DHA Annual Report 2012

DHA's Defence portfolio

Overview

DHA continues to improve the quality and diversity of housing available to Defence members and their families. The stock of dwellings is refreshed as properties leave the portfolio at end-of-lease. While this places demands on the capital program it ensures houses remain consistent with community standards. DHA also acquires land and houses that are well located with respect to Defence bases and establishments. On both accounts (quality and location) success is measured by member satisfaction with DHA provided housing; this remains high.

While most of the Defence portfolio is detached housing, it also includes townhouses, courtyard style houses and apartments. Needing minimal garden maintenance, these housing types are suited to members who prefer well-located inner suburbs. Within limits set by Defence, a small number of apartments with shared recreational amenities and undercover parking are also available. These dwellings can be chosen by Defence members and, therefore, are known as ‘choice housing’. In an important development, Defence and DHA have agreed to trial the use of about 100 inner-city apartments in Sydney as an ‘allowable supply’ of housing for certain types of family composition, effectively removing the choice element in the allocation of these houses.

Housing in the Defence portfolio is classified for provisioning and allocation purposes. This  enables Defence members to obtain accommodation in accordance with their rank and family composition entitlement. Since 1 July 2007, the system of housing classification has been based on market rents with properties assigned to rent bands by region. These are determined by Defence, in consultation with DHA, and updated annually. The system enables location to be factored into classification, where previously houses were classified by amenity alone.

On-base housing

The Defence portfolio includes around 1,400 Defence-owned houses on Defence bases and establishments around the country, more than a third of which are in the Northern Territory. These houses are owned outright by Defence or financed by DHA under annuity arrangements. Defence pays fees to cover the cost of management and maintenance with special arrangements in place to cover 63 houses on the Defence Heritage Register. A further 280 properties are assigned to separate management arrangements pending advice from Defence on disposal action. The majority of these are on RAAF Base Darwin and the nearby Defence Estate Berrimah.

In 2011–12, DHA continued work on the upgrade and replacement of Defence-owned houses as part of a $250 million program to ensure this stock meets Defence minimum amenity standards by 2017. The lead project is the replacement of 61 houses on Larrakeyah Barracks in Darwin. Approved by the Parliamentary Standing Committee on Public Works (PWC) in March 2011 at a revised cost of $64 million, the project involves the construction of 97 new houses, the first 29 of which have been handed over and are ready to be allocated to Defence families. The balance of 68 will be delivered progressively during 2012–13 with final deliveries expected by April 2013. A new project will upgrade 48 existing houses. The PWC also approved a series of projects to upgrade on-base services.

Work has also started on a series of projects to upgrade 193 houses on RAAF Base Tindal at Katherine in the Northern Territory. Costing $55 million, the upgrades will meet new Defence standards and ensure the viability of on-base housing for the next 15 years. The first package of 62 houses has been approved by the PWC. A contract has been let and a demonstration house delivered to enable on-base tenants to familiarise themselves with the scope of upgrades.

Heritage housing

DHA manages and maintains 63 heritage properties across the Defence estate at the Royal Military College, Duntroon; HMAS Creswell, Jervis Bay; HMAS Watson on Sydney Harbour; HMAS Cerberus, Mornington Peninsula; Anglesea Barracks, Hobart; and Victoria Barracks, Sydney. Since the completion of a major upgrade program in 2010, DHA continues to undertake minor upgrades as needed. In 2011–12, DHA managed a series of minor upgrades at HMAS Creswell (new roofs) and Garden Island (new kitchens and bathrooms) and a major upgrade of Bridges House in the grounds of the Royal Military College, Duntroon. The 63 houses on the Defence Heritage Register continue to be maintained by DHA under arrangements set out in the Services Agreement.

Sustainable housing

DHA focuses on five key sustainability areas: energy consumption, water consumption, effective waste management, human wellbeing and the biodiversity of local flora and fauna. In 2011–12, principles of sustainable development in these key areas were incorporated in the decision-making systems, practices and processes of DHA.

These principles are in accordance with the Environmental Protection and Biodiversity Conservation Act 1999.

DHA ensures all newly constructed estates comply with environmental laws and standards. In particular, DHA’s new construction dwellings incorporate environmental sustainability improvements including reduced energy consumption, reduction in potable water use through AAA rated fixtures and fittings and biodiversity in landscape. All DHA houses tendered since 1 July 2010 in all climate zones comply with the requirement for a six-star energy rating. Water tanks are provided in accordance with State and Territory Government requirements.

During 2011–12, DHA initiated participation in the Residential Building Energy Efficiency Study. DHA is collaborating with the Commonwealth Scientific and Industrial Research Organisation (CSIRO) to assess the efficiency of energy usage in 80–90 DHA-managed houses in Sydney, Melbourne and Adelaide. Part of a larger project commissioned by the Department of Climate Change and Energy Efficiency, the study will investigate the influence on thermal efficiency of house design, energy saving measures and tenant energy consumption patterns. The CSIRO will donate $100 to Legacy for each Defence tenant who participates.

The Board Property Committee has been briefed on the expected cost impact of the Government’s Clean Energy Future Plan (carbon pricing) and strategies that might be available to DHA to meet any required changes.

Air conditioning and security upgrades

Since 1 July 2006, houses entering the DHA portfolio have generally been required to satisfy a higher standard of inclusions. In particular, new houses in specified climatic regions have been required to include air conditioning. In those regions, a split standard was introduced, with some dwellings fitted with air conditioning and others in the same location without air conditioning. In 2009–10, Defence agreed to fund a major program of upgrades to these older houses to bring them to a similar standard. During 2011–12, DHA completed installations which, over a three-year period, addressed the air conditioning needs of 3,500 houses at a cost of $23.3 million.

Portfolio management

DHA’s housing portfolio is managed over a full life-cycle—from establishment of the housing requirement with Defence to exit from the portfolio when leases expire or properties are no longer required for Defence families. DHA maintains ownership of some properties to meet prudential requirements and uses financial benchmarks to determine the make up of this part of the total portfolio. DHA also selects properties for its Sale and Leaseback program, the sale proceeds being the most important source of capital for financing its business. DHA works closely with investors to manage their properties through the leasing cycle, from purchase, lease extensions and renewal to the return of properties at lease end.

Satisfied tenants

DHA’s annual tenant survey measures ADF members’ satisfaction with their current DHA-managed home. In 2011–12, 90% of 2,342 respondents were satisfied with their current accommodation. The improvement compared to 2010–11 is statistically significant. In past years, sample sizes have ranged from 1,635 to 4,431.

Figure 2: Defence member satisfaction with current DHA accommodation, 2006–07 to 2011–12

Properties acquired by construction, acquisition or direct lease must satisfy Defence criteria in terms of the quality and level of amenity, inclusions and fittings, including such aspects as security, heating, cooling and covered outdoor areas. Satisfaction of Defence members living in these dwellings has been consistently high. In 2011–12, from a sample of 79 Defence families, satisfaction with newly constructed homes was 90%. In the same survey, from a sample of 50 Defence families, satisfaction with newly acquired homes was 88%.

Total stock under management

In addition to housing stock supplied to meet Defence requirements for Members with Dependants, DHA holds apartments for Defence singles (currently Darwin, Brisbane and Canberra), some houses pending disposal, and small portfolios for the Australian Customs and Border Protection Service and the Australian Maritime Safety Authority. The total DHA portfolio is summarised in the table opposite.