Australian Parliamentary Library Bills Digests Australian Parliamentary Library Bills Digests[Index] [Search] [Download] [Bill] [Help]
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
Defence Force (Home Loans Assistance) Amendment Bill 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.
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:
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:
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’.
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)
Presumably by the time this Bill is debated, the details of the new Scheme will be available.
‘2.2 Million boost to recruitment and retention’, The Hon Brendan Nelson, Media Release B04/2007, 8 May 2007 p. 6.
ibid, p. 4.
Defence Housing Australia, http://www.dha.gov.au/for-adf-members/housing/defence-homeowner-scheme/defence_homeownership_assistance_scheme, Accessed 17 May 2007.
This paper has been prepared to support the work of the Australian Parliament using information available at the time of production. The views expressed do not reflect an official position of the Parliamentary Library, nor do they constitute professional legal opinion.
ISSN 1328-8091
© Commonwealth of Australia 2007
Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by members of the Australian Parliament in the course of their official duties.
Published by the Parliamentary Library, 2007.