Defence Update

While the National President of the RSL, Brigadier Alf Garland has congratulated the Government on accepting 41 of the 48 recommendations by the Cross Defence Sub-Committee, the Armed Forces Federation of Australia is much more critical. AFFA President, Lt Col Bob Copley said he did not believe the Government’s new initiatives would cause the separation rates to fall.

The core of Mr Simmons response is that the Government is going wider than the Cross recommendations to assist service personnel and their families.

“A full review of Service pay is under way already,” he explained. “This review under the structural efficiency principle will address the compression of salaries at senior levels as well as Seeking pay adjustments across the whole Defence Force. ” The minister said that staff jobs in Canberra should become more challenging and rewarding as a result of the rationalisation which would be linked to the pay review.

He added that the Government had accepted the advice of the Chiefs of Staff Committee that there should be a complete review of the Defence Force Retirement and Death Benefits Scheme (DFRDB). “The DFRDB scheme no longer meets Service objectives, nor does it provide the right incentives to those who choose to make the Services their lifetime career,” Simmons said, “The review will look to the future and it will give a fair go to all members of the Defence Force,” he said. “No member of the Defence Force will be disadvantaged as a result of the review. The Government has guaranteed that the existing DFRDB benefits of all current members will remain available to them when they choose to leave the Services,” the Minister added.

He said the Government’s high level of support for Defence housing would continue and that the Defence Housing Authority would, on a progressive basis, take over the leases of private houses which were rented by Defence families.

“These new arrangements would remove for many the frustrations of house hunting in a new locality”. Simmons said, “The Authority will take out the lease and the member will be required to pay only the normal personal rental contribution,” he said. “Bonds paid by individuals will be eliminated, while the important element of choice in rental housing will be preserved. ” The Minister also announced what he described as “a very attractive form of housing assistance” which has been developed for Service personnel who enlisted after May, 1985. This scheme, as previously, will require an initial period of service of six years. He explained that having met that eligibility period, a member who enlists after May 14, 1985 would be entitled to a housing loan of $40,000 with interest being subsidised so that it remains 40% below the market housing loan interest rate. This subsidy would be provided for a period equal to the number of years in excess of six that a member serves. Simmons gave the following example. He said that a 16% market rate would mean a subsidised loan interest rate of 9. 6%. Loan subsidies would be available for maximum of 20 years.

“The needs of Defence families and the self help efforts of their local communities have not been ignored,” Simmons said. He outlined that he had given approval for grants of up to $20,000 a year to be made to each major base for allocation of Defence families which were formed with the objectives of assisting local community welfare.

“I am confident that these measures and the others included in my statement to Parliament will improve the conditions provided for Defence Force personnel and their families,” he said. “In addition, I believe that they will have a significant effect in further reducing the present levels of Service wastage. ” Replying in Parliament, the shadow Minister for Defence Science and Personnel, Senator Jocelyn Newman said it was no secret that there are severe problems facing the Defence Force. “We have had four years of high wastage in the ADF which has meant a tremendous drain on the experience levels,” she said. Newman said many members of the Defence Force had been holding on for six months waiting to see what the Government would say to the Cross report which said it was clear the present level of wastage “is substantially too high and has been for some time”.

She said that in the six months of waiting to see what the Government was going to do, another 3,100 Service personnel had quit, Qantas Airways Ltd had raised its recruitment age to 45, luring into Qantas those who missed out on the wasteful and badly organised pilots’ retention bonus.

The senator said there had also been an internal RAAF report which was critical of the manning deficit in the RAAF and its erosion of Air Force capability and there had been a signal from the Army that it needed reservists to fill the gaps of the 350 officer positions it could not fill. There was a total of 170 vacancies between the ranks of Lieutenant and Major which could not be filled even using reservists full time.

The Navy was 25% short of principal warfare officer billets. The wastage in 1987-88 in the Navy’s weapons electrical branch was 17. 8%, higher than the estimate of 16% in the Cross report, “We have had problems with the Navy worrying about whether it can afford to take ships to sea due to the inexperience of the available engineer officers. ” Newman said the RAAF had an 18-20% deficit in Squadron Leader and Wing Commander ranks and the general duties branch had a wastage rate of 260% over the average. She said the funding realities were of great concern because although the Dibb Review of Australia’s Defence Capabilities recommended a 2. 6-3. 0% real growth in Defence spending in order to maintain capability, it had never been met. The total real growth since 1983 was 1. 7%.

The Returned Services League, however, sees the initiatives outlined by Minister David Simmons as likely to have a significant effect upon the conditions of service for the men and women of the Navy, Army and Air Force.

“The response shows that the Government has recognised the unique nature of service in the ADF with special conditions to compensate for some of the special disadvantages under which members of the ADF worked. ” RSL National President Brigadier Alf Garland said.

