 2 amends the ADF Superannuation Act and the SIS Act to:
- insert new definitions for ‘employer’ and ‘former long term ADF member’ in the ADF Superannuation Act
- insert a new subsection 16(3) into the ADF Superannuation Act to make clear contributions may be made by employers of former long-term ADF members or by self-employed former long-term ADF members in accordance with the Trust Deed
- amend the SIS Act so that ADF Super will be required to offer insurance products that provide benefits for permanent incapacity or death to those members who have left the permanent ADF or ceased full time service. Permanent ADF members or Reserve members rendering continuous full-time service will continue to be covered for these things by the Australian Defence Force Cover Act 2015.
The Explanatory Memorandum for the Bill states that the financial implications are modest, with an estimated additional cost of $1.8 million across the forward estimates.
Committee consideration
The Selection of Bills Committee recommended that the Bill not be referred to any committee. Similarly, the Parliamentary Joint Committee on Human Rights, in its report of 26 February 2020, stated that it had no comment to make on the Bill.