Robert McClelland (Barton, Australian Labor Party, Shadow Minister for Defence) Share this | Hansard source

For 10 years the government has lauded its national security credentials. Successive ministers have been ever ready to use our troops as a backdrop for promotional photos—it creates a good political image. But managing our nation’s defence is much more than imagery. For the last five years Defence has had continuing qualifications of its accounts by the Auditor-General. For the last two years Defence has been in breach of the Financial Management and Accountability Act. The extent of the uncertainty relating to Defence’s accounts—according to the National Audit Office—was $6.8 billion last year and $7.4 billion the year before. These are not just technical issues about bean counting—the inadequacies of the department are affecting capability.

The more publicised programs which are in trouble are the Tiger armed reconnaissance helicopter, the Super Seasprite helicopter, the M113 armoured personnel carrier project and the frigate upgrade project. In addition, the Auditor-General has found failings in respect of a number of projects, including the amphibious transport ship project, the Bushranger vehicle project, major equipment acquisitions, management of the supply system, management of property and facilities, management of defence inventory and workforce planning. In the most recent finding in respect of explosive ordnance, released several weeks ago, the findings were damning. As ASPI says, pretty much the entire life cycle of some $2 billion worth of assets is not being managed as well as it should be. Extraordinarily, $1.4 billion of explosive ordnance was classified in the other than serviceable category. That is an outrage.

I can understand, as the minister has come to power, that he would want to distance himself from the administrative failings of his predecessor, but addressing the systematic mismanagement in the defence department requires more than simply initiating five inquiries and six reviews, that we have counted, over the last four months. As Neil James, the executive director of the respected Australian Defence Association, has said:

Any structure that needs such constant major review is fundamentally flawed.

The bottom line is that the Australian people are entitled to far more than the spin and regular misinformation that has become the trademark of the Defence public affairs unit. For instance, in this year’s budget papers, one of the government’s press releases stated that the Howard government had increased defence spending to 1.9 per cent of GDP, alleging that is considerably ahead of that spent by Labor. The reality is that, as a percentage of GDP, Labor spent significantly more than the current government. When the figures are calculated to the same methodology, under the Hawke and Keating governments defence spending reached a high watermark of 2.5 per cent of GDP and, on average, Labor spent 2.2 per cent of GDP on defence throughout its period in office, compared to an average of just 1.7 per cent under the current government.

Having made those points of criticism, we do recognise the continuation of the real growth in defence spending that has been decided and confirmed at three per cent over the next five years. We welcome this as being essential. In fact, it is the minimum that is required. As ASPI points out in its analysis of the 2006-07 budget, there has been a three per cent growth trend in defence spending since World War II—and, again, that is essential. However, the unfortunate reality is that, if projects continue to suffer from cost and time blow-outs as a result of the mismanagement that we have seen, then this amount, which equates to about $10 billion in extra funding over five years, will simply not be enough to do the task.

Again, as ASPI has pointed out in its analysis of the 2006-07 budget, the current piecemeal cycle of investment followed by bids for additional personnel and operating costs is no substitute for coherent, long-term planning. It goes on to say:

Put simply, there is not enough money in the budget to operate all the equipment currently being purchased ... It makes no sense to spend billions of dollars on new equipment unless it’s certain that there will be enough money to operate it.

This means that the government must immediately regain effective financial management of Defence’s huge $19.5 billion budget and limit cost blow-outs on major capability projects. If that is not addressed, as ASPI points out, we will simply be confronted, as the funds run out, with a situation of axing the next project in line.

For instance, Dr Robert Ayson of the Australian National University in a lecture on 23 May stated:

... such generous funding is unlikely to be sufficient to meet projected commitments. For example, it is not clear just how many Joint Strike Fighters will eventually be afforded because per unit costs of this aircraft are unlikely to respect current estimates.

As experts have advised, we need four squadrons of the Joint Strike Fighter to be effective. If it is the case that, as a result of mismanagement, we are unable to acquire a total of four squadrons, then our air superiority in the region will be significantly impeded and perhaps even lost.

