EXPLANATORY STATEMENT
Defence Home Ownership Assistance Scheme (Average House Price and Median Interest Rate) Determination 2008.
The Defence Home Ownership Assistance Scheme Act 2008 (the Act) provides a home ownership assistance scheme for eligible members of the Australian Defence Force (ADF). Sections 52 and 53 of the Act enable the making of determinations dealing with the average house price and the median interest rate.
The purposes of this Determination are to set the average house price and provide the method for determining the median interest rate for the purpose of calculating the monthly subsidy amount for the Defence Home Ownership Assistance Scheme (the Scheme). The Determination has been prepared by the Office of Legislative Drafting and Publishing in the Attorney-General’s Department.
Clause 1 of this Determination sets out the manner in which this Determination may be cited.
Clause 2 of this Determination provides that the Determination commences on the day after it is registered.
Clause 3 sets out the two definitions used in this Determination. The first definition provides that Act means the Defence Home Ownership Assistance Scheme Act 2008 and the second definition provides that CANNEX means CANNEX (AUST) Pty Limited (ACN 053646165).
Clause 4 provides that, for the purpose of section 52 of the Act, the average house price for 2008-2009 financial year is $467,897. Subsection 52(1) of the Act confers power on the Minister to set a figure as the average house price under the Scheme, by determination from time to time.
Subclause 52(2) requires the Minister to have regard to national average house price and regional weighting data for the purpose of the determination of an average house price for the scheme. The average house price has been derived according to statistical data published by the Australian Bureau of Statistics for the period up to the end of the March 2008 quarter for each of the eight capital cities. The unstratified median house price for each capital city was multiplied by the house price index weighting for that city; the sum of the results for all eight capital cities is the average house price.
Subclause 52(3) explains that the average house price is to be determined annually for a financial year. This ensures that the scheme will be adjusted each year to take account of changes that have been observed in the housing market across Australia.
Clause 5 sets out the method for determining the median interest rate. This clause provides a verbal formula which takes into account interest rates published by CANNEX in relation to owner-occupier standard variable home loans offered by lending institutions in Australia. The median interest rate determined using the formula is the rate used in calculating the amount on which home loan interest subsidy can be paid each monthly authorisation period. The rate is not able to go above the maximum figure set in the Defence Home Ownership Assistance Scheme Regulations 2008.
Consultation was considered inappropriate and unnecessary pursuant to section 18 of the Legislative Instruments Act 2003 because the Determination relates to the service of members of the Australian Defence Force. However, the Treasury and the Department of Finance and Deregulation have been consulted in relation to the methodology for determining the average house price and the median interest rate.
Authority: Defence Home Ownership Assistance Scheme Act 2008
Overview
The Defence Home Ownership Assistance Scheme Act 2008 was enacted to provide a home ownership assistance scheme for eligible members of the Australian Defence Force (ADF). This legislation was introduced to address the need for financial support for ADF members in purchasing homes, thereby facilitating their transition to civilian life and enhancing their overall well-being. The Act is an initiative of the Australian Parliament, aiming to ensure that ADF members have access to affordable home ownership opportunities. The policy objective of the Act is to assist ADF members in achieving home ownership by providing financial subsidies, which are crucial in a fluctuating housing market. The accompanying Determination, issued under sections 52 and 53 of the Act, establishes the average house price and the method for determining the median interest rate for calculating the monthly subsidy amount within the Scheme. This Determination ensures that the subsidy amounts are dynamically adjusted to reflect current market conditions, thereby maintaining the relevance and effectiveness of the assistance provided.
Scope and Application
The Defence Home Ownership Assistance Scheme (Average House Price and Median Interest Rate) Determination 2008 applies to the Defence Home Ownership Assistance Scheme Act 2008, specifically to the members of the Australian Defence Force who are eligible for the home ownership assistance scheme provided by the Act. The Determination sets out the method for calculating the average house price and the median interest rate, which are integral to the computation of the monthly subsidy amount for the Scheme. Geographically, the Determination pertains to the entire nation, as it derives the average house price from statistical data across the eight capital cities of Australia, and the median interest rate from interest rates published nationally by CANNEX. The Determination does not explicitly mention any exclusions or exemptions but is focused on establishing the parameters for the financial aspects of the Scheme. The application of the Determination can be extended or modified through subordinate instruments, such as regulations, which may set specific thresholds or adjust the methodology for determining the average house price and the median interest rate.
Key Provisions
The Defence Home Ownership Assistance Scheme (Average House Price and Median Interest Rate) Determination 2008 is an essential instrument under the Defence Home Ownership Assistance Scheme Act 2008, which aims to assist eligible members of the Australian Defence Force (ADF) with home ownership. The Determination, as outlined in Clause 4, establishes the average house price for the 2008-2009 financial year at $467,897, and specifies the method for determining the median interest rate, as per Clause 5. This average house price is derived from statistical data published by the Australian Bureau of Statistics and is adjusted annually to reflect changes in the housing market.
Under the Act, the Minister has the authority to set the average house price for the Scheme, as per Section 52(1). This determination must take into account national average house price and regional weighting data, as required by Section 52(2). The average house price is calculated by multiplying the unstratified median house price for each of the eight capital cities by the house price index weighting for that city and summing the results. The process ensures that the Scheme's calculations are reflective of current housing market conditions.
The Determination also sets out a method for determining the median interest rate, which is used in calculating the monthly subsidy amount for the Scheme. Clause 5 provides a formula that incorporates interest rates published by CANNEX in relation to owner-occupier standard variable home loans offered by lending institutions in Australia. This method ensures that the Scheme's interest rate calculations are based on market data and remain current.
Entities and individuals governed by the Act must adhere to the average house price and median interest rate provisions as set out in the Determination. These provisions are integral to the calculation of the monthly subsidy amounts for the Scheme, which are critical in assisting eligible ADF members with their home ownership goals. The Determination mandates that the average house price be determined annually and that the median interest rate be calculated using the specified formula.
Failure to comply with the provisions of the Defence Home Ownership Assistance Scheme Act 2008 and the Determination may result in civil or criminal penalties. While the Determination itself does not explicitly outline specific penalties, the Act provides for potential consequences for non-compliance, which may include fines or other legal actions as prescribed by the relevant legislation. The precise penalties would be determined in the context of any legal proceedings resulting from a breach.