Place holder node for 1998
Defence Service Homes
National Office Instruction
amending DSH General Orders (1993 edition)
Instruction No. 62
Date of Effect: On receipt
Purpose
The purpose of this Instruction is to introduce changes to the Subsidy Administration General Orders following the changes to the Agreement between the Commonwealth and the Westpac Banking Corporation which were endorsed on 26 February 1998. The opportunity is also taken to make a minor amendment to Subsidy Procedural Matters General Order 4.1.
Background
The Fourth Supplementary Agreement dated 26 February 1998 amended the original Agreement dated 9 November 1988 and the Second Supplementary Agreement dated 4 November 1992.
As the General Orders include references to relevant clauses in the Agreement, there are a number of changes which need to be made to the Subsidy Administration General Orders. They relate mainly to Clause 9 - Excess Credits, and Clause 11 - Calculation and payment of Subsidy.
Changes to the Agreement
The changes to Clause 9 delete references to Banking Accounts and the rule for applying excess credits in accordance with the former Reg. 23. They also allow the introduction of fees for withdrawals from loan accounts established on and from 5 January 1998.
The changes to Clause 11 allow for the payment of the 1.5% pa interest subsidy guarantee while the Benchmark Rate is within 1.5% pa of the applicable capped rate of the loan. They also provide for the continuation of subsidy for up to six months after the sale of a DSH property where the borrower intends to acquire another property within that time-frame and for the cancellation and recovery of subsidy if another security has not been substituted within the six months period.
Sub-clause 11.5B.1 has also been amended to provide for the payment of subsidy on either the 18 — th day of the month or 7 business days after receiving the invoice from the Bank, whichever is the later.
The revised Schedule D of the Agreement changes the details to be provided by the Bank on the monthly subsidy tape.
General Orders
Subsidy Administration
The above changes to the Agreement have been incorporated into the Subsidy Administration General Orders. The following amendments have also been made.
GO 4.2.1 has been amended to reflect that a 'progressive draw' facility is no longer available. It also reflects the revised deadline for the payment of monthly subsidy to the Bank.
A new GO 6.2.2.2 has been inserted providing for the termination/suspension and/or recovery of subsidy where substitution of security has not occurred within six months of the sale of the former DSH property where subsidy has continued under Clause 11.2A of the Agreement.
An amended Index has also been prepared.
Because of the extent of these changes, the entire Subsidy Administration General Orders have been reprinted. Please replace the existing Subsidy Administration GOs with the revised version.
Subsidy Procedural Matters
GO 4.1 has been amended to reflect the changed interest rates for Advances for Essential Repairs. This amendment was missed when NOI 61 was issued.
Effect on previously issued NOIs
This instruction has no effect on any previously issued operative NOI.
Barry Telford
Branch Head
Housing and Aged Care
8 April 1998
Defence Service Homes
National Office Instruction
amending DSH General Orders (1993 edition)
Instruction No. 61
Date of Effect: 5 January 1998
Purpose
The purpose of this Instruction is to explain the effects of the amending legislation covering the changes to the Defence Service Homes interest rates which came into effect on 5 January 1998. The instruction also explains related changes to the Agreement between the Commonwealth and Westpac which were endorsed on 26 February 1998, including clauses which are aimed at achieving better customer service and administrative efficiencies.
Background
Over the past twelve months there has been considerable reduction in housing market interest rates following five consecutive cuts in official interest rates. This has impacted on the Benchmark Rate and the level of subsidy paid in respect of the previously fixed rate DSH loans. In a sense, this situation had eroded the comparative value of the DSH loan as an important element of the Government's compensation package for the veteran community.
The former sub-clause 11.14 of the Agreement provided for a review of the situation if the Benchmark Rate fell below the 6.85%pa fixed rate.
After consideration of the issues, the Minister announced on 3 September 1997 that, effective from 5 January 1998, the interest rates on most DSH loans would drop as a result of a guaranteed minimum subsidy of 1.5 percentage points below the Benchmark Rate. This concept represents a major change from the fixed rate regime which had applied since the Scheme's inception in 1919.