But the real worry is that the government has not addressed what the Chief of the Defence Force has himself described as the No. 1 challenge facing the Australian Defence Force. That challenge is the ongoing failure to recruit and retain adequate numbers of military personnel. Instead, this defence budget overwhelmingly prioritises equipment over people. The three per cent real growth in spending will be worth about $750 million in this coming financial year alone, yet there is less than $50 million, or 6.7 per cent, allocated in the same period for measures to tackle recruitment and retention. Even if, to be fair, we are able to include some $45 million that is to be spent in the next 12 months on establishing a high readiness reserve, the total spent on the personnel shortfall is just $93 million, or about a tenth of the additional funding.

While expanding capital expenditure by some 20 per cent, the government is simultaneously projecting an immediate fall in the total number of our military personnel. Under the government’s Hardened and Networked Army initiative, the defence department will be required to recruit an additional 2,500 troops by 2010. Astonishingly, the budget papers forecast that the Army’s strength will actually decline by 39 personnel in the coming financial year. With 2010 only four years away, the decline in strength is far from a flying start to acquiring the numbers that we need.

Labor welcomes the establishment of the high readiness reserve, but the funds allocated for the Army Reserve under this budget thin out very quickly. For instance, the allocated $181.6 million is spread over four years and must improve salaries as well as establish the new high readiness reserve capability. Next year’s modest increase of $36 million in salaries and allowances for 19,250 reservists will be unlikely to penetrate the labour market to improve recruitment of reserves.

While the increase in defence spending has attracted headlines, the reality is it falls well short of tackling critical personnel issues. There remains a pressing need for much stronger investment in personnel. It is a shame that the government has not been more creative in this important area. Experts have suggested a number of reforms that could be made, including an alignment of defence workforce planning with workforce trends in the private sector. Such trends include increased flexibility and career mobility across an individual’s working life. The difficulty in transferring between categories within the individual services and between the services themselves is a disincentive to retention in this age of increased flexibility of employment. Gone are the gold watch days of static employment over the course of a person’s working life. This reality should be reflected in the way Defence manages its own workforce. There is a need to acknowledge the propensity of the modern workforce to shorter term engagements and the desire to obtain a greater and broader experience from a number of callings.

The defence minister would do well to implement reforms suggested by the Chief of Army, Lieutenant General Peter Leahy. General Leahy has suggested a reduction in the overall number of big Army bases spread throughout the country. This would allow Defence families to be less subject to regular transfer moves, which can be quite destabilising for partners and their children. We believe the government should not only back General Leahy on this constructive suggestion but also closely examine further measures to reduce the hardship of military life. The long duration of overseas deployment could be reassessed in some circumstances as it is clearly a burden on a mother or a father to be away from home for sometimes up to six months at a time.

When I have met our troops and their families they have often expressed to me the wish for ease of access to child care, including babysitting facilities, particularly at a time when families are posted to new locations and have not as yet established connections to assist in minding the children when the parents are required or have the opportunity to go out together. The government should also explore building better links with training authorities and the private sector to ensure more accreditation is available for specialist skills learnt in our armed forces, as well as recognition of the acquired expertise in leadership and personnel management acquired by officers in our defence forces.

The Australian Strategic Policy Institute has conducted research showing that defence salaries have simply not kept pace with average weekly earnings. While rates of pay are only part of the more complex issue, this widening gap cannot be ignored; it must be addressed by all sides of politics. Further potential for defence workplace reform is available by looking at the way in which other nations have addressed problems of recruitment and retention. The Israelis, for instance, have for many years been operating a broad range of programs to address this problem, many of which are proving successful. While they have conscription in that country, it applies only for a limited time, and they have been successful in retaining the involvement of young men and women and, indeed, older men and women in the defence forces through a number of strategies. Several programs aim to reinvigorate lower socioeconomic sections of the community while tapping an untouched resource for the defence force. For instance it may be that, with some additional training, kids who perhaps have not achieved the literacy standard to satisfy defence admission could be the subject of some additional training to get them up to that standard.