“I congratulate Defence Minister Beazley for his actions in bringing about acceptance of the (Cross) recommendations and the past Defence Personnel Minister Kelly for the work she did,” he said. “Minister Simmons now has to ensure implementation and allocation of sufficient funds to keep these new programmes going. ” The RSL particularly welcomed the new housing loan interest subsidy scheme for post May 1985 enlistees. “This imaginative proposal should have a significant effect upon retention of ADF members, particularly those who are married,” Garland said. “But we are disappointed that while introducing a new scheme the Government did not take up the recommendation to upgrade the existing DSH scheme by increasing the concessional interest loan to at least $35,000 indexed.

“The new Temporary Rental Allowance arrangements will greatly assist in the alleviation of problems faced by Service families as they move around,” Garland added.

He noted that as regards the DFRDB scheme review, because it failed to meet the needs of today’s Defence Force, it was very important for current DFRCB recipients to be represented in the review. Garland said the RSL was concerned that the Government did not accept the recommendation that a married Service member whose spouse works and who has no children receive full exemption from the Medicare levy. “It is quite inequitable that the levy is applied in this way and many thousands of Australians are unfairly disadvantaged by having to pay twice for Medicare benefits,” he said.

But he added the Government’s response to the Cross recommendations went a long way towards recognising the need for special conditions of service for members of the ADF and their families.

Armed Forces Federation President Bob Copley made specific comments on a range of the initiatives announced by Mr Simmons.

He said the full review of Service pay was not an initiative. It was required by the Defence Act and was already overdue. Copley described the DFRBD scheme as a ‘shambles’. He said the proposed review was in order to meet ‘undefined’ Service objectives rather than personnel needs. “Problems in the existing scheme will not be rectified,” he claimed. He added that the representative of the Defence Force on the review body would not necessarily be representing Defence Force personnel but that of Defence Force management tasked to see that Service objective were met. “We like the new arrangements for post 1985 enlistees but they do no more than replace, in a lesser form, a benefit removed in 1985,” Copley said.

He said Cross Committee recommendations for improving existing Service Home Loans for Vietnam veterans, former National Servicemen and long-serving Regulars had been ignored.

The AFFA President described as nonsense the claim that the Government’s initiatives were part of a coordinated strategy. “Why else would it be necessary for Government to initiate a Defence personnel policy plan,” he asked. “AFFA has called many times for such a plan since it failed to materialise in the Defence White Paper. We are glad to see it finally under way. ”

Referring to claims that the uniqueness of the Defence occupation were recognised by the Government, Copley said that the lip service given to special requirements placed on Defence personnel was “beneath contempt” when, in those areas where ADF personnel are most disadvantaged by Service life such as retirement benefits and medical care, they are administered without compassion.

“A close examination of the proposals reveals that the socalled initiatives are uncertain, or will take a considerable time to complete, and in most cases will affect only a handful of existing ADF personnel,” Copley said. In a separate statement Copley said the ADF’s worst fears on undermining the DFRDB scheme were being realised. He listed the following points:

• The May 1988 Economic Statement, eliminated lump·sum tax on up to $60,000 but only if the lump sum was taken after age 55. In the ADF the compulsory retirement age of most personnel occurred before age 55 and to them a 20% tax on lump sum payments applies.

• RBL requirements were extended to DFRDB on the grounds that Government had the capacity to fund higher benefits than taxable employers. The May 1989 Government initiatives package for Defence personnel announced a new review of DFRDB with an ‘iron clad’ guarantee subject to the effect of the RBL requirements not to reduce the benefits of the present scheme.

• RBLs have precluded for some years DFRDB beneficiaries contributing to or benefiting from superannuation funds after they leave the Defence Force, unless their salaries in civilian employment are substantially higher than they were in the Defence Force. A loss of these benefits has cost ADF retirees dearly.

Copley said that accepting that the object of the RBL’s was to provide an equitable distribution of superannuation tax concessions, their relevance to DFRDB was obscure. There were no such tax concessions for DFRDB contributors and recipients.

“AFFA believes the opposite is true,” Copley said. He instanced that compulsory retirement for pre 55 brings a 20% lump sum tax; retired pay is taxed at marginal rates as income; and compulsory undeductable contributions at 5. 5% gross pay returns no interest to contributors. Therefore, there was a notional 100% tax on the annual earnings of these contributions and it was more real than the notional tax benefit received by the DFRDB scheme.

Copley said Mr Simmons was right in saying the ADF was a unique occupation. “Among other things it is the only occupation disentitled by the Government to the so-called equitable share of the superannuation tax concessions,” Copley claimed.

Naturally Mr Simmons had refuted many of the claims by the AFFA and said they were “ill-conceived comments”. At this stage we’ll leave it at that.