John Faulkner (NSW, Australian Labor Party) Share this | Hansard source

I rise to speak tonight on the continuing failure of this government to effectively support the equipment on which the men and women of the ADF rely. The government’s record on major acquisitions is poor—there is no better immediate example than the Seasprite. The government has a similarly poor record on major upgrade projects, including Navy’s frigate upgrade. Money wasted on these projects potentially reduces funds available for support. It is not good enough to have such massive investments and not get the best use of them because of inadequate support arrangements. Inadequate support, through funding shortfalls or poor systems and processes affects serviceability and availability and can adversely impact on both training and mission success.

The real problem is that the ADF’s capability may suffer. That is why it is so important that government gets on top of these major purchases. The Defence Materiel Organisation delivers support services for platforms and weapons systems through 46 systems program offices, or SPOs. These SPOs become involved during the acquisition period, maintain a role in subsequent upgrade projects and conduct the routine maintenance and minor additional works intended to keep the equipment ready to do the job. To be effective the DMO needs the right mix of funds, personnel with skills and experience, as well as effective systems and processes.

How effective are the SPOs? It is a tough question to answer. The government does not keep the taxpayer up to date on major project acquisition and the government is unwilling to say how many of these platforms might be sitting in workshops or are otherwise unavailable. We depend on what limited information we can find in the occasional performance audit by the Auditor-General and the annual reports of the DMO and of Defence.

However, recent audit reports do reveal a concern. Take for example the 2005 report by the Auditor-General Management of Selected Defence System Program Offices. The report states:

In 2003, DMO’s Maintenance Advisory Service audited the Army’s 1st Division logistic support and found that only four per cent of the vehicles sampled by the audit were considered fully functional, and only 22 per cent of all equipment sampled was regarded as fully functional.

I acknowledge that this situation may well have improved, so let me quote again from the same report:

The audit found that TFSPO’s F/A-18 Hornet and Hawk 127 logistics support arrangements are based on well-developed logistics support policy, plans and key performance indicators. Also, indications are that TFSPO is adequately maintaining the technical integrity of the Hornet and Hawk fleets. Hornet and Hawk fleet operations data indicate TFSPO is managing effectively its in-service support role.

Why highlight an apparently successful operation, the TFSPO? Because I want to emphasise that the DMO knows how to run a good SPO. It is reasonable to expect that most of the SPOs will fall somewhere on the continuum between the two cases that I have just highlighted. The question is: why has the government allowed so many SPOs to continue to underperform?

Efficiency in utilisation of capital equipment does not come about by accident. I suggest it is a function of two elements: buying right in the first place and having the systems and processes of the whole enterprise supporting the capability that asset provides.

In my response to the tabling of the ANAO report on the remediation of the standard defence supply system, the SDSS, I commented that the government had a clear choice: to build in hope on the current outdated platform or to adopt a contemporary integrated approach. Decisions about the future of these systems—for example, in project JP2077 and the myriad other minor, logistic information systems—are not just about the money to be spent on those programs; these decisions need to take account of the value of investments that are underutilised.

Let me be clear, Commonwealth agencies are required to select providers of goods and services primarily on the basis of value for money. What is needed is a government committed to realising value for money, not just using it as a selection tool. That means buying well and supporting well to give our forces the capability edge they deserve by making every dollar count. In September 2003, former Minister for Defence Robert Hill, with regard to reducing project failures, said:

What you do is you try to put in place a structure and a process and the people that give you the best chance in our instance of achieving projects on time, within price and have the capability that’s been predetermined.

Then Senator Hill, now Mr Hill, regrettably followed these remarks by asserting, falsely as events turned out, that:

... the evidence is we’re already doing a lot better in that regard. And I think with these—

DMO—

reforms we’ll do even better ... So I can be even more than reasonably confident I think it’ll lead to even yet further improvements.

How quaint and clever that the former minister’s statements contain so many qualifiers.

The government’s own Kinnaird report recognised that defence capability is the combination of people, organisation, equipment, systems and facilities to achieve a desired operational effect, and it acknowledged ‘the importance of considering the entire process’. The government embraced the Kinnaird report, but that is nowhere near enough. It is time for the government to lift its game on both acquisitions and support.