Defence Housing Australia privatisation on the cards after Commission of Audit
The National Commission of Audit has recommended privatising Defence Housing Australia, which manages a portfolio of 18,300 properties valued at around $10 billion.
The DHA delivers annual profits to the Commonwealth of $100 million-plus.
The report suggests in be done in the first phase of any privatisations by the Abbott government.
DHA currently provides housing and related services to Defence members and families in order to support the operational, recruitment and retention goals of the Department of Defence.
DHA constructs, purchases and leases houses for Defence personnel, manages dwelling allocation and tenancies and acquires and develops land to build mixed military and private communities.
Most of its funding comes from Defence, or Defence employees.
It finances additional capital investment by selling and leasing back dwellings, the sale of land and dwellings from developments and the disposal of surplus properties.
As at 30 June 2013, DHA had 18,300 houses under management, including over 3,800 it directly owned and around 12,500 leased from investors.
In 2012-13, DHA spent $305 million on a capital programme to acquire 590 new houses by construction or purchase, and $14.4 million on the acquisition of 38 apartments.
It also has a $360 million programme to upgrade and replace Defence-owned houses.
DHA currently has 12 major developments in progress, including in Sydney, Darwin, Townsville, Canberra and Brisbane.
DHA was established to commercially manage and improve the defence housing stock as a result of criticism in 1986 of the poor standard of accommodation then available.
Since its creation, DHA has undertaken a major program to bring defence housing up to community standards.
The prior 1996 commission noted DHA has also been involved in various joint venture land developments, although only a relatively small proportion of these developments has ultimately provided defence housing.
"The Commission questions whether there is still a need for continued nationwide direct Commonwealth control of, and involvement in, defence housing," according to the 1996 report.
"There may be a need for Commonwealth ownership in remote areas or on defence bases," the then report suggested.
"However, in other locations there appears to be no reason why defence families could not be served equally well by dealing individually on the open housing market with, say, a salary based housing allowance.
"Such an arrangement would provide eligible defence personnel with more freedom of choice and would be simpler and cheaper to administer than existing arrangements," it noted.
It would also free up part of the Commonwealth's $1.6 billion investment in defence housing, the 1996 report suggested.
The 2014 commission also suggested the creation of a central register of the Commonwealth’s $25 billion in property holdings, which should be sold off in part as the commission says the government’s core expertise should not relate to the development, maintenance and leasing of office accommodation.
“This is best left to the private sector,” the commission’s report said, noting sales had been occurring since 1996.
"However, a significant number of properties remain in the Estate.”