Other Israeli defence force recruitment initiatives attempt to cure wider gender imbalances in skilled trades. In stark contrast, the Howard government’s 2006 budget abolished a $38.5 million scheme to encourage more women to take up training in the traditional trades. Tertiary studies programs are made available to the Israeli military personnel in a number of different formats. They are carefully designed to link in with a comprehensive set of career benefits which are targeted at personnel of different age brackets as their military careers develop and, ultimately, enhance their ability for lucrative employment in the private sector. These benefits are also designed with a broader view of developing social infrastructure, including the use of defence housing to reinvigorate struggling municipalities. The army neighbourhood scheme develops affordable, comfortable housing for military families in areas requiring urban renewal. Interest-free loans and mortgage assistance for such houses is available in exchange for six years of mandatory service. This would be an attractive proposition to many defence families in a highly expensive housing market, particularly in our major capital cities.

Unlike in Australia, the issue of technical qualification in Israel has been resolved through a scheme which gives military tradespeople the same qualifications as their civilian counterparts. This has created a demand for military tradespersons in the private sector. The military relationship with technical colleges in Australia could also be improved. In some countries the military have even developed their own fully accredited institutions to meet the special needs and simultaneously enhance skills that ultimately flow to the community. There are opportunities already in place through the vocational education and training schemes that many state governments are now implementing, where students at high school level can start undertaking trade courses in conjunction with private employers who provide outplacement opportunities. There is no reason, I believe, why the military could not be identified and certified as an appropriate employer provider for those purposes. It does not necessarily mean that a child will be compelled to accept military service in exchange for that education, but merely that if a child elected to pursue a trade and expressed interest in a military career then they would have the opportunity of obtaining that experience within our military. I believe there is no reason why those sorts of measures should not be further explored.

It has also been shown in the United States and the Israeli militaries, and obviously other militaries around the world, that there is considerable benefit in creating a feeling of constant advancement. Again, as an example, in Israel after six or seven years of military service the first university ‘rest’, as it is called, becomes available to career personnel. This allows them to undertake a degree with all the associated university benefits. Further intervals become available at different points in their career and all are pursued on full pay as a normal posting, and that is highly significant. Recruitment for the skilled trades is also initiated from the high school level. Students interested in leaving school early to pursue a technical trade have options available through the Israeli Defence Force. The Israeli Defence Force is affiliated with a number of technical colleges which it uses to qualify potential recruits in mechanics, electronics and other necessary trade qualifications. Again, these are models which could and should be pursued in Australia.

An appropriate balance must be reached between developing the Australian Defence Force’s hardware capability and recruiting and retaining its human capability. We are seeing with our deployment in East Timor that increasingly over the next decade the demands on our defence forces are going to be for troops, literally for footslogging troops. That is the basics of the law and order activities currently being engaged in in East Timor. The troops obviously have skills greater than the traditional footslogger, but, basically, we need soldiers in boots to perform that sort of activity. And in all likelihood we will have to do that in the coming decade in a number of countries in our region to assist them to address law and order issues—indeed, to prevent states from becoming failed states.

All experts recognise the threat to our security of having a failed state in our region. Not only do those states tend to become havens for criminal activity, such as the drug trade, but also potentially havens for terrorists to launch attacks from our backyard very much into our territory. So this going to be a crucial security issue in the next decade and it will only be addressed by having sufficient soldiers available to undertake the task. I believe our East Timor deployment over the next three months will cope, and cope admirably. If the deployment is longer than that I think real strains are going to show because of the inattention that has been given by the government to addressing the recruitment and retention crisis in our military.

In conclusion, I am reminded of a verse from the Navy recruiting advertisement which confirmed the need to emphasise the human rather the technological capabilities. The slogan developed was: ‘Today’s pride of the fleet is you’. The 2006 budget demonstrates that this government has forgotten that the pride of the fleet, or the squadron, or the battalion, is its people. Much more must be done to address the needs of our serving men and women and their families.

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