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Strict defence: is DHA allowed to lease property to the public?

Defence Housing Australia, whose mandate is to provide housing for Defence personnel, has rented out several Townsville properties to the general public. Crikey intern Tim Oliver reports.

A number of properties in Townsville owned by Defence Housing Australia, an organisation chartered by the Department of Defence to provide housing and services to Defence personnel and their families, are being managed by a private real estate company and leased to the general public.

Nine of the apartments in a 56-unit Quadrant apartment complex on Stuart Drive, Wulguru, are owned by DHA, and two of these have been leased out on the open real estate market.

A spokesperson for First National Real Estate Nicholson, which manages the two properties, confirmed they were leased to non-Defence personnel and says there are “heaps” more across Townsville, “too many to count”, in First National’s portfolio.

Melbourne Law School Laureate Professor Cheryl Saunders says under the conditions of sections 5 and 6 of the Defence Housing Australia Act 1987, ”the Commonwealth has no power to manage properties in the states for the general rental market”.

Saunders says the DHA must obtain a ministerial determination to lease empty properties to members of other government departments if they can’t be filled with Defence Force personnel. She says leasing to the general public is “beyond the terms” of sections 5 and 6 and “is likely to be a problem of compliance both with statute and with the constitution”.

Section 5 of the Defence Housing Australia Act 1987 states DHA’s main function is to provide housing and housing-related services to Defence personnel. It states:

DHA shall provide such housing and housing-related services as the Minister, by notice in writing given to DHA, directs is necessary for DHA to provide in order to meet the operational needs of the Defence Force and the requirements of the Department.”

Section 6 notes DHA can also provide housing to employees of other government departments, provided that it has ministerial approval:

(1)  The first additional function of DHA is to provide adequate and suitable housing for, and housing-related services to:

(a)  officers and employees of an Agency (within the meaning of the Financial Management and Accountability Act 1997) other than the Department, and their families; and
(b)  persons contracted to provide goods or services to an Agency (within the meaning of the Financial Management and Accountability Act 1997) other than the Department, and their families;

in order to meet the requirements of that Agency.

(2)  The second additional function of DHA is to provide services ancillary to the services mentioned in subsection (1) and in subsection 5(1), to persons mentioned in those subsections, in order to meet the requirements of an Agency (within the meaning of the Financial Management and Accountability Act 1997).

(3)  DHA may perform a function mentioned in subsection (1) or (2) only to the extent mentioned in a determination under subsection (4).

(4)  The Minister may determine, in writing, the extent to which DHA may perform the function in relation to any of the following:

(a)  the persons to whom services can be provided;
(b)  the kinds of services that can be provided;

But DHA spokeswoman Natalie Cooper says the agency is allowed to lease properties to the general public. “The leasing of surplus properties is allowable under the Defence Housing Australia Act 1987 and is consistent with government policy on the efficient use of assets,” she said. “DHA respects its legislative parameters and does not consider this practice to be unethical.”

Another DHA spokeswoman did not address the issue of ministerial approval approval directly, saying: “The Defence Housing Australia Act 1987 enables DHA to do that which is necessary or convenient in the performance of its functions under section 7. The leasing of properties surplus to Defence requirements on the private market is assessed on a case-by-case basis. Indeed, a short-term lease through a real estate agent can prevent disruption to a Defence family and save the Commonwealth the cost of preventable relocations. This approach is consistent with DHA’s obligation as a government business enterprise to act commercially.”

Quadrant chairman Bob Chad says the units on Stuart Drive are “only a fraction of those the DHA has recently purchased in Townsville” and says the agency’s presence — and ability to buy properties with taxpayers’ money — has “been a disaster for the Townsville property rental and resale markets”.

He says that as an ex-serviceman he is “happy to have service personnel reside at Quadrant” but that DHA has created “havoc, confusion and distrust” in Townsville by “compet[ing] unfairly in the local rental real estate market”.

5
  • 1
    Daly
    Posted Friday, 6 December 2013 at 12:43 pm | Permalink

    This is a complete furphy! There is no news here. Except the complaint of a real estate agent!! I hope for better from Crikey.
    DHA was set up after the failure of the DoD to provide suitable housing for Forces members. It is based on the premise that DHA buys property which meets the strict requirements of Forces living quarters. Then it on sells them to the public who wish to own property as investors and it provides the service of maintaining, leasing and managing those properties. The leases are generally to Defence members but sometimes it is necessary to avoid losses and have civilians rent. DHA is achieving its goal under the legislation of providing suitable modern housing for our Defence force members.
    You can see DHA ads in newspapers, investment mags and on their website any time. Totally transparent. All this writer needed to do was to access DHA’s website for this information.
    A Crikey writer needs to do more research than accept the word of a real estate agent who feels duded by a competitor in his market eliminating his slice of the money in the way through!

  • 2
    macca
    Posted Saturday, 7 December 2013 at 12:16 am | Permalink

    So what?

  • 3
    Andrew Grant
    Posted Saturday, 7 December 2013 at 1:02 pm | Permalink

    If this is the typical quality of articles on Crikey I will not be subscribing. Real Estate Agents have been moaning about DHA since inception. Tax payers money is not required to fund the acquisition of residential properties - its Sale and Leaseback Program provides the funding. It is impossible to exactly match supply with demand with the vagaries of postings. Accordingly there is a need to lease properties to the civilian market to act as a buffer and fine tune requirements. This article is much a do about nothing - get a life Tim and learn how to research more rigorously and present a balanced view instead of this sensationalist rubbish published for its own sake.

  • 4
    condel
    Posted Sunday, 8 December 2013 at 12:09 pm | Permalink

    It would be more ridiculous if DHA DID NOT rent unoccupied housing to the public. Sure, according to rules but absolutism is so lame.

  • 5
    Itsarort
    Posted Sunday, 8 December 2013 at 3:51 pm | Permalink

    Well, my experience with DHA is that if they can dud someone or their family, they will. The worst and cheapest carpet known to man, cupboards that wouldn’t close, built-ins with doors that fell off, stoves that used enough power to light up the eastern seaboard but couldn’t bake a cake and the contractors who performed any dodgy ‘upgradeds’ went missing, bankrupt or both… Don’t stop here Crikey Intern, DHA smell, and they smell very badly; keep looking…

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