What it does
The Defence Force (Home Loans Assistance) Act 1990 (Cth) creates a Commonwealth home loan subsidy scheme for serving and former members of the Australian Defence Force who are not already assisted under the older Defence Service Homes Act 1918 (the DSH Act). The scheme reduces the interest cost of a home loan by having the Commonwealth pay a monthly subsidy directly to the lending bank on the borrower's behalf.
The scheme is structured around a trilateral relationship: the Commonwealth (administered by the Secretary of the responsible Department), the National Australia Bank (or its assignee, defined in section 3 as "the Bank"), and the eligible borrower. The terms of the relationship between the Commonwealth and the Bank are set out in an agreement made on 5 November 1990, a copy of which forms Schedule 1 to the Act. That agreement defines key operational terms including the benchmark rate, the method of calculating the subsidy, and the obligations of each party.
The Act no longer generates new entitlements after 1 July 2008. From that date, new assistance flows through the Defence Home Ownership Assistance Scheme Act 2008 (the 2008 Act). Persons receiving subsidy under this Act cannot also receive assistance under the 2008 Act (section 20A). However, existing recipients under this Act retain their entitlements for the remainder of their subsidy period, meaning the Act remains operationally relevant for borrowers who entered the scheme before the 2008 Act cutover.