Defence's Relationship with External Organisations
Defence purchases outputs from external agencies to achieve its mission. Outlined below are Defence's most significant purchaser/provider arrangements:
Defence Housing Authority
Defence and the Defence Housing Authority have two formal agreements:
- the Services Agreement for Housing and Related Requirements (the Services Agreement); and
- the Relocation Services Agreement.
The agreements formalise the relationship between Defence (as the purchaser) and the Defence Housing Authority (as the provider) of housing and relocation services.
The Services Agreement was reviewed in 2005–06, with a revised Agreement signed on 30 June 2006. The revised Agreement establishes a more commercial and transparent arrangement between Defence and the Defence Housing Authority. The Services Agreement extends to 2018 and provides for a major review of the Agreement every five years. The Relocation Services Agreement allows for performance reviews to be conducted in 2007 and 2009 and extends to 2010.
The Defence Housing Authority continues to provide community-standard housing and tenancy management, in accordance with Defence capability requirements, and satisfactory relocation services to ADF personnel. The cost to Defence of the Defence Housing Authority providing housing and relocation services and the Defence Home Loans Scheme for ADF members in 2005–06 was $426.9m. This included $66.8m to pay the outstanding annuity liability for 304 Defence-owned service residences located on Defence bases.
Department of Foreign Affairs and Trade
Defence maintains a service-level agreement and a Memorandum of Understanding with the Department of Foreign Affairs and Trade (DFAT) for the provision of services at DFAT-managed overseas posts. The service-level agreement is intended to facilitate efficient and effective Australian Government business overseas by avoiding unnecessary duplication of common services at overseas posts. An agreed fee is charged for these services.
The services provided for Defence under the agreement include personnel administration, residential and office accommodation, security, financial advice and transactional processing, for Australian-based and program support staff engaged at overseas posts. The cost of the agreement was $4.0m in 2005–06, down $0.1m from 2004–05.
Defence also maintains a Memorandum of Understanding with DFAT for the provision of information and communication technology services to Defence personnel at DFAT-managed overseas posts. For these services, a biannual fee is levied on Defence based on a schedule of charges.
The services provided to Defence under the Memorandum of Understanding are:
- local area networked desktop office products at the classified and unclassified levels, facilitating emails and cablegrams being communicated to and from appropriate Defence networks; and
- telephone exchange services, including the provision of a telephone handset.
The information and communications technology infrastructure providing these services is maintained and supported by DFAT.
The services are provided in 30 countries to approximately 150 Defence personnel and locally engaged staff in overseas posts. The Memorandum of Understanding came into force on 1 July 2004 for a three-year period. The cost to Defence for 2005–06 was $922,008 (excluding Goods and Services Tax), slightly less than last year due to decreases in the schedule of charges.
Comcare
Defence pays an annual workers' compensation premium to Comcare to meet the cost of workers' compensation claims for civilian personnel who suffer work-related injuries or illnesses during the year and the cost of managing those claims. The premium paid for 2005–06 was $15.6m, an increase of $1.1m from the Portfolio Additional Estimates Statements 2005–06. The increase in the premium was largely influenced by the rising incidence and severity of compensation claims including the length of absence from work.
Defence is also required to pay a regulatory contribution to Comcare to fund costs incurred by Comcare and the Safety Rehabilitation and Compensation Commission to conduct regulatory functions under the Safety Rehabilitation and Compensation Act 1988 and the Occupational Health and Safety (Commonwealth Employment) Act 1991. The regulatory contribution for civilian and ADF personnel for 2005–06 was $4.0m.
Defence has formal consultative arrangements in place with Comcare to ensure regular review of claims' management, Defence's injury prevention and return to work performance indicators, as well as ways of jointly generating performance improvement. During 2005–06, Defence was satisfied with the level of service provided by Comcare.
ComSuper
Defence pays superannuation administration fees to the Commonwealth Superannuation Administration (ComSuper). Defence pays ComSuper an agreed annual administration fee for providing administration services (excluding optional administration services) for current and separated military personnel who are either contributing, deferred benefit, or pensioner members of the Military Superannuation and Benefits Scheme, the Defence Force Retirement and Death Benefit Scheme or the Defence Forces Retirement Benefits Scheme. The expenses for 2005–06 were $18.7m.
The Department of Finance and Administration is responsible for negotiating the Commonwealth-wide superannuation administration services provided by ComSuper for civilians. Defence is required to pay the fees negotiated for civilians by the Department of Finance and Administration. The fees for Defence civilian employees for 2005–06 were $2.7m.
Performance service-level standards, which form part of the 2005–07 Service Level Agreement negotiated with the Military Superannuation and Benefits Scheme Board, the Defence Force Retirement and Death Benefits Authority, ComSuper and Defence, apply to the delivery of services provided by ComSuper. During 2005–06, 95 per cent of agreed service standards were achieved.
During the year, ComSuper delivered a number of initiatives. These included business processes to support ancillary contributions, including the Government's superannuation co-contribution and a half-yearly member mail out to Military Superannuation and Benefits Scheme members promoting ancillary contributions. ComSuper also refined its reporting to the Military Superannuation Benefits Board and the Defence Force Retirement and Death Benefits Authority.
The Service Level Agreement, effective until 30 June 2007, was signed by all parties in September 2005. The agreement identifies the military superannuation administration services to be provided by ComSuper and the fee Defence will pay for these services. ComSuper's performance under the terms of the Service Level Agreement is reviewed regularly by the Military Superannuation and Benefits Scheme Board, the Defence Force Retirement and Death Benefits Authority and Defence.