The opportunity was also taken to replace the former tiered loans with single rate loans based on the combined tiered amounts and rates and rounded to either 3.75%pa, 4.5%pa or 6.85%pa.
Policy to be applied
Basically, the changes are:
3.75%pa - the DSH Base Rate,
4.5%pa - the DSH Intermediate Rate, or
6.85%pa - the DSH Standard Rate,
depending upon the structure of those tiered loans. Those rates are capped as maximum rates which will apply.
Amending Legislation
The amending legislation received Royal Assent on 27 November 1997 and provided for a period of three months within which the necessary changes to Clause 11 of the Agreement were to be made. Clause 11 governs the calculation and payment of subsidy and required changing in order to pay the guaranteed 1.5%pa rate of subsidy. The effect being to reduce the rate paid by borrowers.
General Orders
The references to interest rates in the General Orders have been amended to reflect the change from fixed rates to variable where appropriate. The following revised and new GOs are issued accordingly.
Entitlement
Chapter 2 DSH Legislation. The amending legislation has been inserted into Chapter 2. This includes amended or new Sections 31, 33, 34, 35, 35AA, 35AB, 35AC and 35AD. It also includes a new definition of 'Limit' in Schedule 1.
GOs 3.3.1 and 3.4.5 have been amended to include references to variable rates if the Benchmark Rate is below 8.35%pa.
GO 3.4.7 has been inserted to make reference to a 'top-up' facility if the interest rate and term of a new Additional Advance is compatible with an existing advance. This is aimed at achieving administrative efficiencies, better customer service and could also have a fees impact for borrowers.
GO 3.5.3 has been amended to include a note regarding the continuation of subsidy for up to six months after the sale of a home where the borrower intends to acquire another home with DSH assistance within six months of the sale. This will overcome the need to apply for a certificate of entitlement in these circumstances. This is also aimed at achieving administrative efficiencies, better customer service and could also have a fees impact for borrowers.
GO 3.5.4 has been amended to include the revised definition of 'limit' in the Agreement. This is necessary to allow capitilisation of fees to the limit.
GO 3.5.5 has been amended to clarify the interest rates applicable to further advances, particularly where the previous advance was an old tiered loan.
Chapter 5 Legislation re Relief Schemes has been amended to include the amended Section 35.
GO 7.4.2 has been amended to include a reference to a variable rate if the Benchmark Rate is below 8.35%pa.
A new GO 7.4.4 has been inserted referring to the availability of a 'top-up' facility if the interest rate and term of a new Advance for Essential Repairs or Widow Advance is compatible with an existing advance.
GO 10.17 has been amended slightly in view of the abolition of tiered loans.
Appendix A Widows Table has been amended to reflect the changes to interest rates where applicable.
Appendix C which illustrated the former arrangements for Additional Advance interest rates has been deleted from the GO's. It is no longer applicable.
An amended Index has also been prepared.
Because of the extent of these changes, the entire Entitlement General Orders have been reprinted. Please replace the existing Entitlement GOs with the revised version.
Effect on previously issued NOIs
This instruction replaces the instruction regarding Additional Advance interest rates in NOI 54 (i.e. delete the passages regarding Measure 3) and modifies the instruction re widows' entitlements in NOI 29.
Barry Telford
Branch Head
Housing and Aged Care
31 March 1998
Defence Service Homes
National Office Instruction
amending DSH General Orders (1993 edition)
Instruction No. 60
Date of Effect: 3 November 1997
1997/98 BUDGET MEASURES
REVIEW OF ANOMALIES SINCE WWII – DEFENCE SERVICE HOMES ELIGIBILITY
Purpose
The purpose of this Instruction is to explain the effects of the amending legislation covering the changes to the DSH Scheme announced in the Budget of 13 May 1997.
