Defence Home Ownership Assistance Scheme

Mr Fitzgibbon asked the Minister for Defence, upon notice, on 22 September 2008:

Is his department aware of any exposure the three Defence Home Ownership Assistance Scheme lenders may have to the financial turmoil in the United States; if so, what steps is his department taking to protect these mortgages and deposits held by defence personnel.

Mr Fitzgibbon - The answer to the honourable member's question is as follows:

The Defence Home Ownership Assistance Scheme panel of Home Loan Providers comprises the National Australia Bank, the Australian Defence Credit Union and the Defence Force Credit Union. The providers advise that, while there is some exposure as a result of the financial turmoil in the United States, such exposure is limited.  Much of this exposure has taken the form of increased fundraising costs, and is being experienced by most, if not all, financial institutions in Australia.

Defence administers the scheme and mortgage arrangements are between the member and the chosen provider. Defence is not in a position to protect the mortgages and deposits held by Australian Defence Force (ADF) personnel. The risk to the mortgages and deposits of ADF personnel is consistent with the wider Australia community.

The providers have reaffirmed that their balance sheet position is sound. Furthermore, as the providers are authorised deposit taking institutions regulated by the Australian Prudential Regulation Authority, stringent operational controls are in place to ensure the protection of depositor funds, including those of ADF personnel.

During the scheme’s tender evaluation, an independent financial viability assessment was carried out on each of the three providers. All tenderers were considered to be financially viable for the purposes of the tender.

The performance of the providers is regularly monitored by Defence to ensure they effectively manage the delivery of services to ADF personnel.

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