Cadet Forces Allowance Reform

Update 25 June 2020 The Cadet Volunteer Payment (CVP) will commence
being paid from 01 Jul 2020.

As a result of software release controls being impacted by COVID-19, the
upgrade to electronically process CVP claims on CadetNet will not be finalised
prior to mid to late Aug 2020.

Cadet volunteers that need to make a CVP claim before the software release
will still be able to do so. JSSD, in conjunction with the Cadet organisation are in
the process of finalising a interim management solution which will be advised
to you through your Cadet Service HQ elements.

Talking points

• As previously communicated the Cadet Volunteer Payment (CVP) will
  commence from 01 Jul 2020.
• As a result of software release controls being impacted by COVID-19, the
  upgrade to electronically process CVP claims on CadetNet will not be
  finalised prior to mid to late Aug 2020.
• JSSD in conjunction with the Cadet organisation are in the process of
  finalising the interim management solution which will be advised to you
  through your Cadet Service HQ elements.
• All volunteer staff will be able to claim their CVP payments during this
  interim period.

Important Links:

Chief of Joint Capabilities (Approval of payments to ADF Cadets) 2020 - dated 12 June 2020

ATO 2014 Tax Ruling

Update: 27 March 2020 Implementation progresses without any currently advised delay to the 1 July 2020 timeline for ‘Go Live’.  An Implementation Working Group is being established to oversee the process and will work in sync with the Policy Working Group.  With regard to the four elements of Implementation the following is the current status as of 19 March 2020:

Determination:  The Determination (the legal and legislated authority for payments to be made) has been finalised, was cleared by Service Cadet organisations and Defence Legal, and has been signed by Commander Joint Capabilities.

Policy:  The Policy Working Group is progressing with its task to codify relevant aspects of the new payment in YOUTHPOLMAN.  The intention is to provide sufficient capture of the underpinning reasoning for the payment and a guiding set of principles that can inform application in the short term and guide any reviews that may occur subsequently.

Tier Placement:  The three Service Cadet organisations have finalised the placement of positions in Tiers.

Pay system changes:  The Defence Pay and Administration staff are well engaged in the task of recoding the system that delivers the pay outcome.  Work is also underway to ensure CadetNet is providing supporting functionality.  There is no change as yet to the expected commencement date for the revised payment, of 1 July 2020.

Update: 21 November 2019 The Chiefs of Service Committee has considered the Cadet Forces Allowance reform proposal. Pending formal issue of the outcome in the Chiefs of Service Committee Minutes, Commander ADF Cadets can provide preliminary advice that the Chiefs of Service Committee endorsed the proposal as presented in the information on this website. 

Next steps include the confirmation of position placement in the four tiered structure by the Service Cadet organisations (ongoing), finalisation and sign off of the Determination that authorises payments (in progress) and configuration of supporting CadetNet and Defence Pay ICT systems to enact implementation (commenced). Implementation is targeting the 1^st of July 2020 for completion, however this will be dependent on already scheduled system configuration work relating to Defence One changes.

Cadet Forces Allowance Reform

The Cadet Forces Allowance (CFA) is and will remain a key component of the ADF Cadet enterprise.

The CFA has previously been linked to the ADF Reserve rates of pay but was delinked in 2010. The last increase in the allowance occurred on 16 November 2012.
The 2016 amendments to the Defence Act 1903 (the Act) made by the Defence Legislation Amendment (First Principles) Act 2015 and the subsequent changes to the direction and administration of ADF Cadets that came under new arrangements from 1 July 2016 presented an ideal opportunity to review, assess and change outdated policies and procedures.

As the ADF Cadet Organisations reformed and evolved over time, the CFA also changed, often in a reactionary manner and usually well behind the changes to the direction or mode of operation of the three cadet organisations.

The unique position of Officer of Cadets (OOC) and Instructor of Cadets (IOC) in the cadet organisations has at times also raised the perceptions, expectations and beliefs of some individuals inside the cadet organisations, and also those from outside, that they are employees of the ADF. The 2016 legislative changes made it clear this is not the case.This unique association and partnership between community volunteer cadet organisations and the ADF has resulted in a number of issues related to CFA:

• differing interpretations of policy and application of the allowance across the three cadet organisations and the services;
• an allowance paid to the civilian volunteers that has been replicated from ADF salary rates that are designed and regulated in a strict industrial relations framework for a totally different purpose; and
• an allowance that is subject to taxation in the same way as salary has resulted in the payment of the superannuation guarantee levy required in an employee-employer relationship when such an arrangement does not exist, resulting in an allowance that is now considered to not meet the current expectations of the recipients, their communities, Defence or Government.

In 2017, Head of the Joint Support Services Division, Rear Admiral Bruce Kafer, initiated a review of the CFA. The review is now complete and findings of this review will allow for the CFA to be adjusted where considered appropriate and made relevant to the Youth Development Program, the Defence/Community Partnership, and Government.
Following the review, in consultation with the three services, Brigadier Dave Luhrs was appointed to lead the design and implementation of a new Cadet Volunteer Payment. Brigadier Luhrs is a former career Australian Defence Force Officer who has previously been responsible for leading remuneration reform for the Australian Army.