Background
Details of the Budget measures were forwarded on 13 May 1997. The Defence Service Homes Act 1918 was subsequently amended by the Veterans' Affairs Legislation Amendment (Budget and Compensation Measures) Act 1997. The amending legislation received Royal Assent on 3 November 1997. The DSH measures apply from the date of Royal Assent.
The change to Defence Service Homes eligibility comes about following a review of anomalies in Repatriation benefits in respect of various groups of veterans with overseas service since WWII. The definition of 'Australian Soldier' has been extended to cover these groups in the following manner.
The official end date for WWII has been extended to 30 June 1951. This extends eligibility to those who served with the British Commonwealth Occupation Force (BCOF) in Japan during the period 3 January 1949 to 30 June 1951 inclusive.
A new Sub-section 4(1)(gc) has been inserted to extend eligibility to those with operational service in accordance with Section 6D of the Veterans' Entitlements Act 1986 (the VEA). This covers those who were assigned for service:
It also covers those who were attached to the Far East Strategic Reserve (FESR) at any time during the period from and including 2 July 1955 to and including 27 May 1963.
A new Sub-section 4(1)(gd) has been inserted to extend eligibility to those whose first service began on or before 14 May 1985 and who have rendered operational service in accordance with Section 6E of the VEA. This covers those who were assigned for service:
A new Sub-section 4(1)(ge) has been inserted to extend eligibility to those whose first service began on or before 14 May 1985 and who have rendered warlike service as defined in Sub-section 5C(1) of the VEA. That definition reads -
'warlike service means service in the Defence Force of a kind determined in writing by the Minister for Defence to be warlike service.'
A determination of warlike service has been made in relation to members of the Australian Defence Force who rendered service in Vietnam (Southern Zone) during any period between 12 January 1973 and 29 April 1975 inclusive. Any future determinations of warlike service will extend DSH coverage automatically to those whose first service began on or before 14 May 1985.
Policy to be applied
Any person with the above service is eligible for DSH assistance in respect of that service. Other provisions of the Act are then to be applied as appropriate.
General Orders
The following revised and new GOs are issued.
Eligibility
GO 1.2.1 has been amended to include the new areas and dates of operational and warlike service.
GO 3.2.1 and 3.2.2.6. The official end date for World War II has been changed to 30 June 1951 to allow coverage of members of the British Commonwealth Occupation Forces (BCOF).
GO 3.2.2.7 has also been amended to include reference to the BCOF.
GO 4.4.1 has been amended to include a reference to those who were assigned for service in Singapore during the period 29 June 1950 to 31 August 1957 inclusive as being eligible, in addition to those who were allotted for duty.
A new Chapter 5 is inserted covering service in Japan, Korea (DMZ), the FESR, North East Thailand (incl. Ubon) and extended periods in South Vietnam.
Existing Chapters 5-13 have been renumbered 6-14.
New GO 5.3.2 includes a copy of the Instrument which lists the ships attached to the FESR.
New GO 5.3.3 includes a copy of the Instrument which determines ADF service in South Vietnam between 12 January 1973 and 29 April 1975 inclusive as being warlike service.
New GO 6.3.4 (previously GO 5.3.4) has a new instrument inserted which includes a list of ships for Vietnam service. It replaces the existing instrument.
An amended Index has also been prepared.
Because of the extent of these changes, the entire Eligibility General Orders have been reprinted. Please replace the existing Eligibility GOs with the revised version.
Effect on previously issued NOIs
This instruction has no effect on previously issued NOIs.
Barry Telford
Branch Head
Housing and Aged Care
26 March 1998
Links
[1] https://clik.dva.gov.au/user/login?destination=comment/reply/18717%23comment-form
[2] https://clik.dva.gov.au/user/login?destination=node/18682%23comment-form
[3] https://clik.dva.gov.au/user/login?destination=node/18672%23comment-form
[4] https://clik.dva.gov.au/user/login?destination=node/18694%23comment-form