Hon Max Bradford
Minister of Defence
MEDIA RELEASE

October12, 1999

Increase In East Timor Allowances

Operational allowances for Defence Force personnel serving in East Timor are to be increased by just over 100 per cent, Defence Minister Max Bradford confirmed today.

Mr Bradford said that Cabinet had accepted the recommendation of the Chief of Defence Force, Air Marshal Carey Adamson, that New Zealand personnel serving in East Timor deserved a higher level of allowance to reflect the dangerous and arduous duties they faced.

After a review of allowance rates that began several months ago, all New Zealand Defence staff serving in non-UN mandated operations will receive allowance increases.

The size of the increase will depend on the risks it is estimated they face.

New Zealand Defence personnel serving in non-UN mandated operations overseas are given allowances in three bands.

The top A-band is for staff who operate in a wartime environment with extremely high risk, such as we saw in Vietnam.

The middle B-band, under which staff serving in East Timor are presently covered, is for service people operating in an environment where there is a high risk, but short of war.

The bottom C-band is for Defence staff in lower risk environments, such as the Sinai and Bosnia.

Mr Bradford said he was pleased to announce that the Government was significantly increasing the qualifying daily allowances for troops in East Timor.

The troops in East Timor will receive allowances in the B-band.
The three allowances comprise first, an operational allowance which increases from $17 to $65 a day before-tax, and secondly the environmental factor payment which has been increased from $6 to $10 per before tax.

Thirdly, New Zealand troops in East Timor also receive a daily untaxed incidentals allowance of $19.60 a day, which is unchanged.

The total of these allowances is $94.60 per day, pre-tax, or $78.85 per day after tax (at the 21 per cent tax rate).

This compares with the existing rates of $42.60 and $37.80 respectively.

“There will always be differences between levels of New Zealand, and Australian Defence Force remuneration and those of other nations.

“However, New Zealand does not set its allowance rates according to what other nations pay their defence staff. While other rates may be used as a guide, New Zealand rates are set according to the nature of the risk, the environment and what is fair to the staff involved and the New Zealand taxpayer.

“The increase in allowances will go some way towards assisting those personnel and their families back home to cope with the difficulties of the deployment. It also recognises the danger of the East Timor deployment,” Mr Bradford said.

Mr Bradford said the allowance increases were estimated to cost nearly $14 million in the period to the end of June. After then the United Nations is expected to have assumed control of the mission in East Timor and be paying towards its maintenance.

“The Government is being careful to ensure that the allowances do not impact on the rights of service personnel to qualify for benefits such as child disability allowances, the accommodation supplement and family support. Accordingly, the New Zealand Defence Force and WINZ will be co-operating to pay the allowances in such a way as to comply with the relevant law.

The increases will take effect from September 21, and will appear in pay packets as soon as the legal issues are confirmed by Cabinet, Mr Bradford said.

ENDS

QUESTIONS AND ANSWERS

Are the allowances and salaries of New Zealand soldiers in East Timor taxed?

Most are. As has been the case for many years, incomes are taxable, as are the allowances with the exception of the $19.60 per day incidentals allowance.

Cabinet recognises there will always be differences between remuneration of Australian, United States and other forces in comparison to our own. These new rates are seen as fair and go a long way towards compensating personnel and families for the impact of a long deployment in a risky area.

How were the increased allowances determined?

Based on an internationally recognised formula, modified by the New Zealand Defence Force risk assessment of East Timor as an operational area.

Is the level of New Zealand soldiers’ salaries under review?

Yes. The New Zealand Defence Force is currently engaged in a pay review process, and will make any recommendations when this process is complete, possibly by the end of year.

What will the allowance increases cost?

Approximately $14 million to the end of June next year. By this time the operation in East Timor is expected to have moved to a United Nations chapter six “blue beret” operation, where risk levels will be lower. When this is established, the UN will pay towards the maintenance of peacekeeping.

After this, or when the chapter six UN mandate starts, will New Zealand defence staff in East Timor be paid UN allowance rates?

No. The UN will be partly compensating the NZDF for the costs of a “blue beret” peacekeeping operation.

What impact will the increased allowances have on qualifying welfare benefits?

None. This is a difficult area, which the Government is working through to ensure the higher allowances do not affect benefits such as the accommodation allowance. Legislation may be needed to give effect to this, which will have retrospective effect.

Ends.

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