Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Hansard source

Under Senator Hill, the then Minister for Defence, the government initiated the Kinnaird review of the way in which defence procurement operates. As a result of that very substantial review, the DMO has been substantially restructured and is, in my view and in the government’s view, operating extremely effectively under Stephen Gumley, who was appointed as the head of the DMO as a result of the Kinnaird review.

I think that the DMO has instituted some very major changes to the way procurement is conducted in this country. It is true that Finance has worked closely with Defence, both in that review process and in ensuring that Defence operates as efficiently and as effectively as possible in the very difficult task of managing procurement projects in this country. I do not want to allow any suggestion to float in this chamber that those involved in the DMO are doing anything other than working to their professional best in the service of this country in acquiring the equipment that Defence needs. They are extremely well funded by this government.

Senator Bishop is right to point to a recent audit report in relation to the Tiger acquisition. That is the proper role of the Auditor-General. The Auditor-General is independent and is an extremely good Auditor-General. I strongly supported his appointment—and he is a former Finance officer, as you well know, Senator Bishop. Mr McPhee is doing a very good job, and it is very important that Defence know that Mr McPhee will be all over them with respect to their acquisition projects. I am sure that will bring about a superior performance.

It is a regrettable fact for all finance ministers to observe that nowhere in the Western world, at least, is there perfection in the acquisition of defence materiel. Former Labor ministers, like Senator Ray, will know that no matter what efforts governments make to ensure perfection in acquisition, it is probably unachievable. However, all governments must aim to maximise the cost effectiveness, efficiency and delivery of defence acquisitions. Senator Bishop is quite right to point out that there is a lot of taxpayers’ money at stake.

Through the national security committee, to which I am co-opted when matters pertaining to money are raised—therefore I am there a lot—it is my job, but it is also the job of ministers on the national security committee to hold Defence to account in the acquisition process. We regret whenever there are any slippages in contracts or any unfortunate outcomes in relation to defence acquisition. But I am satisfied that there has been very substantial improvement in the operation of the DMO, and they are delivering the equipment which this country needs to ensure our national security and defence at a time when the defence forces of this country are under extreme pressure—as you know. They are serving in many theatres around the world, and that is putting enormous pressure on the Department of Defence. Despite those pressures, I think that the DMO are operating as well as any defence organisation in the Western world.