From six original options, two have been selected for detailed consideration:

a. Option 1 – a tiered payment linked to rank (the extant CFA), albeit subject to a rate increase calculated at 9.5 per cent, being the sum of average annual  Consumer Price Index (CPI) increases since the last CFA increase of 1 November 2012; and

b. Option 2 - a tiered payment linked to position: based on Executive/Command and Specialist Support, Program Delivery and Specialist Support and Program Support and Specialist Support responsibilities, with a tier for volunteers undergoing training.

These two options have been under careful consideration at Ministerial and senior Defence levels, informed by Senior Cadet volunteer staff views of the proposals.

Defence’s intention is to pursue Option 2.

OPTION 2 – CADET VOLUNTEER PAYMENT

The proposed Cadet Volunteer Payment is a tiered payment based on Executive/Command and Specialist Support, Program Delivery and Specialist Support, and Program Support and Specialist Support responsibilities, with a tier for volunteers undergoing training. It combines recognition, reimbursement and retention effects in four tiers linking daily rates of payment to the characteristics of a position.

The Cadet Volunteer Payment rates are arbitrarily identified to balance an element for recognition of volunteer time contributed to the program, provide partial reimbursement of out-of-pocket expenses incurred in supporting the program and to encourage participation as an adult cadet volunteer.

Service Chiefs retain the discretion to align positions to payment tiers in accordance with tier definitions. The payment remains claimable against a 48 day maximum (an unchanged threshold that has been historically established and continues to provide a reasonable framework for the program), or days attended as may be approved.

The payment is not linked to rank, rather is reflective of a bracketed assessment of governance, assurance, risk, responsibility and anticipated cost levels being exercised or incurred by volunteers at each tier. A common base rate recognises generic volunteerism, and the incremental recognition of increasing responsibilities, risk and incurred costs recognises the demands of specific positions over rank.

The payment provides consistency across the Defence cadet program through recognition of position characteristics as defined by tier, with Service Chiefs retaining the discretion to determine tier/position alignment. Perceptions of a cadet volunteer career are reduced by delinking the payment from rank. A ‘Non-Reduction’ effect is applied to disadvantaged individuals until they complete their commitment in a current position.

Note: Blue vertical bars represent the current CFA daily allowance rate by rank

Definitions

The following definitions are applied to guide Service placement of positions in tiers:

1. Executive/Command – The management of the program.  Executive/Command positions have higher level responsibilities for youth safety through the development and delivery of the program, which may include policy development; governance and compliance; and, representational duties.  Additionally, this tier may be applied to volunteers with a specialist skill deemed critical to the effective management of the program, such as, but not limited to, coordination chaplains, airworthiness, sea worthiness.
    
2. Program Delivery – The direct interface with cadets.  Program delivery positions are focused on the delivery of training and other activities for cadets and have ‘first line’ responsibility for youth safety.  Additionally, this tier may be applied to volunteers with a specialist skill critical for the effective delivery of the program, such as, but not limited to, regional chaplains and instructors.   
3. Program Support – The administration and lower level development of the program.  Program Support positions have very limited interaction with cadets and are focused on unit-regional level administration; governance and compliance checks; and, training development and the planning of activities.  They have an indirect role in youth safety.  Additionally, this tier may be applied to volunteers with a specialist skill critical to the effective support of the program, such as, but not limited to, skills necessary in the development of policy and training programs.
4. Under Training –Adult volunteers of Cadets undertaking but having not yet completed mandatory training requirements for acceptance as Adult volunteers of Cadets Volunteer trainees will be principally employed in support of program delivery at unit level and allows the Program to develop volunteer’s leadership and meet youth safety (supervisory) requirements

Approval of payments – standard applications

The following Defence personnel may make payments, in accordance with the amounts set out in Table 1, to Officers and Instructors of Cadets in the ADF Cadets who have applied within the timeframe for payment of a daily amount, or an expense that has been incurred in respect of participation in activities of the ADF Cadets.

For 1 – 48 Days claimable:

(1) For Australian Navy Cadets: Director General Australian Navy Cadets and Reserves, Director Australian Navy Cadets, National Flotilla Manager and appointed Flotilla Support Officers in the ANC Directorate.

(2) For Australian Army Cadets: Commander Australian Army Cadets, an Army Officer of the rank of Major or higher, or an APS Defence employee of the grade of APS6 or higher in the Headquarters Australian Army Cadets.

(3) For Australian Air Force Cadets: Director General Cadets - Air Force and a member with the rank of Wing Commander or higher (or Defence APS equivalent) in the Cadets Branch Air Force.

For 49 – 150 Days claimable:

(4) For Australian Navy Cadets: Director General Australian Navy Cadets and Reserves, Director Australian Navy Cadets.

(5) For Australian Army Cadets: Commander Australian Army Cadets, Deputy Commander Australian Army Cadets.

