Andrew Southcott (Boothby, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Joint Committee of Public Accounts and Audit I present the committee’s report No. 442: Inquiry into the 2012-13 Defence Materiel Organisation Major Projects Report.

Today I table the Joint Committee of Public Accounts and Audit's review of the 2012-13 Defence Materiel Organisation Major Projects Report.

This was the sixth annual Major Projects Report to be produced by the Audit Office and the DMO. This year's report covers 29 projects with a combined budget of over $44 billion.

The committee's aim in reviewing the MPR is to help to maximise transparency and accountability in the Defence acquisition process. The committee has made a range of recommendations directed towards this.

The DMO MPR constitutes the ANAO's review and analysis of the progress of selected major Defence acquisition projects managed by DMO, and aims to consider cost, schedule, and capability performance and to function as a longitudinal analysis of procurement projects over time.

The JCPAA assesses the overall content, accessibility and transparency of the information provided in the MPR, and also reviews and endorses the guidelines that constitute the MPR.

The committee is committed to ensuring the information presented in the Major Projects Report helps to maximise transparency and accountability in the Defence acquisition process for major projects managed by DMO.

Specific areas of focus in the committee's review of this year's report include cost, schedule, and capability performance, and governance and business processes.

Defence major projects are inherently complex. Meeting cost, schedule and capability targets must be considered in this context, particularly for developmental projects.

There are a range of issues affecting the completion of major projects. These include:

The committee acknowledges these various challenges.

The creation of DMO and the evolving improvements in how it operates were a significant step forward for Australia. The MPR is an important element of this progression along with the corresponding parliamentary scrutiny.

The committee's report makes 10 recommendations directed at:

On behalf of the committee, I would like to express my appreciation for the work done by the DMO and the Australian National Audit Office in producing the major projects report each year. I would like to thank the committee secretariat for their assistance in preparing this report. I also thank the witnesses from the DMO and the ANAO for their participation in the committee's review. I commend the report to the House.

Report made a parliamentary paper in accordance with standing order 39(e).

Pat Conroy (Charlton, Australian Labor Party) Share this | Link to this | Hansard source

I rise to briefly speak to the report. First off, I commend the chair on the excellent process that produced this report. This is the latest in a series of major project reports conducted by the DMO and the ANAO at the request of the JCPAA. The key table in this report that people should look at is table 5, which demonstrates that significant improvements have been made in the performance of major defence procurement in this country; but there is a stark contrast between projects approved before the Kinnaird and Mortimer reforms and projects approved post that time. It is in this context that I raise deep concerns about any move to reduce the independence of the DMO or attempts to reintegrate it into the Department of Defence, because I fear that we could return to an era where the average slippage in schedule was 87 per cent, which is what occurred in projects pre the Kinnaird reforms. That is the real lesson that came out of the major projects report.

A key recommendation of the report was around sustainment reporting, and I again commend the committee on the constructive way it approached this issue, trying to balance the very serious national security issues around the disclosure of information that may be of use to potential adversaries areas versus the right of the parliament and the people of Australia to know how their defence dollars are being spent and how that platform is performing. It is fair to say that the committee is still not fully satisfied with how Defence is reporting on sustainment, which is quite opaque in the portfolio budget statements. Hopefully, hard work between the Audit Office, the DMO and the committee can resolve this issue over the coming year.

Finally, I would like to touch on the performance of some individual projects that are in this report, particularly the patrol boats and the air warfare destroyer, which was also subject to a separate ANAO report. In that case, as is highlighted in the major projects report, there is a clear link between a decline in the boom and bust of the shipbuilding industry and the performance of that project. The audit report clearly states that we are paying the price for a run-down of work post the ANZAC projects. It also notes the ongoing problems with the patrol boats. In my firm view, this adds more evidence to the case that we need to bridge the shipbuilding 'valley of death', where we have 4,000 naval shipbuilding jobs at risk. We can get greater performance for the Defence department, for the Navy, by bringing work forward and at the same time save 4,000 jobs. I was deeply disappointed that the budget of a fortnight ago had no information and no certainties for those 4,000 workers and their families.

I commend this report to the House. I congratulate all participants in the hearing process, particularly the ANAO and the DMO. I echo the chair's thanks to the committee for delivering an excellent report.

Andrew Southcott (Boothby, Liberal Party) Share this | Link to this | Hansard source

I move:

That the House take note of the report.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

In accordance with standing order 39, the debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.