EXPLANATORY STATEMENT

Defence Determination 2017/25

This Determination amends Defence Determination 2016/19, Conditions of service (the Principal Determination), made under section 58B of the Defence Act 1903 (the Defence Act) and in accordance with subsection 33(3) of the Acts Interpretation Act 1901 (AIA Act). Determinations made under section 58B of the Defence Act are disallowable legislative instruments subject to the Legislation Act 2003. These instruments are also subject to the interpretation principles in the AIA Act, as modified by section 58B of the Defence Act.

This Determination amends Chapter 15 of the Principal Determination, which sets out provisions dealing with living and working on long-term posting overseas for members of the Australian Defence Force (ADF).

This Determination has the following purposes.

• To implement a more efficient administrative process for publishing post indexes which are used to calculate a range of overseas allowances.
• To amend all cross references to a post index annex repealed by this Determination.

Section 1 of this Determination sets out the manner in which this Determination may be cited.

Section 2 is the commencement provision for the Determination and includes a table setting out the details of the commencement of sections of the Determination. Column 1 of the table sets out the provisions in numbered items, column 2 sets out the commencement and column 3 sets out date/details. Information in column 3 does not form part of the Act, so information can subsequently be inserted in the column (or edited) in a published version of the Determination.

• Item 1 in the table provides that sections 1 to 4 of the Determination commence on the day after this instrument is registered.
• Item 2 in the table provides that the schedules commences on a single date to be fixed by a notifiable instrument. The commencement of these provisions will align with the commencement of the new ADF payroll system, which is expected to occur this year. Item 2 also provides for the schedules to be repealed if the notifiable instrument is not made within the period of 12 months beginning on the day after this instrument is registered. The purpose of this Determination is to set out a range of reforms to leave that support the introduction.

Section 3 provides that the authority for the instrument is under section 58B of the Defence Act 1903.

Section 4 provides that each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.

Schedule 1 sets out amendments to the Principal Determination.

Simplification of the post index calculation process will make it easier for staff to administer and for new systems to process. Changes made by this Determination mean the exchange rate data used to calculate the post indexes are more current to the pay period to which they are applied. Post indexes will therefore be more indicative of the cost differences between living in Australia and the member's overseas posting location.

• Sections 1 and 2 insert section 12.3.14A and Annex 12.3.B into the Principle Determination. Section 12.3.14A provides a definition of a post index, a figure referenced throughout Chapter 15. The post index is an indication of the relative cost of living difference between Australia and an overseas location. These figures are provided to Defence twice a year by an independent data provider. Annex 12.3.B lists the data service provider locations that are used for the post index locations under section 12.3.14A.

• The data service provider does not provide specific data for each location in which Defence has personnel posted. The rule at 12.3.14A.3 combined with Annex 12.3.B is used to determine which post index will be applied to members based on their posting location. If the post index is less than 100 the rule provides that the post index applied to the calculations cannot be less than 100 and therefore not reduce any salary or allowances.
• The figures provided to Defence are based on data obtained and exchange rates at a particular time. In applying these figures Defence modifies them by the exchange rate variation between the data sample period and the time of application to ensure they remain relevant. To not do so would provide unintended benefit or disadvantage to members where there have been significant exchange rate fluctuations. This process is repeated each fortnight until the updated figures are provided.
• The post index values are available for the locations listed in Annex 12.3.B column 1 on the Defence intranet. These values are the intellectual property of the data service provider and cannot be disclosed publically as they do not belong to the Commonwealth and would be in breach of the terms and conditions under which it is obtained.
• Sections 3, 4, 6, 7 and 10 amend sections 15.1.6, 15.2.2 and 15.2.12, 15.2.21 and 15.2A.2 of the Principal Determination respectively. Each contained a cross reference to Annex 15.2.A or Annex 15.2A.A of the Principal Determination, which are omitted by section 9 and section 14 of this Determination. The cross reference is replaced with section 12.3.14A of the Principal Determination, which defines a post index, consequential upon Schedule 1 section 1 of Schedule 1.
• Sections 5 and 11 omit sections 15.2.8 and 15.2A.7 of the Principal Determination respectively which provided the definition and rules for the post index. These sections are replaced with section 12.3.14A of the Principal Determination, which defines a post index, consequential upon Schedule 1 section 1 of this Determination.
• Sections 8 and 18 amend subsections 15.2.37.2 and 15.3.21.4, which provide the calculation methods for meal allowance for additional duty and vehicle allowance respectively. Two variables in the formulae (post index and posting location exchange rate) were previously those in force on 1 March of that year occurring before the additional duty or vehicle travel took place. These dates are no longer applied. Instead the exchanges rates and post index rates in force during the pay period in which the additional duty or vehicle travel occurred are used to calculate the amounts of allowance.
• Sections 9 and 17 omit Annexes 15.2.A (member posted before 1 July 2017) and 15.2A.A (members posted on or after 1 July 2017) of the Principal Determination respectively, which provided the post indexes that are applied to a range of overseas allowances for each overseas posting location. In the past post indexes have been determined every month which has been a costly process. These Annexes are replaced by the definition and Annex inserted by Schedule 1 sections 1 and 2 of this Determination.
• Sections 12 to 16 amend subsections 15.2A.12.2 and 15.2A.20.2 of the Principal Determination respectively. Both sections contain formulas that use a post index as one of the variables for calculating overseas living allowances. These subsections are being amended to replace the term 'applied post index' with 'post index' to reflect the changes made by Schedule 1 section 1 of this Determination. In both subsections a cross reference to the definition of a post index is also being inserted.

Authority:  Section 58B of the
Defence Act 1903

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Defence Determination 2017/25, Post indexes calculation – amendment

This Determination is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Determination

This Determination has the following purposes.

• To implement a more efficient administrative process for publishing post indexes which are used to calculate a range of overseas allowances.
• To amend all cross references to a post index annex which has been omitted by this Determination.

Human rights implications

Right to the enjoyment of just and favourable conditions of work

The protection of a person's right to remuneration engages Article 7 of the International Covenant on Economic, Social and Cultural Rights. Article 7 guarantees just and favourable conditions of work, including remuneration, safe and healthy conditions, equal opportunity and reasonable limitations.

Legitimate objective: Defence members are posted to perform duty in overseas locations. This could cause the member and their family economic hardship if the location has a high cost of living. The purpose of a post index is to show the relative cost of living at a posting location compared with Australia. This is then used to calculate various overseas allowances.

Reasonable, necessary and proportionate: This Determination simplifies the post index calculation process to make it easier for staff to administer and for new systems to process. It also provides that the exchange rates used to calculate a post index are more current making the post index more indicative of the cost differences between living in Australia and the member's overseas posting location.

Conclusion

This Determination is compatible with human rights because it does not limit any human rights.

Lisa Annette Arnold, Acting Assistant Secretary People Policy and Employment Conditions