(6) For Australian Air Force Cadets: Director General Cadets - Air Force and Deputy Director General Cadets – Air Force.

For 151 – 200 Days claimable:

(7) For Australian Navy Cadets: Deputy Chief of Navy

(8) For Australian Army Cadets: Deputy Chief of Army

(9) For Australian Air Force Cadets: Deputy Chief of Air Force

Daily amount and payments for volunteers in the ADF Cadets

For the purpose of calculating the daily amount, six or more hours of support on any day counts as a full day. Between two and six hours on any day counts as a part day. Each part day is paid at half the daily rate. Less than two hours of support on any day does not receive a daily or part day amount.

ADF members undertaking SERVOP C service who participate in a cadet activity will not be entitled to any payments under this determination unless they are accepted as Officers of Cadets or Instructors of Cadets and are participating in a cadet activity in that capacity. A member of the ADF Reserves who is in receipt of Reserve pay for participating in a cadet activity will not be entitled to any payments under this determination.

Non-Reduction Clause

An individual who would otherwise be negatively affected by the tiered payment scheme will retain access to the daily rate of payment as previously determined and in place on the date of this payment structure coming into effect. Should an individual take up a different appointment at either a lower or higher rate of payment, any non-reduction provisions will cease and the individual will be subject to the rate that the new position they occupy attracts in accordance with this schedule. A future change of position will enact a potential change of daily rate entitlement depending on the tier to which the new position is aligned.

Payments for pre-approved travel and meal expenses

An eligible Officer of Cadets or Instructor of Cadets in the ADF Cadets may seek payments in relation to travel and meal expenses at the rate prescribed for PTE(E) – COL(E), the non-Star-Rank rate, having reference to a pre-approved schedule of activities for which such expenses can be sought.

Approval of payments – authorised persons to make non-standard payments

For the purpose of the relevant prescriptions in a future determination, the following position holders exercise the associated delegations:

a. For Australian Navy Cadets: Director-General Australian Navy Cadets and Reserves and a member with the rank of Commander or higher (or Defence APS equivalent) in the ANC Directorate.

b. For Australian Army Cadets: Commander Australian Army Cadets, an Army Officer of the rank of Lieutenant Colonel or higher, or an Defence APS employee of the grade of Executive Level One or higher in the Headquarters Australian Army Cadets.

c. For Australian Air Force Cadets: Director-General Cadet - Air Force and a member with the rank of Wing Commander or higher (or Defence APS equivalent) in the Cadets Branch Air Force.

Tax Treatment

On 23 December 2014 the Australian Taxation Office (ATO) determined that Defence is required to continue to withhold an amount for taxation purposes from the payments made to Officers and Instructors of Cadets and that income tax implications are subject to the recipient’s personal taxation circumstances.

The structure of this proposed Cadet Volunteer Payment does not provide defensible reasoning to allow the ATO to adjust its 23 December 2014 ruling. Consequently, a future Cadet Volunteer Payment of this structure will remain subject to the conditions of the 23 December 2014 ATO decision on Cadet Forces Allowance.

Superannuation Guarantee Levy

The Defence Department’s broader approach to payment of the Superannuation Guarantee Levy (SGL) in circumstances relating to part-time or contract related payments is under review.

Defence is seeking clarification from the ATO in relation to its obligations to pay the Superannuation Guarantee Levy (SGL) to a number of Defence-related workers, such as Board - Council members and volunteers. ADF Officers of Cadets and Instructors of Cadets are included in this deliberation. ATO advice may impact both the current CFA and SGL payments and any future allowance/payment made to Officers and Instructors of Cadets.

SGL will continue to be paid in relation to Cadet Volunteer Payment until the Department confirms its future policy. At that time the payment of SGL for a Cadet Volunteer Payment should be aligned with that policy.

Payment of Cadet Volunteer Payment and/or Travel Allowance

The Services currently apply different approaches to the payment of the CFA and/or Travel Allowance. With minor exceptions, Army pays the CFA or Travel Allowance, while Navy and Air Force may more routinely pay both depending on the circumstances.

For the purpose of this revised payment, Cadet Volunteer Payment and Travel Allowance will normally be claimed separately and for specific reasons that align with the requirements for payment. They may be claimed concurrently when Officers and Instructors of Cadets are supporting scheduled Cadet activities and for which approval of payments has been provided, when in the opinion of the delegate expenses incurred are considered unreasonable, and when all other criteria for entitlement to the respective payments have been satisfied.

It is worth noting that this review of the CFA and the implementation of any revisions is not intended as a cost cutting measure. It carries a potential additional cost of $4.25 million if all volunteers were to claim their full 48 days of payment.

Similarly, there is no intention to use this review to effect any changes to the wearing and recognition of rank, as it is a foundational aspect of the ‘military-like’ experience that is central to the Defence/Community Youth Development Program.

This information will be updated as the CFA reform activity continues.

Any questions relating to the review and reform of CFA can be directed through the respective ADF Cadet organisations.