Mark Bishop (WA, Australian Labor Party) Share this | Hansard source

by leave—I move:

That the Senate take note of the report.

Defence procurement is perhaps the most complex and unproductive sector of government anywhere in this country. By my reckoning, there are more than 8,000 employees in Defence and DMO currently engaged in procurement matters and roughly another 26,000 in industry—all feeding off an annual government budget of over $9 billion, supplying consumables, equipment, weaponry and ordnance to almost 58,000 serving personnel. This is a massive part of the government and the economy without which we have, it is clear to say, no defence at all.

The tragedy is it is being managed so badly and, despite numerous reviews over the last 12 years, it has not improved. That is the essence of the report before the chamber. The committee has now run out of patience with the Defence bureaucracy. Indeed, it can be said that of all the mountains of evidence taken by the committee, every person or entity who gave that evidence thinks Defence is failing; that is, of course, with the exception of Defence itself. That is the nub of the problem. In the face of all the evidence and despite all the reviews, Defence keeps putting up the same old 'work in progress'—a mantra of reform and change, with lots of good intentions; honestly motivated, but with no effect.

As the committee has noted, that is not to say all those working in this area of Defence are in any way incapable. It is simply that the organisation has so many layers of complexity, choking on ever-changing processes and coordinated by a plethora of committees. But those committees are not the cause of the problem, as many experts would have us believe. They are simply symptomatic of an organisation made so complex that it has effectively become a Sargasso Sea. What is worse, no-one—from the top down—seems capable of asking the hard questions, let alone providing the necessary remedies. That is what the committee has, in this case, tried to do.

For the record, the parts of this bureaucratic monster which have a direct role in procurement are as follows: the Defence Strategic Group, the DSG; the Capability Development Group, the CDG; each of the services—Army, Air Force and Navy; the Defence Materiel Organisation, the DMO; the Defence Science and Technology Organisation, the DSTO; and the Australian Submarine Corporation, the ASC, which is owned by the Department of Finance and Deregulation. I cannot describe how all this works simply because it does not; it is just a potpourri of people in stovepipes whose roles are confused by the poor communication between them and who have no accountability whatsoever.

I want to address the organisational reform which the committee has recommended. Put simply, the committee wants the whole shooting match simplified by removing layers of bureaucracy. It wants full and clearly identifiable accountability. It wants clear role definitions and the removal of duplication. As indicated in the committee's interim report, the current matrix model is a complete failure. In short, the proposal is that service chiefs should have full control of all major single-service projects, such as ships and aircraft. After all, they have to operate and maintain this equipment with full budgetary responsibility. By this means we will have a hierarchy of responsibility sheeted home, without qualification, to the service chief. This will in itself remove several layers of bureaucracy.

First, the role of the DMO in such projects will be reduced to a specialised source of tendering, contracting and project management expertise. This will allow the consolidation of current technical expertise, shared between the forces and DMO, into one area under the management of the relevant service chief. That centre of technical expertise should also be responsible for project development, in association with the Defence Strategy Group, prior to government approval. They will be responsible for the procurement contract, all liaison with suppliers and all maintenance through to disposal—that is, the complete integration of this post-decision procurement process into one task. DMO will remain as an agency for the great raft of procurement tasks which are cross service and less technically complex—that is, boots, uniforms, land transport, ordnance, fuel et cetera—and in my view this should include logistics. I base this on the recent experience of the failed RAAF procurement of aircraft services for supplies to the Middle East.

The current capability group should also see its role and resources reduced. The role of the CDG should be to monitor and report to government on the implementation of white paper policies and the agreed capability plan. Instead of being the main player prior to and after second-pass approval, they should be the coordinator sitting between technical and operational expertise, the service chiefs and the strategic group responsible for capability plan prescription. Their job is to report on accountability, not to be responsible for it. It is for that reason I believe the new project monitoring office established in DMO should be relocated to the CDG. As for DSTO, it should remain independent, advising government and its minister directly; that minister should be the minister responsible for procurement.

The committee believes this simplified model will significantly streamline the current archaic mess of the matrix model. It potentially removes duplication, second-guessing, endless circles of process and committees. It forces the services to reskill and take charge of the equipment they use. It removes the waste of skills through short rotations of staff and the repetitive and time-consuming processes which seemingly continue to increase. There should not be any more denial, buck-passing or hand-washing and no more assurances that all is well, that reforms are being made and that a new leaf has been turned. The committee has not bought any of this rhetoric—that is all it is, rhetoric. However, there is no radical change; it is simply streamlining through clear role clarity and improved, complementary relationships.

I have no doubt at all that it will have its sceptics. The military no doubt will endorse it simply because it shifts power away from the centre and the bureaucrats, who have grown in numbers like Topsy, into their hands as operators. The bureaucracy, however, will be completely sceptical—but that unfortunately is the very nature of the problem we face in defence. Neither side trusts one another, and that is endemic around the world. More detached civilians with a sharper eye for strategy, policy and budget management have long tried to contain the wish lists and materiel ambitions of the military. Conversely, the military believe in their war-fighting training and expertise on such matters. They are continually suspicious and untrusting of civilians whom they believe lack such knowledge and experience. Of course, in between are ministers and governments who must be able to arbitrate and bring it all into some sort of a whole. Is it any wonder that ministers and governments struggle simply because the advice to them may be incomplete, compromised and often wrong?

I do not quite know the answer to this particular dilemma, but it has to get better than it currently is. What is needed, the critics say, is genuine contestability. This can only be achieved with full engagement of industry, rigorous assurance on the scientific practicality, and a discussion based on complete evidence and information. Contestability is the facility whereby the notorious group-think of defence can be counteracted by separate and independent challenge in the current model that is asserted as being the role of CDG, plus the DMO, plus DSTO and industry. Of course, industry are often ignored as being a vested interest, supported by another asserted risk—that of probity. It is clear though that the current form of contestability does not work. It does not even work anywhere near as it should. The final outcome is an old-fashioned power play whereby those with the power ignore the internal critics and hence we have this continuing mantra of a one defence view or a one defence family which puts a uniform recommendation to ministers who may or may not be adequately informed and who are developing an increased degree of scepticism.

I want to make some final remarks that go to the Secretary of the Senate Standing Committees on Foreign Affairs, Defence and Trade, Dr Kathleen Dermody, and her staff. There was a mountain of evidence and it was quite complex and there were hearings all around Australia and events that occurred overseas. All of that impacted on the quality of the report that is before the chair and it goes without saying that her effort in bringing it all together into a coherent whole is simply a major feat which should be acknowledged on the record.