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Annual Report on the Administration and Operation of the Defence Force (Home Loans Assistance) Act 1990


The Defence HomeOwner Scheme is covered by the Defence Force (Home Loans Assistance) Act 1990. Section 39 of the act requires that an annual report be prepared for the Minister on the administration and operation of the act. The annual report is set out below.


The Defence HomeOwner Scheme is an Australian Government initiative that provides a subsidy on the interest payable on a home loan for members of the ADF. The scheme is open to permanent Defence Force members who enlisted on or after 15 May 1985 and to those permanent Defence Force members who elected to revoke their entitlement under the Defence Service Homes Scheme in favour of a Defence HomeOwner entitlement. Reserve and Emergency Force personnel who provide part-time efficient service are also eligible for assistance.

The Defence Housing Authority administers the scheme for Defence. The benefits are provided under an agreement between the National Australia Bank and the Commonwealth. Under the scheme, the Commonwealth assesses eligibility and entitlement and pays monthly interest subsidies on loans provided by the National Australia Bank. Interest subsidy is paid on loans between $10,000 and $80,000. Spouses who are both members of the ADF can apply for a combined subsidised loan of up to $160,000. The subsidy amount is calculated at 40 per cent of the average monthly interest to be paid over the life of a 25-year loan.

Providing a person has a period of entitlement, the subsidised loans can be used from one home to another during service as often as is required and once within two years of the date of separation from the ADF.

Subsidy Entitlement

The subsidy entitlement period is calculated on the number of completed years of effective full-time service after completion of a five-year qualifying period. The qualifying period for active Reservists is eight continuous years of efficient service.

For members with operational or war-like service, the five year qualifying period is waived and the maximum period of the subsidy may be extended from 20 to 25 years. There are special considerations for re-joining members, widows and widowers, eligible persons and members discharged as a result of a compensatable disability.


The objectives of the Defence HomeOwner Scheme are to attract and retain ADF personnel, to encourage home ownership during service as a cost-effective alternative to rental assistance and to assist in the reintegration of ADF personnel into the community on return to civilian life.

Program Evaluation Against Objectives

The objectives of the Defence HomeOwner Scheme are achieved through providing a subsidised home loan for a period which is directly related to the member's length of service with the permanent or reserve forces, bringing home ownership within the reach of more members and providing a subsidised loan once within two years of separation from the ADF.

During 2002-03, there were 2,271 application for entitlement certificates and 1,544 applications for loan subsidies processed. The total number of approval loans current as at 30 June 2003 was 6,195. Since 2000, the take-up rate has improved and is almost double that of 1998-99.

Encourage Home Ownership as a Cost Effective Alternative to Rental Assistance

The take-up rate has remained high. Much of this is a direct result of the significant rise in eligibility numbers from personnel serving in war-like areas and the fact that interest rates remain low. The introduction of the Government's First Home Buyer's Scheme and the availability of the Home Purchase Assistance Scheme have also made buying a very attractive option.

Assist in the Re-integration of Defence Force Personnel into the Community on Return to Civilian Life

Of new subsidy applications, 35 per cent were from members either discharging or transferring to the Reserves. This is five per cent higher than last year and continues to be a growing trend.

Performance Evaluation of the Administration of the Scheme

Defence is satisfied with the administration of the scheme by the Defence Housing Authority. During the reporting period, there were no appeals lodged with the Administrative Appeals Tribunal against decisions made by the delegate.

The National Australia Bank has met its obligations to the Government under the Act and has provided effective support to the scheme. The National Australia Bank and the Defence Housing Authority continue in their efforts to streamline the administration process of obtaining the subsidy.

Table 5.21: Applications for Payment of Subsidy by Type of Assistance
Activity 1998-99(1) 1999-2000(2) 2000-01 2001-02 2002-03
Buy a home 1,011 709 1,332 1,042 953
Re-finance a loan 333 322 350 321 356
Enlarge a home 12 11 8 11 4
Build a home 193 150 139 220 186
Renovate a home 26 30 34 54 45
  1. Prior to 1999-2000, the above figures were taken from the entitlement certificate applications. |
  2. From 1999-2000, the figures are taken from the subsidy application.
Table 5.22: Comparison of Activities
Activity 1998-99 1999-2000 2000-01 2001-02 2002-03
Applications for entitlement certificate received 1,575 2,122 2,959 2,451 2,271
Entitlement certificate issued(1) 1,474 2,006 2,829 2,342 2,186
Applications for entitlement certificate declined/withdrawn 106 116 130 109 85
Applications for payment of subsidy received 941 1,222 1,863 1,648 1,544
Applications for payment of subsidy approved 938 1,194 1,845 1,634 1,520
Applications for payment of subsidy declined/withdrawn 13 3 18 14 24
Number of subsidy payees as at 30 June 3,519 3,970 5,051 5,816 6,195
Amount of subsidy paid ($) 3.6m 4.4m 6.6m 6.5m 7.4m
  1. Entitlement certificates are valid for 12 months.

Operational Costs

An annual management fee of $491,920 (including GST) was paid in 2002-03 to the Defence Housing Authority by Defence. The Authority was also paid a fee in respect of each application for entitlement certificates lodged. These fees totalled $171,869 (including GST).